EXHIBIT 10.5

SPINEMEDICA CORP.

2005 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

1. DEFINITIONS. Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this SpineMedica Corp. 2005 Employee,
Director and Consultant Stock Plan, have the following meanings:

Administrator means the Board of Directors, unless it has delegated power to act
on its behalf to the Committee, in which case the Administrator means the
Committee.

Affiliate means a corporation which, for purposes of Section 424 of the Code, is
a parent or subsidiary of the Company, direct or indirect.

Board of Directors means the Board of Directs of the Company.

Code means the United States Internal Revenue Code of 1986, as amended.

Committee means the committee of the Board of Directors to which the Board of
Directors has delegated power to act under or pursuant to the provisions of the
Plan.

Common Stock means shares of the Company common stock, $.001 par value per
share.

Company means SpineMedica Corp., a Florida corporation.

Disability or Disabled means permanent and total disability as defined in
Section 22(e)(3) of the Code.

Employee means any employee of the Company or of an Affiliate (including,
without limitation, an employee who is also serving as an officer or director of
the Company or of an Affiliate), designated by the Administrator to be eligible
to be granted one or more Stock Rights under the Plan.

Fair Market Value of a Share of Common Stock means:

(1) If the Common Stock is listed on a national securities exchange or traded in
the over-the-counter market and sales prices are regularly reported for the
Common Stock, the closing or last price of the Common Stock on the Composite
Tape or other comparable reporting system for the trading day immediately
preceding the applicable date;

(2) If the Common Stock is not traded on a national securities exchange but is
traded on the over-the-counter market, if sales prices are not regularly
reported for the Common Stock for the trading day referred to in clause (1), and
if bid and asked prices for the Common Stock are regularly reported, the mean
between the bid and the asked price for the Common Stock at the close of trading
in the over-the-counter market for the trading day on which Common Stock was
traded immediately preceding the applicable date; and

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(3) If the Common Stock is neither listed on a national securities exchange nor
traded in the over-the-counter market, except as otherwise provided in the
applicable Option Agreement or Stock Grant Agreement, such value as the
Administrator, in good faith, shall determine.

ISO means an option meant to qualify as an incentive stock option under
Section 422 of the Code.

Non-Qualified Option means an option which is not intended to qualify as an ISO.

Option means an ISO or Non-Qualified Option granted under the Plan.

Option Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall approve.

Participant means an Employee, director or consultant of the Company or an
Affiliate to whom one or more Stock Rights are granted under the Plan. As used
herein, “Participant” shall include “Participant’s Survivors” where the context
requires.

Plan means this SpineMedica Corp. 2005 Employee, Director and Consultant Stock
Plan.

Shares means shares of the Common Stock as to which Stock Rights have been or
may be granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or both.

Stock Grant Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall approve.

Stock Right means a right to Shares of the Company granted pursuant to the Plan,
an ISO, a Non-Qualified Option or a Stock Grant.

Survivor means a deceased Participant’s legal representatives and/or any person
or persons who acquired the Participant’s rights to a Stock Right by will or by
the laws of descent and distribution.

2. PURPOSES OF THE PLAN. The Plan is intended to encourage ownership of Shares
by Employees and directors of and certain consultants to the Company in order to
attract such people, to induce them to work for the benefit of the Company or of
an Affiliate and to provide additional incentive for them to promote the success
of the Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options and Stock Grants.

3. SHARES SUBJECT TO THE PLAN. The number of Shares which may be issued from
time to time pursuant to this Plan shall be 1,500,000 Shares, or the equivalent
of such number of Shares after the Administrator, in its sole discretion, has
interpreted the effect of any stock split, stock dividend, combination,
recapitalization or similar transaction in accordance with Paragraph 23 of the
Plan. If an Option ceases to be “outstanding”, in whole or in part, or if

 

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the Company shall reacquire any Shares issued pursuant to a Stock Grant, the
Shares which were subject to such Option and any Shares so reacquired by the
Company shall be available for the granting of other Stock Rights under the
Plan. Any Option shall be treated as “outstanding” until such Option is
exercised in fill, or terminates or expires under the provisions of the Plan, or
by agreement of the parties to the pertinent Option Agreement.

4. ADMINISTRATION OF THE PLAN. The Administrator of the Plan will be the Board
of Directors, except to the extent the Board of Directors delegates its
authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the Administrator is
authorized to:

a. Interpret the provision of the Plan or of any Option or Stock Grant and to
make all rules and determinations which it deems necessary or advisable for the
administration of the Plan;

b. Determine which Employees, directors and consultants shall be granted Stock
Rights;

c. Specify the terms and conditions upon which a Stock Right or Stock Rights may
be granted; and

d. Adopt any sub-plans applicable to residents of any specified jurisdiction as
it deems necessary or appropriate in order to comply with or take advantage of
any tax laws applicable to the Company or to Plan Participants or to otherwise
facilitate the administration of the Plan, which sub-plans may include
additional restrictions or conditions applicable to Options or Shares acquired
upon exercise of Options.

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under
it shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee. In addition, if the Administrator is the
Committee, the Board of Directors may take any action under the Plan that would
otherwise be the responsibility of the Committee. If permissible under
applicable law, the Board of Directors or the Committee may allocate all or any
portion of its responsibilities and powers to any one or more of its members and
may delegate all or any portion of its responsibilities and powers to any other
person selected by it. Any such allocation or delegation may be revoked by the
Board of Directors or the Committee at any time.

5. ELIGIBILITY FOR PARTICIPATION. The Administrator will, in its sole
discretion, name the Participants in the Plan, provided, however, that each
Participant must be an Employee, director or consultant of the Company or of an
Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing,
the Administrator may authorize the grant of a Stock Right to a person not then
an Employee, director or consultant of the Company or of an Affiliate, provided,
however, that the actual grant of such Stock Right shall be conditioned upon
such person becoming eligible to become a Participant at or prior to the time of
the execution of the

 

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Agreement evidencing such Stock Right. ISOs may be granted only to Employees.
Non-Qualified Options and Stock Grants may be granted to any Employee, director
or consultant of the Company or an Affiliate. The granting of any Stock Right to
any individual shall neither entitle that individual to, nor disqualify him or
her from, participation in any other grant of Stock Rights.

6. TERMS AND CONDITIONS OF OPTIONS. Each Option shall be set forth in writing in
an Option Agreement, duly executed by the Company and, to the extent required by
law or requested by the Company, by the Participant. The Administrator may
provide that Options be granted subject to such terms and conditions, consistent
with the terms and conditions specifically required under this Plan, as the
Administrator may deem appropriate including, without limitation, subsequent
approval by the shareholders of the Company of this Plan or any amendments
thereto. The Option Agreements shall be subject to at least the following terms
and conditions

A. Non-Qualified Options: Each Option intended to be a Non-Qualified Option
shall be subject to the terms and conditions which the Administrator determines
to be appropriate and in the best interest of the Company, subject to the
following minimum standards for any such Non-Qualified Option.

a. Option Price: Each Option Agreement shall state the option price (per share)
of the Shares covered by each Option, which option price shall be determined by
the Administrator but shall not be less than the par value per share of Common
Stock.

b. Each Option Agreement shall state the number of Shares to which it pertains;

c. Each Option Agreement shall state the date or dates on which it first is
exercisable and the date after which it may no longer be exercised, and may
provide that the Option rights accrue or become exercisable in installments over
a period of months or years, or upon the occurrence of certain conditions or the
attainment of stated goals or events; and

d. Exercise of any Option may be conditioned upon the Participant’s execution of
a Share purchase agreement in form satisfactory to the Administrator providing
for certain protections for the Company and its other shareholders, including
requirements that:

i. The Participant’s or the Participant’s Survivors’ right to sell or transfer
the Shares may be restricted; and

ii. The Participant or the Participant’s Survivors may be required to execute
letters of investment intent and must also acknowledge that the. Shares will
bear legends noting any applicable restrictions.

B. ISOs: Each Option intended to be an ISO shall be issued only to an Employee
and be subject to the following terms and conditions, with such additional

 

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restrictions or changes as the Administrator determines are appropriate but not
in conflict with Section 422 of the Code and relevant regulations and rulings of
the Internal Revenue Service:

a. Minimum standards: The ISO shall meet the minimum standards required of
Non-Qualified Options, as described in Paragraph 6(A) above, except clause
(a) thereunder.

b. Option Price: Immediately before the ISO is granted, if the Participant owns,
directly or by reason of the applicable attribution rules in Section 424(d) of
the Code:

i. 10% or less of the total combined voting power of all classes of stock of the
Company or an Affiliate, the Option price per share of the Shares covered by
each ISO shall not be less than 100% of the Fair Market Value per share of the
Shares on the date of the grant of the Option; or

ii. More than 10% of the total combined voting power of all classes of stock of
the Company or an Affiliate, the Option price per share of the Shares covered by
each ISO shall not be less than 110% of the said Fair Market Value on the date
of grant.

c. Term of Option: For Participants who own:

i. 10% or less of the total combined voting power of all classes of stock of the
Company or an Affiliate, each ISO shall terminate not more than ten years from
the date of the grant or at such earlier time as the Option Agreement may
provide; or

ii. More than 10% of the total combined voting power of all classes of stock of
the company or an Affiliate, each ISO shall terminate not more than five years
from the date of the grant or at such earlier time as the Option Agreement may
provide.

d. Limitation on Yearly Exercise: The Option Agreements shall restrict the
amount of ISOs which may become exercisable in any calendar year (under this or
any other ISO plan of the Company or an Affiliate) so that the aggregate Fair
Market Value (determined at the time each ISO is granted) of the stock with
respect to which ISOs are exercisable for the first time by the Participant in
any calendar year does not exceed $100,000.

7. TERMS AND CONDITIONS OF STOCK GRANTS. Each offer of a Stock Grant to a
Participant shall state the date prior to which the Stock Grant must be accepted
by the Participant, and the principal terms of each Stock Grant shall be set
forth in a Stock Grant Agreement, duly executed by the Company and, to the
extent required by law or requested by the Company, by the Participant. The
Stock Grant Agreement shall be in a form approved by the

 

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Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, subject to
the following minimum standards:

(a) Each Stock Grant Agreement shall state the purchase price (per share), if
any, of the Shares covered by each Stock Grant, which purchase price shall be
determined by the Administrator but shall not be less than the par value per
share of Common Stock on the date of the grant of the Stock Grant;

(b) Each Stock Grant Agreement shall state the number of Shares to which the
Stock Grant pertains; and

(c) Each Stock Grant Agreement shall include the term of any right of the
company to restrict or reacquire the Shares subject to the Stock Grant,
including the time and events upon which such reacquisition rights shall accrue
and the purchase price therefore, if any.

8. EXERCISE OF OPTIONS AND ISSUE OF SHARES. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
or its designee, together with provision for payment of the full purchase price
in accordance with this Paragraph for the Shares as to which the Option is being
exercised, and upon compliance with any other condition(s) set forth in the
Option Agreement. Such notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such
Option is being exercised shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option and held for at least six
months, or (c) at the discretion of the Administrator, by delivery of the
grantee’s personal note, for full, partial or no recourse, bearing interest
payable not less than annually at market rate on the date of exercise and at no
less than 100% of the applicable Federal rate, as defined in Section 1274(d) of
the Code, with or without the pledge of such Shares as collateral, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by the Administrator,
or (e) at the discretion of the Administrator, by any combination of (a), (b),
(c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept
only such payment on exercise of an ISO as is permitted by Section 422 of the
Code. The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant’s Survivors,
as the case may be). In determining what constitutes “reasonably promptly,” it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or “blue sky” laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be fully paid, non-assessable Shares.

The Administrator shall have the right to accelerate the date of exercise of any
installment of any Option, provided that the Administrator shall not accelerate
the exercise date of any installment of any Option granted to an Employee as an
ISO (and not previously converted into a Non-Qualified Option pursuant to
Paragraph 26) if such acceleration would

 

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violate the annual vesting limitation contained in Section 422(d) of the Code,
as described in Paragraph 6.B.d. The Administrator may, in its discretion, amend
any term or condition of an outstanding Option provided (i) such term or
condition as mended is permitted by the Plan, (ii) any such amendment shall be
made only with the consent of the Participant to whom the Option was granted, or
in the event of the death of the Participant, the Participant’s Survivors, if
the amendment is adverse to the Participant and (iii) any such amendment of any
ISO shall be made only after the Administrator determines whether such amendment
would constitute a “modification” of any Option which is an ISO (as that term is
defined Section 424(h) of the Code) or would cause any adverse tax consequences
for the holder of such ISO.

9. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES. A Stock Grant (or any part or
installment thereof) shall be accepted by executing the Stock Grant Agreement
and delivering it to the company or its designee, together with provision for
payment of the full purchase price, if any, in accordance with this Paragraph
for the Shares as to which such Stock Grant is being accepted, and upon
compliance with any other conditions set forth in the Stock Grant Agreement.
Payment of the purchase price for the Shares as to which such Stock Grant is
being accepted shall be made (a) in United States dollars in cash or by check,
or (b) at the discretion of the Administrator, through delivery of shares of
Common Stock held for at least six months and having a Fair Market Value equal
as of the date of acceptance of the Stock Grant to the purchase price of the
Stock Grant, or (c) at the discretion of the Administrator, by delivery of the
grantee’s personal note, for full or partial recourse as determined by the
Administrator, bearing interest payable not less than annually at no less than
100% of the applicable Federal rate, as defined in Section 1274(d) of the Code,
or (d) at the discretion of the Administrator, by any combination of (a),
(b) and (c) above. The Company shall then reasonably promptly deliver the Shares
as to which such Stock Grant was accepted to the Participant (or to the
Participant’s Survivors, as the case may be), subject to any escrow provision
set forth in the Stock Grant Agreement. In determining what constitutes
“reasonably promptly,” it is expressly understood that the issuance and delivery
of the Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or “blue sky” laws)
which requires the Company to take any action with respect to the Shares prior
to their issuance. The Administrator may, in its discretion, amend any term or
condition of an outstanding Stock Grant or Stock Grant Agreement provided
(1) such term or condition as amended is permitted by the Plan and (ii) any such
amendment shall be made only with the consent of the Participant to whom the
Stock Grant was made, if the amendment is adverse to the Participant.

10. RIGHTS AS A SHAREHOLDER. No Participant to whom a Stock Right has been
granted shall have rights as a shareholder with respect to any Shares covered by
such Stock Right, except after due exercise of the Option or acceptance of the
Stock Grant and tender of the full purchase price, if any, for the Shares being
purchased pursuant to such exercise or acceptance and registration of the Shares
in the Company’s share register in the name of the Participant.

11. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS. By its terms, a Stock
Right granted to a Participant shall not be transferable by the Participant
other than (i) by will or by the laws of descent and distribution, or (ii) as
approved by the Administrator in its discretion and set forth in the applicable
Option Agreement or Stock Grant Agreement. Notwithstanding the foregoing, an ISO
transferred except in compliance with clause

 

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(1) above shall no longer qualify as an ISO. The designation of a beneficiary of
a Stock Right by a Participant, with the prior approval of the Administrator and
in such form as the Administrator shall prescribe, shall not be deemed a
transfer prohibited by this Paragraph. Except as provided above, a Stock Right
shall only be exercisable or may only be accepted, during the Participant’s
lifetime, only by such Participant (or by his or her legal representative) and
shall not be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of any Stock Right or of any rights granted thereunder
contrary to the provisions of this Plan, or the levy of any attachment or
similar process upon a Stock Right, shall be null and void.

12. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH
OR DISABILITY. Except as otherwise provided in a Participant’s Option Agreement,
in the event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:

a. A participant who cases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than termination “for cause,”
Disability, or death for which events there are special rules in Paragraphs 13,
14 and 15, respectively), may exercise any Option granted to him or her to the
extent that the Option is exercisable on the date of such termination of
service, but only within such term as the Administrator has designated in a
Participant’s Option Agreement.

b. Except as provided in Subparagraph (c) below, or Paragraph 14 or 15, in no
event may an Option intended to be an ISO, be exercised later than three months
after the Participant’s termination of employment.

c. The provisions of this Paragraph, and not the provisions of Paragraph 14 or
15, shall apply to a Participant who subsequently becomes Disabled or dies after
the termination of employment, director status or consultancy, provided,
however, in the case of a Participant’s Disability or death within three months
after the termination of employment, director status or consultancy, the
Participant or the Participant’s Survivors may exercise the Option within one
year after the date of the Participant’s termination of service, but in no event
after the date of expiration of the term of the Option.

d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant’s termination of employment, termination of director status or
termination of consultancy, but prior to the exercise of an Option, the Board of
Directors determines that, either prior or subsequent to the Participant’s
termination, the Participant engaged in conduct which would constitute “cause”,
then such Participant shall forthwith cease to have any right to exercise any
Option.

e. A Participant to whom an Option has been granted under the Plan who is absent
from work with the Company or with an Affiliate because of temporary disability
(any disability other than a permanent and total Disability as defined in
Paragraph I hereof), or who is on leave of absence for any purpose, shall not,
during the period of any

 

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such absence, be deemed, by virtue of such absence alone, to have terminated
such Participant’s employment; director status or consultancy with the Company
or with an Affiliate, except as the Administrator may otherwise expressly
provide.

f. Except as required by law or as set forth in a Participant’s Option
Agreement, Options granted under the Plan shall not be affected by any change of
a Participant’s status within or among the Company and any Affiliates, so long
as the Participant continues to be an director or consultant of the Company or
any Affiliate.

13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE “FOR CAUSE”. Except as otherwise
provided in a Participant’s Option Agreement, the following rules apply if the
Participant’s service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated “for cause” prior to the time that all his
or her outstanding Options have been exercised:

a. All outstanding and unexpected Options as of the time the Participant is
notified his or her service is terminated “for cause” will immediately be
forfeited.

b. For purposes of this Plan, “cause” shall include (and is not limited to)
dishonesty with respect to the Company or any Affiliate, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized disclosure of
confidential information, breach by the Participant if any provision of any
employment, consulting, advisory, nondisclosure, non-competition or similar
agreement between the Participant and the Company, and conduct substantially
prejudicial to the business of the Company or any Affiliate. The determination
of the Administrator as to the existence of “cause” will be conclusive on the
Participant and the Company.

c. “Cause” is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
“cause” occur prior to termination. If the Administrator determines, subsequent
to a Participant’s termination of service but prior to the exercise of an
Option, that either prior or subsequent to the Participant’s termination the
Participant engaged in conduct which would constitute “cause”, then the right to
exercise any Option is forfeited.

d. Any definition in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of “cause” for termination
and which is in effect at the time of such termination, shall supersede the
definition in this Plan with respect to that Participant.

14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY. Except as
otherwise provided in a Participant’s Option Agreement, a Participant who ceases
to be an employee, director or consultant of the Company or of an Affiliate by
reason of Disability may exercise any Option granted to such Participant:

a. To the extent that the Option has become exercisable but has not been
exercised on the date of Disability; and

 

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b. In the event rights to exercise the Option accrue periodically, to the extent
of a pro rata portion through the date of Disability of any additional vesting
rights that would have accrued on the next vesting date had the Participant not
become Disabled. The proration shall be based upon the number of days accrued in
the current vesting period prior to the date of Disability.

A Disabled Participant may exercise such rights only within the period ending
one year after the date of the Participant’s termination of employment,
directorship or consultancy, as the case may be, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of the
Shares on a later date if the Participant had not become Disabled and had
continued to be an employee, director or consultant or, if earlier, within the
originally prescribed term of the Option. The Administrator shall make the
determination both of whether Disability has occurred and the date of its
occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure
shall be used for such determination). If requested, the Participant shall be
examined by a physician selected or approved by the Administrator, the cost of
which examination shall be paid

15. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. Except
as otherwise provided in a Participant’s Option Agreement, in the event of the
death of a Participant while the Participant is an employee, director or
consultant of the Company or of an Affiliate, such Option may be exercised by
the Participant’s Survivors:

a. To the extent that the Option has become exercisable but has not been
exercised on the date of death; and

b. In the event rights to exercise the Option accrue periodically to the extent
of a pro rata portion through the date of death of any additional vesting rights
that would have accrued on the next vesting date had the Participant not died.
The proration shall be based upon the number of days accrued in the current
vesting period prior to the Participant’s date of death.

If the Participant’s Survivors wish to exercise the Option, they must take all
necessary steps to exercise the Option within one year after the date of death
of such Participant, notwithstanding that the decedent might have been able to
exercise the Option as to some, or all of the Shares on a later date if he or
she had not died and had continued to be an employee, director or consultant or,
if earlier, within the originally prescribed term of the Option.

16. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS. In the event of a
termination of service (whether as an employee, director or consultant) with the
Company or an Affiliate for any reason before the Participant has accepted a
Stock Grant, such offer shall terminate. For purposes of this Paragraph 16 and
Paragraph 17 below, a Participant to whom a Stock Grant has been offered and
accepted under the Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other than a permanent
and total Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with an
Affiliate, except as the Administrator may otherwise expressly

 

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provide. In addition, for purposes of this Paragraph 16 and Paragraph 17 below,
any change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.

17. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR
DEATH OR DISABILITY. Except as otherwise provided in a Participant’s Stock Grant
Agreement, in the event of a termination of service (whether as an employee,
director or consultant), other than termination “for cause,” Disability, or
death for which events there are special rules in Paragraphs 18, 19 and 20,
respectively, before all Company rights of repurchase shall have lapsed, then
the Company shall have the right to repurchase that number of Shares subject to
a Stock Grant as to which the Company’s repurchase rights have not lapsed.

18. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE “FOR CAUSE”. Except as
otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if the Participant’s service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated “for cause.”

a. All Shares subject to any Stock Grant shall be immediately subject to
repurchase by the Company at a price per Share equal to the purchase price, if
any, thereof.

b. For purposes of this Plan, “cause” shall include (and is not limited to)
dishonesty with respect to the employer, insubordination, substantial
malfeasance or non-feasance of duty, unauthorized disclosure of confidential
information, breach by the Participant of any provision of any employment,
consulting, advisory, nondisclosure, non-competition or similar agreement
between the Participant and the Company, and conduct substantially prejudicial
to the business of the Company or any Affiliate. The determination of the
Administrator as to the existence of “cause” will be conclusive on the
Participant and the Company.

c. “Cause” is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
“cause” occur prior to termination. If the Administrator determines, subsequent
to a Participant’s termination of service, that either prior or subsequent to
the Participant’s termination the Participant engaged in conduct which would
constitute “cause,” then the Company’s right to repurchase all of such
Participant’s Shares shall apply.

d. Any definition in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of “cause” for termination
and which is in effect at the time of such termination, shall supersede the
definition in this Plan with respect to that Participant.

19. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY. Except as
otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if a Participant ceases to be an employee, director or consultant of the

 

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Company or of an Affiliate by reason of Disability. To the extent the Company’s
rights of repurchase have not lapsed on the date of Disability, they shall be
exercisable, provided, however, that in the event such rights of repurchase
lapse periodically, such rights shall lapse to the extent of a pro rata portion
of the Shares subject to such Stock Grant through the date of Disability. The
Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

20. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in a Participant’s Stock Grant Agreement, the
following rules apply in the event of the death of a Participant while the
Participant is an employee, director or consultant of the Company or of an
Affiliate. To the extent the Company’s rights of repurchase have not lapsed on
the date of death, they shall be exercisable, provided, however, that in the
event such rights of repurchase laps periodically, such rights shall lapse to
the extent of a pro rata portion of the Shares subject to such Stock Grant
through the date of death as would have lapsed had the Participant not died. The
proration shall be based upon the number of days accrued prior to the
Participant’s death.

21. PURCHASE FOR INVESTMENT. Unless the offering and sale of the Shares to be
issued upon the particular exercise or acceptance of a Stock Right shall have
been effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the “1933 Act”), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:

a. The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to
the Company, prior to the receipt of such Shares, that such person(s) are
acquiring such Shares for their own respective accounts, for investment, and not
with a view to, or for sale in connection with, the distribution of any such
Shares, in which event the person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed upon the
certificate(s) evidencing their Shares issued pursuant to such exercise or such
grant:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAS BEEN TAKEN FOR INVESTMENT AND
THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A
PLEDGEE, UNLESS (1) EITHER (A) A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SHARES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS THEN AVAILABLE AND
(2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS.”

 

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b. At the discretion of the Administrator, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such particular
exercise or acceptance in compliance with the 1933 Act without registration
thereunder.

22. DISSOLUTION OR LIQUIDATION OF THE COMPANY. Upon the dissolution or
liquidation of the Company, all Options granted under this Plan which as of such
date shall not have been exercised and all Grants which have not been accepted
will terminate and become null and void, provided however, that if the rights of
a Participant or a Participant’s Survivors have not otherwise terminated and
expired, the Participant or the Participant’s Survivors will have the right
immediately prior to such dissolution or liquidation to exercise or accept any
Stock Right to the extent that the Stock Right is exercisable or subject to
acceptance as of the date immediately prior to such dissolution or liquidation.

23. ADJUSTMENTS. Upon the occurrence of any of the following events, a
Participant’s rights with respect to any Stock Right granted to him or her
hereunder shall be adjusted as hereinafter provided, unless otherwise
specifically provided in a Participant’s Option Agreement or Stock Grant
Agreement:

A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased, proportionately, and appropriate
adjustments may be made including, in the purchase price per share, to reflect
such events.

B. Corporate Transactions. If the Company is to be consolidated with or acquired
by another entity in a merger, sale of all or substantially all of the Company’s
assets other than a transaction to merely change the state of incorporation (a
“Corporate Transaction”), the Administrator or the board of directors of any
entity assuming the obligations of the Company hereunder (the “Successor
Board”), shall, as to outstanding Options, either (i) make appropriate provision
for the continuation of such Options by substituting on an equitable basis for
the Shares then subject to such Options either the consideration payable with
respect to the outstanding shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity, or
(ii) upon written notice to the Participants, provide that all Options must be
exercised (either to the extent then exercisable or, at the discretion of the
Administrator, or, upon a change of control of the Company, all Options being
made fully exercisable for purposes of this Subparagraph), within a specified
number of days of the date of such notice, at the end of which period the
Options shall terminate, or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the Fair Market Value of the Shares subject to
such Options (either to the extent then exercisable or, at the discretion of the
Administration, all Options being made full exercisable for purposes of this
Subparagraph) over the exercise price thereof. With respect to outstanding Stock
Grants, the Administrator or the Successor Board, shall either (i) make
appropriate

 

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provisions for the continuation of such Stock Grants by substituting on an
equitable basis for the Shares then subject to such Stock Grants either the
consideration payable with respect to the outstanding Shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or
acquiring entity, or (ii) upon written notice to the Participants, provide that
all Stock Grants must be accepted (to the extent then subject to acceptance)
within a specified number of days of the date of such notice, at the end of
which period the offer of the Stock Grants shall terminate, or (in) terminate
all Stock Grants in exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Stock Grants over the purchase price
thereof, if any. In addition, in the event of a Corporate Transaction, the
Administrator may waive any or all Company repurchase rights with respect to
outstanding Stock Grants.

C. Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company other than a Corporate Transaction pursuant to
which securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, a Participant upon exercising
or accepting a Stock Right after the recapitalization or reorganization shall be
entitled to receive for the purchase price paid upon such exercise or acceptance
the number of replacement securities which would have been received if such
Stock Right had been exercised or accepted prior to such recapitalization or
reorganization.

D. Modification of ISOs. Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph A, B or C above with respect to ISOs shall be made only
after the Administrator determines whether such adjustments would constitute a
“modification” of such ISOs (as that term is defined in Section 424(h) of the
Code) or would cause any adverse tax consequences for the holders of such ISOs.
If the Administrator, determines that such adjustments made with respect to ISOs
would constitute a modification of such ISOs, it may refrain from making such
adjustments, unless the bolder of an ISO specifically requests in writing that
such adjustment be made and such writing indicates that the holder has full
knowledge of the consequences of such “modification” on his or her income tax
treatment with respect to the ISO.

24. ISSUANCES OF SECURITIES. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares subject to Stock
Rights. Except as expressly provided herein, no adjustments shall be made for
dividends paid in cash or in property (including without limitation, securities)
of the Company prior to any issuance of Shares pursuant to a Stock Right.

25. FRACTIONAL SHARES. No fractional shares shall be issued under the Plan and
the person exercising a Stock Right shall receive from the Company cash in lieu
of such fractional shares equal to the Fair Market Value.

26. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs. The
Administrator, at the written request of any Participant, may in its discretion
take such actions as may be necessary to convert such Participant’s ISOs (or any
portions thereof) that have not been exercised on the date of conversion into
Non-Qualified Options at any time

 

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prior to the expiration of such ISOs, regardless of whether the Participant is
an employee of the Company or an Affiliate at the time of such conversation. At
the time of such conversion, the Administrator (with the consent of the
Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any Participant the right to have such
Participant’s ISOs converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Administrator takes appropriate action. The
Administrator, with the consent of the Participant, may also terminate any
portion of any ISO that has not been exercised at the time of such conversion.

27. WITHHOLDING. In the event that any federal, state, or local income taxes,
employment taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings
or other amounts are required by applicable law or governmental regulation to be
withheld from the Participant’s salary, wages or other remuneration in
connection with the exercise or acceptance of a Stock Right or in connection
with a Disqualifying Disposition (as defined in Paragraph 28) or upon the
lapsing of any right of repurchase, the Company may withhold from the
Participant’s compensation, if any, or may require that the Participant advance
in cash to the Company, or to any Affiliate of the Company which employs or
employed the Participant, the statutory minimum amount of such withholdings
unless a different withholding arrangement, including the use of shares of the
Company’s Common Stock or a promissory note, is authorized by the Administrator
(and permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant’s payment of
such additional withholding.

28. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each Employee who receives
an ISO must agree to notify the Company in writing immediately after the
Employee makes a Disqualifying Disposition of any shares acquired pursuant to
the exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c)
of the Code and includes any disposition (including any sale or gift) of such
shares before the later of (a) two years after the date the Employee was granted
the ISO, or (b) one year after the date the Employee acquired Shares by
exercising the ISO, except as otherwise provided in Section 424(c) of the Code.
If the Employee has died before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.

29. TERMINATION OF THE PLAN. The Plan will terminate on the date which is ten
years from the earlier of the date of its adoption by the Board of Directors and
the date of its approval by the shareholders. The Plan may be terminated at an
earlier date by vote of the shareholders or the Board of Directors of the
Company, provided however, that any such earlier termination shall not affect
any Option Agreements or Stock Grant Agreements executed prior to the effective
date of such termination.

30. AMENDMENT OF THE PLAN AND AGREEMENTS. The Plan may be amended by the
shareholders of the Company. The Plan may also be amended by the

 

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Administrator, including, without limitation, to the extent necessary to qualify
any or all outstanding Stock Rights granted under the Plan or Stock Rights to be
granted under the Plan for favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under Section 422 of the Code, and to the extent necessary to qualify the shares
issuable upon exercise or acceptance of any outstanding Stock Rights granted, or
Stock Rights to be granted, under the Plan for listing on any national
securities exchange or quotation in any national automated quotation system of
securities dealers. Any amendment approved by the Administrator which the
Administrator determines is of a scope that requires shareholder approval shall
be subject to obtaining such shareholder approval. Any modification or amendment
of the Plan shall not, without the consent of a Participant, adversely affect
his or her rights under a Stock Right previously granted to him or her. With the
consent of the Participant affected, the Administrator may amend outstanding
Option Agreements and Stock Grant Agreements in a manner which may be adverse to
the Participant but which is not inconsistent with the Plan. In the discretion
of the Administrator, outstanding Option Agreements and Stock Grant Agreements
may be amended by the Administrator in a mariner which is not adverse to the
Participant.

31. EMPLOYMENT OR OTHER RELATIONSHIP. Nothing in this Plan or any Option
Agreement or Stock Grant Agreement shall be deemed to prevent the Company or an
Affiliate from terminating the employment, consultancy or director status of a
Participant, nor to prevent a Participant from terminating his or her own
employment, consultancy or director status or to give any Participant a right to
be retained in employment or other service by the Company or any Affiliate for
any period of time.

32. GOVERNING LAW. This Plan shall be construed and enforced in accordance with
the law of the State of Florida.

 

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