Document:

Master Lease No. 1 Amendment Agreement

 EXHIBIT 10.76 

  
 MASTER LEASE NO. 1 AMENDMENT AGREEMENT 
  
 BY AND AMONG 
  
 KINDRED HEALTHCARE, INC. 
 (f/k/a Vencor, Inc.), 
  
 KINDRED HEALTHCARE OPERATING, INC. 
 (f/k/a Vencor Operating, Inc.), 
  
 AND 
  
 VENTAS REALTY, LIMITED PARTNERSHIP 
  

  
 MASTER LEASE NO. 1
AMENDMENT AGREEMENT 
  
 THIS MASTER LEASE NO. 1 AMENDMENT
AGREEMENT (hereinafter this “Agreement”) is dated as of the 22nd day of December, 2004, and is by and among VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership (together with its successors and
assigns, “Lessor”), having an office at 10350 Ormsby Park Place, Suite 300, Louisville, Kentucky 40223, and KINDRED HEALTHCARE, INC., a Delaware corporation (f/k/a Vencor, Inc.) (“Kindred”), and KINDRED
HEALTHCARE OPERATING, INC., a Delaware corporation (f/k/a Vencor Operating, Inc.) (“Operator”; Operator, jointly and severally with Kindred and permitted successors and assignees of Operator and Kindred,
“Tenant”), both having an office at 680 South 4th Avenue, Louisville, Kentucky 40202. 

 
 RECITALS 
  
 A. Lessor and Tenant entered into a certain Amended and Restated Master Lease Agreement No. 1 dated as of April 20, 2001 (as
the same may have been or may hereafter be amended, amended and restated, supplemented, modified, severed, renewed, extended or replaced, the “Lease”), demising to Tenant certain properties. 
  
 B. Lessor and Tenant entered into those two certain Agreements for Sale of
Real Estate and Master Lease Amendment dated as of the date hereof (the “Sale/Amendment Agreements”). 
  
 C. Immediately prior hereto and pursuant to the Sale/Amendment Agreements, Lessor and Tenant entered into those certain Master Lease No. 1 Partial Lease
Termination Agreements bearing even date herewith (the “Partial Lease Terminations”), pursuant to which the Lease was terminated as it applied to certain properties. 
  
 D. Lessor and Tenant desire to amend the Lease as it applies to the remaining Leased Properties, after the aforesaid
termination, on the terms set forth in this Agreement. 
  
 NOW,
THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereby agree as follows: 
  
 1. Capitalized Terms. All capitalized terms used herein and not defined herein shall have the meaning ascribed thereto in the Lease. 
  
 2. Base Rent and Current Rent Amendments. Relative to the definitions
of “Base Rent” and “Current Rent” contained in Section 2.1 of the Lease, Lessor and Tenant agree that the Base Rent and Current Rent for the Leased Properties remaining under the Lease after the termination referenced in
the Partial Lease Termination shall, for the period from the date immediately following the date hereof through April 30, 2005, be equal to Forty Three Million One Hundred Thirty Seven Thousand Six Hundred Eighty Two and 44/100 Dollars
($43,137,682.44) per annum, and, for Rent Calculation Years thereafter, Base Rent and Current 

  

 2 

 
Rent shall be determined as set forth in subsection (d) of the definition of “Base Rent” or subsection (b) of the definition of “Current
Rent”, as applicable, contained in such Section 2.1, in each case subject to the provisions of such definitions relative to the Reset Option and to the provisions of Article XIX relative to the amount of the Base Rent and Current
Rent during Extended Terms. 
  
 3. New Exhibit C. Effective
as of the date immediately following the date hereof, Exhibit C to the Lease shall be amended and restated in its entirety to read as set forth in Attachment 1 to this Agreement. 
  
 4. New Exhibit D. Exhibit D to the Lease is hereby amended and
restated in its entirety to read as set forth in Attachment 2 to this Agreement. 
  
 5. No Other Amendments. Except as provided in this Agreement, the Lease remains in full force and effect without modification. 
  
 6. Successors and Assigns. This Agreement and the covenants and agreements herein contained shall be binding upon and
inure to the benefit of Lessor and Tenant and their respective heirs, devisees, successors and assigns. 
  
 7. Integrated Agreement; Modifications; Waivers. This Agreement constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes any and all prior representations, understandings and agreements, whether written or oral, with respect to such subject matter. Each of the parties hereto acknowledges that it has not relied upon, in entering
into this Agreement, any representation, warranty, promise or condition not specifically set forth in this Agreement. No supplement, modification or waiver of any provision of this Agreement shall be binding unless executed in writing by the party
to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided. 
  
 8. Headings and Captions. The
headings and captions of the paragraphs of this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement or any provision hereof. 
  
 9. Gender and Number. As used in this Agreement, the neuter shall
include the feminine and masculine, the singular shall include the plural, and the plural shall include the singular, except where expressly provided to the contrary. 
  
 10. Severability. In the event that any paragraph, section, sentence, clause or phrase contained in this Agreement
becomes or is held by any court of competent jurisdiction to be illegal, null or void or against public policy, the remaining paragraphs, sections, sentences, clauses or phrases contained in this Agreement shall not be affected thereby. 

 

 3 

 11. Counterparts. This Agreement and any amendment to this Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument. 
  
 [Signature Page Follows] 
  

 4 

 IN WITNESS WHEREOF, the parties hereto have executed these presents the day and year first above
written. 
  

					
	TENANT:
	
	 KINDRED HEALTHCARE, INC., a
 Delaware corporation formerly known as
 Vencor, Inc.

		
	By:	 	 /s/ Joseph L. Landenwich

	 Name:
	 	 Joseph L. Landenwich

	 Its:
	 	 Senior Vice President of Corporate Legal
 Affairs and Corporate Secretary

	
	TENANT:
	
	 KINDRED HEALTHCARE OPERATING,
 INC., a Delaware corporation formerly known
 as Vencor Operating, Inc.

		
	By:	 	 /s/ Joseph L. Landenwich

	 Name:
	 	 Joseph L. Landenwich

	 Its:
	 	 Senior Vice President of Corporate Legal
 Affairs and Corporate Secretary

	
	LESSOR:
	
	 VENTAS REALTY, LIMITED
 PARTNERSHIP, a Delaware limited
 partnership

		
	By:	 	 Ventas, Inc., a Delaware corporation, its
 general partner

			
	 	 	 By:
	 	 /s/ T. Richard Riney

	 	 	 	 	 T. Richard Riney, Executive Vice
 President, General Counsel and
 Secretary

  

  
 Acknowledgments

  

			
	STATE OF KENTUCKY	  	)
	 	  	)
	COUNTY OF JEFFERSON	  	)

  
 This 21st day of
December, 2004, personally came before me Deborah L. Stemmle, a Notary Public in and for said County and State, Joseph L. Landenwich, who being by me duly sworn, says that he is the Senior Vice President of Corporate Legal Affairs and Corporate
Secretary of KINDRED HEALTHCARE, INC., a Delaware corporation, and that the seal affixed to the foregoing instrument in writing is the corporate seal of said corporation, and that said writing was signed and sealed by him on behalf of such
corporation by its authority duly given. And the said Joseph L. Landenwich acknowledged the said writing to be the act and deed of said corporation. 
  
 WITNESS my hand and notarial stamp/seal this 21st day of December, 2004. 
  

	
	
	 /s/ Deborah L. Stemmle

	 Notary Public

  
 My Commission Expires:

  
 May 22, 2005 
 [Notarial Stamp/Seal] 
  

			
	STATE OF KENTUCKY	  	)
	 	  	)
	COUNTY OF JEFFERSON	  	)

  
 This 21st day of
December, 2004, personally came before me Deborah L. Stemmle, a Notary Public in and for said County and State, Joseph L. Landenwich, who being by me duly sworn, says that he is the Senior Vice President of Corporate Affairs and Corporate Secretary
of KINDRED HEALTHCARE OPERATING, INC., a Delaware corporation, and that the seal affixed to the foregoing instrument in writing is the corporate seal of said corporation, and that said writing was signed and sealed by him on behalf of such
corporation by its authority duly given. And the said Joseph L. Landenwich acknowledged the said writing to be the act and deed of said corporation. 
  
 WITNESS my hand and notarial stamp/seal this 21st day of December, 2004. 
  

	
	
	 /s/ Deborah L. Stemmle

	 Notary Public

  
 My Commission Expires:

  
 May 22, 2005 
 [Notarial Stamp/Seal] 
  

			
	STATE OF KENTUCKY	  	)
	 	  	)
	COUNTY OF JEFFERSON	  	)

  
 This 20th day of
December, 2004, personally came before me Barbara F. Thompson, a Notary Public in and for said County and State, T. Richard Riney, who being by me duly sworn, says that he is the Executive Vice President, General Counsel and Secretary of VENTAS,
INC., a Delaware corporation, in its capacity as the general partner of VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership, and that the seal affixed to the foregoing instrument in writing is the corporate seal of said corporation,
and that said writing was signed and sealed by him on behalf of such corporation by its authority duly given, in its aforesaid general partner capacity on behalf of the aforesaid limited partnership. And the said Executive Vice President, General
Counsel and Secretary acknowledged the said writing to be the act and deed of said corporation, acting in such general partner capacity. 
  
 WITNESS my hand and notarial stamp/seal this 20th day of December, 2004. 
  

	
	
	 /s/ Barbara F. Thompson

	 Notary Public

  
 My Commission Expires:

  
 Dec. 9, 2006 
 [Notarial Stamp/Seal] 
  

  
 CONSENT

  
 The undersigned hereby consents to the terms of the foregoing
instrument. 
  
 JPMORGAN CHASE BANK (formerly THE CHASE MANHATTAN BANK, successor
by merger to MORGAN GUARANTY TRUST COMPANY OF NEW YORK), as administrative agent and Collateral Agent under that certain $300,000,000 Amended and Restated Credit Agreement, dated as of June 28, 2004 
  

			
		
	By:	 	 /s/ Dawn L. Lee Lum

	 Name:
	 	 Dawn L. Lee Lum

	 Title:
	 	 Vice President

  

			
	STATE OF NEW YORK	  	)
	 	  	)
	COUNTY OF NEW YORK	  	)

  
 This 20th day of
December, 2004, personally came before me Edeline C. Adderley, a Notary Public in and for said County and State, Dawn L. Lee Lum, who being by me duly sworn, says that he is the Vice President of JPMORGAN CHASE BANK, a NATIONAL ASSOCIATION
corporation, and that the seal affixed to the foregoing instrument in writing is the corporate seal of said corporation, and that said writing was signed and sealed by him on behalf of such corporation by its authority duly given. And the said Vice
President acknowledged the said writing to be the act and deed of said corporation. 
  
 WITNESS my hand and notarial stamp/seal this 20th day of December, 2004. 
  

	
	
	 /s/ Edeline C. Adderley

	 Notary Public

  
 My Commission Expires:

  
 September 3, 2006 
 [Notarial Stamp/Seal] 
  

  
 ATTACHMENT 1

  
 Exhibit C 
  
 Allocation Schedule – Applicable Transferred Property Percentages

  

										
	 	  	Facility ID

	  	 Facility Name

	  	Base Rent
Commencing
May 1, 2004

	  	Percentage of
Master Lease
Commencing
December 22,
2004

	 
	1	  	114	  	Arden Rehab & Healthcare Center	  	523,908.12	  	1.2145	%
	2	  	127	  	Northwest Continuum Care Center	  	481,270.44	  	1.1157	%
	3	  	132	  	Madison Healthcare & Rehab Center	  	372,884.04	  	0.8644	%
	4	  	140	  	Wasatch Care Center	  	385,006.80	  	0.8925	%
	5	  	185	  	Heritage Health & Rehab Center	  	40,279.20	  	0.0934	%
	6	  	191	  	Silas Creek Manor	  	526,343.76	  	1.2201	%
	7	  	198	  	Harrington House Nursing & Rehab Center	  	854,699.40	  	1.9813	%
	8	  	218	  	Cascade Rehab & Care Center	  	341,130.48	  	0.7908	%
	9	  	327	  	Laurel Ridge Rehab & Nursing Center	  	368,526.60	  	0.8543	%
	10	  	409	  	Mountain Valley Care & Rehab	  	305,354.28	  	0.7079	%
	11	  	416	  	Park Place Health Care Center	  	956,295.36	  	2.2168	%
	12	  	433	  	Parkview Acres Care & Rehab Center	  	350,970.60	  	0.8136	%
	13	  	436	  	Valley Healthcare & Rehab Center	  	404,320.80	  	0.9373	%
	14	  	441	  	Mountain Towers Healthcare & Rehab	  	219,530.64	  	0.5089	%
	15	  	452	  	Sunnyside Care Center	  	241,847.40	  	0.5606	%
	16	  	462	  	Queen Anne Healthcare	  	617,740.56	  	1.4320	%
	17	  	516	  	Hammersmith House Nursing Care Center	  	160,218.36	  	0.3714	%
	18	  	518	  	Timberlyn Heights Nursing & Alzheimer’s Center	  	441,210.84	  	1.0228	%
	19	  	525	  	La Veta Healthcare Center	  	460,982.52	  	1.0686	%
	20	  	552	  	Shore Village Rehab & Nursing Center	  	309,961.92	  	0.7185	%
	21	  	555	  	Brentwood Manor Rehab & Nursing Center	  	184,541.16	  	0.4278	%
	22	  	567	  	Nutmeg Pavilion Healthcare	  	565,927.68	  	1.3119	%
	23	  	577	  	Minerva Park Nursing & Rehab Center	  	398,088.48	  	0.9228	%
	24	  	640	  	Las Vegas Healthcare & Rehab Center	  	395,059.68	  	0.9158	%
	25	  	738	  	Bay View Nursing & Rehab Center	  	285,999.48	  	0.6630	%
	26	  	742	  	Sonoran Rehab & Care Center	  	343,784.16	  	0.7969	%
	27	  	745	  	Aurora Care Center	  	585,522.12	  	1.3573	%
	28	  	769	  	North Ridge Med. & Rehab Center	  	701,488.32	  	1.6262	%
	29	  	779	  	Westview Nursing & Rehab Center	  	445,821.00	  	1.0335	%
	30	  	784	  	Northfield Center for Health & Rehab	  	694,461.72	  	1.6099	%
	31	  	868	  	Lebanon County Manor	  	288,227.88	  	0.6682	%

  

										
	32	  	4602	  	Kindred Hospital So. Florida Coral Gables Campus	  	823,904.40	  	1.9099	%
	33	  	4618	  	Kindred Hospital Oklahoma City	  	1,115,430.00	  	2.5857	%
	34	  	4628	  	Kindred Hospital Chattanooga	  	847,254.48	  	1.9641	%
					
	 	  	Facility ID

	  	 Facility Name

	  	Base Rent
Commencing
May 1, 2004

	  	Percentage of
Master Lease
Commencing
December 22,
2004

	 
	35	  	4633	  	Kindred Hospital Louisville	  	3,379,637.16	  	7.8345	%
	36	  	4637	  	Kindred Hospital Chicago North Campus	  	5,964,519.00	  	13.8267	%
	37	  	4638	  	Kindred Hospital Indianapolis	  	1,894,324.56	  	4.3913	%
	38	  	4652	  	Kindred Hospital North Florida	  	3,452,246.64	  	8.0029	%
	39	  	4656	  	Kindred Hospital Phoenix	  	895,680.36	  	2.0763	%
	40	  	4680	  	Kindred Hospital St. Louis	  	1,067,596.44	  	2.4749	%
	41	  	4690	  	Kindred Hospital Chicago Northlake Campus	  	1,827,749.28	  	4.2370	%
	42	  	4822	  	Kindred Hospital San Francisco Bay Area	  	1,719,033.48	  	3.9850	%
	43	  	4842	  	Kindred Hospital Westminster	  	4,942,342.92	  	11.4571	%
	44	  	4848	  	Kindred Hospital San Diego	  	1,956,559.92	  	4.5356	%
	 	  	 	  	 	  	
	  	
	

	 	  	 	  	Total Master Lease 1	  	43,137,682.44	  	100.00%	 
	 	  	 	  	 	  	
	  	
	

  

  
 ATTACHMENT 2

  
 EXHIBIT D 
 Renewal Groups 
  
 Master Lease #1 
  

													
	 	  	Facility ID

	  	 Name

	  	 City

	  	State

	  	Lease Expiration
Date

	  	Renewal
Group
Number

	1	  	132	  	Madison Healthcare & Rehab. Ctr.	  	Madison	  	TN	  	30-Apr-08	  	#1
	2	  	577	  	Minerva Park Nursing & Rehab. Ctr.	  	Columbus	  	OH	  	30-Apr-08	  	#1
	3	  	779	  	Westview Nursing & Rehab. Center	  	Bedford	  	IN	  	30-Apr-08	  	#1
	4	  	784	  	Northfield Centre for Health & Rehab.	  	Louisville	  	KY	  	30-Apr-08	  	#1
	5	  	4618	  	Kindred Hospital - Oklahoma City	  	Oklahoma City	  	OK	  	30-Apr-08	  	#1
	6	  	4822	  	Kindred Hospital - San Francisco Bay Area	  	San Leandro	  	CA	  	30-Apr-08	  	#1
	7	  	114	  	Arden Rehabilitation & Healthcare Ctr.	  	Seattle	  	WA	  	30-Apr-08	  	#3
	8	  	140	  	Wasatch Care Center	  	Ogden	  	UT	  	30-Apr-08	  	#3
	9	  	416	  	Park Place Health Care Center	  	Great Falls	  	MT	  	30-Apr-08	  	#3
	10	  	525	  	La Veta Healthcare Center	  	Orange	  	CA	  	30-Apr-08	  	#3
	11	  	4842	  	Kindred Hospital – Westminster	  	Westminster	  	CA	  	30-Apr-08	  	#3
	12	  	327	  	Laurel Ridge Rehab. & Nursing Ctr.	  	Jamaica Plain	  	MA	  	30-Apr-13	  	#4
	13	  	436	  	Valley Healthcare & Rehab. Center	  	Tucson	  	AZ	  	30-Apr-13	  	#4
	14	  	462	  	Queen Anne Healthcare	  	Seattle	  	WA	  	30-Apr-13	  	#4
	15	  	552	  	Shore Village Rehab. & Nursing Ctr.	  	Rockland	  	ME	  	30-Apr-13	  	#4
	16	  	555	  	Brentwood Rehab. & Nsg. Center	  	Yarmouth	  	ME	  	30-Apr-13	  	#4
	17	  	640	  	Las Vegas Healthcare & Rehab. Ctr.	  	Las Vegas	  	NV	  	30-Apr-13	  	#4
	18	  	738	  	Bay View Nursing & Rehab. Center	  	Alameda	  	CA	  	30-Apr-13	  	#4
	19	  	742	  	Sonoran Rehab & Care Center	  	Phoenix	  	AZ	  	30-Apr-13	  	#4

  

 1 

													
	20	  	4633	  	Kindred Hospital – Louisville	  	Louisville	  	KY	  	30-Apr-13	  	#4
	21	  	4638	  	Kindred Hospital – Indianapolis	  	Indianapolis	  	IN	  	30-Apr-13	  	#4
	22	  	127	  	Northwest Continuum Care Center	  	Longview	  	WA	  	30-Apr-10	  	#6
	23	  	185	  	Heritage Health & Rehab. Center	  	Vancouver	  	WA	  	30-Apr-10	  	#6
	24	  	191	  	Silas Creek Manor	  	Winston-Salem	  	NC	  	30-Apr-10	  	#6
	25	  	452	  	Sunnyside Care Center	  	Salem	  	OR	  	30-Apr-10	  	#6
	26	  	769	  	North Ridge Med. & Rehab. Center	  	Manitowoc	  	WI	  	30-Apr-10	  	#6
	27	  	868	  	Lebanon Country Manor	  	Lebanon	  	OH	  	30-Apr-10	  	#6
	28	  	4637	  	Kindred Hospital – Chicago North	  	Chicago	  	IL	  	30-Apr-10	  	#6
	29	  	4690	  	Kindred Hospital - Chicago (Northlake Campus)	  	Northlake	  	IL	  	30-Apr-10	  	#6
	30	  	516	  	Hammersmith House Nsg. Care Ctr.	  	Saugus	  	MA	  	30-Apr-10	  	#7
	31	  	518	  	Timberlyn Heights Nsg. & Alz. Ctr.	  	Great Barrington	  	MA	  	30-Apr-10	  	#7
	32	  	567	  	Nutmeg Pavilion Healthcare	  	New London	  	CT	  	30-Apr-10	  	#7
	33	  	4602	  	Kindred Hospital - Coral Gables	  	Coral Gables	  	FL	  	30-Apr-10	  	#7
	34	  	4652	  	Kindred Hospital - North Florida	  	Green Cove Spr.	  	FL	  	30-Apr-10	  	#7
							
	 	  	Facility ID

	  	 Name

	  	 City

	  	State

	  	Lease Expiration
Date

	  	Renewal
Group
Number

	35	  	218	  	Cascade Care Center	  	Caldwell	  	ID	  	30-Apr-10	  	#8
	36	  	409	  	Mountain Valley Care and Rehab.	  	Kellogg	  	ID	  	30-Apr-10	  	#8
	37	  	433	  	Parkview Acres Care & Rehab Ctr.	  	Dillon	  	MT	  	30-Apr-10	  	#8
	38	  	441	  	Mountain Towers Healthcare & Rehab	  	Cheyenne	  	WY	  	30-Apr-10	  	#8
	39	  	745	  	Aurora Care Center	  	Aurora	  	CO	  	30-Apr-10	  	#8
	40	  	4656	  	Kindred Hospital – Phoenix	  	Phoenix	  	AZ	  	30-Apr-10	  	#8
	41	  	4848	  	Kindred Hospital - San Diego	  	San Diego	  	CA	  	30-Apr-10	  	#8
	42	  	198	  	Harrington House Nsg. & Rehab. Ctr.	  	Walpole	  	MA	  	30-Apr-10	  	#9
	43	  	4628	  	Kindred Hospital – Chattanooga	  	Chattanooga	  	TN	  	30-Apr-10	  	#9
	44	  	4680	  	Kindred Hospital - St. Louis	  	St. Louis	  	MO	  	30-Apr-10	  	#9Amended and Restated Director Compensation Policy

 EXHIBIT 10.40 
  
 INSPIRE PHARMACEUTICALS, INC. 
  

AMENDED AND RESTATED 
 DIRECTOR
COMPENSATION POLICY 
  
 ADOPTED: September 28, 2004

  
 A. Directors. All non-employee members of the Inspire
Pharmaceuticals, Inc. (the “Company”) board of directors (the “Board”) shall receive the following compensation pursuant to the Amended and Restated Director Compensation Policy (this “Policy”): 
  

	 	1)	Cash compensation of $25,000 annually to cover general availability and participation in meetings and conference calls of the Board; 

  

	 	2)	A stock option grant in the amount of 20,000 shares will be granted to each director upon election at an annual meeting of stockholders to a three-year term, which will vest as
follows: 10,000 shares in year one (1/12th per month), 5,000 shares in year two (1/12th per month) and 5,000 shares in year three (1/12th per month); provided, however, that all vesting will cease if the director resigns from the Board or otherwise ceases to serve as director,
unless the Board determines that the circumstances warrant continuation of vesting; 

  

	 	3)	A stock option grant in the amount of 10,000 shares will be granted to each director serving as such at the time of each annual meeting of stockholders who was not elected at such
annual meeting, which grant will be made at the time of such annual meeting (to vest 1/12th per month);
provided, however, that all vesting will cease if the director resigns from the Board or otherwise ceases to serve as a director, unless the Board determines that the circumstances warrant continuation of vesting; and

  

	 	4)	Cash compensation of $3,500 per day, plus reasonable out-of-pocket travel expenses, to cover preparation for, attendance at and participation in the meetings, seminars and other
events comprising the Company’s “Science Day”, including any follow-up discussions relating to the issues discussed at the Science Day (it being understood that such compensation shall be paid only to those directors that attend a
Science Day and that the events constituting a Science Day may take place over a period of time covering up to 48 hours). 

  
 B. Audit Committee. In addition to the compensation provided under any other provision of this Policy, all non-employee directors who serve on the Audit
Committee will receive the following compensation: 
  

	 	1)	Cash compensation of $10,000 annually to cover general availability and participation in Audit Committee conference calls and meetings; and 

	 	2)	Stock option grants in the amount of 4,000 shares will be granted to each director appointed at each annual meeting of the Board of Directors to serve on the Audit Committee (to
vest 1/12th per month); provided, however, that all vesting will cease if the director resigns from
the Audit Committee or otherwise ceases to serve as an Audit Committee member (including without limitation as a result of a committee member’s term expiring without re-election), unless the Board determines that the circumstances warrant
continuation of vesting. 

  
 C. Compensation
Committee. In addition to the compensation provided under any other provision of this Policy, all non-employee directors who serve on the Compensation Committee will also receive the following compensation: 
  

	 	1)	Cash compensation of $5,000 annually to cover general availability and participation in Compensation Committee conference calls and meetings; and 

  

	 	2)	Stock option grants in the amount of 2,000 shares will be granted to each director appointed at each annual meeting of the Board of Directors to serve on the Compensation Committee
(to vest 1/12th per month); provided, however, that all vesting will cease if the director resigns
from the Compensation Committee or otherwise ceases to serve as a Compensation Committee member (including without limitation as a result of a committee member’s term expiring without re-election), unless the Board otherwise determines that the
circumstances warrant continuation of vesting. 

  
 D.
Corporate Governance Committee. In addition to the compensation provided under any other provision of this Policy, all non-employee directors who serve on the Corporate Governance Committee will also receive the following compensation:

  

	 	1)	Cash compensation of $5,000 annually to cover general availability and participation in Corporate Governance Committee conference calls and meetings; and 

 

	 	2)	Stock option grants in the amount of 2,000 shares will be granted to each director appointed at each annual meeting of the Board of Directors to serve on the Corporate Governance
Committee (to vest 1/12th per month); provided, however, that all vesting will cease if the director
resigns from the Corporate Governance Committee or otherwise ceases to serve as a Corporate Governance Committee member (including without limitation as a result of a committee member’s term expiring without re-election), unless the Board
otherwise determines that the circumstances warrant continuation of vesting. 

 E. Chairman of the Board. In addition to the compensation provided under any other provision of this
Policy, the director who serves as the Chairman of the Board will receive the following compensation: 
  

	 	1)	Cash compensation of $25,000 annually to cover general availability for consultations and communications with the Company’s senior management, and to work closely with the
Chief Executive Officer of the Company on key matters affecting the Company; and 

  

	 	2)	Stock option grants in the amount of 4,000 shares will be granted to the director appointed at each annual meeting of the Board of Directors to serve as Chairman of the Board (to
vest 1/12th per month); provided, however, that all vesting will cease if the director resigns from
the position of Chairman of the Board or otherwise ceases to serve as the Chairman of the Board (including without limitation as a result of the director’s term expiring without re-election), unless the Board otherwise determines that the
circumstances warrant continuation of vesting. 

  
 F.
Vice-Chairman of the Board. In addition to the compensation provided under any other provision of this Policy, the director who serves as the Vice-Chairman of the Board will also receive the following compensation: 
  

	 	1)	Cash compensation of $5,000 annually to cover general availability for consultations and communications with the Company’s senior management, and to work closely with the
Chairman of the Board and Chief Executive Officer of the Company on key matters affecting the Company; and 

  

	 	2)	Stock option grants in the amount of 2,000 shares will be granted to the director appointed at each annual meeting of the Board of Directors to serve as Vice-Chairman of the Board
(to vest 1/12th per month); provided, however, that all vesting will cease if the director resigns
from the position of Vice-Chairman of the Board or otherwise ceases to serve as the Vice-Chairman of the Board (including without limitation as a result of the director’s term expiring without re-election), unless the Board otherwise determines
that the circumstances warrant continuation of vesting. 

  
 G.
Vacancies. In the event that a director is appointed to fill a vacancy on the Board, any Committee of the Board, as Chairman of the Board or as Vice-Chairman of the Board, the Board will determine the amount of cash compensation and
stock option grants appropriate to provide such director with comparable compensation for the period such director will so serve for the remainder of the term. 
  

H. Payment/Grant Procedure. All cash compensation payments made pursuant to this Policy shall be paid quarterly in arrears as soon as practicable, but
not later than 10 days, after the last day of such quarter. 

 All stock options awarded pursuant to this Policy (other than options granted pursuant to Paragraph G) shall be granted
on the date of the annual meeting of the Board of Directors, and the exercise price for each share available under such option will be equal to the fair market value of the common stock of the Company, par value of $.001 per share (the “Common
Stock”), on the date of such grant. All stock options awarded pursuant to Paragraph G of this Policy shall be granted on the date of such appointment, and the exercise price for each share available under such option will be equal to the fair
market value of the Common Stock, on the date of such grant. 
  
 I.
Effective Date. All cash compensation provisions of this Policy shall be effective as of April 1, 2004. 
  
 All Stock option grant provisions of this Policy shall be effective for directors elected or serving as of the annual meeting of stockholders to be held in 2004, or
appointed to a Committee or as Chairman of the Board or Vice-Chairman of the Board at the annual meeting of the Board of Directors to be held in 2004. 
  
 J. Change of Control Provisions. Notwithstanding the foregoing, all options granted under this Policy shall vest immediately if: (i) there is a Change of
Control (as hereinafter defined); and (ii) the optionee will cease to serve as a director of the Company as a result of such Change of Control. 
  
 For purposes of this Policy, a “Change of Control” shall mean: (i) a dissolution or liquidation of the Company; (ii) a sale of all or substantially all the
assets of the Company; (iii) a merger or consolidation in which the Company is not the surviving corporation and in which beneficial ownership of securities of the Company representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of directors has changed; (iv) a reverse merger in which the Company is the surviving corporation but the shares of the common stock of the Company outstanding immediately before the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or otherwise, and in which beneficial ownership of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the
election of directors has changed; or (v) an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or subsidiary of the Company or other entity controlled by the Company) resulting in a change of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors.

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