Document:

Exhibit 10.2

Exhibit 10.2

***CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

DEVELOPMENT AND SUPPLY AGREEMENT

THIS AGREEMENT is between Medical Components, Inc. a Pennsylvania corporation, located at 1499
Delp Drive, Harleysville, PA 19438 (“Medcomp”) and VeriChip Corporation, a Delaware corporation,
located at 1690 South Congress Avenue, Suite 200, Delray, FL 33445 (“VeriChip”).

RECITALS

	 	A.	 	Medcomp is engaged in the development, manufacture and sale of various
medical devices, including venous catheters and infusion ports.
	 
	 	B.	 	The parties have agreed that VeriChip will seek development and
manufacture of an 8mm RFID Microchip similar to its current 12mm RFID Microchip,
as described on Exhibit A (the “Product”) for sale to Medcomp in accordance with
the specifications, delivery schedules and other requirements referenced in this
Agreement.
	 
	 	C.	 	Medcomp wishes to purchase the Product from VeriChip for implantation
into Medcomp’s vascular access product lines.
	 
	 	D.	 	The parties now desire to enter into an arrangement whereby VeriChip will
develop, manufacture and sell the Product and Medcomp will buy the Product for
implantation into vascular access medical devices on an exclusive basis.

NOW, THEREFORE, intending to be legally bound, the parties hereto agree as follows:

ARTICLE IA — DEVELOPMENT OF THE PRODUCT

Section 1A.01 Development Efforts. Medcomp and VeriChip acknowledge that they will cooperate
in the development of the Product and agree that all prior and future joint development efforts
with respect to the Product shall be governed by the terms of this Agreement. Medcomp and VeriChip
agree that, during the term of this Agreement, they will cooperate and expend reasonable efforts to
jointly develop the Product in a manner which permits the effective use of the Product. Such joint
development efforts may include testing, development of prototypes, development and/or refinement
of specifications for the Product (the “Specifications”) manufacturing processes and other research
efforts. Medcomp shall be responsible for obtaining any necessary regulatory approvals for use of
the Product. Medcomp and VeriChip agree to jointly conduct studies, tests, research and other
procedures designed to develop the Product and improve the Product. Each party shall assist and
coordinate with the other, make its technical personnel and facilities required to perform such
research and development available to the other and use its best efforts to successfully complete
the development of the Product.

 

 

 

*** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

Section 1A.02 Development Plan. As soon as possible following the signing of this Agreement,
VeriChip will begin development of the Product. VeriChip shall provide Medcomp with a complete and
operational prototype of the Product as well as the design history file for the prototype of the
Product within ninety (90) days of the commencement of this Agreement. If VeriChip fails to meet
this ninety (90) day deadline, Medcomp may terminate this Agreement provided however, that the
ninety (90) day deadline may be extended by written agreement.

Section 1A.03 Development Costs and Expenses. Subject to Section 1A.07, each party shall be
responsible for payment of all of its own direct costs and expenses for personnel and facilities
relating to the development of the prototype and the Product.

Section 1A.04 Specifications and Standards for the Product. Upon completion of the development
of the prototype of the Product, such that the parties agree the same is feasible for manufacture
and sale, they shall discuss and agree upon the Specifications. The Specifications shall, when
adopted, be consistent with Exhibit A, be reduced to writing, be signed by authorized individuals
from Medcomp and VeriChip, and by reference be incorporated herein provided, however, that the
Specifications may be amended at any time by the written agreement of the parties.

Section 1A.05 Property Rights. Medcomp acknowledges and agrees that VeriChip owns and/or has
the right to use and shall retain all of the right, title and interest in and to all of the
patents, trademarks, trade names, inventions, copyrights, know-how, trade secrets and other
intellectual property rights relating to the design, assembly, manufacture, operation and/or
service of its RFID Microchips and the Product. The use by Medcomp of any of these property rights
is authorized only for the purposes set forth in this Agreement and upon expiration of termination
of this Agreement for any reason such authorization shall cease.

Section 1A.06 Product Development Fee. Medcomp will pay VeriChip a fee to cover its costs
relating to completion of the development of the Product in an agreed amount of ***. Medcomp will
make this payment in two equal installments of *** each, with the first installment due within ten
(10) days of the commencement of this Agreement and the second installment due within forty (40)
days of the commencement of this Agreement. Should VeriChip fail to meet the ninety (90) day
deadline set forth in Section 1A.02 above, or such extended deadline as is agreed to by the
parties, and Medcomp terminates this Agreement as a result, VeriChip shall, within ten (10) days of
the termination of this Agreement, repay to Medcomp the Product development fee set forth above.

Section 1A.07 Tooling. All tooling unique to the production of the Product (the “Tooling”)
shall be the sole property of VeriChip. VeriChip shall be responsible for the routine maintenance
and repairs of the Tooling.

 

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*** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

ARTICLE I. SUPPLY OF PRODUCTS

Section 1.01 Supply of Product.

(a) VeriChip agrees to sell the Product exclusively to Medcomp during the Term of this
Agreement, and agrees that it shall not manufacture or sell the Product, or any product
using or incorporating the same, or substantially similar technology, to any other
manufacturer, seller or distributor of vascular access products. Notwithstanding the
foregoing, VeriChip may use or sell a product substantially equivalent to the Product so
long as such use or sale is not in connection with vascular access products (that compete
with Medcomp, directly or indirectly). VeriChip agrees that it will seek a similar
exclusivity from the manufacturer of the Product. In the event VeriChip becomes insolvent or
otherwise ceases operations during the term of this Agreement, and has no successor which is
bound by the terms of this Agreement, Medcomp shall be able to maintain said exclusivity
with the manufacturer of the Product. Medcomp agrees during the Initial Term of this
Agreement, that it will purchase not less than the following number of Products (the
“Minimum Purchase Requirements”): (i) *** in the first Product Purchase Year, (ii) *** in
the second Product Purchase Year, (iii) *** in the third Product Purchase Year, (iv) *** in
the fourth Product Purchase Year and (v) *** in the fifth Product Purchase Year. For the
purpose of this Agreement, the “Product Purchase Years” are the five (5) respective
consecutive twelve (12) month periods beginning on the date of the last to occur of the
following: (i) the Product being ready for production; or (ii) 510k approval of the Product.
In the event Medcomp fails to meet the Minimum Purchase Requirements for a Product Purchase
Year, Medcomp shall, within thirty (30) days of written demand from VeriChip, make a payment
to VeriChip equal to *** times the number of Products by which Medcomp failed to meet the
Minimum Purchase Requirement for the Product Purchase Year at issue. Medcomp shall be
released from the Minimum Purchase Requirements should the FDA issue a recall of the
Product, for more than thirty (30) days.

(b) Medcomp’s original order for the Product shall be submitted within ten (10) days of
510k approval of the Product and Medcomp shall order the Product on a quarterly basis
thereafter. All orders for the Product shall be in writing and shall specify (i) the number
of units of each of the Product to be purchased (in accordance with the terms and conditions
of the Agreement) and (ii) the destination to which the Product is to be shipped. With each
order of the Product, Medcomp shall also provide a forecast of the number of Products it
will be purchasing for the next six (6) months. VeriChip will deliver no less than ninety
percent (90%) of the first order for Products within eight (8) weeks of full production
commencing. Thereafter, VeriChip agrees to deliver no less than ninety percent (90%) of the
Products ordered by Medcomp within less than thirty (30) days of the order date provided
that the number of Products (i) does not exceed one-hundred twenty percent (120%) of the
immediately previous order or, (ii) alone, or in conjunction with the immediately previous
order, does not exceed the then current six (6) month forecast of Medcomp. If the number of
Products ordered (i) does exceed one-hundred twenty percent (120%) of the immediately
previous order or, (ii) alone, or in
conjunction with the immediately previous order, exceeds the then current six (6) month
forecast of Medcomp, VeriChip agrees to deliver no less than ninety percent (90%) ordered
within sixty (60) days of the order date. VeriChip shall be permitted a thirty (30) day cure
period for any missed delivery deadline. VeriChip shall not be liable for any consequential
damages as result of a failure to meet delivery deadlines. Medcomp shall be released from
the Minimum Purchase Requirements of any particular year if its inability to meet the
minimum purchase requirements of that particular year was due to VeriChip’s inability to
make delivery pursuant to the schedule set forth above.

(c) VeriChip agrees, during the Term, to make its other products that are compatible
with the Product available to Medcomp on commercially reasonable terms.

 

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***CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

Section 1.02 Pricing. The standard purchase price for the Product will be ***,
provided, however, that if Medcomp places an order within the first three (3) months of any
Product Purchase Year (i) for not less than *** units for delivery of Product in that
Product Purchase Year, the price for those Products will be ***, or (ii) for not less than
*** units for delivery in that Product Purchase Year, the price of those Products will be
***. It is understood that all such pricing will be firm for the Initial Tem.

Section 1.03 Delivery Terms. Products will be shipped, FOB Medcomp’s Harleysville, PA,
facility. Payment for shipping charges shall be Medcomp’s responsibility.

Section 1.04 Payment. Notwithstanding the Product Development Fee subject to Section
1A.06, unless otherwise agreed by the parties in writing, payment shall be made by Medcomp
separately for each shipment of Products. Medcomp shall pay all invoice amounts within
thirty (30) days of the date of invoice in U.S. dollars. Any invoices not paid within thirty
(30) days shall accrue interest at the rate of one and one-half percent (1-1/2%) per month.

Section 1.05 Inability to Supply. VeriChip expects and intends to supply Medcomp with
the Product in accordance with the provisions of this Agreement. If VeriChip determines that
it will be unable to supply Medcomp with the Product in the desired quantities for
unanticipated reasons such as an Act of God or a long-term shortage of materials, VeriChip
shall give Medcomp prompt notice of its inability to timely supply of the Product. If
VeriChip is unable to make timely deliveries of the Product for unanticipated reasons such
as set forth above, or by reason such as war, civil commotion, embargo, strike or any other
act which is beyond the reasonable control of VeriChip, VeriChip shall be excused from
meeting said delivery deadlines provided, however, that VeriChip shall continue performance
hereunder with reasonable dispatch whenever such causes are removed.

 

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ARTICLE II. — REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01 By VeriChip

VeriChip represents, warrants and covenants to Medcomp as follows:

(a) This Agreement has been duly authorized, executed and delivered by VeriChip and
constitutes a valid and binding obligation of VeriChip, enforceable in accordance with its
terms.

(b) This Agreement does not conflict with any applicable law, rule or regulation to
which VeriChip is subject, or any agreement to which VeriChip is a party.

(c) VeriChip represents and warrants that the Products, when sold to Medcomp, do not
infringe or encroach upon any party’s personal, contractual or proprietary rights, including
but not limited to, patents, trademarks, copyrights, or trade secrets. VeriChip further
represents and warrants that the Products, when sold to Medcomp, (i) are merchantable, (ii)
are fit for the purposes for which they were sold, (iii) are free from any and all defects
in design, material and workmanship, (iv) conform to the Specifications and Medcomp’s
quality standards (v) are fit and safe for use by Medcomp; and (vi) shall have at least
eighty percent (80%) of their shelf life remaining when sold to Medcomp, and shall remain in
full compliance with the Specifications for the full shelf life period of such Products; and
(vii) shall be in compliance with all applicable laws and regulations and all regulatory
requirements of the United States Food and Drug Administration (the “FDA”), or other
appropriate regulatory authority currently in effect, including without limitation the
Federal Food, Drug and Cosmetic Act, as amended from time to time (the “Act”), the FDA’s
then current Good Manufacturing Practices (“cGMP”). VeriChip further represents and
warrants that they will convey good and merchantable title to Medcomp for the Products and
that the Products are free of any security interest or other lien or encumbrance.

(d) No Products constituting or being a part of any shipment hereunder shall at the time
of any such shipment be (i) adulterated or misbranded within the meaning of the Act, or
regulations promulgated thereunder, as such law or regulation is constituted and in effect at
the time of any such shipment, or (ii) an article which may not, under the provisions of
Sections 404, 505 or 512 of the Act, be introduced into interstate commerce.

(e) VeriChip agrees that it will attain the manufacturing, processing and packaging of
the Products only at specified and approved facility(ies) (the “Plant”) and that part of such
services may at any time be subcontracted to a third party without prior written approval of
Medcomp.

(f) VeriChip shall not make any changes in the Specifications or raw materials,
purchased components, packaging materials, labeling, formulations, quality control test
methods or manufacturing processes or manufacturing equipment, with regard to the Product,
without Medcomp’s prior written agreement.

 

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(g) VeriChip owns or has the right to use all copyright, trademarks, patents, and other
intellectual property rights to the intellectual property which they shall use to perform
their obligations hereunder.

(h) VeriChip shall provide to Medcomp all documentation and information requested by
Medcomp: (i) in order to assist Medcomp in determining whether any delivery complies fully
with the Specifications and the requirements of this Agreement (including VeriChip’s
calculation of any price adjustments, rebates, loss allowance, credits and/or most favored
nations status); (ii) in order to assist Medcomp in obtaining any and all regulatory
approvals necessary to market Medcomp’ products which contain the Product; or (iii) to
enable Medcomp to comply with any statutory or regulatory requirements, or with a request by
any governmental or regulatory authority.

(i)

(i) VeriChip agrees to work with the manufacturer to assure the quality
level of the Product through the use of a formal quality assurance program (the
“QA Program”) reasonably acceptable to Medcomp. The QA program shall require the
manufacturer to prepare and maintain written records sufficient to enable Medcomp
to trace the build and inspection history of the Product. VeriChip will require
the manufacturer to maintain such records for a period of five (5) years after
manufacture. Pursuant to the QA Program, VeriChip shall require the manufacturer
to place lot numbers and date codes on all Products to enable the identification
and traceability of the Product. During the Term, and upon reasonable notice,
Medcomp shall have the right to reasonably audit the QA program, at its expense,
during regular business hours.

(ii) VeriChip shall require the manufacturer to conduct and document final
inspection and quality control tests in accordance with reasonable Medcomp
procedures on the Products prior to shipment to verify that the Product meets
and conforms to the Specifications and the QA Program provided, however, that
if Medcomp requires a type of inspection or quality control test involving
equipment that is not currently owned by manufacturer, that Medcomp shall be
responsible for the cost of obtaining such
equipment.

(iii) Medcomp will, at its expense, and upon reasonable notice to VeriChip
and the manufacturer, have the right to reasonably inspect manufacturer’s
facilities to ensure compliance with the terms and conditions of the QA Program.
Proprietary VeriChip or manufacturer’s manufacturing process technology shall not
be subject to any such inspection.

(iv) VeriChip shall cooperate with, and provide assistance to, Medcomp with
respect to customer complaints and product recalls relating to
the Product.

 

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(j) VeriChip shall immediately notify Medcomp of any contact which the FDA or any other
regulatory or other governmental authority has with it concerning the Product or its
manufacturing facilities relating thereto, including, but not limited to, cGMP’s, product
registrations and safety and efficacy claims. The parties shall consult with one another in
an effort to arrive at a mutually acceptable response; however, should the parties not agree
as to a response, Medcomp shall have total discretion to respond appropriately to such
regulatory or other governmental authority.

(k) VeriChip shall inform Medcomp within twenty-four (24) hours of any notification to
VeriChip of any site visits by the FDA, state or federal regulatory agencies or any other
governmental or regulatory agency, relating, directly or indirectly, to the manufacture,
storage, disposal and/or transportation of the Product, and shall provide to Medcomp all
other materials related thereto or used in connection therewith. VeriChip shall report in
writing the results of the visit to Medcomp within thirty (30) days of the occurrence
thereof In the event that any such governmental or regulatory agency finds that VeriChip’s
operation relating, directly or indirectly, to the manufacture, storage, disposal and/or
transportation of the Product is deficient or unsatisfactory in any respect, VeriChip, as is
appropriate, shall cure all said deficiencies within the earlier of ninety (90) days or such
cure period as ordered by the governmental or regulatory agency.

(l) VeriChip shall make available to Medcomp all records and reports relating to the
manufacture, storage, disposal and transportation of the Product, and all other materials
related thereto or used in connection therewith, including without limitation those documents
relating to analytical data, for Medcomp’s review during normal business hours and upon
reasonable prior notice, and Medcomp shall have the right to make and retain copies of these
documents as required at Medcomp’s expense. Such records and reports shall be subject to the
confidentiality provisions of this Agreement. Medcomp shall have the right to conduct
inventory reconciliation audits and other audits as reasonably required for its internal
control, at Medcomp’s sole cost and expense.

(m)

(i) In the event (A) any government authority of the United States or
other jurisdiction issues a request, directive or order that any of the
Product or Medcomp’s products containing the Product be recalled, or (B) a
court of competent jurisdiction orders such a recall, or (C) the parties
reasonably determine after consultation with each other that any of the
Product or Medcomp’s products containing the Product should be recalled (a
“Recall”), the parties shall take all appropriate corrective action. Medcomp
shall also retain the right to conduct a product recall for safety reasons
at Medcomp’s sole discretion.

 

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(ii) In the event a Recall results from the defective manufacture
of the Product or any other cause or event solely attributable to VeriChip
or the manufacturer of the Product. VeriChip shall be responsible for all
out-of-pocket expenses of a Recall. In all other cases, Medcomp shall be
responsible for the expenses of a Recall including, but not limited to,
responsibility to reimburse VeriChip for its expenses in connection with a
Recall. For purposes of this Agreement, Recall expenses shall include, but
not be limited to, the expenses of notification and destruction or return of
the recalled Products, as the case may be, and Medcomp’s cost

of the recalled Products, as the case may be.

(n) Written notice and an explanation of the circumstances of any claim that the Products
are not in conformance with the Specifications or are defective in material or workmanship
shall be given promptly by Medcomp to VeriChip. VeriChip shall thereafter notify manufacturer
and allow manufacturer to be provided a reasonable opportunity to inspect said Products.

Section 2.02 By Medcomp

Medcomp represents warrants and covenants to VeriChip as follows:

(a) This Agreement has been duly authorized, executed and delivered by Medcomp and
constitutes a valid and binding obligation of Medcomp, enforceable in accordance with its
terms.

(b) This Agreement does not conflict with any applicable law, rule or regulation to
which Medcomp is subject, or any agreement to which Medcomp is a party.

(c) All vascular access products manufactured by Medcomp and the Medcomp trademark do not
infringe or encroach upon any parties’ personal, contractual or proprietary rights, including,
but not limited to, patents, trademarks, copyrights, or trade secrets.

Section 2.03 Covenants of both parties: co-marketing

(a) Upon FDA 510k approval of the Product, Medcomp will use its best efforts

to:

	 	(i)	 	engage in a co-marketing relationship with VeriChip Corporation to
market, distribute, sell and promote the sale of the new Medcomp vascular port
(with RFID microchip) and the Health Link by VeriMed personal health record
system.
	 
	 	(ii)	 	purchase and/or facilitate the purchase of “Health Link by VeriMed”
scanners for distribution to appropriate medical personnel and/or facilities;
	 
	 	(iii)	 	brand all ports with RFID technology as the brand name of the port
with RFID technology (e.g. “Dignity w/RFID”).
	 
	 	(iv)	 	site VeriChip Corporation on all literature focused on implantation
of the device.
	 
	 	(v)	 	include “Health Link by VeriMed” information on all literature
focused on continuous care (Oncology) and diagnosis (CT / Radiology).
	 
	 	(vi)	 	provide training to all VeriChip Sales and Marketing Staff and sales
partners on the details of the port technology.
	 
	 	(vii)	 	provide VeriChip with sales tracings of facilities and
departments where the
ports w/RFID have been sold on a quarterly basis. This information will include
facility, department and main contact information to focus sales efforts.

 

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	 	(viii)	 	hand over all leads or inquiries for Health Link by VeriMed to VeriChip
Corporation.
	 
	 	(ix)	 	work closely with VeriChip Corporation and also agree to not poach
employees or partners from VeriChip Corporation without prior consent.

(b) Upon FDA 510k approval of the Product, VeriChip Corporation will use its best efforts to:

	 	(i)	 	engage in a co-marketing relationship with Medcomp to market,
distribute, sell and promote the sale of the new Medcomp vascular port (with
RFID microchip) and the HealthLink by VeriMed personal health record system.
	 
	 	(ii)	 	provide training to Medcomp Sales and Marketing Staff on the
details of the Health Link by VeriMed System.
	 
	 	(iii)	 	hand over all leads or inquiries for port technology to Medcomp.
	 
	 	(iv)	 	work closely with Medcomp and also agree to not poach employees or
partners from Medcomp without prior consent.

ARTICLE III. — TERM

Section 3.01
Term.

This Agreement shall be deemed to have commenced as of the date this Agreement has been signed
by all parties hereto and shall continue in force until the expiration of the fifth Product
Purchase Year (the “Initial Term”), unless earlier terminated in accordance with Section 3.02. Upon
expiration of the Initial Term, this Agreement may be extended as agreed upon in writing by the
parties for such term as they agree (“Renewal Term(s)”). The Initial Term and any Renewal Term(s)
are collectively referred to herein as the “Term”.

Section 3.02 Termination.

(a) Either party may terminate this Agreement as follows:

(i) If the other party commits a material breach of any of the provisions of this
Agreement and does not cure such breach within sixty (60) days after receipt of
written notice thereof; or

(ii) Immediately upon written notice to the other party in the event that
proceedings in bankruptcy or insolvency are instituted by or against the other
party, or a receiver is appointed, or if any substantial part of the assets of the
other party is the object of attachment, sequestration or other type of comparable
proceeding, and such proceeding is not vacated or terminated within thirty (30) days
after its commencement or institution.

 

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***CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

(iii) Immediately upon written notice to the other if the development of the
Product is not completed in accordance with the deadline and any extensions thereof
as set forth in paragraph IA.02 provided, however, that such notice is effective
only if provided within thirty (30) days of the end of the deadline period.

(b) Medcomp may terminate this Agreement as follows:

(i) Prior to the end of the Initial or any Renewal Term upon thirty (30) days’
written notice, in the event that VeriChip is acquired (whether through merger, sale
of stock representing fifty percent (50%) or more of the outstanding voting stock of
that party, sale of all or substantially all of that party’s assets or otherwise) by
any third party (or by an entity that is a party to a collaboration agreement with a
third party) that manufactures, sells or otherwise distributes products which are
competitive with vascular ports manufactured, sold or distributed by Medcomp.

(ii) Immediately upon written notice in the event the FDA fails to approve the
Product and said failure was not the result of any action or inaction on the part of
Medcomp. In the event of such a termination, Medcomp shall still be responsible to
pay to VeriChip for any Products ordered and manufactured.

(iii) In the event Medcomp determines, in its sole discretion, that (i) the Product
is not commercially feasible due to market preferences, (ii) new technology has made
the Product obsolete or non-competitive or (iii) applicable clinical research or FDA
findings have made the sale of the Product inadvisable, Medcomp may terminate this
Agreement by providing sixty (60) days written notice to VeriChip. In the event
Medcomp so terminates this Agreement, Medcomp shall, within thirty (30) days of the
date of termination, make a payment to VeriChip of an amount equal to *** times the
number of Products by which Medcomp failed to meet the Minimum Purchase Requirement
for the Product Purchase Year in which the Agreement is terminated by Medcomp.

(iv) Immediately upon written notice if any governmental or regulatory agency finds
that VeriChip’s operation at the site relating, directly or indirectly, to the
manufacture, storage, disposal and/or transportation of the Product is deficient or
unsatisfactory and VeriChip fails to cure said deficiencies as set forth in Article
2.01(k).

(v) Subject to Section 1.05, immediately upon written notice if VeriChip fails to
deliver Product within the time periods set forth in Section 1.01(b) and any cure
period set forth therein.

Section 3.03 Effects of Termination.

Following the expiration or termination of this Agreement, all further rights and
obligations of the parties shall cease, except that the parties shall not be relieved of (i)
their respective obligations set forth in Sections IA.05, 1A.07, 2.01(h), 2.01(j-n), 3.02, 3.03,
7.01, 7.07, Article IV
and Article VI of this Agreement; (ii) their respective obligations to pay monies due or
which become due as of or subsequent to the date of expiration or termination; and (iii) any
other respective obligations under this Agreement which specifically survive or are to be
performed after the date of expiration or termination. In addition, following the termination of
this Agreement, VeriChip shall, upon the request of Medcomp, within ten (10) days of said
request, deliver to Medcomp all items owned by Medcomp that are in VeriChip’s possession.

 

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ARTICLE IV. — INDEMNIFICATION

(a) Medcomp shall indemnify, defend and hold VeriChip, its directors, officers,
shareholders, employees, servants and agents (collectively “VeriChip Indemnitees”) harmless
from and against any and all liabilities, claims, demands, actions, suits, losses, damages,
costs and expenses (including reasonable attorney’s fees and disbursements) based upon any
death, actual bodily injury or physical property damage resulting from Medcomp’s negligence
or willful misconduct, except to the extent caused by VeriChip’s negligence or willful
misconduct.

(b) VeriChip shall indemnify, defend and hold Medcomp and its directors, officers,
shareholders, employees, servants and agents (collectively “Medcomp Indemnitees”) harmless
from and against any and all liabilities, claims, demands, actions, suits, losses, damages,
costs and expenses (including reasonable attorney’ s fees and disbursements) based upon any
death, actual bodily injury or physical property damage resulting from any defect in the
manufacture of the Product and/or VeriChip’s negligence or willful misconduct, except to the
extent caused by Medcomp’s negligence or willful misconduct.

(c) Medcomp shall defend, indemnify and hold harmless the VeriChip Indemnitees from and
against all claims, demands, actions, liabilities, losses, damages and expenses, including
reasonable attorney’ s fees, arising out of any claim made against VeriChip for infringement
of any copyright, patent or other intellectual property right of any kind related to any of
Medcomp’s products and the Medcomp trademark. VeriChip shall defend, indemnify and hold
harmless the Medcomp Indemnitees from and against all claims, demands, actions, liabilities,
losses, damages and expenses, including reasonable attorney’s fees, arising out of any claim
made against Medcomp for infringement of any copyright, patent, or other intellectual
property right of any kind related to the Product.

(d) Each of the parties shall notify the other of any such claim or potential
claim covered by any of the above subparagraphs in this Article and shall include sufficient
information to enable the other party to assess the facts. Each of the parties shall
cooperate fully with the other party in the defense of all such claims. No settlement or
compromise shall be binding on a party hereto without its prior written consent, which shall
not be unreasonably withheld or delayed.

 

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(e) Upon the assertion of any third party claim against a party entitled to
indemnification hereunder’ (an “Indemnified Party”) hereto that may give rise to a
right of indemnification of this Agreement, the Indemnified Party shall give prompt
notice to a party obligated to provide indemnification hereunder (an “Indemnifying Party”)
of the existence of such claim and shall give the Indemnifying Party reasonable opportunity
to control, defend and/or settle such claim at its own expense and with counsel of its own
selection; provided, however, that the Indemnified Party shall, at all times, have the right
to fully participate in such defense at its own expense with separate counsel and, provided
that both parties shall, to the extent that they are not contractually or legally excluded
therefrom, or otherwise prejudiced in a legal position by so doing, cooperate with each
other and with their respective insurers in relation to the defense of such third party
claim. The Indemnifying Party shall consult with the Indemnified Party with respect to
settlement of any claim. The Indemnifying Party shall have the right to settle any claim
without the consent of the Indemnified Party, provided that the Indemnified Party is
unconditionally released from such claim and is not otherwise prejudiced by the terms of
settlement in the sense that the Indemnified Party reasonably believes that such settlement
terms may have a material adverse effect on its business.

ARTICLE
V. — INSURANCE

Each party shall maintain Commercial General Liability (CGL) insurance (including product
liability coverage) and upon such terms (including coverages, deductible limits and self-insured
retentions) as is customary for the activity to be conducted by it under this Agreement and is
appropriate to cover its indemnification obligations hereunder. VeriChip shall maintain for the
entire terms of this Agreement CGL including product liability coverage of $1,000,000 per
occurrence and $5,000,000 in the aggregate. Medcomp shall be named as an additional insured on the
policy. VeriChip shall provide Medcomp with a certificate of insurance reflecting the same within
thirty (30) days from the effective date of this Agreement.

ARTICLE VI. — CONFIDENTIALITY

Section 6.01 Confidential Information.

“Confidential Information” and “Proprietary Concept” shall include any terms normally embraced
within such terms (e.g., drawings, specifications, customer lists, patient information, technical
data, marketing and financial plans, and production or’ purchasing schedules or forecasts) and, in
addition, any information concerning either party’s marketing or pricing of its products, or any
information regarding the customers of either party, that enables or would enable that party to
obtain a competitive advantage in the marketplace. The existence, subject matter and terms and
conditions of this Agreement shall be considered to be included in the Confidential Information.
“Confidential Information” shall not include information that (i) is in or comes into the public
domain without violation of this Agreement, (ii) is known by the receiving party prior to
disclosure to it by the other’ party, (iii) is received lawfully and under no obligation of
confidentiality by the receiving party from a third party subsequent to this Agreement, (iv) is
released by the owner to others without restriction, or (v) is independently developed by the
receiving party, provided that the person or persons developing this information have not had
exposure to the same information as received from the disclosing party.

 

12

 

Section 6.02 Protection of Confidential Information

Each party agrees: (a) to protect the confidentiality of the other’s Confidential Information
to the same extent and in the same manner as it protects its own confidential information; and (b)
not to disclose any Confidential Information obtained under the Agreement to any third party except
to the extent necessary to serve the purposes of this Agreement and in any event subject to this
Agreement, including this Article VI. The party receiving Confidential Information under this
Agreement shall disclose that information only to its employees who need to know such information.
Each party agrees to provide in all contracts with third parties confidentiality provisions
equivalent to those contained in this Agreement. The burden of proving the existence of facts which
would negate the obligations of this Agreement under this Article VI shall rest with the party in
receipt of the subject information.

Section 6.03 Use of Confidential Information

Both parties shall use the Confidential Information solely for the purpose of furthering
the relationship contemplated by this Agreement.

Section 6.04 Ownership

Any trade secrets, confidential information or proprietary concepts received or learned by
either party from the other, or any of its employees, servants, or agents, relating to the business
or customers of the other party shall be deemed the exclusive property of the disclosing party and
shall remain the valuable scientific, trade, and engineering secrets of the disclosing party.

Section 6.05 Disclosure Compelled by Law

In the event either party believes it is required by law (whether pursuant to oral questions,
interrogatories, requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any confidential information, it shall provide the disclosing party
with prompt notice thereof so that the disclosing party may seek an appropriate protective order
and/or waive compliance with this Agreement; provided however, that if, in the absence of a
protective order or the receipt of a waiver hereunder, such party is in the reasonable opinion of
its counsel compelled to disclose confidential information not otherwise disclosable hereunder to
any legislative, judicial or regulatory body, agency or authority or else be exposed to liability
for contempt, fine, or penalty, or to other censure, such confidential information may be
disclosed.

Section 6.06 Ongoing Confidentiality Obligation

The obligations of VeriChip and Medcomp pursuant to this Article VI shall survive
termination of this Agreement.

 

13

 

ARTICLE VII. — MISCELLANEOUS

Section 7.01 Applicable Law and Arbitration

This Agreement, and any claim or controversy relating thereto, shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania and United States of
America. All disputes, controversies or differences which may arise between the parties in relation
or in connection with this Agreement shall be resolved by arbitration. Arbitration shall take place
in Montgomery County, Pennsylvania, United A. States of America, and be conducted as provided
under Subchapter B of the Pennsylvania Uniform Arbitration Act. The arbitrators shall be selected
as follows: the party demanding arbitration shall do so in writing and, as part of its demand,
shall select an arbitrator. The party receiving the demand will select its arbitrator and notify
the party demanding arbitration in writing of said election within ten (10) days of service of the
demand for arbitration. The two arbitrators will select a third arbitrator. If the two arbitrators
chosen by the parties cannot agree on a third arbitrator within fourteen (14) days of the selection
of the second arbitrator, the Court of Common Pleas of Montgomery County, Pennsylvania shall select
a third arbitrator upon the filing of a petition by either party. Either party will bear the cost
of its own arbitrator. The expense of the third arbitrator will be shared equally between the
parties. A decision agreed to by two of the three arbitrators shall be binding upon the parties and
may be entered as a judgment in the Court of Common Pleas of Montgomery County, Pennsylvania and in
any court of competent jurisdiction with the ability to enforce a judgment against the party whom
the judgment is rendered. All parties hereby consent to the jurisdiction of the arbitration panel
described above and to the jurisdiction of the Court of Common Pleas of Montgomery County,
Pennsylvania.

Section 7.02 No Agency

VeriChip shall at all times during the term of this Agreement be an independent contractor,
maintaining sole and exclusive control over their personnel and operations. At no time shall any
party hold itself out to be the agent, employee, lessee, sub lessee, partner, or joint venture
partner of any other. It is understood and agreed between VeriChip and Medcomp that the full and
exclusive relationship between them is that of an independent contractor and nothing in this
Agreement shall be construed to create any relationship between the parties other than that of
independent contractor. No party shall have any express or implied right or authority to assume or
create any obligations on behalf of or in the name of any other party or to bind any other party
with regard to any other contract, agreement, or undertaking with a third party.

Section 7.03 Titles and Headings

Titles and headings in this Agreement are for the convenience of the parties only, and are
not intended to be a part of or affect the meaning or interpretation of this Agreement.

 

14

 

Section 7.04 Severability of Provisions

If any term or provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement or
the application of such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected, and each term and provision of this
Agreement shall be valid and be enforced to the fullest extent permitted by law.

Section 7.05 Amendment

This Agreement may not be amended, supplemented or, otherwise modified except by an
instrument in writing signed by all parties.

Section 7.06 Assignment

This Agreement may not be assigned by any party except to an Affiliate without the prior
written consent of the other party. If any such Affiliate has been the assignee of any rights
under this Agreement and loses its status as an Affiliate, then immediately and automatically upon
the loss of such status as an Affiliate, the assignment of this Agreement to such former Affiliate
and all rights under or with respect to this Agreement shall immediately terminate and be of no
further force or effect. This Agreement shall be binding upon, and inure to the benefit, of the
parties respective heirs, successors, and assigns.

Section 7.07 No Use of Name

Neither party shall employ or use the name of the other party in any publication or
promotional materials nor in any form of public distribution nor make any public disclosure of this
Agreement without the prior express written consent of the other party, except as may be required
for compliance with Governmental obligations.

Section 7.08 Notices

Any notices, waivers, and other communications required or permitted hereunder shall be in
writing and shall be deemed to be fully given when delivered by hand or dispatched (with
reasonable evidence of receipt) by telex, telegraph or other names of electronic facsimile
transmission or by an internationally recognized overnight courier service, addressed to the party
to whom the notice is intended to be given at the addresses specified below,

	 	(a)	 	If to Medcomp:
	 
	 	 	 	Medical Components, Inc.

1499 Delp Drive

Harleysville, Pennsylvania 19438

Attn: Timothy Schweikert

Facsimile No.                                        

 

15

 

	 	(b)	 	If to VeriChip:
	 
	 	 	 	VeriChip Corporation

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attn: William Caragol

Facsimile No. 561-805-8001

or such other address or addresses as a party may from time to time designate for itself by like
notice.

Section 7.09 Waiver

No provision of this Agreement shall be deemed to have been waived unless such waiver is in
writing, signed by the waiving party. No failure by any party to insist upon the strict performance
of any provision of this Agreement, or to exercise any right or remedy consequent upon a breach
thereof, shall constitute a waiver of any such breach, of such provision, or of any other
provision. No waiver of any provision of this Agreement shall be deemed a waiver of any other
provision of this Agreement or a waiver of such provision with respect to any subsequent breach,
unless expressly provided in writing.

Section 7.10 No Third-Party Beneficiary Rights

No person not a party to this Agreement is an intended beneficiary of this Agreement, and
no person not a party to this Agreement shall have any right to enforce any term of this
Agreement.

Section 7.11 Governing Document

The parties contemplate exchanging the usual commercial forms such as purchase orders and
invoices in furtherance of this Agreement; provided, however, that any terms and conditions which
may appear on such documents, other than those purchase order terms required by Section 1.01(b) of
this Agreement and the invoice amounts, shall be of no force or effect.

Section 7.12 Entire Agreement

This Agreement constitutes the entire agreement of the parties relating to the subject matter
hereof. There are no promises, terms, conditions, obligations, or warranties other than those
contained in this Agreement. This Agreement supersedes all prior communications, representations,
or agreements, verbal or written, among the parties, relating to the subject matter hereof.

Section 7.13 Force Majeure

In the event an act of the government, war conditions, strikes, fire, flood, or other act of
God (collectively “force majeure”) prevents either party from performance in accordance with the
provisions of this Agreement, such non-performance shall be excused and shall not be considered a
breach or default for so long as such conditions prevail. The party invoking force
majeure shall give prompt written notice thereof to the other party and shall take whatever
reasonable steps are necessary to relieve the effect of such cause as rapidly as possible.

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be effective as of the
date first written above.

	 	 	 	 	 	 	 	 	 	 	 
	MEDICAL COMPONENTS, INC.	 	 	 	VERICHIP CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Timothy M. Schweikert
 

Name: Timothy M. Schweikert
	 	 	 	By:
	 	/s/ William J. Caragol
 

Name: William J. Caragol
	 	 
	 

	 	Title:   President
	 	 	 	 	 	Title:   President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: 04/02/09	 	 	 	Date: 3/17/09	 	 

 

17

 

TRANSPONDER SPECIFICATION

	 	 	 
	 

	 	Injectable
	 

	 	Transponder
	 

	 	TX1400SST

Product Description:

The injectable Transponder is a passive radio-frequency Identification tag, designed to work
in conjunction with a compatible radio-frequency ID reading system. The transponder consists
of an electromagnetic coil and microchip sealed in a tubular glass enclosure. The chip is
pre-programmed with a unique ID code that cannot be altered; over 274 billion individual
code numbers are available. When the transponder is activated by a low-frequency radio
signal, it transmits the ID code to the reading system.

Although specifically designed for injecting in fish and livestock, this transponder can be
used for other animal and non animal applications.

Specifications:

Dimensions (nominal): 12.48mm X 2.07mm (0.49134” X 0.08150”)

Antenna type: Ferrite

Operating frequency: 134.2kHz

ISO Conformance: ISO 11784, ISO 11785

Housing: Bio-compatible glass

Weight: 0.1020 gram (0.0036 ounce)

Temperature range: -40 to 70C (-40 to 158F), operating and storage

Read range with the Model FS2001F-ISO Portable Reader:

(In a benign noise environment with optimal orientation of transponder and scanner
antenna)

FS2001F-ISO Portable Reader with 2001F-ISO (710060801) Racket Antenna and 2 meter cable
(228004502)

Typical: 20.32 cm (8.0 inches)      Minimum: 19.05 cm (7.5 inches)

Read speed: 1 meter per second

Vibration:

Sinusoidal; 1.5 mm (0.06”) peak-to-peak, 10 to 80 Hz, 3 axis

Sinusoidal; 10 g peak-to-peak, 80 Hz to 2 kHz, 3 axis

Injector needle size: About 12 gauge (Destron part #445-0008-00)

 

18Exhibit 10.3

Exhibit 10.3

VERIGREEN ENERGY CORPORATION

2009 FLEXIBLE STOCK PLAN

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. NAME AND PURPOSE
	 	 	 	 
	1.1. Name
	 	 	1	 
	1.2. Purpose
	 	 	1	 
	 
	 	 	 	 
	2. DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
	 	 	 	 
	2.1. General Definitions
	 	 	1	 
	2.1.1. Affiliate
	 	 	1	 
	2.1.2. Agreement
	 	 	1	 
	2.1.3. Benefit
	 	 	1	 
	2.1.4. Board
	 	 	1	 
	2.1.5. Cash Award
	 	 	1	 
	2.1.6. Change of Control
	 	 	1	 
	2.1.7. Code
	 	 	2	 
	2.1.8. Company
	 	 	2	 
	2.1.9. Committee
	 	 	2	 
	2.1.10. Common Stock
	 	 	2	 
	2.1.11. Director
	 	 	2	 
	2.1.12. Effective Date
	 	 	2	 
	2.1.13. Employee
	 	 	2	 
	2.1.14. Employer
	 	 	2	 
	2.1.15. Exchange Act
	 	 	2	 
	2.1.16. Fair Market Value
	 	 	2	 
	2.1.17. Fiscal Year
	 	 	2	 
	2.1.18. ISO
	 	 	2	 
	2.1.19. NQSO
	 	 	3	 
	2.1.20. Option
	 	 	3	 
	2.1.21. Other Stock Based Award
	 	 	3	 
	2.1.22. Parent
	 	 	3	 
	2.1.23. Participant
	 	 	3	 
	2.1.24. Performance Based Compensation
	 	 	3	 
	2.1.25. Performance Share
	 	 	3	 
	2.1.26. Plan
	 	 	3	 
	2.1.27. Reload Option
	 	 	3	 
	2.1.28. Restricted Stock
	 	 	3	 
	2.1.29. Rule 16b-3
	 	 	3	 
	2.1.30. SEC
	 	 	3	 
	2.1.31. Share
	 	 	3	 
	2.1.32. SAR
	 	 	4	 
	2.1.33. Subsidiary
	 	 	4	 
	2.2. Other Definitions
	 	 	4	 
	2.3. Conflicts
	 	 	4	 
	 
	 	 	 	 
	3. COMMON STOCK
	 	 	 	 
	3.1. Number of Shares
	 	 	4	 
	3.2. Reusage
	 	 	4	 
	3.3. Adjustments
	 	 	4	 
	 
	 	 	 	 
	4. ELIGIBILITY
	 	 	 	 
	4.1. Determined By Committee
	 	 	4	 

 

i

 

	 	 	 	 	 
	 	 	Page	 
	5. ADMINISTRATION
	 	 	 	 
	5.1. Committee
	 	 	5	 
	5.2. Authority
	 	 	5	 
	5.3. Delegation
	 	 	5	 
	5.4. Determination
	 	 	5	 
	 
	 	 	 	 
	6. AMENDMENT
	 	 	 	 
	6.1. Power of Board
	 	 	5	 
	6.2. Limitation
	 	 	6	 
	 
	 	 	 	 
	7. TERM AND TERMINATION
	 	 	 	 
	7.1. Term
	 	 	6	 
	7.2. Termination
	 	 	6	 
	 
	 	 	 	 
	8. MODIFICATION OR TERMINATION OF BENEFITS
	 	 	 	 
	8.1. General
	 	 	6	 
	8.2. Committee’s Right
	 	 	6	 
	8.3. Compliance with Applicable Laws
	 	 	6	 
	 
	 	 	 	 
	9. CHANGE OF CONTROL
	 	 	 	 
	9.1. Vesting and Payment
	 	 	6	 
	9.2. Other Action
	 	 	7	 
	 
	 	 	 	 
	10. AGREEMENTS AND CERTAIN BENEFITS
	 	 	 	 
	10.1. Grant Evidenced by Agreement
	 	 	7	 
	10.2. Provisions of Agreement
	 	 	7	 
	10.3. Transferability
	 	 	7	 
	 
	 	 	 	 
	11. REPLACEMENT AND TANDEM AWARDS
	 	 	 	 
	11.1. Replacement
	 	 	7	 
	11.2. Tandem Awards
	 	 	7	 
	 
	 	 	 	 
	12. PAYMENT, DIVIDENDS AND WITHHOLDING
	 	 	 	 
	12.1. Payment
	 	 	7	 
	12.2. Dividend Equivalents
	 	 	8	 
	12.3. Withholding
	 	 	8	 
	 
	 	 	 	 
	13. OPTIONS
	 	 	 	 
	13.1. Types of Options
	 	 	8	 
	13.2. Grant of ISOs and Option Price
	 	 	8	 
	13.3. Other Requirements for ISOs
	 	 	8	 
	13.4. NQSOs
	 	 	8	 
	13.5. Determination by Committee
	 	 	8	 
	 
	 	 	 	 
	14. SARS
	 	 	 	 
	14.1. Grant and Payment
	 	 	8	 
	14.2. Grant of Tandem Award
	 	 	8	 
	14.3. ISO Tandem Award
	 	 	9	 
	14.4. Payment of Award
	 	 	9	 
	 
	 	 	 	 
	15. ANNUAL LIMITATIONS
	 	 	 	 
	15.1. Limitation on Options and SARs
	 	 	9	 
	15.2. Limitation on Performance Shares
	 	 	9	 
	15.3. Computations
	 	 	9	 

 

ii

 

	 	 	 	 	 
	 	 	Page	 
	16. RESTRICTED STOCK AND PERFORMANCE SHARES
	 	 	 	 
	16.1. Restricted Stock
	 	 	9	 
	16.2. Cost of Restricted Stock
	 	 	9	 
	16.3. Non-Transferability
	 	 	9	 
	16.4. Performance Shares
	 	 	9	 
	16.5. Grant
	 	 	10	 
	 
	 	 	 	 
	17. CASH AWARDS
	 	 	 	 
	17.1. Grant
	 	 	10	 
	17.2. Annual Limits
	 	 	10	 
	17.3. Restrictions
	 	 	10	 
	 
	 	 	 	 
	18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS
	 	 	 	 
	18.1. Other Stock Based Awards
	 	 	10	 
	18.2. Other Benefits
	 	 	10	 
	 
	 	 	 	 
	19. MISCELLANEOUS PROVISIONS
	 	 	 	 
	19.1. Underscored References
	 	 	10	 
	19.2. Number and Gender
	 	 	10	 
	19.3. Unfunded Status of Plan
	 	 	11	 
	19.4. Termination of Employment
	 	 	11	 
	19.5. Designation of Beneficiary
	 	 	11	 
	19.6. Governing Law
	 	 	11	 
	19.7. Purchase for Investment
	 	 	11	 
	19.8. No Employment Contract
	 	 	11	 
	19.9. No Effect on Other Benefits
	 	 	12	 
	19.10. Limitation on Exercise
	 	 	12	 

 

iii

 

VERIGREEN ENERGY CORPORATION

2009 FLEXIBLE STOCK PLAN

1.
NAME AND PURPOSE

1.1 Name.

The name of this Plan is the “VeriGreen Energy Corporation 2009 Flexible Stock Plan.”

1.2 Purpose.

The Company has established this Plan to attract, retain, motivate and reward Employees and
Directors and to encourage ownership of the Company’s Common Stock by them. The Company also
intends in appropriate circumstances to grant awards of its common stock in lieu of cash
compensation pursuant to the mutual agreement of the Participant and the Company.

2. DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION

2.1 General Definitions.

The following words and phrases, when used in the Plan, unless otherwise specifically defined
or unless the context clearly otherwise requires, shall have the following respective meanings:

2.1.1 Affiliate.

A Parent or Subsidiary of the Company.

2.1.2 Agreement.

The document that evidences the grant of any Benefit under the Plan and that sets forth the
Benefit and the terms, conditions and provisions of, and restrictions relating to, such Benefit.

2.1.3 Benefit.

Any benefit granted to a Participant under the Plan.

2.1.4 Board.

The Board of Directors of the Company.

2.1.5 Cash Award.

A Benefit payable in the form of cash.

2.1.6 Change of Control.

If any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of the combined
voting power of the Company’s then outstanding securities; upon the first purchase of the Common
Stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by the
Company); upon the approval by the Company’s stockholders of a merger or consolidation, a sale or
disposition of all or substantially all of the Company’s assets or a plan of liquidation or
dissolution of the Company; or if during a period
of two consecutive years, individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless the election or nomination
for the election by the Company’s stockholders of each new director was approved by a vote of at
least 2/3 of the Board then still in office who were members of the Board at the beginning of the
period. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur if the
Company either merges or consolidates with or into another company or sells or disposes of all or
substantially all of its assets to another company, if such merger, consolidation, sale or
disposition is in connection with a corporate restructuring wherein the stockholders of the Company
immediately before such merger, consolidation, sale or disposition own, directly or indirectly,
immediately following such merger, consolidation, sale or disposition of at least 80% of the
combined voting power of all outstanding classes of securities of the company resulting from such
merger or consolidation, or to which the Company sells or disposes of its assets, in substantially
the same proportion as their ownership in the Company immediately before such merger,
consolidation, sale or disposition.

 

1

 

2.1.7 Code.

The Internal Revenue Code of 1986, as amended. Any reference to the Code includes the
regulations promulgated pursuant to the Code.

2.1.8 Company.

VeriGreen Energy Corporation.

2.1.9 Committee.

A Committee described in Section 5.1.

2.1.10 Common Stock.

The Company’s common stock, which presently has a par value of $0.01 per Share.

2.1.11 Director.

A member of the Board or a member of the Board of Directors of an Affiliate.

2.1.12 Effective Date.

The date that the Plan is approved by the shareholders of the Company which was May 8, 2009.

2.1.13 Employee.

Any person employed by the Employer.

2.1.14 Employer.

The Company and all Affiliates.

2.1.15 Exchange Act.

The Securities Exchange Act of 1934, as amended.

2.1.16 Fair Market Value.

The last sale price on the date for which Fair Market Value is being determined or, in case no
such sale takes place on such date, the average of the closing bid and asked prices of the Shares
on such date, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock Exchange, Inc. (the
“NYSE”) or, if the Shares are not listed or admitted to trading on the NYSE, as reported in the
principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Shares are listed or admitted to trading or, if
the Shares are not listed or admitted to trading on any national securities exchange, the last
quoted sale price on such date or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market on such date, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System or such other system then in use, or, if on
any such date the Shares are not quoted by any such organization, the average of the closing bid
and asked prices on such date as furnished by a professional market maker making a market in the
Shares selected by the Committee. If the Shares are not publicly held or so listed or publicly
traded, the determination of the Fair Market Value per Share shall be made in good faith by the
Committee.

2.1.17 Fiscal Year.

The taxable year of the Company, which is the calendar year.

2.1.18 ISO.

An Incentive Stock Option as defined in Section 422 of the Code.

 

2

 

2.1.19 NQSO.

A non-qualified stock Option, which is an Option that does not qualify as an ISO.

2.1.20 Option.

An option to purchase Shares granted under the Plan.

2.1.21 Other Stock Based Award.

An award under Section 3.1 that is valued in whole or in part by reference to, or is otherwise
based on, Common Stock.

2.1.22 Parent.

Any corporation (other than the Company or a Subsidiary) in an unbroken chain of corporations
ending with the Company, if, at the time of the grant of an Option or other Benefit, each of the
corporations (other than the Company) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain.

2.1.23 Participant.

An individual who is granted a Benefit under the Plan. Benefits may be granted only to
Employees, Directors (including former Employees and former Directors if in connection with their
separation from the Company or an Affiliate), employees and owners of entities which are not
Affiliates but which have a direct or indirect ownership interest in an Employer or in which an
Employer has a direct or indirect ownership interest, individuals who, and employees and owners of
entities which, are customers and suppliers of an Employer, individuals who, and employees and
owners of entities which, render services to an Employer, and individuals who, and employees and
owners of entities which, have ownership or business affiliations with any individual or entity
previously described.

2.1.24 Performance Based Compensation.

Compensation that meets the requirements of Section 162(m)(4)(C) of the Code.

2.1.25 Performance Share.

A Share awarded to a Participant under Section 16.4 of the Plan.

2.1.26 Plan.

The VeriGreen Energy Corporation 2009 Flexible Stock Plan and all amendments and supplements
to it.

2.1.27 Reload Option.

An Option to purchase the number of Shares used by a Participant to exercise an Option and to
satisfy any withholding requirement incident to the exercise of such Option.

2.1.28 Restricted Stock.

Shares issued under Section 16.1 of the Plan.

2.1.29 Rule 16b-3.

Rule 16b-3 promulgated by the SEC, as amended, or any successor rule in effect from time to
time.

2.1.30 SEC.

The Securities and Exchange Commission.

2.1.31 Share.

A share of Common Stock.

 

3

 

2.1.32 SAR.

A stock appreciation right, which is the right to receive an amount equal to the appreciation,
if any, in the Fair Market Value of a Share from the date of the grant of the right to the date of
its payment.

2.1.33 Subsidiary.

Any corporation, other than the Company, in an unbroken chain of corporations beginning with
the Company if, at the time of grant of an Option or other Benefit, each of the corporations, other
than the last corporation in the unbroken chain, owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain.

2.2 Other Definitions.

In addition to the above definitions, certain words and phrases used in the Plan and any
Agreement may be defined in other portions of the Plan or in such Agreement.

2.3 Conflicts.

In the case of any conflict in the terms of the Plan relating to a Benefit, the provisions in
the section of the Plan which specifically grants such Benefit shall control those in a different
section. In the case of any conflict between the terms of the Plan relating to a Benefit and the
terms of an Agreement relating to a Benefit, the terms of the Plan shall control.

3.
COMMON STOCK

3.1 Number of Shares.

The number of Shares that may be issued or sold or for which Options, SARs, Restricted Stock
or Performance Shares may be granted under the Plan shall be 3,000,000. Such Shares may be
authorized but unissued Shares, Shares held in the treasury, or both. The full number of Shares
available may be used for any type of Option or other Benefit, including ISOs.

3.2 Reusage.

If an Option or SAR expires or is terminated, surrendered, or canceled without having been
fully exercised, if Restricted Shares or Performance Shares are forfeited, or if any other grant
results in any Shares not being issued, the Shares covered by such Option or SAR, grant of
Restricted Shares, Performance Shares or other grant, as the case may be, shall again be available
for use under the Plan. Any Shares which are used as full or partial payment to the Company upon
exercise of an Option or for any other Benefit that requires a payment to the Company shall be
available for purposes of the Plan.

3.3 Adjustments.

If there is any change in the Common Stock of the Company by reason of any stock dividend,
spin-off, split-up, spin-out, recapitalization, merger, consolidation, reorganization, combination
or exchange of shares, or otherwise, the number of SARs and number and class of shares available
for Options and grants of Restricted Stock, Performance Shares and Other Stock Based Awards and the
number of Shares subject to outstanding Options, SARs, grants of Restricted Stock which are not
vested, grants of Performance Shares which are not vested, and Other Stock Based Awards, and the
price thereof, as applicable, may be appropriately adjusted by the Committee.

4. ELIGIBILITY

4.1 Determined By Committee.

The Participants and the Benefits they receive under the Plan shall be determined solely by
the Committee. In making its determinations, the Committee shall consider past, present and
expected future contributions of Participants and potential Participants to the Employer,
including, without limitation, the performance of, or the refraining from the performance of,
services. Unless specifically provided otherwise herein, all determinations of the Committee in
connection with the Plan or an Agreement shall be made in its sole discretion.

 

4

 

5. ADMINISTRATION

5.1 Committee.

The Plan shall be administered by the Committee. The Committee shall consist of the entire
Board until the time that the Board designates a Compensation Committee of the Board. From the time
a Compensation Committee of the Board is designated, the Committee shall consist of the
Compensation Committee of the Board.

If the Committee does not include the entire Board, it shall serve at the pleasure of the
Board, which may from time to time appoint members in substitution for members previously appointed
and fill vacancies, however caused, in the Committee. The Committee may select one of its members
as its Chairman and shall hold its meetings at such times and places as it may determine. A
majority of its members shall constitute a quorum. All determinations of the Committee made
at a meeting at which a quorum is present shall be made by a majority of its members present
at the meeting. Any decision or determination reduced to writing and signed by a majority of the
members shall be fully as effective as if it had been made by a majority vote at a meeting duly
called and held.

5.2 Authority.

Subject to the terms of the Plan, the Committee shall have discretionary authority to:

(a) determine the individuals to whom Benefits are granted, the type and amounts of
Benefits to be granted and the date of issuance and duration of all such grants;

(b) determine the terms, conditions and provisions of, and restrictions relating to,
each Benefit granted;

(c) interpret and construe the Plan and all Agreements;

(d) prescribe, amend and rescind rules and regulations relating to the Plan;

(e) determine the content and form of all Agreements;

(f) determine all questions relating to Benefits under the Plan;

(g) maintain accounts, records and ledgers relating to Benefits;

(h) maintain records concerning its decisions and proceedings;

(i) employ agents, attorneys, accountants or other persons for such purposes as the
Committee considers necessary or desirable;

(j) take, at any time, any action required or permitted by Section 9.1 or 9.2(a),
respectively, irrespective of whether any Change of Control has occurred or is imminent;

(k) determine, except to the extent otherwise provided in the Plan, whether and the
extent to which Benefits under the Plan will be structured to conform to the requirements
applicable to Performance-Based Compensation, and to take such action, establish such
procedures, and impose such restrictions at the time such Benefits are granted as the
Committee determines to be necessary or appropriate to conform to such requirements; and

(l) do and perform all acts which it may deem necessary or appropriate for the
administration of the Plan and carry out the purposes of the Plan.

5.3 Delegation.

Except as required by Rule 16b-3 with respect to grants of Options, Stock Appreciation Awards,
Performance Shares, Other Stock Based Awards, or other Benefits to individuals who are subject to
Section 16b-3 of the Exchange Act or as otherwise required for compliance with Rule 16b-3 or other
applicable law, the Committee may delegate all or any part of its authority under the Plan to any
Employee, Employees or committee.

5.4 Determination.

All determinations of the Committee shall be final.

6.
AMENDMENT

6.1 Power of Board.

Except as hereinafter provided, the Board shall have the sole right and power to amend the
Plan at any time and from time to time.

 

5

 

6.2 Limitation.

The Board may not amend the Plan, without approval of the shareholders of the Company:

(a) in a manner which would cause Options which are intended to qualify as ISOs to
fail to qualify;

(b) in a manner which would cause the Plan to fail to meet the requirements of Rule
16b-3;

(c) in a manner which would violate applicable law (including applicable rules of any
stock exchange on which Common Stock is traded); or

(d) in a manner which would result in:

	 	(1)	 	any material increase in the number of Shares to be issued under the
Plan (other than to reflect a reorganization, stock split, merger,
spinoff or similar transaction);

	 
	 	(2)	 	any material increase in Benefits to Participants, including any
material change to permit a repricing (or decrease in exercise price)
of outstanding Options, reduce the price at which Shares or Options to
purchase Shares may be offered, or extend the duration of the Plan;

	 
	 	(3)	 	any material expansion of the class of Participants eligible to participate in the Plan; and

	 
	 	(4)	 	any expansion in the types of Options or Benefits provided under the Plan.

7.
TERM AND TERMINATION

7.1 Term.

The Plan shall commence as of the Effective Date and, subject to the terms of the Plan,
including those requiring approval by the shareholders of the Company and those limiting the period
over which ISOs or any other Benefits may be granted, shall continue in full force and effect until
the earlier of the tenth anniversary of the Effective Date or the date the Plan is terminated by
the Board pursuant to Section 7.2.

7.2 Termination.

The Plan may be terminated at any time by the Board.

8. MODIFICATION OR TERMINATION OF BENEFITS

8.1 General.

Subject to the provisions of Section 8.2, the amendment or termination of the Plan shall not
adversely affect a Participant’s right to any Benefit granted prior to such amendment or
termination.

8.2 Committee’s Right.

Any Benefit granted may be converted, modified, forfeited or canceled, in whole or in part, by
the Committee if and to the extent permitted in the Plan or applicable Agreement or with the
consent of the Participant to whom such Benefit was granted. Except as may be provided in an
Agreement, the Committee may, in its sole discretion, in whole or in part, waive any restrictions
or conditions applicable to, or accelerate the vesting of, any Benefit.

8.3 Compliance with Applicable Laws.

The Plan shall be administered and interpreted in accordance with applicable federal tax laws,
including Section 409A of the Code, and the regulations promulgated thereunder.

9.
CHANGE OF CONTROL

9.1 Vesting and Payment.

In the event of a Change of Control:

(a) all outstanding Options shall become fully exercisable, except to the extent that
the right to exercise the Option is subject to restrictions established in connection with
a SAR that is issued in tandem with the Option;

(b) all outstanding SARs shall become immediately payable, except to the extent that
the right to exercise the SAR is subject to restrictions established in connection with an
Option that is issued in tandem with the SAR;

(c) all Shares of Restricted Stock shall become fully vested;

 

6

 

(d) all Performance Shares shall be deemed to be fully earned and shall be paid out
in such manner as determined by the Committee; and

(e) all Cash Awards, Other Stock Based Awards and other Benefits shall become fully
vested and/or earned and paid out in such manner as determined by the Committee.

9.2 Other Action.

In the event of a Change of Control, the Committee, in its sole discretion, may, in addition
to the provisions of Section 9.1 above and to the extent not inconsistent therewith:

(a) provide for the purchase of any Benefit for an amount of cash equal to the amount
which could have been attained upon the exercise or realization of such Benefit had such
Benefit been currently exercisable or payable;

(b) make such adjustment to the Benefits then outstanding as the Committee deems
appropriate to reflect such transaction or change; and/or

(c) cause the Benefits then outstanding to be assumed, or new Benefits substituted
therefor, by the surviving corporation in such change.

10. AGREEMENTS AND CERTAIN BENEFITS

10.1 Grant Evidenced by Agreement.

The grant of any Benefit under the Plan shall be evidenced by an Agreement which shall
describe the specific Benefit granted and the terms and conditions of the Benefit. Except as
otherwise provided in an Agreement, all capitalized terms used in the Agreement shall have the same
meaning as in the Plan, and the Agreement shall be subject to all of the terms of the Plan.

10.2 Provisions of Agreement.

Each Agreement shall contain such provisions that the Committee shall determine to be
necessary, desirable and appropriate for the Benefit granted which may include, but not necessarily
be limited to, the following with respect to any Benefit: description of the type of Benefit; the
Benefit’s duration; its transferability; if an Option, the exercise price, the exercise period and
the person or persons who may exercise the Option; the effect upon such Benefit of the
Participant’s death, disability, changes of duties or termination of employment; the Benefit’s
conditions; when, if, and how any Benefit may be forfeited, converted into another Benefit,
modified, exchanged for another Benefit, or replaced; and the restrictions on any Shares purchased
or granted under the Plan.

10.3 Transferability.

Unless otherwise specified in an Agreement or permitted by the Committee, each Benefit granted
shall be not transferable other than by will or the laws of descent and distribution and shall be
exercisable during a Participant’s lifetime only by him.

11. REPLACEMENT AND TANDEM AWARDS

11.1 Replacement.

The Committee may permit a Participant to elect to surrender a Benefit in exchange for a new
Benefit.

11.2 Tandem Awards.

Awards may be granted by the Committee in tandem. However, no Benefit may be granted in tandem
with an ISO except SARs.

12. PAYMENT, DIVIDENDS AND WITHHOLDING

12.1 Payment.

Upon the exercise of an Option or in the case of any other Benefit that requires a payment by
a Participant to the Company, the amount due the Company is to be paid:

(a) in cash, including by means of a so-called “cashless exercise” of an Option;

 

7

 

(b) in other property, rights and credits deemed acceptable by the Committee, including the Participant’s promissory note; or

(c) by any combination of the payment methods specified in (a) and (b) above.

Notwithstanding the foregoing, any method of payment other than (a) may be used only with the
consent of the Committee or if and to the extent so provided in an Agreement. The proceeds of the
sale of Shares purchased pursuant to an Option and any payment to the Company for other Benefits
shall be added to the general funds of the Company and used for the corporate purposes of the
Company, as the Board shall determine.

12.2 Dividend Equivalents.

Grants of Benefits in Shares or Share equivalents may include dividend equivalent payments or
dividend credit rights.

12.3 Withholding.

To the extent specified in the Agreement, the Company may, at the time any distribution is
made under the Plan, whether in cash or in Shares, or at the time any Option is exercised, withhold
from such distribution or Shares issuable upon the exercise of an Option, any amount necessary to
satisfy federal, state and local income and/or other tax withholding requirements with respect to
such distribution or exercise of such Options. The Committee or the Company may require a
participant to tender to the Company cash and/or Shares in the amount necessary to comply with any
such withholding requirements.

13.
OPTIONS

13.1 Types of Options.

It is intended that both ISOs and NQSOs, which may be Reload Options, may be granted by the
Committee under the Plan.

13.2 Grant of ISOs and Option Price.

Each ISO must be granted to an Employee and granted within ten years from the earlier of the
date of adoption by the Board or the Effective Date. The purchase price for Shares under any ISO
shall be no less than the Fair Market Value of the Shares at the time the Option is granted.

13.3 Other Requirements for ISOs.

The terms of each Option which is intended to qualify as an ISO shall meet all requirements of
Section 422 of the Code.

13.4 NQSOs.

The terms of each NQSO shall provide that such Option will not be treated as an ISO. The
purchase price for Shares under any NQSO shall be no less than 100% of the Fair Market Value of the
Shares at the time the Option is granted.

13.5 Determination by Committee.

Except as otherwise provided in Section 13.1 through Section 13.4, the terms of all Options
shall be determined by the Committee.

14. SARS

14.1 Grant and Payment.

The Committee may grant SARs. Upon electing to receive payment of a SAR, a Participant shall
receive payment in Shares.

14.2 Grant of Tandem Award.

The Committee may grant SARs in tandem with an Option, in which case: the exercise of the
Option shall cause a correlative reduction in SARs standing to a Participant’s credit which were
granted in tandem with the Option; and the payment of SARs shall cause a correlative reduction of
the Shares under such Option.

 

8

 

14.3 ISO Tandem Award.

When SARs are granted in tandem with an ISO, the SARs shall have such terms and conditions as
shall be required for the ISO to qualify as an ISO.

14.4 Payment of Award.

SARs shall be paid by the Company to a Participant, to the extent payment is elected by the
Participant (and is otherwise due and payable), as soon as practicable after the date on which such
election is made.

15. ANNUAL LIMITATIONS

15.1 Limitation on Options and SARs.

The number of (a) Shares covered by Options where the purchase price is no less than the Fair
Market Value of the Shares on the date of grant plus (b) SARs which may be granted to any
Participant in any Fiscal Year shall not exceed 3,000,000.

15.2 Limitation on Performance Shares

The number of Shares covered by Performance Shares in any Fiscal Year shall not exceed
3,000,000.

15.3 Computations.

For purposes of Section 15.1, Shares covered by an Option that is canceled shall count against
the maximum, and, if the exercise price under an Option is reduced, the transaction shall be
treated as a cancellation of the Option and a grant of a new Option; and SARs covered by a grant of
SARs that is canceled shall count against the maximum; and, if the Fair Market Value of a Share on
which the appreciation under a grant of SARs will be calculated is reduced, the transaction will be
treated as a cancellation of the SARs and the grant of a new grant of SARs.

16. RESTRICTED STOCK AND PERFORMANCE SHARES

16.1 Restricted Stock.

The Committee may grant Benefits in Shares available under Section 3.1 of the Plan as
Restricted Stock. Shares of Restricted Stock shall be issued and delivered at the time of the grant
or as otherwise determined by the Committee, but shall be subject to forfeiture until provided
otherwise in the applicable Agreement or the Plan. Each certificate representing Shares of
Restricted Stock shall bear a legend referring to the Plan and the risk of forfeiture of the Shares
and stating that such Shares are nontransferable until all restrictions have been satisfied and the
legend has been removed. At the discretion of the Committee, the grantee may or may not be entitled
to full voting and dividend rights with respect to all shares of Restricted Stock from the date of
grant.

16.2 Cost of Restricted Stock.

Unless otherwise determined by the Committee, grants of Shares of Restricted Stock shall be
made at a per Share cost to the Participant equal to par value.

16.3 Non-Transferability.

Shares of Restricted Stock shall not be transferable until after the removal of the legend
with respect to such Shares.

16.4 Performance Shares.

Performance Shares are the right of an individual to whom a grant of such Shares is made to
receive Shares or cash equal to the Fair Market Value of such Shares at a future date in accordance
with the terms and conditions of such grant. The terms and conditions shall be determined by the
Committee, in its sole discretion, but generally are expected to be based substantially upon the
attainment of targeted profit and/or performance objectives. The Committee shall determine the
performance targets which will be applied with respect to each grant of Performance Shares at the
time of grant, but in no event later than 90 days after the beginning of the period of service to
which the performance targets relate. The performance criteria applicable to Performance Shares
will be one or more of the following: (1) stock price; (2) average annual growth in earnings per
share; (3) increase in shareholder value; (4) earnings per share; (5) net income; (6) return on
assets; (7) return on shareholders’ equity; (8) increase in cash flow; (9) operating profit or
operating margins; (10) revenue growth of the Company; and (11) operating expenses. Each
performance target applicable to a Performance Share award and the deadline for satisfying each
such target shall be stated in the Agreement between the Company and the Employee. The Committee
must certify in writing that each such target has been satisfied before the Performance Shares
award becomes effective.

 

9

 

16.5 Grant.

The Committee may grant an award of Performance Shares. The number of Performance Shares and
the terms and conditions of the grant shall be set forth in the applicable Agreement.

17.
CASH AWARDS

17.1 Grant.

The Committee may grant Cash Awards at such times and (subject to Section 17.2) in such
amounts as it deems appropriate.

17.2 Annual Limits.

The amount of any Cash Award in any Fiscal Year to any Participant shall not exceed the
greater of $100,000 or 100% of his cash compensation (excluding any Cash Award under this
Section 17.2) for such Fiscal Year.

17.3 Restrictions.

Cash Awards may be subject or not subject to conditions (such as an investment requirement),
restricted or nonrestricted, vested or subject to forfeiture and may be payable currently or in the
future or both. The Committee may make grants of Cash Awards that are intended to be Performance
Based Compensation and grants of Cash Awards that are not intended to be Performance Based
Compensation.

The Committee shall determine the performance targets which will be applied with respect to
each grant of Cash Awards that are intended to be Performance Based Compensation at the time of
grant, but in no event later than 90 days after the beginning of the period of service to which the
performance targets relate. The performance criteria applicable to Performance Based Compensation
awards will be one or more of the following: (1) stock price; (2) average annual growth in earnings
per share; (3) increase in shareholder value; (4) earnings per share; (5) net income; (6) return on
assets; (7) return on shareholders’ equity; (8) increase in cash flow; (9) operating profit or
operating margins; (10) revenue growth of the Company; and (11) operating expenses. Each
performance target applicable to a Cash Award intended to be Performance Based Compensation and the
deadline for satisfying each such target shall be stated in the Agreement between the Company and
the Employee. The Committee must certify in writing that each such target has been satisfied before
the Performance Based Compensation award is paid.

18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS

18.1 Other Stock Based Awards.

The Committee shall have the right to grant Other Stock Based Awards which may include,
without limitation, the grant of Shares based on certain conditions, the payment of cash based on
the performance of the Common Stock, and the grant of securities convertible into Shares.

18.2 Other Benefits.

The Committee shall have the right to provide types of Benefits under the Plan in addition to
those specifically listed, if the Committee believes that such Benefits would further the purposes
for which the Plan was established.

19.
MISCELLANEOUS PROVISIONS

19.1 Underscored References.

The underscored references contained in the Plan are included only for convenience, and they
shall not be construed as a part of the Plan or in any respect affecting or modifying its
provisions.

19.2 Number and Gender.

The masculine and neuter, wherever used in the Plan, shall refer to either the masculine,
neuter or feminine; and, unless the context otherwise requires, the singular shall include the
plural and the plural the singular.

 

10

 

19.3 Unfunded Status of Plan.

The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.
With respect to any payments or deliveries of Shares not yet made to a Participant by the Company,
nothing contained herein shall give any rights that are greater than those of a general creditor of
the Company. The Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Shares or payments hereunder consistent with the
foregoing.

19.4 Termination of Employment.

If the employment of a Participant by the Company terminates for any reason, except as
otherwise provided in an Agreement, all unexercised, deferred, and unpaid Benefits may be
exercisable or paid only in accordance with rules established by the Committee, provided however if
a Participant is an Employee and he or she is “Terminated for Cause”, as defined herein below, or
violates any of the terms of their employment after they have become vested in any of their rights
herein, the Participant’s full interest in such rights shall terminate on the date of such
termination of employment and all rights thereunder shall cease. Whether a Participant’s employment
is Terminated for Cause shall be determined by the Board. Cause shall include, but not be limited
to gross negligence, willful misconduct, flagrant or repeated violations of the Employer’s
policies, rules or ethics, a material breach by the Participant of any employment agreement between
the Participant and the Employer, intoxication, substance abuse, sexual or other unlawful
harassment, disclosure of confidential or proprietary information, engaging in a business
competitive with the Employer, or dishonest, illegal or immoral conduct.

19.5 Designation of Beneficiary.

A Participant may file with the Committee a written designation of a beneficiary or
beneficiaries (subject to such limitations as to the classes and number of beneficiaries and
contingent beneficiaries as the Committee may from time to time prescribe) to exercise, in the
event of the death of the Participant, an Option, or to receive, in such event, any Benefits. The
Committee reserves the right to review and approve beneficiary designations. A Participant may from
time to time revoke or change any such designation of beneficiary and any designation of
beneficiary under the Plan shall be controlling over any other disposition, testamentary or
otherwise; provided, however, that if the Committee shall be in doubt as to the right of any such
beneficiary to exercise any Option or to receive any Benefit, the Committee may determine to
recognize only an exercise by the legal representative of the recipient, in which case the Company,
the Committee and the members thereof shall not be under any further liability to anyone.

19.6 Governing Law.

This Plan shall be construed and administered in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law. By accepting an Option, the Employee
irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of
the State of Florida or of the United States of America, in each case located in Palm Beach County,
Florida, for any litigation arising out of or relating to this Plan (and agrees not to commence any
litigation relating thereto except in such courts). The Employee also irrevocably and
unconditionally waives any objection to the laying of venue of any litigation arising out of or
related to the Option or this Plan in the courts of the State of Florida or of the United States of
America, in each case located in Palm Beach County, Florida, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that any such litigation
brought in any such court has been brought in an inconvenient forum.

19.7 Purchase for Investment.

The Committee may require each person purchasing Shares pursuant to an Option or other award
under the Plan to represent to and agree with the Company in writing that such person is acquiring
the Shares for investment and without a view to distribution or resale. The certificates for such
Shares may include any legend which the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for Shares delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable under all
applicable laws, rules and regulations, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate references to such restrictions.

19.8 No Employment Contract.

Neither the adoption of the Plan nor any Benefit granted hereunder shall confer upon any
Employee any right to continued employment nor shall the Plan or any Benefit interfere in any way
with the right of the Employer to terminate the employment of any of its Employees at any time.

 

11

 

19.9 No Effect on Other Benefits.

The receipt of Benefits under the Plan shall have no effect on any benefits to which a
Participant may be entitled from the Employer, under another plan or otherwise, or preclude a
Participant from receiving any such benefits.

19.10 Limitation on Exercise.

Notwithstanding anything herein or in the stock option award, no holder of an Option may
exercise such Option if the Company’s common stock is not then traded publicly on the bulletin
board or on a stock exchange or stock market, except: (i) in connection with a sale of all or part
of the Company’s common stock, (ii) within two months prior to the expiration of the Option, as
provided in the stock option award, or (iii) as may be extended by the Committee.

 

12

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