Document:

exv10w1

 

NON-QUALIFIED STOCK OPTION PLAN

     The following Non-Qualified Stock Option Plan is adopted by First State Bank of Sarasota
(“Employer”) as of May 15, 1996.

     WHEREAS, the Board of Directors of the Employer considered a stock option plan for its
Directors, Officers and certain key employees (“Participants”) at its regular Board of Director’s
Meeting on May 15, 1996.

     WHEREAS, after due consideration and discussion, it was determined and resolved by the Board
of Directors to be in the best interests of the Bank to allocate and designate one hundred thousand
(100,000) unissued, but authorized, shares of voting common stock of the Bank for the purpose of
providing stock options to Directors, Officers and certain key employees to motivate and retain
said individuals, upon whose judgment, initiative, leadership and continued effort, the success of
Employer in a large measure depends;

     NOW THEREFORE, the Employer adopts the following Stock Option Plan:

          1. Share Options. The plan shall be implemented and carried out by an allocation and
designation of one hundred thousand (100,000) unissued but authorized shares of stock of the
Employer. The Board of Directors of the Employer may grant options to the Participants from time
to time in such amounts as the Board of Directors determines in accordance with the terms and
conditions of this Non-Qualified Stock Option Plan.

          2. Share Price. The share price of a stock option shall not be less than the greater
of the fair market value of the date the option is granted on such shares or the par value thereof
as determined by the Board of Directors; however, if such shares are not publicly traded, the book
value of such shares may be substituted for the fair market value.

          3. Time of Exercise of Option. The Participant may exercise his/her option to
purchase all or any part of the option shares at any time upon the occurrence of any event set
forth below:

     a. The acquisition by any person or entity of direct or indirect beneficial
ownership of 25% or more of the combined voting power of the Employer’s outstanding
common stock;

     b. The first purchase of common stock pursuant to a tender or exchange offer
(other than such an offer made by the Employer);

     c. The approval of the shareholders of:

     (1) a merger or consolidation of the Employer, unless the Employer is
the surviving corporation and no capital reorganization or reclassification
or other change

 

 

in the Employer’s then outstanding share of common stock occurs;

     (2) a sale or disposition of all or substantially all of the Employer’s
assets; and

     (3) liquidation or dissolution of the Employer;

     d. A situation in which the individuals who constitute the Board of Directors
at the beginning of a two-year period cease to constitute a majority of the Board of
Directors during the two-year period, unless the nomination or election of the new
Directors was approved by at least two-third of the Directors still in office who
were Directors at the beginning of the two-year period;

     e. During the period as designated by the Board of Directors in the Stock
Option Agreement which period shall not exceed ten (10) years after the issuance of
the stock option.

     f. The majority vote of the Board of Directors, which authorizes the
Participants to exercise the option.

     Any of the options provided above shall remain effective only so long as the Participant
remains employed by or serves on the Board of Directors of the Employer at all times beginning with
the date of the grant of the option and ending three months prior to the exercise of the option,
unless otherwise provided by Employer. If the Participant is discharged for good cause, all rights
to the option shall cease. Good cause shall be defined as the removal from office by any state or
federal banking or non-banking authority, a willful violation of any rule or law of any state or
federal banking authority having jurisdiction over the bank or conviction of a felony.

          4. Capital Adjustments. The existence of any option shall not effect in any way the
right of power of the Employer or stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Employer’s capital structure or its
business; any merger or consolidation of the Employer; any issues of bonds, debentures, preferred
or prior preferenced stocks ahead of or effecting the common stock or the rights of the common
stock; the issuance of any securities, convertible into any other securities or of any other
rights, options or warrants to purchase any convertible securities; the dissolution of the
Employer, or any sale or transfer of all or any part of its assets or business; or any other
corporate act or proceeding of the Employer.

     An option shall be granted with respect to the shares of the voting common stock of FIRST
STATE BANK OF SARASOTA as presently constituted. However, if, prior to the Employer’s delivery of
all shares of the stock that are the subject of the option, the Employer shall effect a subdivision
or consolidation of shares or other capital readjustment, the payment of a stock dividend, or any
other increase or reduction in the number of shares of the outstanding stock without receiving
compensation for these changes in money, services, or property, the number of shares then
remaining, subject to the option, shall be effected in the following manner:

     a.
If there is an increase in the number of outstanding shares, the stock shares, subject to this option, shall be

 

 

proportionately increased, and the case consideration payable per share shall
be proportionately reduced; and

     b. If there is a reduction in the number of outstanding shares, the stock shares, subject to this option, shall be proportionately reduced, and the case
consideration payable per share shall be proportionately increased.

     Whenever the price or number of the shares shall be adjusted as provided in this paragraph,
the Employer shall forthwith file a statement signed by the Chairman of the Board, or other
corporate officer, shown in reasonable detail the facts requiring such adjustment and the price
that will be effective after such adjustment. The Employer shall forthwith also cause a notice
setting forth any such adjustments to be sent by First Class Mail, postage prepaid, to the
Participant.

          5. Merger and Consolidation. If one or more corporations merges into the Employer, or
if the Employer consolidates with one or more corporations and the Employer is the surviving
corporation, the option is effected in this way; on any exercise of the option and at no additional
cost, the Participant shall be entitled to receive the number and class of shares of stock or other
securities to which the Employer would have been entitled pursuant to the terms of the merger or
consolidation agreement if the Participant had been the holder of record of those shares of the
Employer’s stock that the Participant had an option to purchase immediately prior to the merger or
consolidation. This new stock option shall be in lieu of the option held by the Participant prior
to the merger or consolidation, and its term or exercise is subject to any required action by
stockholders. Anything contained to the contrary in this option plan notwithstanding, unless the
option is exercised by the Participant pursuant to Paragraph 2 above, on the dissociation or
liquidation of the Employer, or on any merger or consolidation where the Employer is not the
surviving corporation, the option shall terminate upon thirty (30) days prior written notice to the
Participant.

          6. Transfer and Termination of Option. The option shall not be transferable, but
shall be exercisable only by the Participant during his/her lifetime. However, if the Participant
dies while employed by or as a Director of the Employer, within three months of the date of the
Participant’s death, his/her personal representative may exercise the option with regard to the
shares not previously exercised by the Participant. Except as provided herein, the option shall
terminate on the earlier of:

     (1) the expiration of three calendar months from either the date of the
Participant’s death; or

     (2) the date designated by the Board of Directors which date should not
exceed ten (10) years from the issuance of the stock option.

          7. Rights Prior to Exercise of Option. The Participant will not be deemed to be a
holder of any shares pursuant to the exercise of this option until payment of the option price by
him/her and delivery of a stock certificate to him/her for those shares. No adjustment shall be
made for dividends or other rights with a record date prior to the date the stock certificate is
delivered.

 

 

          8. Exercise of Option. The option may be exercised by giving written notice to the
Employer at its principal officers in Sarasota, Florida, Attention: Cashier, specifying the number
of shares being purchased, together with full payment therefor.

          9. Notice of Change of Rights. In case (a) the Employer shall declare a dividend (or
make any other distribution) on its common stock payable otherwise than in cash out of the
consolidated earnings surplus of the Employer and its subsidiaries; (b) the Employer shall
authorize the granting to the holders of its common stock of rights to subscribe or purchase any
shares of capital stock of any class or any other rights; 9(c) of any reclassification of the common
stock of the Employers (other than a subdivision or a combination of its outstanding shares of
common stock); of any consolidation or any merger to which the Employer is a party and for which
approval of any stockholders of the Employer is required; or of the sale or transfer of all or
substantially all the assets of the Employer; or (d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Employer; then the Employer shall cause to be filed at the office
of the Employer and shall cause to be mailed to Participant at his/her address as they shall appear
on the records of the Employer at least thirty (30) days prior to the date specified in Paragraph
(1) below, a notice stating: 

     1. The record date for such dividend, distribution or rights or, if a record is not to be
taken, the date as of which the holders of common stock of record entitled to such dividend,
distribution or rights are to be determined; or

     2. The date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected; and that Participant shall be entitled to
exchange his/her option for an option to any securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up.

          10. Document Stamps. The Employer will pay any document stamp taxes attributable to
the issuance of the option shares upon the exercise by Participant of the option provided herein.

          11. Governing Law. This Stock Option Plan shall be subject to, and governed by the
law of the State of Florida.

          12. Amendment. The Stock Option Plan shall not be altered, amended or changed except
by an amendment in writing duly authorized by the Board of Directors and approved by the Department
of Banking and Finance and the consent of the Participant.

          13. Required Approval of Plan. The Stock Option Plan is expressly conditioned on the
approval by the Florida Department of Banking and Finance and the shareholders of First State Bank
of Sarasota. The Participant shall not be entitled to purchase any shares subject to this option
unless and until such approval is granted.

 

 

          EXECUTED AT Sarasota, Florida, on the day and year first written above.

	 	 	 	 	 
	 	FIRST STATE BANK OF SARAOSTA

 	 
	 	By:  	/s/ Patrick L. Arnold
 	 
	 	 	Patrick L. Arnold, President<PAGE>

                                                                    EXHIBIT 10.1

               FIRST AMENDMENT TO REPLACEMENT REDUCED AND MODIFIED
                       RENEWAL REVOLVING PROMISSORY NOTE

      THIS FIRST AMENDMENT TO REPLACEMENT REDUCED AND MODIFIED RENEWAL REVOLVING
PROMISSORY NOTE is made and entered into by and among AMSOUTH BANK (the "Bank")
and DIVERSICARE MANAGEMENT SERVICES, CO., a Tennessee corporation (the
"Borrower").

                              W I T N E S S E T H :

      WHEREAS, Borrower executed to Bank that certain Replacement Reduced and
Modified Renewal Revolving Promissory Note dated October 29, 2004, in the
original principal amount of TWO MILLION FIVE HUNDRED THOUSAND AND NO/100
($2,500,000.00) DOLLARS (the "Note"); and

      WHEREAS, Bank has agreed to further modify the Note in accordance with the
terms and conditions set forth herein and as set forth in the Sixth Amendment to
Master Amendment to Loan Documents and Agreement executed of even date herewith
by Bank and Debtors as defined therein, and Borrower has agreed to lower the
maximum sum which may be advanced hereafter by Bank from $2,500,000.00 to
$2,300,000.00.

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in accordance with the terms
and conditions of that Sixth Amendment to Master Amendment and Loan Documents
executed by Bank, and Debtors, as defined therein, to be effective as of January
29, 2005, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

      1.    That as of the effective date hereof, the Note has a principal
balance of $0.00.

      2.    The first and second full paragraphs of the Note are hereby deleted
entirely, and the following language is substituted instead:

            FOR VALUE RECEIVED, the undersigned, DIVERSICARE MANAGEMENT SERVICES
      CO., a Tennessee corporation (the "Borrower"), promises to pay to the
      order of AMSOUTH BANK (the "Bank"), in lawful currency of the United
      States of America, at AmSouth Center, 315 Deaderick Street, Nashville,
      Tennessee 37237, or at such other place as the holder from time to time
      may designate in writing, the principal sum of TWO MILLION THREE HUNDRED
      THOUSAND AND N0/100 ($2,300,000.00) DOLLARS, or so much thereof as may be
      advanced hereunder in accordance with the terms of a Master Amendment to
      Loan Documents and Agreement dated effective October 1, 2000 executed
      between Bank, Borrower, and other subsidiaries, or affiliates of Borrower,
      all of which, including Borrower, are defined as "Debtors" therein, as
      amended (the "Master Amendment"). Interest shall accrue on the principal

                                       1
<PAGE>

      balance outstanding from and after April 29, 2005 at the Bank's Prime Rate
      plus one half of one percent (0.50%) per annum, provided that the interest
      rate shall not, during the term hereof, exceed nine and one-half percent
      (9.5%) per annum so long as there is no default hereunder, after which
      time interest shall accrue at the default rate as set forth below (the
      "Default Rate"). Interest shall be due and payable monthly commencing on
      the first (1st) day of each month commencing on May 29, 2005. All
      principal and unpaid interest shall be payable at maturity on the 29th day
      of January 2006 (the "Maturity Date"). The "Prime Rate" of Bank is the
      "Prime Rate" in effect from time to time, as designated by Bank, such rate
      being one of the base rates Bank establishes from time to time for lending
      purposes and not necessarily being the lowest rate offered by Bank. In the
      event the Prime Rate should become unavailable for any reason, then the
      interest rate hereunder shall be based upon a reasonably comparable index
      for determining variable interest rates chosen by Bank in good faith.

            The whole of the principal sum and, to the extent permitted by law,
      any accrued interest, shall bear, after default or maturity, interest at
      the lesser of (i) the highest lawful rate then in effect pursuant to
      applicable law, or (ii) the rate that is four percentage points (4%) in
      excess of Lender's Prime Rate, as it varies from time to time.

      3. The Note is amended as stated herein, but no further or otherwise, and
the terms and provisions of the Note, as hereby amended, shall be and continue
to be in full force and effect. Nothing herein is intended to operate to release
or diminish any right of Bank under the Note or with respect to any collateral
securing the Note or with respect to any guaranty or suretyship agreement for
the Note, all of which shall remain in full force and effect. This instrument
constitutes the entire agreement of the parties with respect to the subject
matter hereof.

      IN WITNESS WHEREOF, this instrument has been executed to be effective on
the 29th day of January, 2005.

                                            BORROWER:

                                            DIVERSICARE MANAGEMENT SERVICES CO.,
                                            a Tennessee corporation

                                            By: /s/ William R. Council
                                                -------------------------
                                                William R. Council, President

                                            BANK:

                                            AMSOUTH BANK

                                            By: /s/ Clark Cox
                                                ---------------------------
                                                Clark Cox, Vice President

                                       2

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