Document:

Exhibit 10.1

 

Exhibit 10.1

 

WINSTON HOTELS, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

 

Amended and Restated as of January 1, 2005

 

 

	1.	 	Purpose
	 
	(a)	 	General. The purpose of the Plan is to attract, motivate, and retain
top management employees of the Company by providing an opportunity and an incentive
for each individual to defer the receipt of compensation otherwise payable currently
and to accumulate earnings thereon on a tax-deferred basis.
	 
	(b)	 	Unfunded Plan. The Plan is intended to be an unfunded plan for
purposes of the Employee Retirement Income Security Act of 1974, as amended, and
maintained primarily for the purpose of providing deferred compensation for a select
group of management or highly compensated employees.
	 
	(c)	 	Effective Date. The Plan, as amended and restated in this document, is
effective January 1, 2005, and must be administered and interpreted in a manner that is
consistent with the requirements of Section 409A of the Code.
	 
	2.	 	Definitions
	 
	 	 	The following capitalized terms used in the Plan shall have the respective meanings
set forth in this Article:

 

 

	(a)	 	Board. “Board” means the Board of Directors of the Company.
	 
	(b)	 	Bonus Deferral Election. “Bonus Deferral Election” means an election
to defer payment of an annual bonus, if any, on the form(s) provided by the Committee
subject to the requirements and terms of Article IV hereof.
	 
	(c)	 	Change in Control. “Change in Control” means a transaction or event or
a series of transactions or events that constitutes a “change in control” as that term
is defined for purposes of Section 409A of the Code.
	 
	(d)	 	Code. “Code” means the Internal Revenue Code of 1986, as amended.
	 
	(e)	 	Committee. “Committee” means the individuals appointed by the Board to
administer the Plan and to perform the functions set forth herein.
	 
	(f)	 	Company. “Company” means Winston Hotels, Inc., a North Carolina
corporation, or any successor entity thereto, including without limitation, the
transferee of all or substantially all of the stock or assets of the Company.
	 
	(g)	 	Company Stock Account. “Company Stock Account” means the portion of
the Deferred Account attributable to Stock Deferral Elections. Dividend Equivalents
also may be credited to the Company Stock Account pursuant to a Participant’s election
under Article VI. Amounts credited to the Company Stock Account shall be expressed in
notional shares of Company common stock (including a fractional share) and shall be
equitably adjusted as determined by the Committee to reflect stock dividends, stock
splits, stock consolidations or other changes in the capitalization of the Company. A
Participant will not have any rights as a shareholder of the Company with respect to
amounts credited to the Company Stock Account.
	 
	(h)	 	Control Change Date. “Control Change Date” means the date on which a
Change in Control occurs. If a Change in Control occurs as a result of a series of
transactions or events, the Control Change Date is the date of the last transaction or
event in the series.
	 
	(i)	 	Deferral Account. “Deferral Account” means the notional account
established and maintained for each Participant in accordance with Article VI hereof,
for bookkeeping purposes only, to measure the value of elective deferrals made under
the Plan and the earnings thereon. The Deferral Account consists of two subaccounts,
the Investment Account and the Company Stock Account. The Deferral Account and the
Investment Account and the Company Stock Account shall record the amounts deferred and
the gains and losses thereon on a Plan Year basis.
	 
	(j)	 	Deferral Election. “Deferral Election” means a Salary Deferral
Election or a Bonus Deferral Election or a Stock Deferral Election as defined under
this Article II.
	 
	(k)	 	Dividend Equivalent. “Dividend Equivalent” means the amount determined
by multiplying (x) the value of the dividend paid on one share of Company common

 

 

	 	 	stock and (y) the number of notional shares (including any fraction) of Company
common stock credited to a Participant’s Company Stock Account on the record date
for the dividend payment. Notwithstanding the preceding sentence, a Participant
will not be entitled to a Dividend Equivalent if a dividend payable on the Company
common stock is paid in the form of a Company security but in that event the
Participant’s Company Stock Account shall be equitably adjusted as determined by the
Committee to reflect the dividend.
	 
	(l)	 	Investment Account. “Investment Account” means the portion of the
Deferral Account other than the Company Stock Account. Amounts credited to or charged
against the Investment Account shall be expressed in dollars and cents.
	 
	(m)	 	Participant. “Participant” means any individual who is eligible to
participate in the Plan as provided in Section 4.1 hereof.
	 
	(n)	 	Plan. “Plan” means the Winston Hotels, Inc. Executive Deferred
Compensation Plan, as from time to time amended.
	 
	(o)	 	Plan Year. “Plan Year” means the period beginning on the effective
date of the Plan and ending on December 31 and thereafter any calendar year.
	 
	(p)	 	Salary Deferral Election. “Salary Deferral Election” means an election
to defer payment of base salary on the form(s) provided by the Committee subject to the
requirements and terms of Article IV hereof.
	 
	(q)	 	Specified Employee. “Specified Employee” means a participant who is a
“specified employee” as that term is defined for purposes of Section 409A of the Code.
	 
	(r)	 	Stock Award. “Stock Award” means a Stock Award granted under the
Company’s Stock Incentive Plan. The term “Stock Award” also includes any similar award
granted under a Company plan adopted after the Stock Incentive Plan.
	 
	(s)	 	Stock Deferral Election. “Stock Deferral Election” means an election
to surrender a Stock Award, on the form(s) provided by the Committee subject to the
requirements and terms of Article IV hereof. The Stock Deferral election includes the
Participant’s direction under Section 6.5 with respect to the treatment of Dividend
Equivalents.
	 
	(t)	 	Unforeseeable Emergency. “Unforeseeable Emergency” means an
“unforeseeable emergency” as that term is defined for purposes of Section 409A of the
Code.
	 
	3.	 	Administration
	 
	(a)	 	Committee. The Plan shall be administered by the Committee, which
shall hold meetings at such times as may be necessary for the proper administration of
the Plan. Except as otherwise provided in the Plan, the Committee shall have full
power to construe and interpret the Plan, establish and amend rules and

 

 

	 	 	regulations for its administration, and perform all other acts relating to the Plan,
including the delegation of administrative responsibilities that it believes
reasonable and proper.
	 
	(b)	 	Duties. The Committee, or any person or entity designated by the
Committee, shall be responsible for the administration of the Plan including but not
limited to determination of eligibility, receiving Deferral Elections, designating
investment choices, distributing benefits hereunder, maintaining Deferral Account
balances, calculating hypothetical investment returns and any other duties concerning
the day-to-day operation of the Plan.
	 
	(c)	 	Adjudication. Any decision made, or action taken, by the Committee or
the Board arising out of, or in connection with, the interpretation and administration
of the Plan, including but not limited to the adjudication of claims and payment of
benefits hereunder, shall be final and conclusive.
	 
	(d)	 	Indemnification. No member of the Committee or its delegate shall be
liable for any action, failure to act, determination or interpretation made in good
faith with respect to this Plan or any transaction hereunder, except for liability
arising from his/her own willful misfeasance, gross negligence or reckless disregard of
his/her duties. The Company hereby agrees to indemnify each member of the Committee
for all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to, negotiation for
the settlement of or otherwise dealing with any claim, cause of action or dispute of
any kind arising in connection with any actions in administering this Plan or in
authorizing, denying authorization to, or failing to authorize any transaction
hereunder.
	 
	4.	 	Participation
	 
	(a)	 	Eligibility. Participation in the Plan shall be limited to any
employee of the Company and its subsidiaries who is selected by the Board, in its sole
discretion, to participate in the Plan.
	 
	(b)	 	Filing a Deferral Election.
	 
	 	 	A Salary Deferral Election, Bonus Deferral Election and a Stock Deferral Election
shall be effective for a Plan Year if the Participant files the executed election or
elections with the Committee on or before the December 31 immediately preceding the
Plan Year in which the base salary, bonus or Stock Award is earned. For example,
December 31, 2005, is the last date for making a Salary Deferral Election, Bonus
Deferral Election or Stock Deferral Election under this Section 4.2 (a) for base
salary, bonus or Stock Awards payable for services rendered in 2006.
	 
	 	 	Notwithstanding Section 4.2(a), a Bonus Deferral Election and a Stock Deferral
Election may be made under this Section 4.2(b) if (i) the bonus or Stock Award is
payable on account of the satisfaction of Company or individual performance
criteria, (ii) the performance criteria are measured over a period of at least
twelve

 

 

	 	 	months and (iii) the performance criteria are established in writing before the
ninety-first day of the performance measurement period. A Bonus Deferral Election
and Stock Deferral Election under this Section 4.2(b) shall be effective for a Plan
Year if the Participant files the executed election or elections with the Committee
on a date when at least six months remain in the performance measurement period and
when the satisfaction of the performance criteria is not substantially certain. For
example, June 30, 2006, is the last date for making a Bonus Deferral Election or
Sock Deferral Election under this Section 4.2(b) if the bonus or Stock award is
payable for the satisfaction of performance criteria measured during 2006.
	 
	 	 	Notwithstanding Section 4.2(a), a Bonus Deferral Election and a Stock Deferral
Election may be made under this Section 4.2(c) if the Participant’s right to the
bonus or Stock Award is subject to a forfeiture condition requiring the
Participant’s continued employment or services for a period of at least twelve
months. A Bonus Deferral Election and a Stock Deferral Election under this Section
4.2(c) shall be effective for a Plan Year if the Participant files the executed
election or elections with the Committee on a date (i) that is not later than thirty
days after the grant of the bonus opportunity or Stock Award and (ii) when at least
twelve months remain in the service period. For example, March 30, 2006, is the
last day for making a Bonus Deferral Election or Stock Deferral Election under this
Section 4.2(c) with respect to a bonus opportunity or Stock Award that is granted on
March 1, 2006, and that will vest if the Participant’s employment continues until
March 31,2007.
	 
	 	 	Notwithstanding Section 4.2(a), a Salary Deferral Election, a Bonus Deferral
Election and a Stock Deferral Election may be made under this Section 4.2(d) by a
Participant who was not previously eligible to participate in this Plan or any other
nonqualified deferred compensation plan maintained by the Company that provided a
benefit based on the value of each participant’s account. A Participant described
in the preceding sentence may make a Salary Deferral Election, a Bonus Deferral
Election and a Stock Deferral Election that is effective for a Plan Year if the
Participant files the executed election or elections with the Committee on a date
that is not more than thirty days after the date the individual is selected to
participate in the Plan under Section 4.1. For example, March 30, 2006, is the last
day for making a Salary Deferral Election, a Bonus Deferral Election and a Stock
Deferral Election under this Section 4.2(d) by an individual who was selected to
participate in this Plan on March 1, 2006. An election submitted to the Committee
under this Section 4.2(d) may defer amounts that are earned and payable after the
date that the election is submitted to the Committee; provided, however, that only a
pro rata amount of a bonus or Stock Award may be affected by a Bonus Deferral
Election or a Stock Deferral Election submitted under this Section 4.2 if the
performance measurement period for the bonus or Stock Award began before the date
that the election was submitted to the Committee. The pro ration shall be
determined based on the number of days remaining in the performance measurement
period after the date the election was submitted to the Committee and the total
number of days in the performance measurement period.

 

 

	(c)	 	Irrevocable. A Deferral Election shall be irrevocable after the last
date prescribed by Section 4.2 for making an effective deferral election.
	 
	5.	 	Compensation Subject to Deferral
	 
	(a)	 	Base Salary. With respect to the base salary otherwise payable to a
Participant during the Plan Year for which a Salary Deferral Election is in effect, the
dollar amount or percentage of salary specified on such Salary Deferral Election shall
be deferred in accordance with the terms prescribed therein; provided however that such
Salary Deferral Election shall be for no more than 80% of the Participant’s salary,
unless otherwise permitted by the Committee.
	 
	(b)	 	Annual Bonus. With respect to the annual bonus, if any, that is earned
by a Participant during the Plan Year for which a Bonus Deferral Election is in effect,
the dollar amount or percentage of annual bonus specified on such Bonus Deferral
Election shall be deferred in accordance with the terms prescribed therein; provided
however that such Bonus Deferral Election shall be for no more than 80% of the
Participant’s bonus, unless otherwise permitted by the Committee. Notwithstanding the
preceding sentence, the dollar amount or percentage of annual bonus specified on a
Bonus Deferral Election shall not be more than the amount described in Section 4.2(d)
(if the Bonus Deferral Election was submitted to the Committee pursuant to Section
4.2(d)).
	 
	(c)	 	Stock Award. With respect to a Stock Award for which a Stock Deferral
Election is in effect, the number of shares or percentage of the Stock Award shares
specified on such Stock Deferral Election shall be deferred in accordance with the
terms prescribed therein. A Stock Deferral Election may be for up to 100% of the Stock
Award. Notwithstanding the preceding sentence, the number of shares or percentage of
the Stock Award shares specified on a Stock Deferral Election shall not be more than
the amount described in Section 4.2(d) (if the Stock Deferral Election was submitted to
the Committee pursuant to Section 4.2(d)).
	 
	6.	 	Elective Deferrals
	 
	(a)	 	Elective Deferral. Amounts deferred under a Salary Deferral Election
or a Bonus Deferral Election with respect to each Plan Year of participation in the
Plan shall be credited to the Participant’s Investment Account if, as, and when such
amounts would otherwise have been paid to the Participant. In accordance with the
terms of a Stock Deferral Election (x) the portion of the related Stock Award subject
to the Stock Deferral Election shall be cancelled as of the day preceding the day that
would have been the date of grant absent the Stock Deferral Election and (y) such
portion of the Stock Award shall be credited to the Participant’s Company Stock Account
as of the day that the Stock Award will become nonforfeitable or transferable.
	 
	(b)	 	Vesting. Each Participant shall have a nonforfeitable and fully vested
right to the amounts credited in such Participant’s Deferral Account.

 

 

	(c)	 	Investment Choices. Each Participant shall be entitled to direct the
deemed investment of the amounts credited to such Participant’s Investment Account in
any of the investment choices or combination of investment choices as may be offered by
the Committee from time to time in accordance with the rules, regulations and
procedures established by the Committee. The Committee may add or remove investment
choices at its sole discretion; provided, however, no amount shall be
subject to forfeiture solely by reason of a removal of an investment choice in
accordance with Section 6.3 hereof.
	 
	(d)	 	Investment Earnings. Each Participant’s Investment Account shall be
credited with earnings and losses in accordance with such Participant’s investment
choice(s). Earnings and losses shall begin to accrue with respect to amounts credited
to a Participant’s Investment Account under Section 6.1 in accordance with the
procedures established by the Committee.
	 
	(e)	 	Company Stock Account. Amounts credited to a Participant’s Company
Stock Account shall be expressed in notional shares of Company common stock (including
a fractional share). Dividend Equivalents for a Stock Award that is deferred under the
Plan shall be paid to the Participant in cash as of the applicable dividend payment
date unless the applicable Stock Deferral Election specifies that such Dividend
Equivalents shall be (x) credited to the Participant’s Investment Account in
accordance with Section 6.3 as of the applicable dividend payment date or (y) credited
to the Participant’s Company Stock Account as additional notional shares of Company
common stock (including a fractional share) based on the closing price of the Company
common stock on the dividend payment date. Amounts credited to a Participant’s
Investment Account may not be transferred to the Participant’s Company Stock Account.
Amounts credited to a Participant’s Company Stock Account may not be transferred to the
Participant’s Investment Account.
	 
	7.	 	Distributions
	 
	(a)	 	Distribution Event. The balance in a Participant’s Deferral Account
shall be payable upon the earlier of (x) the Participant’s termination of employment
for any reason or (y) a Change in Control regardless of whether the Participant’s
employment has terminated.
	 
	(b)	 	Timing of Payment.
	 
	 	 	Except as provided in Section 7.2(b), a distribution on account of termination of
employment shall be payable during the calendar month next following the month in
which the Participant’s termination occurs. A distribution on account of a Change
in Control shall be payable within ten days after the Control Change Date.
	 
	 	 	Section 7.2 (a) to the contrary notwithstanding, a distribution to a Specified
Employee on account of termination of employment shall be payable on the first day
of the seventh month beginning after the Specified Employee’s termination of
employment if the Participant’s employment terminates for a reason other than

 

 

	 	 	the Participant’s death or because the Specified Employee is “disabled” (within the
meaning of Section 409A of the Code).
	 
	(c)	 	Form of Payment. Any payment from a Participant’s Investment Account
shall be made in cash in a single sum. Any payment from a Participant’s Company Stock
Account shall be made in whole shares of Company common stock (which shall be issued
pursuant to the Stock Incentive Plan or another plan adopted after the Stock Incentive
Plan that authorizes the issuance of such shares). A cash payment will be made in
settlement of any notional fractional share of Company common stock credited to the
Participant’s Company Stock Account.
	 
	(d)	 	Account Balance. Upon payment to a Participant under this Article VII,
such Participant’s Deferral Account shall be reduced by the amount distributed (or
forfeited under Section 7.7)
	 
	(e)	 	Beneficiary. The balance in a Participant’s Deferral Account shall be
paid to the Participant’s designated beneficiary if the Participant’s employment ends
on account of death or if the Participant dies after termination of employment but
before a distribution of the Participant’s entire Deferral Account. If no beneficiary
has been designated by the Participant or if a designated beneficiary fails to survive
the Participant or is not in existence on the date of the Participant’s death, then the
balance of the Deferral Account or the amount that would have been payable to such
beneficiary, as applicable, shall be paid to the Participant’s estate.
	 
	(f)	 	Distribution for Unforeseeable Emergency. Notwithstanding any
provision of the Plan to the contrary, in the event of an Unforeseeable Emergency a
Participant shall be entitled to early payment of all or part of the balance of such
Participant’s Deferral Account to the extent necessary to satisfy the Unforeseeable
Emergency. An application for an early payment under this Section 7.6 shall be made
and reviewed by the Committee in accordance with the procedures and requirements
adopted by the Committee. The procedures and requirements shall conform to the
requirements of Section 409A of the Code. An early payment under this Section 7.6
first shall be charged against the Participant’s Investment Account, and after
exhausting the balance credited to the Investment Account, then shall be charged
against the Participant’s Company Stock Account.
	 
	(g)	 	Valuation of Distributions. Any distribution to be made under this
Plan from a Participant’s Investment Account shall be based on the value of the
Participant’s Investment Account as of the last business day of the calendar month
ending before the date of distribution.
	 
	(h)	 	162(m) Deduction Limitation. In the event the Company would be denied
a deduction for amounts otherwise payable in any Plan Year to a Participant under this
Article VII by reason of the application of section 162(m) of the Internal Revenue Code
of 1986, as amended, the Committee, in its sole discretion, may reduce any payment
otherwise due to such Participant (but not below zero) to the extent necessary to avoid
such application of section 162(m) and such reduced amount and the net earnings thereon
shall be paid to the Participant in the earliest

 

 

	 	 	Plan Year(s) in which payment may be made without application of section 162(m).
	 
	8.	 	Statement of Accounts
	 
	 	 	Statements shall be sent no less frequently than annually to each Participant (or
such Participant’s estate beneficiary or legal representative).
	 
	9.	 	Beneficiary Designation
	 
	 	 	Each Participant shall have the right, at anytime, to designate any single person or
entity as such Participant’s designated beneficiary. A beneficiary designation
shall be made, and may only be amended or revoked by the participant by filing a
written designation with the Committee or its designee in accordance with the
procedures adopted by the Committee, Any such beneficiary designation shall apply to
all benefits under this Plan.
	 
	10.	 	Amendment or Termination
	 
	 	 	The Board or the Committee may (in its sole discretion) amend, modify or terminate
the Plan at any time for any or no reason; provided, however, no amendment,
modification or termination shall, without the consent of the Participant, adversely
affect such Participant’s right to payment from the Participants vested balance
under the Deferral Account as of the date of such amendment, modification or
termination. An amendment or termination of the Plan shall not cause a distribution
in violation of Section 409A of the Code.

 

 

	11.	 	Miscellaneous
	 
	(a)	 	Unsecured Right. Any right to receive a payment under the Plan shall
be no greater than that of an unsecured general creditor of the Company. No amount
payable under the Plan may be assigned, transferred, encumbered or subject to any legal
process for the payment of any claim against a Participant. The Committee may, but
need not, establish a grantor trust (commonly referred to as a “rabbi trust”) to hold
assets of the Company that may, but need not, be used to pay benefits hereunder.
	 
	(b)	 	No Right to Continued Employment. Participation in the Plan shall not
give any employee any right to remain in the employ of the Company or any subsidiary or
affiliate thereof.
	 
	(c)	 	Withholding. The Company shall withhold to the extent required by law
all applicable income and other taxes from amounts deferred or paid under the Plan.
	 
	(d)	 	Governing Law. The Plan shall be construed, governed and enforced in
accordance with the laws of the State of North Carolina, without reference to rules
relating to conflicts of law, except to the extent preempted by federal law.
	 
	(e)	 	Compliance with Other Laws. The Committee may, from time to time, impose additional
restrictions upon Participants as it deems necessary, advisable or
appropriate in order to comply with applicable federal and state
securities laws.EX-4.2 INCENTIVE AND NON-STATUTORY STOCK OPTION PL

 

EXHIBIT 4.2

TUTOGEN MEDICAL, INC.

2006 INCENTIVE AND NON-STATUTORY

STOCK OPTION PLAN

SECTION 1. PURPOSE

     This Incentive and Non-Statutory Stock Option Plan (the “Plan”) is intended as a performance
incentive for officers and employees of Tutogen Medical, Inc., a Florida corporation (the
“Company”) or its Subsidiaries (as hereinafter defined) and for certain other individuals providing
services to or acting as directors of the Company or its Subsidiaries, to enable the persons to
whom options are granted (an “Optionee” or “Optionees”) to acquire or increase a proprietary
interest in the success of the Company. The Company intends that this purpose will be effected by
the granting of incentive stock options (“Incentive Options”) as defined in Section 422A(b) of the
Internal Revenue Code of 1986 (the “Code”) and other stock options (“Non-statutory Options”) under
the Plan.

SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION

     2.1 Options to the Granted. Options granted under the Plan may be either Incentive
Options or Non-statutory Options.

     2.2 Administration by the Board. This Plan shall be administered by the Board of
Directors of the Company (the “Board”). The Board shall have full and final authority to operate,
manage and administer the Plan on behalf of the Company. This authority includes, but is not
limited to: (i) the power to grant options conditionally or unconditionally; (ii) the power to
prescribe the form or forms of the instruments evidencing options granted under this Plan; (iii)
the power to interpret the Plan; (iv) the power to provide regulations for the operation of the
incentive features of the Plan, and otherwise to prescribe regulations for interpretation,
management and administration of the Plan; (v) the power to delegate responsibility for Plan
operation, management and administration on such terms, consistent with the Plan, as the Board may
establish; (vi) the power to delegate to other persons the responsibility for performing
ministerial acts in furtherance of the Plan’s purpose; and (vii) the power to engage the services
of persons or organizations in furtherance of the Plan’s purpose, including but not limited to,
banks, insurance companies, brokerage firms and consultants.

     In addition, as to each option, the Board shall have full and final authority in its
discretion: (i) to determine the number of shares subject to each option; (ii) to determine the
time or times at which options will be granted; (iii) to determine the time or times when each
option shall become exercisable and the duration of the exercise period, which shall not exceed the
limitations specified in Section 5.1.1; and (iv) to determine the option price for the shares
subject to each option, which price shall be subject to the applicable requirements, if any, of
Section 5.1.4 hereof.

     2.3 Appointment and Proceedings of Committee. The Board may appoint a Stock Option
Committee (the “Committee”), which shall consist of at least three members of the Board. The Board
may from time to time appoint members of the Committee in substitution for or in addition to
members previously

 

 

appointed, and may fill vacancies, however caused, in the Committee. The Committee shall select
one of its members as its chairman and shall hold its meetings at such times and places as it shall
deem advisable. A majority of its members shall constitute a quorum, and all actions of the
Committee shall be taken by a majority of its members. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall be as fully effective as if
it had been taken by a vote of a majority of the members at a meeting duly called and held.

     2.4 Powers of Committee. Subject to the provisions of this Plan and the approval of
the Board, the Committee shall have the power to make recommendations to the Board as to whom
options should be granted, the number of shares to be covered by each option, the time or times of
option grants, and the terms and conditions of each option. In addition, the Committee shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan, and to exercise the administrative and ministerial powers of the Board with regard to
aspects of the Plan other than the granting of options. The interpretation and construction by the
Committee of any provisions of the Plan or of any option granted hereunder and the exercise of any
power delegated to it hereunder shall be final, unless otherwise determined by the Board. No
member of the Board or the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted hereunder.

SECTION 3. STOCK

     3.1 Shares Subject to Plans. The stock subject to the options granted under the Plan
shall be shares of the Company’s authorized but unissued common stock, par value $.01 per share
(“Common Stock”). The total number of shares that may be issued pursuant to options granted under
the Plan shall not exceed an aggregate of 1,000,000 shares of Common Stock.

     3.2 Lapsed or Unexercised Options. Whenever any outstanding option under the Plan
expires, is cancelled or is otherwise terminated (other than by exercise), the shares of Common
Stock allocable to the unexercised portion of such option shall be restored to the Plan and be
available for the grant of other options under the Plan.

SECTION 4. ELIGIBILITY

     4.1 Eligible Optionees. Incentive options may be granted only to officers and other
employees of the Company or its Subsidiaries, including members of the Board who are also employees
of the Company or a Subsidiary. Non-statutory options may be granted to officers or other
employees of the Company or its Subsidiaries and to certain other individuals, including
non-employee directors, providing services to the Company or its Subsidiaries.

     4.2 Limitations on 10% Stockholders. No Incentive Option shall be granted to an
individual who, at the time the Incentive Option is granted, owns (including ownership attributed
pursuant to Section 425(d) of the Code) more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any parent or Subsidiary of the Company (a
“greater-than 10% stockholder”), unless such Incentive Option provides that (i) the purchase price
per share shall not be less than one hundred ten percent (110%) of the fair market value of the
Common Stock at the time such Incentive Option is granted, and (ii) that such Incentive Option
shall not be exercisable to any extent after the expiration of five years from the date it is
granted.

 

 

     4.3 Limitation on Exercisable Options. The aggregate fair market value (determined at
the time the Incentive Option is granted) of the Common Stock with respect to which Incentive
Options are exercisable for the
first time by any person during any calendar year under the Plan and under any other option plan of
the Company (or a parent or subsidiary as defined in Section 425 of the Code) shall not exceed
$100,000. Any option granted in excess of the foregoing limitation shall be specifically
designated as being a Non-statutory Option.

SECTION 5. TERMS OF THE OPTION AGREEMENTS

     5.1 Mandatory Terms. Each option agreement shall contain such provisions as the Board
or the Committee shall from time to time deem appropriate, and shall include provisions relating to
the method of exercise, payment of exercise price, adjustments on changes in the Company’s
capitalization and the effect of a merger, consolidation, liquidation, sale or other disposition of
or involving the Company. Option agreements need not be identical, but each option agreement by
appropriate language shall include the substance of all of the following provisions:

          5.1.1 Expiration. Notwithstanding any other provision of the Plan or of any option
agreement, each option shall expire on the date specified in the option agreement, which date shall
not be later than the tenth anniversary of the date on which the option was granted (fifth
anniversary in the case of a greater-than 10% stockholder).

          5.1.2 Exercise. Each option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the option, (ii) full
payment of the aggregate option price of the shares of Common Stock as to which the option is
exercised has been made, and (iii) arrangements that are satisfactory to the Board or the Committee
in its sole discretion have been made for the optionee’s payment to the Company of the amount that
is necessary for the Company or Subsidiary employing the optionee to withhold in accordance with
applicable Federal or state tax withholding requirements. Unless further limited by the Board or
the Committee in any option, the option price of any shares of Common Stock purchased shall be paid
in cash, by certified or official bank check, by money order, with shares of Common Stock or by a
combination of the above; provided further, however, that the Board or the Committee in its sole
discretion may accept a personal check in full or partial payment of any shares of Common Stock.
If the exercise price is paid in whole or in part with shares, the value of the shares surrendered
shall be their fair market value on the date the option is exercised as determined in accordance
with Section 5.1.4 hereof. No optionee shall be deemed to be a holder of any shares of Common
Stock subject to an option unless and until a stock certificate or certificates for such shares of
Common Stock are issued to such person(s) under the terms of the Plan. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date such stock certificate
is issued, except as expressly provided in Section 6 hereof. No optionee shall be deemed to be a
holder of any shares of Common Stock subject to an option unless and until a stock certificate or
certificates for such shares of Common Stock are issued to such person(s) under the terms of the
Plan.

          5.1.3 Events Causing Immediate Exercise. Unless otherwise provided in any option,
each outstanding option shall become immediately fully exercisable.

          5.1.3.1 if there occurs any transaction (which shall include a series of
transactions occurring within 60 days or occurring pursuant to a plan), that has the result
that stockholders of the Company immediately before such transaction cease to own at least
51 percent of the voting stock of

 

 

the Company or of any entity that results from the
participation of the Company in a reorganization, consolidation, merger, liquidation or any
other form of corporate transaction;

     5.1.3.2 if the stockholders of the Company shall approve a plan of merger,
consolidation, reorganization, liquidation or dissolution in which the Company does not
survive (unless the approved merger, consolidation, reorganization, liquidation or
dissolution is subsequently abandoned); or

     5.1.3.3 if the stockholders of the Company shall approve a plan for the sale, lease,
exchange or other disposition of all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned).

          The Board or the Committee may in its sole discretion accelerate the date on which any option
may be exercised and may accelerate the vesting of any shares of Common Stock subject to any option
or previously acquired by the exercise of any option.

          5.1.4 Purchase Price. The purchase price per share of the Common Stock under each
Incentive Option shall be not less than the fair market value of the Common Stock on the date the
option is granted (110% of the fair market value in the case of a greater-than 10% stockholder).
The price at which shares may be purchased pursuant to Non-statutory Options shall be specified by
the Board at the time the option is granted, and may be less than, equal to or greater than the
fair market value of the shares of Common Stock on the date such Non-statutory Option is granted,
but shall not be less than the par value of shares of Common Stock.

          For the purpose of the Plan, the “fair market value” per share of Common Stock on any date of
reference shall be the Closing Price of the Common Stock of the Company which is referred to in
either clause (i), (ii) or (iii) below, on the business day immediately preceding such date, or if
not referred to in either clause (i), (ii) or (iii) below, “fair market value” per share of Common
Stock shall be such value as shall be determined by the Board or the Committee, unless the Board or
the Committee in its sole discretion shall determine otherwise in a fair and uniform manner. For
this purpose, the Closing Price of the Common Stock on any business day shall be (i) if the Common
Stock is listed or admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system, as reported in any
newspaper of general circulation, (ii) if the Common Stock is quoted on the National Association of
Securities Dealers Automated Quotations System (“NASDAQ”), or any similar system of automated
dissemination of quotations of securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of Common Stock on such system, or (iii) if neither
clause (i) or (ii) is applicable, the mean between the high bid and low asked quotations for the
Common Stock as reported by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least five of the ten
preceding days.

          5.1.5 Transferability of Options. Incentive options granted under the Plan and the
rights and privileges conferred thereby may not be transferred, assigned, pledged or hypothecated
in any manner (whether by operation of law or otherwise) other than by will or by applicable laws
of descent and distribution, and shall not be subject to execution, attachment or similar process.
Upon any attempt so to transfer, assign, pledge, hypothecate or otherwise dispose of any Incentive
Option under the Plan or any right or privilege conferred hereby, contrary to the provisions of the
Plan, or upon the sale or levy or any attachment or similar process upon the rights and privileges
conferred hereby, such option shall thereupon terminate and become null

 

 

and void. Non-statutory
Options shall be transferable to the extent provided in the option agreements under which they are
granted.

          5.1.6 Termination of Employment or Death of Optionee. Except as may be otherwise
expressly provided in the terms and conditions of the option granted to an Optionee, options
granted hereunder shall terminate on the earlier to occur of:

     5.1.6.1 the date of expiration thereof; or

     5.1.6.2 other than the case of death of the Optionee or disability of the Optionee
within the meaning of Section 22(e)(3) of the Code (“disability”), (A) ninety (90) days
after termination of the employment between the Company and the Optionee in the case of an
Incentive Option (thirty (30) days if termination of employment is for cause), and (B)
ninety (90) days after termination of the employment or other relationship between the
Company and the Optionee (thirty (30) days if termination is for cause), unless such
termination provision is waived by resolution adopted by the Board within thirty (30) days
of the termination of such relationship, in the case of a Non-statutory Option.

          Except as may otherwise be expressly provided in the terms and conditions of the option
granted to an Optionee, in the event of the death of an Optionee while in an employment or other
relationship with the Company and before the date of expiration of such option, such option shall
terminate on the earlier of such date of expiration or one hundred eighty (180) days following the
date of such death. After the death of the Optionee, his executors, administrators or any person
or persons to whom his option may be transferred by will or by laws of descent and distribution,
shall have the right, at any time prior to such time termination, to exercise the option to the
extent the Optionee was entitled to exercise such option immediately prior to his death.

          Except as may otherwise be expressly provided in the terms and conditions of the option
granted to an Optionee, if an Optionee’s employment or other relationship with the Company
terminates because of a disability, the Optionee’s option shall terminate on the earlier of the
date of expiration thereof or one hundred eighty (180) days following the termination of such
relationship; and unless by its terms it sooner terminates and expires during such one hundred
eighty (180) day period, the Optionee may exercise that portion of his or her option which is
exercisable at the time of termination of such relationship.

          An employment relationship between the Company and the Optionee shall be deemed to exist
during any period during which the Optionee is employed by the Company or by any Subsidiary.
Whether authorized leave of absence or absence on military government service shall constitute
termination of the employment relationship between the Company and the Optionee shall be determined
by the Board at the time thereof.

          5.1.7 Rights of Optionees. No Optionee shall be deemed for any purpose to be the
owner of any shares of Common Stock subject to any option unless and until (i) the option shall
have been exercised pursuant to the terms thereof, (ii) the Company shall have issued and delivered
the shares of the Optionee, and (iii) the Optionee’s name shall have been entered as a stockholder
of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend
and other ownership rights with respect to such shares of Common Stock.

 

 

	 	5.2	 	Certain Optional Terms. The Board may in its discretion provide, upon
the grant of any option hereunder, that the Company shall have an option to repurchase
all or any number of shares purchased upon exercise of such option. The repurchase
price per share payable by the Company shall be such amount or be determined by such
formula as is fixed by the Board at the time the option for the shares subject to
repurchase was granted. The Board may also provide that the Company shall have a right
of first refusal with respect to the transfer or proposed
transfer of any shares purchased upon exercise of an option granted hereunder. In
the event the Board shall grant options subject to the Company’s repurchase rights
or rights of first refusal, the certificate or certificates representing the shares
purchased pursuant to such option shall carry a legend satisfactory to counsel for
the Company referring to the Company’s repurchase option.

SECTION 6. ADJUSTMENT OF SHARES OF COMMON STOCK

     6.1 Increase or Decrease of Outstanding Shares. If at any time while the Plan is in
effect or unexercised options are outstanding, there shall be any increase or decrease in the
number of issued and outstanding shares of Common Stock through the declaration of a stock dividend
or through any recapitalization resulting in a stock split-up, combination or exchange of shares of
Common Stock, then and in such event (i) appropriate adjustment shall be made in the maximum number
of shares of Common Stock available for grant under the Plan, so that the same percentage of the
Company’s issued and outstanding shares of Common Stock shall continue to be subject to being so
optioned, and (ii) appropriate adjustment shall be made in the number of shares and the exercise
price per share of Common Stock thereof then subject to any outstanding option, so that the same
percentage of the Company’s issued and outstanding shares of Common Stock shall remain subject to
purchase at the same aggregate exercise price.

     6.2 Discretionary Adjustment. Subject to the specific terms of any option, the Board
or the Committee may change the terms of options outstanding under this Plan, with respect to the
option price or the number of shares of Common Stock subject to the options, or both, when, in the
sole discretion of the Board or the Committee, such adjustments become appropriate by reason of a
corporate transaction described in Section 5.1.4 hereof.

     6.3 Conversion of Shares. Except as otherwise expressly provided herein, the issuance
by the Company of shares of its capital stock of any class, or securities convertible into shares
of capital stock of any class, either in connection with direct sale or upon the exercise of rights
or warrants to subscribe therefore, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to the number of or exercise price of shares of Common Stock
then subject to outstanding options granted under the Plan.

     6.4 General. Without limiting the generality of the foregoing, the existence of
outstanding options granted under the Plan shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its business; (ii) any
merger or consolidation of the Company; (iii) any issue by the Company of debt securities, or
preferred or preference stock that would rank above the shares subject to outstanding options; (iv)
the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any
part of the assets or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.

 

 

SECTION 7. AMENDMENT OF THE PLAN

     The Board may amend the Plan at any time, and from time to time, subject to the limitation
that no amendment shall be effective unless approved by the stockholders of the Company in
accordance with applicable law and regulations at an annual or special meeting held within twelve
(12) months before or after the date of adoption of such amendment, in any instance in which such
amendment would: (i) increase the number of shares
of Common Stock as to which options may be granted under the Plan; of (ii) change in substance the
provisions of Section 4 hereof relating to eligibility to participate in the Plan.

     Rights and obligations under any option granted before any amendment of the Plan shall not be
altered or impaired by such amendment, except with the consent of the Optionee.

SECTION 8. NON-EXCLUSIVITY OF THE PLAN

     Neither the adoption of the Plan by the Board nor the approval of the Plan by the stockholders
of the Company shall be construed as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including without limitation the
granting of stock options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.

SECTION 9. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW

     The obligation of the Company to sell and delivery shares of Common Stock with respect to
options granted under the Plan shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and the obtaining of all such approvals
by government agencies as may be deemed necessary or appropriate by the Board or the Committee.
All shares sold under the Plan shall bear appropriate legends. The Plan shall be governed by and
construed in accordance with the laws of the State of Florida.

SECTION 10. EFFECTIVE DATE OF PLAN

     The effective date of the Plan is March 13, 2006, the date on which it was approved by the
Shareholders of the Company. No option may be granted under the Plan after the tenth anniversary
of such effective date.

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