EXHIBIT 10BB
DECORATOR INDUSTRIES, INC.
2006 INCENTIVE STOCK OPTION PLAN*
FOR
OFFICERS AND OTHER KEY EMPLOYEES
1. Purpose
The purpose of the 2006 Incentive Stock Option Plan (the "Plan") is to
motivate and provide additional incentive for officers and other key employees
of Decorator Industries, Inc. (the "Company") to exert their best efforts on
behalf of the Company by enabling and encouraging such individuals to acquire a
greater stock interest in the Company, thereby increasing their proprietary
interest in the business, encouraging their continued service and promoting the
interests of the Company and all its Shareholders. In addition, the Plan is
intended to permit the Company to compete with other companies offering similar
plans in attracting and retaining the services of executive personnel. All
options granted hereunder are intended to qualify as Incentive Stock Options
under Section 422 of the Internal Revenue Code of 1986, as amended (the "1986
Code").
2. Definitions
(a) "Board" - The Board of Directors of the Company.
(b) "Committee" - the committee referred to in Section 3 of the Plan.
(c) "Common Stock" - the common stock, par value $.20 per share, of the
Company.
(d) "Fair Market Value" - the "fair market value" per share of Common
Stock at a given time shall be deemed to be the last sale price for
shares of the Common Stock on the American Stock Exchange.
(e) "Financial Statements" - the financial statements of the Company.
(f) "Options" - grants of options to purchase shares of Common Stock under
the Plan.
(g) "Option Right" - the right to purchase a share of Common Stock upon
exercise of an Outstanding Option.
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* As adopted by the Board of Directors on February 28, 2006, and approved by
the Shareholders on May 24, 2006.
(h) "Outstanding Option" - at any time, an option to purchase Common Stock
granted by the Company pursuant to the Plan, whether or not such stock
option is at such time exercisable, to the extent that such stock
option at such time has not been exercised and has not terminated.
(i) "Participants" - employees of the Company to whom Options have been
granted under the Plan. When appropriate and not otherwise indicated
that the incapacity or death of a Participant terminates or limits his
rights under the Plan, as used herein the term "Participant" shall
also be deemed to refer, in the event of the death or incapacity of a
Participant, to his or her legal representative.
3. Administration
(a) Appointment of the Committee. The Plan shall be administered by a
committee (the "Committee") consisting of two or more directors of the
Company; provided, however, the Board shall have the power to rescind
or overrule any action taken by the Committee. Members of the
Committee shall be appointed by, and serve at the pleasure of, the
Board. No director shall serve as a member of the Committee unless he
or she shall be a "disinterested person" within the meaning of Rule
16b-3 of the General Rules and Regulations, or the equivalent thereof
from time to time in effect, under the Securities Exchange Act of
1934, as amended. Notwithstanding the foregoing, in the event there is
not a sufficient number of directors who are "disinterested persons"
within the meaning of Rule 16b-3, or the equivalent thereof from time
to time in effect, then any director who shall exercise appropriate
waivers or take such other action which, in the opinion of counsel for
the Company, is then sufficient to satisfy Rule 16b-3, or the
equivalent thereof from time to time in effect, shall be eligible to
serve on the Committee. Commencing February 28, 2006, the Compensation
Committee of the Board shall serve as the Committee.
(b) Committee Action. A majority of the Committee shall constitute a
quorum thereof and the action (i) of a majority of the members of the
Committee present and voting at a meeting at which a quorum shall be
present, or (ii) authorized in writing by all members of the
Committee, shall be the action of the Committee. A member of the
Committee participating in a meeting by telephone or similar
communications equipment shall be deemed present for this purpose if
the member or members who are present in person can hear him or her
and he or she can hear them.
(c) Authority of the Committee, Etc. Subject to the power of the Board to
terminate or amend the Plan as provided in Section 6 and to rescind or
overrule any action taken by the Committee, the Committee shall have
authority to interpret the Plan and options granted, to prescribe,
amend and rescind rules and regulations, if any, relating to the Plan,
and to make all determinations necessary or advisable for the
administration of the Plan. Decisions of the Committee shall be final
and binding upon all parties who have an interest in the Plan. The
Committee shall have authority to and may make recommendations to the
Board as to any matter under the Plan requiring Board action for final
determination, whether or not expressly so stated, but the Board shall
not be bound to follow any recommendations made by the Committee. No
member of the Committee shall be liable for anything done or omitted
to be done by him or her or by any other member of the Committee in
connection with the Plan, except for his or her own willful misconduct
or recklessness.
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4. Effective Date and Duration
The Plan shall become effective upon its adoption by the Board, subject,
however, to the approval of the Plan by the Company's shareholders within twelve
(12) months of such adoption. Unless sooner terminated by the Board, the Plan
will expire at midnight, prevailing time in Pembroke Pines, Florida on February
27, 2016, and no Options may be made, granted or assigned under the Plan after
such date. However, shares issuable upon the exercise of Options granted on or
prior to such date may be subsequently delivered to Participants in accordance
with the terms and conditions applicable to their respective Options.
5. Eligibility
Options shall be granted under the Plan only to employees, including
officers and directors who are employees, of the Company who are responsible for
the management, growth and protection of the business of the Company. Only
persons regularly employed on a full-time basis by the Company are eligible to
receive a recommendation of the Committee, from among those eligible.
6. Amendment and Termination of the Plan
The Board may at any time terminate the Plan, or from time to time make
such amendments thereto, including additions or deletions, as the Board deems
advisable, except that no amendment may adversely affect any Option theretofore
granted to a Participant, except to the extent deemed necessary or advisable by
the Board to assure that such Option qualifies as an Incentive Stock Option
under Section 422 of the 1986 Code, or the equivalent thereof from time to time
in effect, and meets the requirements of Rule 16b-3, or the equivalent thereof
from time to time in effect. No amendment shall be made, however, unless
approved by the Shareholders of the Company, which would (a) increase the
maximum number of shares of Common Stock that may be issued under the Plan, (b)
extend the period during which Options may be granted, (c) change the purchase
price per share at which Options may be granted, (d) materially modify the
requirements as to eligibility for participation in the Program, (e) increase
the maximum period for exercise of any Option, or (f) cause Rule 16b-3, or the
equivalent thereof from time to time in effect, to become inapplicable.
7. Stock Subject to the Plan
Subject to adjustments made pursuant to Section 8, the total number of
shares of Common Stock that may be issued under the Plan (which shares may be
authorized but unissued shares or treasury shares) is 250,000, less any shares
for which payment may be made under Section 14(e) hereof.
8. Effect of Recapitalization, Merger, Etc.
(a) In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock or other
securities of the Company for, the outstanding Common Stock, or other
similar event, the maximum number and class of shares as to which
Options may be granted under the Plan, the number and class of shares
subject to Options theretofore granted under the Plan, and the price
per share payable upon exercise of such Options shall be appropriately
adjusted by the Board, whose determination shall be conclusive.
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(b) If, prior to the expiration of any Option granted under the Plan,
there shall be a merger, consolidation or reorganization of the
Company with another corporation in which the Company is not the
surviving corporation, the holder of any then outstanding Option shall
thereafter be entitled to receive, upon exercise of the unexercised
portion of the Option, the same number and kind of shares, securities
or other property (including cash) as the optionee would have received
had the optionee exercised the unexercised portion of the Option
immediately prior to such merger, consolidation or reorganization.
Notwithstanding the foregoing, any Participant may agree to the
assumption of his or her Option by a corporation other than the
Company, or the substitution of a stock option of a corporation other
than the Company for his or her Option.
9. Procedure for Granting of Options and Related Matters
(a) Board to Make Determination. Subject to the terms, provisions and
conditions of the Plan, the Board, on the recommendation of the
Committee, shall (i) select the employees to whom Options shall be
granted, (ii) determine the number of shares subject to each Option
granted, (iii) determine the time or times when Options will be
granted, and (iv) determine the time or times when each Option may be
exercised within the limits stated in the Plan; and the Committee
shall prescribe the form, which shall be consistent with the Plan, of
the instruments evidencing any Options granted hereunder.
Notwithstanding the foregoing, the Compensation Committee of the Board
shall have exclusive authority to (i) grant Options to the chief
executive officer of the Company and determine the terms and
conditions thereof and (ii) recommend to the Board any Options to be
granted to other officers of the Company and the terms and conditions
thereof.
(b) Requisite Action by Participants, Etc. As a condition to the granting
of an Option, each Participant shall be required to enter into an
Agreement (the "Option Agreement") with the Company which shall
contain such provisions consistent with the Plan as may be prescribed
by the Board, on the recommendation of the Committee, including such
restrictions as to the transferability of the shares to be issued upon
the exercise of an Option as the Board may, in its discretion, deem
appropriate. Such restrictions may be for the purpose of assuring
compliance with Federal and state securities laws (as contemplated by
Section 14(d)) or for other reasons deemed advisable by the Board.
10. Option Price
Except as provided in Section 12, the purchase price per share of Common
Stock under each Option granted pursuant to the Plan shall be 100% of the Fair
Market Value per share of Common Stock at the time such Option is granted.
11. Duration of Options
Each Option granted under the Plan shall expire not later than ten (10)
years after the date on which it was granted.
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12. Options for Employees Who Own More Than 10% of Common Stock
In the event of a grant of an Option to an employee who owns more than 10%
of the outstanding Common Stock, then (a) the purchase price per share of Common
Stock under each such Option granted shall be 110% of the Fair Market Value per
share of Common Stock at the time of such grant, and (b) such Option shall
terminate not later than five (5) years after the date it is granted.
13. Nontransferability of Options
No Option granted under the Plan shall be transferable by a Participant
otherwise than by will or the laws of descent and distribution; and an Option
may be exercised, during a Participant's lifetime, only by the Participant.
14. Exercise of Options; Restrictions on Exercise
(a) Each Option shall be exercisable according to terms set by the Board,
on the recommendation of the Committee, at the time of the grant;
provided, however, that the aggregate Fair Market Value (determined at
the time the Option is granted) of the stock with respect to which
Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under all plans of the
Participant's employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000. The Board may direct that an
Option become exercisable in installments, which need not be annual
installments, over a period which may be less than the term of the
Option. At such time as an installment shall become exercisable, it
may be exercised at any time thereafter in whole or in part until the
expiration or termination of the Option. Unless otherwise provided in
the Option Agreement referred to in Section 9(b), an Option granted
under the Plan shall be exercisable, prior to the expiration or
termination of the Option, in whole at any time or in part from time
to time. Only full shares which a Participant is entitled to purchase
will be issued; no fractional shares will be issued.
(b) A Participant may purchase shares pursuant to an Option granted under
the Plan only by giving the Company written notice of his or her
election to exercise the Option, specifying the number of shares to be
purchased. Payment for the shares may be in cash, or by delivery to
the Company of shares of its Common Stock owned by the Optionee having
a Fair Market Value equal to the required purchase price. If the
shares delivered to the Company were originally acquired from the
Company, either directly or indirectly, upon the exercise of an Option
or otherwise, such shares must have been held by the Optionee for the
requisite period specified in Section 422(a) of the 1986 Code. At the
Optionee's election, such shares may be constructively delivered to
the Company through "attestation"; that is, the Optionee (or the
registered securities broker holding the shares on behalf of the
Optionee) shall provide the Company a written statement attesting to
the Optionee's ownership of the shares that are intended to be
delivered to the Company and to the period the shares have been owned
by the Optionee. Upon receipt of such a statement, the Company will
treat such shares as constructively exchanged and will issue to the
Optionee (or the broker, if appropriate) a stock certificate for the
number of shares for which the Option was exercised minus the number
of shares used to pay for the exercise through the constructive
delivery.
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(c) Each Option granted under the Plan shall be subject to the condition
that if at any time, in the opinion of counsel for the Company, the
registration, listing or qualification of the shares covered by the
Option under the Securities Act of 1933, as amended (the "Act"), upon
any securities exchange or under any state law, or the consent or
approval of any governmental regulatory body or the updating,
amendment or revision of any registration statement, listing
application or similar document, is required as a condition of, or in
connection with, the purchase of shares under such Option, no such
Option may be exercised unless and until such registration, listing,
qualification, consent, approval, updating, amendment or revision
shall have been effected or obtained free of any conditions not
acceptable to the Board. If the right to exercise any Option is
suspended for any of the foregoing reasons and the Option would
otherwise expire during such suspension, the expiration date of the
Option shall be extended until thirty (30) days after the date on
which the holder of such Option is notified that such suspension of
the right to exercise the Option has ended; provided, however, that
the Option shall not be exercisable more than ten (10) years after the
date on which it was granted.
(d) The Board, on the recommendation of the Committee, may, as a condition
to the exercise by a Participant of an Option, require that the
Participant agree in writing that he or she will not dispose of the
shares to be acquired upon such exercise in a transaction which, in
the opinion of counsel for the Company, would violate the Act or the
rules and regulations promulgated thereunder. The Board shall have the
authority to require additional agreements or impose additional
conditions which it reasonably believes are necessary to assure
compliance with Federal and state securities and other laws.
(e) The Board, on the recommendation of the Committee, in its sole
discretion and under such terms and conditions as the Committee deems
appropriate, may accept surrender by a Participant of a right to
exercise in whole or in part an Option previously granted, and may
authorize a payment in consideration therefor of an amount equal to
the excess of the Fair Market Value of the shares of Common Stock over
the option price, such payment to be in shares of Common Stock valued
at Fair Market Value on the date of surrender of the Option, or in
cash, or partly in such shares and partly in cash, provided the
Committee determines that such settlement is consistent with the
provisions set forth in Section 1 hereof.
(f) In the event that a Participant is subject to the alternative minimum
tax under Section 55 of the 1986 Code as a result of the exercise of
an Option, such Participant may, with the approval of the Committee,
provide for the payment of the additional income tax resulting from
such exercise by delivering to the Company shares of Common Stock
having a Fair Market Value equal to the additional income tax, such
Fair Market Value to be credited to the Participant's income tax
withholding account with the Company.
(g) A Participant shall have none of the rights of a Shareholder with
respect to any shares as to which he or she has exercised an Option
until the shares are issued to him or her.
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15. Termination of Employment, Disability, Retirement or Death
(a) If the employment of a Participant by the Company or a subsidiary
shall terminate for any reason except death after such Participant
shall have been continuously employed by the Company for one (1) year
after the granting of an Option to such Participant, such Option may
be exercised by such Participant within ninety (90) days after such
termination to the extent the Option might have been exercised at the
date of such termination of employment and provided that the exercise
would not occur later than the expiration date of the Option.
(b) In the event of the death of a Participant while employed by the
Company (or within ninety (90) days after the termination of such
employment), any Option granted to the Participant may be exercised,
within one (1) year after his or her death, by the legal
representative of his or her estate, but only to the extent such
Option was exercisable by the Participant at the date of death and
provided that the exercise would not occur later than the expiration
date of the Option.
(c) In the event of the termination of employment with the Company or a
subsidiary by reason of the disability of a Participant while employed
(or in the event of the disability of a Participant within ninety (90)
days after the termination of such Participant's employment by the
Company), the Board may extend the time within which such Participant
or his or her legal representative may exercise any Option held by
such Participant, but only to the extent such Option was exercisable
by the Participant at the date of such termination of employment and
provided that the exercise would not occur later then the expiration
date of the Option.
To the extent that any Option held by any Participant whose employment
is terminated shall not have been exercised within the applicable
period hereinbefore provided, such Option, and all rights to purchase
shares pursuant thereto, shall thereupon expire.
16. Miscellaneous Provisions
(a) Employment. No employee shall have any claim or right to be granted an
Option under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee any right to be retained in
the employ of the Company, or to limit the right of the Company to
terminate the employment of any Participant at any time, or to change
the terms of such employment.
(b) Nonalienation of Benefits. A Participant's rights and interests under
the Plan may not be assigned or transferred in whole or in part either
directly or by operation of law or otherwise (except as specifically
provided in the Plan in the event of a Participant's death),
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner, and no such
right or interest of any Participant shall be subject to any
obligations or liability of such Participant.
(c) Effect Upon Other Compensation Plans. The adoption of the Plan shall
not affect any other compensation or incentive plan in effect for the
Company, and the Plan shall not preclude the Board from establishing
any other forms of incentive or compensation for employees of the
Company.
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