TMI HOLDINGS, INC.
2003 NON-QUALIFIED
STOCK GRANT AND OPTION PLAN
1. PURPOSE: This Non-Qualified Stock Grant and Option Plan (the "Plan")
is intended to serve as an incentive to and to encourage stock ownership by
certain directors, officers, employees of and certain persons rendering service
to TMI Holdings, Inc., a Florida corporation (the "Corporation"), so that they
may acquire or increase their proprietary interest in the success of the
Corporation, and to encourage them to remain in the Corporation's service.
2. ADMINISTRATION: The Plan shall be administered by a committee
appointed by the Corporation's Board of Directors (the "Committee"). The
Committee shall consist of not less than three (3) members who shall be
appointed by, and serve at the pleasure of, the Corporation's Board of
Directors. The Board of Directors may from time to time remove members from, or
add members to, the Committee. Vacancies on the Committee, however caused, shall
be filled only by the Board of Directors. The Committee shall select one of its
members as Chairman, and shall hold meetings at such times and places as it may
determine. Acts by a majority of the Committee in a meeting at which a quorum is
present and acts approved in writing by a majority of the members of the
Committee shall be the valid acts of the Committee. No member of the Committee
shall vote on any matter concerning his or her own participation in the Plan,
except that the Board of Directors as a whole may act on options granted to
directors. If no Committee has been appointed, the entire Board shall constitute
the Committee.
The Committee shall be authorized to grant stock and/or
options under the Plan to such directors, officers, employees of and other
persons rendering service to the Corporation or any parent or subsidiary
corporation of the Corporation, as defined for purposes of Internal Revenue Code
Section 422A ("Parent or Subsidiary"), at such times and in such amounts as it
may decide.
The interpretation and construction by the Committee of any
provisions of the Plan or of any option granted under it shall be final unless
otherwise determined by the Board of Directors. No member of the Committee or
Board of Directors shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted under it.
3. ELIGIBILITY
3.1. General: Any person who performs services of special
importance to the Corporation, or any Parent or Subsidiary thereof, relating to
the Corporation's management, operation or development shall be eligible to
receive stock or options under the Plan. The selection of stock and/or options
received shall be within the sole and absolute discretion of the Committee, or
the Board of Directors.
3.2. Termination of Eligibility: Any option granted hereunder
shall expire if, for any reason other than his or her death, the optionee (i)
ceases to be employed by the Corporation or a Parent or Subsidiary thereof; (ii)
is no longer a member of the Corporation's Board of Directors; or (iii) no
longer performs services for the Corporation as an independent contractor. The
expiration will take effect at the earliest of the following times: four (4)
months from the date of the occurrence causing termination of eligibility
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(twelve (12) months if the optionee's eligibility ceases because of his or her
disability), or upon the date the option expires by its terms. During such
four-month period, the option may be exercised in accordance with its terms, but
only in respect to the number of shares for which the right to exercise has
accrued on the date of termination of employment, or status as a director or
independent contractor. The Committee shall decide whether an authorized leave
of absence or absence for military or governmental service, or absence for any
other reason, shall constitute termination of eligibility for purposes of this
Section. This determination shall be subject to review by the Board of
Directors.
3.3. Death of Optionee and Transfer of Option: If the optionee
dies while eligible to participate in the Plan, or within four (4) months after
the termination of his or her eligibility, and shall not have fully exercised
the option, the option may be exercised at any time within twelve (12) months
after the optionee's death by the optionee's executors or administrators or by
any person or persons who acquired the option directly from the optionee by
bequest or inheritance. However, no option shall be exercisable after it
expires; and options may be exercised only to the extent that the optionee's
right to exercise the option had accrued at the time of his or her death and had
not been previously exercised.
No option shall be transferable by the optionee otherwise than
by will or the laws of intestate succession.
4. IDENTIFICATION OF STOCK: The stock subject to grant and the options
shall be shares of the Corporation's authorized but unissued or acquired or
reacquired Common Stock, par value $0.01 (the "Stock"). The aggregate number of
shares subject to outstanding options shall not exceed two million five hundred
thousand (2,500,000) shares of Stock (subject to adjustment as provided in
Section 5.6). If any option granted hereunder shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares subject
thereto shall again be available for purposes of this Plan.
5. TERMS AND CONDITIONS OF OPTIONS: Any option granted pursuant to the
Plan shall be evidenced by an agreement in such form as the Committee shall from
time to time determine, which agreement shall comply with and be subject to the
following terms and conditions:
5.1. Number of Shares: Each option shall state the number of
shares to which it pertains.
5.2. Option Exercise Price: Each option shall state the option
price, which shall be determined at the Committee's discretion.
5.3. Method of Exercise: An option shall be exercised by written
notice to the Corporation stating the number of shares with respect to which the
option is being exercised and designating a time for the delivery thereof, which
shall be not more than fifteen (15) days after notice is given unless another
date was mutually agreed upon. At the time specified in the notice, the
Corporation shall deliver to the optionee at the Corporation's principal office,
or other appropriate place the Committee determines, a certificate(s) for such
shares of previously authorized but unissued shares or acquired or reacquired
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shares of Stock as the Corporation may elect. Notwithstanding the foregoing, the
Corporation may postpone delivery of any certificate(s) after notice of exercise
for any reasonable period required to comply with any applicable listing
requirements of any national or other securities exchange. In the event an
option shall be exercisable by any person other than the optionee, the required
notice under this section shall be accompanied by appropriate proof of such
person's right to exercise the option.
5.4. Medium and Time Payment: The option price shall be payable
in full upon the exercise of the option by certified or bank cashier's check,
the promissory note of the optionee, or any equivalent form of payment
acceptable to the Corporation.
5.5. Term of Option: The term of an option granted hereunder
shall be determined by the Committee at the time of grant, but shall not exceed
ten (10) years from the day of the grant. In no event shall any option be
exercisable after the expiration of its term.
5.6. Adjustments Upon Changes in Capitalization: Subject to any
required shareholder action, the number of shares of stock covered by each
outstanding option and the price per share in each such option shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock of the Corporation resulting from: (i) a subdivision or
consolidation of shares; (ii) the payment of a stock dividend (but only on the
Stock); (iii) any other increase or decrease in the number of such shares
effected without receipt of consideration by the Corporation; (iv) or, as to
Stock issued other than pursuant to a stock option granted to a director,
officer, employee or a person rendering services as an independent contractor to
the Corporation or any Parent or Subsidiary, any increase or decrease in the
number of shares made for per share consideration less than the option price of
such option. Any fraction of a share subject to option that would otherwise
result from an adjustment pursuant to this subparagraph shall be rounded
downward to the next full number of shares without other compensation or
consideration to the holder of the option.
Subject to any required shareholder action, if the Corporation
shall be the surviving corporation in any merger or consolidation, each
outstanding option shall pertain and apply to the securities to which a holder
of the number of shares of Stock subject to the option would have been entitled.
The Corporation's Board of Directors may grant each optionee the right to
exercise his or her option in whole or in part immediately prior to the
Corporation's dissolution or liquidation, or merger or consolidation in which
the corporation is not the surviving corporation. If the Corporation is
consolidated with or merged into any other corporation, or if the Corporation
sells or transfers all or substantially all of its assets, or if any other
similar event affecting shares of Stock of the Corporation should occur, and if
the exercisability of the options is not accelerated by the Board of Directors
and the acquiring Corporation assumes the Corporation's obligations under the
options granted under this Plan, then each optionee shall be entitled thereafter
to purchase shares of stock and other securities and property in the kind and
amount, and at the price, which the optionee would have been entitled had his or
her option been exercised prior to such event. The Corporation shall make lawful
provision therefore as part of any such transaction.
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To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, they shall be made by the Committee, whose
determinations shall be final, binding and conclusive.
The grant of an option pursuant to the Plan shall not affect
in any way the Corporation's right or power to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
Whenever the Corporation takes any action resulting in any
adjustment provided for in this Section 5.6, the Corporation shall forthwith
deliver notice of the action to optionee. The notice shall set forth the number
of shares subject to this Option and the purchase price thereof resulting from
the adjustment.
5.7. Rights as a Shareholder: An optionee or a transferee of an
option shall have no rights as a shareholder with respect to any shares
underlying his or her option until the date the optionee is issued a certificate
for such shares. 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 provided in Section 5.6 above.
5.8. Modification, Extension and Renewal of Options: Subject to
the terms and conditions and within the limitations of the Plan, the Committee
may modify, extend or renew outstanding options granted under the Plan, or
accept the surrender of outstanding options (to the extent not theretofore
exercised) and authorize the granting of new options in substitution therefore
(to the extent not theretofore exercised).
5.9. Other Provisions: The option agreements authorized under
the Plan shall contain such other provisions, including without limitation,
restrictions upon the exercise of the option, as the Committee and the Board of
Directors of the Corporation shall deem advisable. Thus, for example, the
Committee and the Board of Directors may require that all or any portion of an
option granted hereunder not be exercisable until a specified period of time has
passed or some other event has occurred.
6. TERM OF PLAN: Options may be granted pursuant to the Plan from time
to time within a period of ten (10) years from the date the Plan is adopted by
the Corporation's Board of Directors or is approved by the Corporation's
shareholders, whichever occurs earlier. Termination of the Plan shall not affect
any option previously granted.
7. AMENDMENT OF THE PLAN: To the extent permitted by law and subject to
any required approval by the Corporation's shareholders, the Board of Directors
may suspend or discontinue the Plan or revise or amend it in any way with
respect to any shares not subject to options at that time.
8. APPLICATION OF FUNDS: The proceeds received by the Corporation from
the sale of Stock pursuant to options may be used for general corporate
purposes.
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9. NO OBLIGATION TO EXERCISE OPTION: The granting of an option shall
impose no obligation upon the optionee to exercise such option.
10. SECURITIES LAWS COMPLIANCE: Notwithstanding anything contained
herein, the Corporation shall not be obligated to grant any option under this
Plan, or to sell or issue any share pursuant to any option agreement executed
pursuant to the Plan, unless the grant or sale is effectively registered or
exempt from registration under the Securities Act of 1933, as amended, and is
qualified or exempt from qualification under the California Corporate Securities
Law of 1968, as amended.
As adopted by the Board of Directors on April 29, 2003.
TMI HOLDINGS, INC.,
a Florida corporation
/s/ Scott Siegel
By: Scott Siegel
Its: President