-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pd92UWCf6cDF42LIlWPn7wdFyuLohsGreSLO5DLK4rE9LXZmsh2VfziXUyhypQu8 PHqfqf64uIlSVRO0pZlRzg== 0001135432-03-000172.txt : 20030509 0001135432-03-000172.hdr.sgml : 20030509 20030509163517 ACCESSION NUMBER: 0001135432-03-000172 CONFORMED SUBMISSION TYPE: PRE 14C PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030507 FILED AS OF DATE: 20030509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TMI HOLDINGS INC/FL CENTRAL INDEX KEY: 0001016611 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 650309540 STATE OF INCORPORATION: FL FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: PRE 14C SEC ACT: 1934 Act SEC FILE NUMBER: 000-30011 FILM NUMBER: 03690735 BUSINESS ADDRESS: STREET 1: 4463 PAHE'E STREET STREET 2: SUITE 203-B CITY: LIHUE STATE: HI ZIP: 96766 BUSINESS PHONE: 8083844622 MAIL ADDRESS: STREET 1: 4463 PAHE'E STREET STREET 2: SUITE 203-B CITY: LIHUE STATE: HI ZIP: 96766 FORMER COMPANY: FORMER CONFORMED NAME: THRIFT MANAGEMENT INC DATE OF NAME CHANGE: 19960711 PRE 14C 1 doc1.txt SCHEDULE 14C INFORMATION INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Check the appropriate box: [ X ] Preliminary Information Statement [__] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) [__] Definitive Information Statement TMI HOLDINGS, INC. (Name of Registrant as Specified in Charter) Payment of Filing Fee (Check the appropriate box): [ X ] No fee required [__] Fee computed on table below per Exchange Act Rules 14c-5(g) and O-11 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [__] Fee paid previously with preliminary materials. [__] Check box if any part of the fee is offset as provided by Exchange Act Rule O-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: TMI HOLDINGS, INC. 11924 FOREST HILL BLVD., SUITE 22-204 WELLINGTON, FL 33414 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 10, 2003 TO OUR SHAREHOLDERS: You are cordially invited to attend the Annual Meeting of the Shareholders of TMI Holdings, Inc. (the "Company") to be held on June 10, 2003 at 9:00 AM, Pacific Standard Time, at the Courtyard Marriott located at 620 North University Drive, Coral Springs, Florida 33071, to consider and act upon the following proposals, as described in the accompanying Information Statement: 1. To elect three (3) directors to serve until the next Annual Meeting of Shareholders and thereafter until their successors are elected and qualified; 2. To amend the Articles of Incorporation of the Company to effectuate an increase in the number of shares of the Company's authorized common stock to 30 million shares; 3. To adopt the Second Restated Articles of Incorporation for the purpose of consolidating previous amendments to the Company's Articles of Incorporation; 4. To approve the TMI Holdings, Inc. 2003 Qualified Securities Plan; 5. To ratify the TMI Holdings, Inc. 2003 Non-Qualified Securities Plan; 6. To approve the Second Restated Bylaws of TMI Holdings, Inc.; 7. To ratify the appointment of Berkowitz Dick Pollack & Brant LLP, Certified Public Accountants, as independent auditors of the Company for the fiscal year ending December 31, 2003; and 8. To transact such other business as may properly come before the meeting or any adjournments thereof. 2 The foregoing items of business are more fully described in the Information Statement accompanying this Notice. The Board of Directors has fixed the close of business on April 29, 2003, as the record date for Shareholders entitled to notice of and to vote at this meeting and any adjournments thereof. By Order of the Board of Directors Scott Siegel, President May __, 2003 Coral Springs, Florida 3 WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY INFORMATION STATEMENT INTRODUCTION This information statement is being mailed or otherwise furnished to stockholders of TMI Holdings, Inc., a Florida corporation (the "Company") in connection with the upcoming annual meeting of its shareholders. This information statement is being first sent to stockholders on or about May 19, 2003. PROPOSALS The following proposals are being presented at the meeting (the "Proposals"): 1. To elect three (3) directors to serve until the next Annual Meeting of Shareholders and thereafter until their successors are elected and qualified; 2. To amend the Articles of Incorporation of the Company to effectuate an increase in the number of shares of the Company's authorized common stock to 30 million shares; 3. To adopt the Second Restated Articles of Incorporation for the purpose of consolidating previous amendments to the Company's Articles of Incorporation; 4. To approve the TMI Holdings, Inc. 2003 Omnibus Securities Plan ("2003 Omnibus Securities Plan"); 5. To ratify the TMI Holdings, Inc. 2003 Non-Qualified Securities Plan ("2003 Non-Qualified Securities Plan"); 6. To approve the Second Restated Bylaws of TMI Holdings, Inc.; 7. To ratify the appointment of Berkowitz Dick Pollack & Brant LLP, Certified Public Accountants, as independent auditors of the Company for the fiscal year ending December 31, 2003; and 8. To transact such other business as may properly come before the meeting or any adjournments thereof. VOTE REQUIRED The vote which is required to approve the above Proposals is the affirmative vote of the holders of a majority of the Company's voting stock. Each holder of common stock is entitled to one (1) vote for each share held. The holders of Series A Preferred Stock are entitled to ten (10) votes for each share held; and the holders of Series B Convertible Preferred Stock do not have voting rights. 4 The record date for purposes of determining the number of outstanding shares of voting stock of the Company, and for determining stockholders entitled to vote, is the close of business on April 29, 2003 (the "Record Date"). The Board of Directors of the Company adopted the resolution approving and recommending each of the Proposals on May 2, 2003. As of the Record Date, the Company had outstanding 1,439,675 shares of common stock, 250,000 shares of Series A Preferred Stock, and 500,000 shares of Series B Convertible Preferred Stock. Holders of the shares have no preemptive rights. All outstanding shares are fully paid and nonassessable. The transfer agent for the common stock is North American Transfer Co., 147 West Merrick Rd., Freeport, New York 11520, telephone (516) 379-8501. VOTE OBTAINED - SECTION 607.0704 FLORIDA REVISED STATUTES Section 607.0704 of the Florida Revised Statutes (the "Florida Law") provides that the written consent of the holders of the outstanding shares of common stock, having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, may be substituted for such a meeting. Pursuant to Sections 607.1003 and 607.1007 of the Florida Revised Statutes, approval by a majority of the outstanding shares of preferred and common stock entitled to vote thereon is a valid method in order to amend or restate the Articles of Incorporation. In addition, the Company's Articles of Incorporation require a majority of the outstanding shares of preferred and common stock approve the Restated Bylaws. In addition, the terms of the 2003 Omnibus Securities Plan and the 2003 Non-Qualified Securities Plan (hereinafter the 2003 Omnibus Securities Plan and the 2003 Non-Qualified Plan shall be referred to together as the "Plans") require that a majority of the outstanding shares of preferred and common stock approve the Plans. In order to eliminate the costs and management time involved in obtaining proxies and in order to effect the Amended and Restated Articles of Incorporation, the Restated Bylaws, and the Plans, as early as possible in order to accomplish the purposes of the Company as hereafter described, the Board of Directors of the Company voted to utilize, and did in fact obtain, the written consent of the holders of a majority in the interest of the common stock of the Company. Pursuant to Section 607.0704 of the Florida Revised Statutes, the Company is required to provide prompt notice of the taking of the corporate action without a meeting to the stockholders of record who have not consented in writing to such action. This Information Statement is intended to provide such notice. No dissenters' or appraisal rights under the Florida Law are afforded to the Company's stockholders as a result of the approval of the Proposals. PROPOSAL ONE ELECTION OF DIRECTORS Directors are elected by the shareholders at each annual meeting to hold office until their respective successors are elected and qualified, and need not be shareholders of the Company or residents of the State of Florida. Directors may receive compensation for their services as determined by the Board of Directors. See "Compensation of Directors." Pursuant to the Second Restated Bylaws of the Company, which were approved by the Shareholders, the Board of Directors consists of no less than one (1), nor more than ten (10) members. Presently, the Board consists of two (2) members, namely Mr. Scott Siegel and Mr. Neil Dolgin. All of the above-mentioned directors have chosen to stand for re-election and have been nominated for re-election by the Board. In addition, the Board has nominated Mr. Manny Losada for election to the Board. The remaining seven (7) spots on the Board of Directors shall remain vacant. 5 The Board of Directors has instructed the President to explore additional candidates to be added to the Board. No candidates have been identified at this time. Voting for the election of directors is non-cumulative, which means that a simple majority of the shares voting may elect all of the directors. Each share of common stock is entitled to one (1) vote and, therefore, has a number of votes equal to the number of authorized directors. Each share of Series A Preferred Stock is entitled to ten (10) votes, and, therefore, has a number of votes equal to ten times the number of authorized directors. Shares of Series B Convertible Preferred Stock do not have voting rights and, as such, are not entitled to vote on this proposal. On May 2, 2003, the three nominees were approved by written consent of a majority of the Company's stockholders. Although management of the Company expects that each of the following nominees will be available to serve as a director, in the event that any of them should become unavailable prior to the shareholders meeting, a replacement will be appointed by a majority of the then-existing Board of Directors. Management has no reason to believe that any of its nominees, if elected, will be unavailable to serve. All nominees are expected to serve until the next annual shareholders meeting or until their successors are duly elected and qualified. NOMINEES FOR ELECTION AS DIRECTOR The following table sets forth certain information with respect to persons nominated by the Board of Directors of the Company for election as Directors of the Company and who will be elected following the annual shareholders meeting: Name Age Position(s) - ---- --- ------------ Scott Siegel 49 Director, Chief Executive Officer, Chief Financial Officer, and Treasurer Neil Dolgin 51 Director Manny Losada 38 Director Nominee Mr. Siegel has been a director of the Company since March 5, 2003. Mr. Siegel was also installed as Chief Executive Officer, Chief Financial Officer, and Treasurer of the Company since March 5, 2003. Mr. Siegel is the Chief Executive Officer, Secretary and Treasurer of First Aid Direct, Inc.. He has been an officer and/or director of First Aid Direct, Inc. since August 1997. Mr. Dolgin has been a director of the Company since April 29, 2003. He also serves in the following capacities: Chairman of the Board and Chief Executive Officer of AMRES (commencing in 1997); Chief Executive Officer of BravoRealty.com, Expidoc.com, and Anza Properties; Chief Executive Officer of Firstline Mortgage, Inc., a HUD-approved originator of FHA, VA, and Title 1 loans (commencing in 1985); and Chairman of the Board of Firstline Relocation Services, Inc., a three office enterprise that provides real estate sales, financing, destination, and departure services to Fortune 500 companies (commencing in 1995). Mr. Rinehart received his B.A. in Business Administration from California State University at Long Beach in 1972. 6 Mr. Losada is a nominee for the Board of Directors. He is not currently a director of the Company. Mr. Losada was Vice President and General Manager of Henry Schein, Inc. from 1999-2002, where he managed the overall business operations of the Caligor Hospital Supply division. Prior to his position at Henry Schein, Inc., Mr. Losada held various positions at Caligor Physician and Hospital Supply from 1992-1998. His latest position was Vice President, and prior to that he was Sales Manager and Director of Sales. In these positions Mr. Losada was responsible for sales as well as the successful acquisitions of several regional hospital suppliers. Mr. Losada is a member of the Health Industry Distributor Association. In 1994 Mr. Losada received his Certification in Materials Management from Bloomfield College, and in 1986 Mr. Losada received his Bachelor of Science from Montclair State University. COMPENSATION OF DIRECTORS Directors of the Company receive no compensation as a Director but they are entitled to reimbursement for their travel expenses. The Company does not pay additional amounts for committee participation or special assignments of the Board of Directors. BOARD MEETINGS AND COMMITTEES During the fiscal year ended December 31, 2002, the Board of Directors met on several occasions and took written action on numerous other occasions. All the members of the Board attended the meetings. The written actions were by unanimous consent. The Company presently has no executive committee, nominating committee or audit committee of the Board of Directors. PROPOSAL TWO AMENDMENT TO THE ARTICLES OF INCORPORATION On May 2, 2003, the Board of Directors of the Company approved, declared it advisable and in the Company's best interests and directed that there be submitted to the holders of a majority of the Company's common stock for action by written consent the proposed amendment to Article 5 of the Company's Articles of Incorporation to increase the Company's authorized common stock from 1,500,000 shares to 30 million shares. On May 2, 2003, the Amendment to the Articles of Incorporation was approved by written consent of a majority of the Company's stockholders. The Board of Directors believes that it is advisable and in the Company's best interests to have available additional authorized but unissued shares of common stock in an amount adequate to provide for the Company's future needs. The additional shares will be available for issuance from time to time by the Company in the discretion of the Board of Directors, normally without further stockholder action (except as may be required for a particular transaction by applicable law, requirements of regulatory agencies or by stock exchange rules), for any proper corporate purpose including, among other things, future acquisitions of property or securities of other corporations, stock dividends, stock splits, stock options, convertible debt and equity financing. The availability of additional authorized but unissued shares will be achieved by effectuating an increase in the number of authorized shares of common stock from 1,500,000 to 30 million. This step is necessary, in the judgment of the Board of Directors, in order to raise additional capital and carry out the Company's business objectives. The Board of Directors believes that it is advisable and in the Company's best interests to increase the authorized common stock in order to more accurately reflect changes in the Company's business focus and changes in management. 7 PROPOSAL THREE ADOPTION OF SECOND RESTATED ARTICLES OF INCORPORATION On May 2, 2003, the Board of Directors approved, declared it advisable and in the Company's best interests and directed that there be submitted to the holders of a majority of the Company's common stock for action by written consent the Second Restated Articles of Amendment of TMI Holdings, Inc. On May 2, 2003, the Second Restated Articles of Incorporation was approved by written consent of a majority of the Company's stockholders. Following the initial filing of the Company's original Articles of Incorporation, and First Restated Articles of Incorporation, the Company has filed numerous amendments to its Articles of Incorporation and First Restated Articles of Incorporation, and the amendment discussed herein will be an additional amendment. In order to simplify the Company's Articles of Incorporation and the various subsequent amendments, the Board of Directors believes it in the Company's best interest to consolidate the original Articles of Incorporation, the First Restated Articles of Incorporation, and the subsequent amendments into a single Second Restated Articles of Incorporation. PROPOSAL FOUR APPROVAL OF THE TMI HOLDINGS, INC. 2003 QUALIFIED SECURITIES PLAN GENERAL On May 2, 2003, the Board of Directors of the Company approved, declared it advisable and in the Company's best interests and directed that there be submitted to the holders of a majority of the Company's voting stock for action by written consent, the TMI Holdings, Inc. 2003 Omnibus Securities Plan (the "2003 Omnibus Securities Plan"). On May 2, 2003, the 2003 Omnibus Securities Plan was approved by written consent of a majority of the Company's stockholders. PURPOSE The purpose of the 2003 Omnibus Securities Plan is to promote the interests of the Company (including its subsidiaries) and its stockholders by using investment interests in the Company to attract, retain and motivate its management and other persons, including officers, directors, key employees and certain consultants, to encourage and reward such persons' contributions to the performance of the Company and to align their interests with the interests of the Company's stockholders. In furtherance of this purpose, the 2003 Omnibus Securities Plan authorizes the granting of the following types of stock-based awards (each, an "Award"): 8 - stock options (including incentive stock options and non-qualified stock options); - restricted stock awards; - unrestricted stock awards; and - performance stock awards. Each of these types of Awards is described below under "Awards." ELIGIBILITY Key employees (including employees who are also directors or officers), directors and certain consultants of the Company or any subsidiary are eligible to be granted Awards under the 2003 Omnibus Securities Plan at the discretion of the Board of Directors. In determining the eligibility of any person, as well as in determining the number of shares to be covered by an Award and the type or types of Awards to be made, the Board of Directors may consider: - the position, relationship, responsibilities and importance of the person to the Company; and - such other factors as the Board of Directors deems relevant. Selected consultants may participate in the 2003 Omnibus Securities Plan if: - the consultant renders bona fide services to the Company or one of its subsidiaries; - the services rendered by the consultant are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and - the consultant is a natural person who has contracted directly with the Company or a subsidiary of the Company to render such services. ADMINISTRATION The 2003 Omnibus Securities Plan currently is administered by the Board of Directors. In the future, the Board of Directors may form a Compensation Committee to administer the 2003 Omnibus Securities Plan. Any Compensation Committee must be comprised of at least two non-employee directors. If a Compensation Committee is formed to administer the 2003 Omnibus Securities Plan, the Board of Directors will delegate to the Compensation Committee full authority, in its discretion, to: - select the persons to whom Awards will be granted (each a "Participant"); - grant Awards under the 2003 Omnibus Securities Plan; - determine the number of shares to be covered by each Award; - determine the nature, amount, pricing, timing and other terms of the Award; - interpret, construe and implement the provisions of the 2003 O mnibus Securities Plan (including the authority to adopt rules and regulations for carrying out the purposes of the plan); and - terminate, modify or amend the 2003 Omnibus Securities Plan. 9 The 2003 Omnibus Securities Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974. SHARES SUBJECT TO THE PLAN A total of 140,000 shares of Common Stock (subject to adjustment as described below) are reserved for issuance under the 2003 Omnibus Securities Plan. Shares of common stock issued under the 2003 Omnibus Securities Plan may be authorized but unissued shares, or shares reacquired by the Company, including shares purchased on the open market. The unexercised, unearned or yet-to-be acquired portions of any Award that expire, terminate or are canceled, and shares of common stock issued pursuant to Awards under the 2003 Omnibus Securities Plan that are reacquired by the Company pursuant to the terms under which such shares were issued, will again become available for the grant of further Awards. ADJUSTMENT. In general, the aggregate number of shares as to which Awards may be granted to Participants under the 2003 Omnibus Securities Plan, the number and kind of shares thereof covered by each outstanding Award, and/or the price per share thereof in each such Award will, upon a determination of the Board of Directors, all be proportionately adjusted for any increase or decrease in the number of issued shares of common stock resulting from an increase, decrease or exchange in the outstanding shares of common stock or additional shares or new or different shares are distributed in respect of such shares of common stock, through merger, consolidation, sale or exchange of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, spin-off or other distribution with respect to such shares. On May 1 of each year, the number of shares in the 2003 Omnibus Securities Plan shall automatically be adjusted to an amount equal to ten percent (10%) of the outstanding stock of the Company on April 30 of the immediately preceding year. Fractional interests will not be issued upon any adjustments made by the Board or Directors; however, the committee may, in its discretion, make a cash payment in lieu of any fractional shares of common stock issuable as a result of such adjustments. AWARDS STOCK OPTIONS. Under the 2003 Omnibus Securities Plan, the Board of Directors may grant either incentive stock options or nonqualified stock options. Incentive stock options and non-qualified stock options may be granted for such number of shares of common stock as the Board of Directors determines, so long as such number of shares does not exceed the amount permitted under the plan, or in the case of incentive stock options, the amount permissible under I.R.C. Section 422. The exercise price for each stock option is determined by the Board of Directors. Stock options must have an exercise price of at least 85% (100% in the case of incentive stock options, or at least 110% in the case of incentive stock options granted to certain employees owning more than 10% of the outstanding voting stock) of the fair market value of the common stock on the date the stock option is granted. Under the 2003 Omnibus Securities Plan, fair market value of the common stock for a particular date is generally the average of the closing bid and asked prices per share for the stock as quoted on the OTC Bulletin Board on such date. 10 No stock option may be exercised after the expiration of ten years from the date of grant (or five years in the case of incentive stock options granted to certain employees owning more than 10% of the outstanding voting stock). Pursuant to the 2003 Omnibus Securities Plan, the aggregate fair market value of the common stock, for which one or more incentive stock options granted to any participant may for the first time become exercisable as incentive stock options under the federal tax laws during anyone calendar year shall not exceed $100,000. A stock option may be exercised in whole or in part according to the terms of the applicable stock option agreement by delivery of written notice of exercise to the Company specifying the number of shares to be purchased. The exercise price for each stock option may be paid by the Participant in cash or by such other means as the Board of Directors may authorize. Fractional shares are not to be issued upon exercise of a stock option. The Board of Directors may grant reload stock options in tandem with stock options that provide for an automatic grant of a stock option in the event a participant pays the exercise price of a stock option by delivery of common stock. The Board of Directors may, in its discretion, at any time after the grant of a stock option, accelerate vesting of such option, as a whole or in part, by increasing the number of shares then purchasable. However, the Board of Directors may not increase the total number of shares subject to an option. Subject to the foregoing and the other provisions of the 2003 Omnibus Securities Plan, stock options may be exercised at such times and in such amounts and be subject to such restrictions and other terms and conditions, if any, as determined by the Board of Directors. RESTRICTED STOCK. Restricted stock may be awarded by the Board of Directors subject to such terms, conditions and restrictions as it deems appropriate. Restrictions may include limitations on voting rights and transferability of the shares, restrictions based on the duration of employment or engagement with the Company, and Company or individual performance. Restricted stock may not be sold or encumbered until all restrictions expire or are terminated. In this regard, the Secretary of the Company or such other escrow holder as the Board of Directors may appoint shall retain physical custody of each certificate representing restricted stock until all restrictions imposed under the applicable Award Agreement shall expire or be removed. The Board of Directors may require the Participant to pay the Company an amount at least equal to the par value of the common stock awarded to the Participant. Subject to any limitations imposed by the applicable Award Agreement, from the date a Participant becomes the holder of record of restricted stock, the Participant has all the rights of a stockholder with respect to such shares, including the right to vote the shares and to receive all dividends and other distributions paid with respect to the shares. The 2003 Omnibus Securities Plan provides that to the extent the Board of Directors elects to grant an Award of restricted stock, the Award Agreement applicable thereto shall, except in certain specified situations, provide the Company with the right to repurchase the restricted stock then subject to restrictions immediately upon a termination of employment or engagement for any reason whatsoever at a cash price per share equal to the price paid by the Participant for the restricted stock. UNRESTRICTED STOCK. The Board of Directors may, in its discretion, grant an Award of unrestricted stock to any eligible Participant, pursuant to which such Participant may receive shares of Common Stock free of any vesting restrictions under the 2003 Omnibus Securities Plan. The Board of Directors may also sell shares of unrestricted stock to eligible Participants at a purchase price determined in its discretion. Unrestricted stock may be granted or sold in respect of past services or other valid consideration, or in lieu of any cash compensation due to such individual. 11 PERFORMANCE STOCK AWARDS. The Board of Directors may make performance stock awards under the 2002 Securities Plan based upon terms it deems appropriate. The Board of Directors may make performance stock awards independent of or in connection with the granting of any other Award under the 2003 Omnibus Securities Plan. The Board of Directors shall determine whether and to whom performance stock awards shall be made, the performance criteria applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded shares. The Board of Directors may utilize any of the following performance criteria when granting performance stock awards: - net income; - pre-tax income; - operating income; - cash flow; - earnings per share; - return on equity; - return on invested capital or assets; - cost reductions or savings; - funds from operations; - appreciation in the fair market value of the common stock; - earnings before anyone or more of the following: interest, taxes, depreciation or amortization; and - such other criteria deemed appropriate by the Board of Directors. The Participant receiving a performance stock award shall have the rights of a stockholder only as to shares actually received by the Participant and not with respect to shares subject to the Award but not actually received. At any time prior to the Participant's termination of employment (or other business relationship) by the Company, the Board of Directors may, in its discretion, accelerate, waive or, subject to the other provisions of the 2003 Omnibus Securities Plan, amend any and all performance criteria specified under any performance stock award. FEDERAL INCOME TAX CONSEQUENCES The following is a brief summary of the principal federal income tax consequences of the grant and exercise of Awards under present law. This summary is not intended to be exhaustive and does not describe foreign, state or local tax consequences. Recipients of Awards are advised to consult their personal tax advisors with regard to all tax consequences arising with respect to the Awards. TAX WITHHOLDING. If a distribution is made under this 2003 Omnibus Securities Plan in cash, the Company will withhold taxes as required by law. If an Award is satisfied in the form of shares of the common stock, then no shares may be issued unless and until arrangements satisfactory to the Company have been made to satisfy any tax withholding obligations applicable with respect to such Award. 12 DEDUCTIBILITY OF AWARDS. Company deductions for Awards granted under the 2003 Omnibus Securities Plan are limited by Section 162(m) of the Internal Revenue Code of 1986 (the "Code") which generally limits the Company's deduction for non-performance based compensation to $1.0 million per year for the Company's CEO and its other four (4) most highly compensated officers. The Company has not paid any compensation to any executive officers that was not deductible by reason of the prohibition of Section 162(m). INCENTIVE STOCK OPTIONS. Pursuant to the 2003 Omnibus Securities Plan, employees may be granted stock options that are intended to qualify as "incentive stock options" under the provisions of Section 422 of the Code. An optionee will not recognize any taxable income for federal income tax purposes upon receipt of an incentive stock option or, generally, at the time of exercise of an incentive stock option. The exercise of an incentive stock option generally will result in an increase in an optionee's taxable income for alternative minimum tax purposes. If an optionee exercises an incentive stock option and does not dispose of the shares received in a subsequent "disqualifying disposition" (generally, a sale, gift or other transfer within two years after the date of grant of the incentive stock option or within one year after the shares are transferred to the optionee), upon disposition of the shares any amount realized in excess of the optionee's tax basis in the shares disposed of will be treated as a long-term capital gain, and any loss will be treated as a long-term capital loss. In the event of a disqualifying disposition, the difference between the fair market value of the shares received on the date of exercise and the exercise price (limited, in the case of a taxable sale or exchange, to the excess of the amount realized upon disposition over the optionee's tax basis in the shares) will be treated as compensation received by the optionee in the year of disposition. Any additional gain will be taxable as a capital gain and any loss as a capital loss, which will be long-term or short-term, depending on the length of time the optionee held the shares. If the exercise price of an incentive stock option is paid in whole or in part with shares of common stock, no income gain or loss generally will be recognized by the optionee with respect to the shares of common stock paid as the exercise price. However, if such shares of common stock were received upon the exercise of an incentive stock option, the use of those shares as payment of the exercise price will be considered a disposition for purposes of determining whether there has been a disqualifying disposition of those shares. Neither the Company nor any of its subsidiaries will be entitled to a deduction with respect to shares received by an optionee upon exercise of an incentive stock option and not disposed of in a disqualifying disposition. If an amount is treated as compensation received by an optionee because of a disqualifying disposition, the Company or one of its subsidiaries generally will be entitled to a corresponding deduction in the same amount for compensation paid. NON-QUALIFIED STOCK OPTIONS. An optionee will not recognize any taxable income for federal income tax purposes upon receipt of a non-qualified stock option. Upon the exercise of a non-qualified stock option the amount by which the fair market value of the shares received, determined as of the date of exercise, exceeds the exercise price, the stock option will be treated as compensation received by the optionee in the year of exercise. If the exercise price of a non-qualified stock option is paid in whole or in part with shares of common stock, (i) no income, gain or loss will be recognized by the optionee on the receipt of shares equal in value on the date of exercise to the shares delivered in payment of the exercise price, and (ii) no income, gain or loss will be recognized by the optionee with respect to the shares of common stock paid as the exercise price of the option. The fair market value of the remainder of the shares received upon exercise of the non-qualified stock option, determined as of the date of exercise, less the amount of cash, if any, paid upon exercise, will be treated as compensation income received by the optionee on the date of exercise of the stock option. The Company or one of its subsidiaries, generally will be entitled to a deduction for compensation paid in the same amount treated as compensation received by the optionee. 13 RELOAD OPTION RIGHTS. An optionee should not recognize any taxable income for federal income tax purposes upon receipt of reload option rights, and a reload option should be treated as a non-qualified stock option. RESTRICTED STOCK. A recipient of restricted stock will not recognize any taxable income for federal income tax purposes in the year of the Award, provided the shares are subject to restrictions (that is, they are non-transferable and subject to a substantial risk of forfeiture). However, the recipient may elect under Section 83(b) of the Code to recognize compensation income in the year of the Award in an amount equal to the fair market value of the shares on the date of the Award (less the amount paid by the recipient for such shares), determined without regard to the restrictions. If the recipient does not make a Section 83(b) election, the fair market value of the shares on the date the restrictions lapse (less the amount paid by the recipient for such shares) will be treated as compensation income to the recipient and will be taxable in the year the restrictions lapse. The Company or one of its subsidiaries generally will be entitled to a deduction for compensation paid in the same amount treated as compensation income to the recipient. UNRESTRICTED STOCK. Any shares of common stock received pursuant to an Award of unrestricted stock will be treated as compensation income received by the recipient, generally, in the year in which the recipient receives such shares. In each case, the amount of compensation income will equal the fair market value of the shares of common stock on the date compensation income is recognized (less the amount, if any, paid by the recipient for such shares). The Company or one of its subsidiaries, generally, will be entitled to a corresponding deduction in the same amount for compensation paid. PERFORMANCE STOCK AWARDS. A recipient of a performance stock award will not recognize any taxable income for federal income tax purposes upon receipt of the Award. Any shares of common stock received pursuant to the Award will be treated as compensation income received by the recipient, generally, in the year in which the recipient receives such shares of common stock. The amount of compensation income will equal the fair market value of the shares of common stock on the date compensation income is recognized. The Company or one of its subsidiaries, generally, will be entitled to a deduction for compensation paid in the same amount treated as compensation income to the recipient. OTHER TAX MATTERS. The exercise by a recipient of a stock option, the lapse of restrictions on restricted stock, or the deemed earnout of performance stock awards following the occurrence of a change in control, in certain circumstances, may result in: - a 20% federal excise tax (in addition to federal income tax) to the recipient on certain payments of common stock or cash resulting from such exercise or deemed earnout of performance stock awards or, in the case of restricted stock, on all or a portion of the fair market value of the shares on the date the restrictions lapse; and - the loss of a compensation deduction which would otherwise be allowable to the Company or one of its subsidiaries as explained above. 14 GRANTS UNDER THE 2003 OMNIBUS SECURITIES PLAN As of the date of this Information Statement, no employee has been granted Options or Shares under the Plan. PROPOSAL FIVE APPROVAL OF THE TMI HOLDINGS, INC. 2003 NON-QUALIFIED SECURITIES PLAN GENERAL On May 2, 2003, the Board of Directors of the Company approved, declared it advisable and in the Company's best interests and directed that there be submitted to the holders of a majority of the Company's voting stock for action by written consent, the TMI Holdings, Inc. 2003 Non-Qualified Securities Plan (the "2003 Non-Qualified Securities Plan"). On May 2, 2003, the Board of Directors approval of the 2003 Non-Qualified Securities Plan was ratified by written consent of a majority of the Company's stockholders. The 2003 Non-Qualified Securities Plan is already in effect based upon the above Board of Directors' approval. PURPOSE The purpose of the 2003 Non-Qualified Securities Plan is to promote the interests of the Company (including its subsidiaries) and its stockholders by using investment interests in the Company to attract, retain and motivate its management and other persons, including officers, directors, key employees and certain consultants, to encourage and reward such persons' contributions to the performance of the Company and to align their interests with the interests of the Company's stockholders. In furtherance of this purpose, the 2003 Non-Qualified Securities Plan authorizes the granting of the following types of stock-based awards (each, an "Award"): - stock options (including incentive stock options and non-qualified stock options); - restricted stock awards; - unrestricted stock awards; and - performance stock awards. Each of these types of Awards is described below under "Awards." ELIGIBILITY Key employees (including employees who are also directors or officers), directors and certain consultants of the Company or any subsidiary are eligible to be granted Awards under the 2003 Non-Qualified Securities Plan at the discretion of the Board of Directors. In determining the eligibility of any person, as well as in determining the number of shares to be covered by an Award and the type or types of Awards to be made, the Board of Directors may consider: - the position, relationship, responsibilities and importance of the person to the Company; and - such other factors as the Board of Directors deems relevant. 15 Selected consultants may participate in the 2003 Non-Qualified Securities Plan if: - the consultant renders bona fide services to the Company or one of its subsidiaries; - the services rendered by the consultant are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and - the consultant is a natural person who has contracted directly with the Company or a subsidiary of the Company to render such services. ADMINISTRATION The 2003 Non-Qualified Securities Plan currently is administered by the Board of Directors. In the future, the Board of Directors may form a Compensation Committee to administer the 2003 Non-Qualified Securities Plan. Any Compensation Committee must be comprised of at least two non-employee directors. If a Compensation Committee is formed to administer the 2003 Non-Qualified Securities Plan, the Board of Directors will delegate to the Compensation Committee full authority, in its discretion, to: - select the persons to whom Awards will be granted (each a "Participant"); - grant Awards under the 2003 Non-Qualified Securities Plan; - determine the number of shares to be covered by each Award; - determine the nature, amount, pricing, timing and other terms of the Award; - interpret, construe and implement the provisions of the 2003 Non-Qualified Securities Plan (including the authority to adopt rules and regulations for carrying out the purposes of the plan); and - terminate, modify or amend the 2003 Non-Qualified Securities Plan. The 2003 Non-Qualified Securities Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974. SHARES SUBJECT TO THE PLAN A total of 2.5 million shares of Common Stock (subject to adjustment as described below) are reserved for issuance under the 2003 Non-Qualified Securities Plan. Shares of common stock issued under the 2003 Non-Qualified Securities Plan may be authorized but unissued shares, or shares reacquired by the Company, including shares purchased on the open market. The unexercised, unearned or yet-to-be acquired portions of any Award that expire, terminate or are canceled, and shares of common stock issued pursuant to Awards under the 2003 Non-Qualified Securities Plan that are reacquired by the Company pursuant to the terms under which such shares were issued, will again become available for the grant of further Awards. ADJUSTMENT. In general, the aggregate number of shares as to which Awards may be granted to Participants under the 2003 Non-Qualified Securities Plan, the number and kind of shares thereof covered by each outstanding Award, and/or the price per share thereof in each such Award will, upon a determination of the Board of Directors, all be proportionately adjusted for any increase or decrease in the number of issued shares of common stock resulting from an increase, decrease or exchange in the outstanding shares of common stock or additional shares or new or different shares are distributed in respect of such shares of common stock, through merger, consolidation, sale or exchange of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, spin-off or other distribution with respect to such shares. 16 Fractional interests will not be issued upon any adjustments made by the Board or Directors; however, the committee may, in its discretion, make a cash payment in lieu of any fractional shares of common stock issuable as a result of such adjustments. AWARDS STOCK OPTIONS. Under the 2003 Non-Qualified Securities Plan, the Board of Directors may only grant non-qualified stock options. Non-qualified stock options may be granted for such number of shares of common stock as the Board of Directors determines, so long as such number of shares does not exceed the amount permitted under the plan. The exercise price for each stock option is determined by the Board of Directors. Stock options under the 2003 Non-Qualified Securities Plan must have an exercise price of at least 85% of the fair market value of the common stock on the date the stock option is granted. Under the 2003 Non-Qualified Securities Plan, fair market value of the common stock for a particular date is generally the average of the closing bid and asked prices per share for the stock as quoted on the OTC Bulletin Board on such date. No stock option may be exercised after the expiration of ten years from the date of grant. A stock option may be exercised in whole or in part according to the terms of the applicable stock option agreement by delivery of written notice of exercise to the Company specifying the number of shares to be purchased. The exercise price for each stock option may be paid by the Participant in cash or by such other means as the Board of Directors may authorize. Fractional shares are not to be issued upon exercise of a stock option. The Board of Directors may grant reload stock options in tandem with stock options that provide for an automatic grant of a stock option in the event a participant pays the exercise price of a stock option by delivery of common stock. The Board of Directors may, in its discretion, at any time after the grant of a stock option, accelerate vesting of such option, as a whole or in part, by increasing the number of shares then purchasable. However, the Board of Directors may not increase the total number of shares subject to an option. Subject to the foregoing and the other provisions of the 2003 Non-Qualified Securities Plan, stock options may be exercised at such times and in such amounts and be subject to such restrictions and other terms and conditions, if any, as determined by the Board of Directors. RESTRICTED STOCK. Restricted stock may be awarded by the Board of Directors subject to such terms, conditions and restrictions as it deems appropriate. Restrictions may include limitations on voting rights and transferability of the shares, restrictions based on the duration of employment or engagement with the Company, and Company or individual performance. Restricted stock may not be sold or encumbered until all restrictions expire or are terminated. In this regard, the Secretary of the Company or such other escrow holder as the Board of Directors may appoint shall retain physical custody of each certificate representing restricted stock until all restrictions imposed under the applicable Award Agreement shall expire or be removed. 17 The Board of Directors may require the Participant to pay the Company an amount at least equal to the par value of the common stock awarded to the Participant. Subject to any limitations imposed by the applicable Award Agreement, from the date a Participant becomes the holder of record of restricted stock, the Participant has all the rights of a stockholder with respect to such shares, including the right to vote the shares and to receive all dividends and other distributions paid with respect to the shares. The 2003 Non-Qualified Securities Plan provides that to the extent the Board of Directors elects to grant an Award of restricted stock, the Award Agreement applicable thereto shall, except in certain specified situations, provide the Company with the right to repurchase the restricted stock then subject to restrictions immediately upon a termination of employment or engagement for any reason whatsoever at a cash price per share equal to the price paid by the Participant for the restricted stock. UNRESTRICTED STOCK. The Board of Directors may, in its discretion, grant an Award of unrestricted stock to any eligible Participant, pursuant to which such Participant may receive shares of Common Stock free of any vesting restrictions under the 2003 Non-Qualified Securities Plan. The Board of Directors may also sell shares of unrestricted stock to eligible Participants at a purchase price determined in its discretion. Unrestricted stock may be granted or sold in respect of past services or other valid consideration, or in lieu of any cash compensation due to such individual. PERFORMANCE STOCK AWARDS. The Board of Directors may make performance stock awards under the 2002 Securities Plan based upon terms it deems appropriate. The Board of Directors may make performance stock awards independent of or in connection with the granting of any other Award under the 2003 Non-Qualified Securities Plan. The Board of Directors shall determine whether and to whom performance stock awards shall be made, the performance criteria applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded shares. The Board of Directors may utilize any of the following performance criteria when granting performance stock awards: - net income; - pre-tax income; - operating income; - cash flow; - earnings per share; - return on equity; - return on invested capital or assets; - cost reductions or savings; - funds from operations; - appreciation in the fair market value of the common stock; - earnings before anyone or more of the following: interest, taxes, depreciation or amortization; and - such other criteria deemed appropriate by the Board of Directors. The Participant receiving a performance stock award shall have the rights of a stockholder only as to shares actually received by the Participant and not with respect to shares subject to the Award but not actually received. At any time prior to the Participant's termination of employment (or other business relationship) by the Company, the Board of Directors may, in its discretion, accelerate, waive or, subject to the other provisions of the 2003 Non-Qualified Securities Plan, amend any and all performance criteria specified under any performance stock award. 18 FEDERAL INCOME TAX CONSEQUENCES The following is a brief summary of the principal federal income tax consequences of the grant and exercise of Awards under present law. This summary is not intended to be exhaustive and does not describe foreign, state or local tax consequences. Recipients of Awards are advised to consult their personal tax advisors with regard to all tax consequences arising with respect to the Awards. TAX WITHHOLDING. If a distribution is made under this 2003 Non-Qualified Securities Plan in cash, the Company will withhold taxes as required by law. If an Award is satisfied in the form of shares of the common stock, then no shares may be issued unless and until arrangements satisfactory to the Company have been made to satisfy any tax withholding obligations applicable with respect to such Award. DEDUCTIBILITY OF AWARDS. Company deductions for Awards granted under the 2003 Non-Qualified Securities Plan are limited by Section 162(m) of the Internal Revenue Code of 1986 (the "Code") which generally limits the Company's deduction for non-performance based compensation to $1.0 million per year for the Company's CEO and its other four (4) most highly compensated officers. The Company has not paid any compensation to any executive officers that was not deductible by reason of the prohibition of Section 162(m). NON-QUALIFIED STOCK OPTIONS. An optionee will not recognize any taxable income for federal income tax purposes upon receipt of a non-qualified stock option. Upon the exercise of a non-qualified stock option the amount by which the fair market value of the shares received, determined as of the date of exercise, exceeds the exercise price, the stock option will be treated as compensation received by the optionee in the year of exercise. If the exercise price of a non-qualified stock option is paid in whole or in part with shares of common stock, (i) no income, gain or loss will be recognized by the optionee on the receipt of shares equal in value on the date of exercise to the shares delivered in payment of the exercise price, and (ii) no income, gain or loss will be recognized by the optionee with respect to the shares of common stock paid as the exercise price of the option. The fair market value of the remainder of the shares received upon exercise of the non-qualified stock option, determined as of the date of exercise, less the amount of cash, if any, paid upon exercise, will be treated as compensation income received by the optionee on the date of exercise of the stock option. The Company or one of its subsidiaries, generally will be entitled to a deduction for compensation paid in the same amount treated as compensation received by the optionee. RELOAD OPTION RIGHTS. An optionee should not recognize any taxable income for federal income tax purposes upon receipt of reload option rights, and a reload option should be treated as a non-qualified stock option. RESTRICTED STOCK. A recipient of restricted stock will not recognize any taxable income for federal income tax purposes in the year of the Award, provided the shares are subject to restrictions (that is, they are non-transferable and subject to a substantial risk of forfeiture). However, the recipient may elect under Section 83(b) of the Code to recognize compensation income in the year of the Award in an amount equal to the fair market value of the shares on the date of the Award (less the amount paid by the recipient for such shares), determined without regard to the restrictions. If the recipient does not make a Section 83(b) election, the fair market value of the shares on the date the restrictions lapse (less the amount paid by the recipient for such shares) will be treated as compensation income to the recipient and will be taxable in the year the restrictions lapse. The Company or one of its subsidiaries generally will be entitled to a deduction for compensation paid in the same amount treated as compensation income to the recipient. 19 UNRESTRICTED STOCK. Any shares of common stock received pursuant to an Award of unrestricted stock will be treated as compensation income received by the recipient, generally, in the year in which the recipient receives such shares. In each case, the amount of compensation income will equal the fair market value of the shares of common stock on the date compensation income is recognized (less the amount, if any, paid by the recipient for such shares). The Company or one of its subsidiaries, generally, will be entitled to a corresponding deduction in the same amount for compensation paid. PERFORMANCE STOCK AWARDS. A recipient of a performance stock award will not recognize any taxable income for federal income tax purposes upon receipt of the Award. Any shares of common stock received pursuant to the Award will be treated as compensation income received by the recipient, generally, in the year in which the recipient receives such shares of common stock. The amount of compensation income will equal the fair market value of the shares of common stock on the date compensation income is recognized. The Company or one of its subsidiaries, generally, will be entitled to a deduction for compensation paid in the same amount treated as compensation income to the recipient. OTHER TAX MATTERS. The exercise by a recipient of a stock option, the lapse of restrictions on restricted stock, or the deemed earnout of performance stock awards following the occurrence of a change in control, in certain circumstances, may result in: - a 20% federal excise tax (in addition to federal income tax) to the recipient on certain payments of common stock or cash resulting from such exercise or deemed earnout of performance stock awards or, in the case of restricted stock, on all or a portion of the fair market value of the shares on the date the restrictions lapse; and - the loss of a compensation deduction which would otherwise be allowable to the Company or one of its subsidiaries as explained above. GRANTS UNDER THE 2003 NON-QUALIFIED SECURITIES PLAN As of the date of this Information Statement, no employee has been granted Options or Shares under the Plan. PROPOSAL SIX ADOPTION OF SECOND RESTATED BYLAWS On May 2, 2003, the Board of Directors approved, subject to stockholder approval, the Second Restated Bylaws of TMI Holdings, Inc. In order to simplify the Company's Bylaws and subsequent amendments, including changing the number of directors in the Bylaws to correspond with the Company's Articles of Incorporation, the Board of Directors believes it in the Company's best interest to adopt the Second Restated Bylaws of TMI Holdings, Inc. On May 2, 2003, the Second Restated Bylaws were approved by written consent of a majority of the Company's stockholders. 20 The Second Restated Bylaws will become effective upon their execution, anticipated to be approximately twenty-one (21) days after this Information Statement has been distributed to the Company's stockholders. PROPOSAL SEVEN RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board of Directors has appointed Berkowitz Dick Pollack & Brant LLP, independent certified public accountants, to audit the consolidated financial statements of the Company for the fiscal year ending December 31, 2003 and seeks ratification of such appointment. On May 2, 2003, the appointment of Berkowitz Dick Pollack & Brant LLP was ratified by written consent of a majority of the Company's stockholders. Representatives of Berkowitz Dick Pollack & Brant LLP, are not expected to be present at the Annual Meeting. Audit Fees: During the fiscal year ended December 31, 2002, Berkowitz Dick Pollack & Brant LLP billed the Company approximately $37,000 in fees for professional services rendered in connection with the audit of the Company's annual financial statements and for reviewing the Company's quarterly financial statements included in its quarterly reports on Form 10-QSB for the fiscal year then ended. Financial Information Systems Design and Implementation Fees: During the fiscal year ended December 31, 2002, the Company did not engage Berkowitz Dick Pollack & Brant LLP to provide advice regarding financial information systems design and implementation. All Other Fees: During the fiscal year ended December 31, 2002, Berkowitz Dick Pollack & Brant LLP billed the approximately $7,000 for professional services related to tax consulting and general consulting. The Company does not have an audit committee, however, the Company's Board of Directors has considered whether the services provided by Berkowitz Dick Pollack & Brant LLP in connection with the Other Fees is compatible with maintaining the independence of Berkowitz Dick Pollack & Brant LLP. 21 OTHER INFORMATION DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the names and ages of the current directors and executive officers of the Company, the principal offices and positions with the Company held by each person and the date such person became a director or executive officer of the Company. The executive officers of the Company are elected annually by the Board of Directors. The directors serve one year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. Unless described below, there are no family relationships among any of the directors and officers. NAME Age Position(s) --- ----------- Scott Siegel 49 Director, Chie Executive Officer, Chief Financial Officer, and Treasurer Neil Dolgin 51 Director Mr. Siegel has been a director of the Company since March 5, 2003. Mr. Siegel was also installed as Chief Executive Officer, Chief Financial Officer, and Treasurer of the Company since March 5, 2003. Mr. Siegel is the Chief Executive Officer, Secretary and Treasurer of First Aid Direct, Inc.. He has been an officer and/or director of First Aid Direct, Inc. since August 1997. Mr. Dolgin has been a director of the Company since April 29, 2003. He also serves in the following capacities: Chairman of the Board and Chief Executive Officer of AMRES (commencing in 1997); Chief Executive Officer of BravoRealty.com, Expidoc.com, and Anza Properties; Chief Executive Officer of Firstline Mortgage, Inc., a HUD-approved originator of FHA, VA, and Title 1 loans (commencing in 1985); and Chairman of the Board of Firstline Relocation Services, Inc., a three office enterprise that provides real estate sales, financing, destination, and departure services to Fortune 500 companies (commencing in 1995). Mr. Rinehart received his B.A. in Business Administration from California State University at Long Beach in 1972. EXECUTIVE COMPENSATION The Summary Compensation Table shows certain compensation information for services rendered in all capacities for the fiscal years ended December 31, 2001 and 2000. Other than as set forth herein, no executive officer's salary and bonus exceeded $100,000 in any of the applicable years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted and certain other compensation, if any, whether paid or deferred. 22
SUMMARY COMPENSATION TABLE Annual Compensation Long Term Compensation - --------------------------------------------------------------------------------------------------------------- Annual Compensation Long Term Compensation -------------------------------------------- --------------------------------------------- Awards Payouts ---------------------------- -------------- RESTRICTED SECURITIES OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER NAME AND PRINCIPAL . YEAR SALARY BONUS ($) COMPENSATION AWARDS ($) OPTIONS SARS PAYOUTS COMPENSATION POSITION ($) (#) ($) ($) Scott Siegel(1) 2003 -0- -0- -0- -0- -0- -0- -0- W. Michael Sessions 2002 -0- -0- -0- -0- -0- -0- -0- John W. Meyers (3) 2002 -0- -0- -0- -0- -0- -0- -0- Marc Douglas (4) 2002 -0- -0- -0- -0- -0- -0- -0- 2001 286,347 -0- -0- -0- -0- -0- -0- Ileen Little(5) 2001 59,200 7,000 -0-(6) -0- 25,000 -0- -0- Stephen L. Wiley (7) 2001 65,385 -0- -0-(6) -0- 25,000 -0- -0-
(1) Mr. Siegel was appointed as a Director and as President, Treasurer and Secretary of the Company on March 5, 2003. (2) On March 5, 2003, Mr. Sessions resigned as President and Secretary of the Company. (3) On March 5, 2003, Mr. Meyers resigned as President and Secretary of the Company. (4) On November 7, 2002, Mr. Douglas resigned from all positions he held at the Company. (5) Ms. Little resigned as the Company's Vice President and Secretary following the sale of the Company's business units on August 27, 2001. (6) Perquisites and other personal benefits paid to the indicated Named Executive Officers for the applicable periods did not exceed 10% of the total of annual salary and bonus reported. (7) Mr. Wiley resigned as the Company's Chief Financial Officer following the sale of the Company's business units on August 27, 2001. 23
OPTION/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS) NAME NUMBER OF SECURITIES PERCENT OF TOTAL UNDERLYING OPTIONS/SAR'S GRANTED OPTIONS/SAR'S GRANTED TO EMPLOYEES IN FISCAL EXERCISE OF BASE PRICE (#) YEAR ($/SH) EXPIRATION DATE Scott Siegel -0- N/A N/A N/A W. Michael Sessions. -0- N/A N/A N/A John W. Meyers -0- N/A N/A NA/ Marc Douglas -0- N/A N/A N/A
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES NUMBER OF UNEXERCISED SECURITIES UNDERLYING VALUE OF UNEXERCISED OPTIONS/SARS AT FY-END (#) MONEY OPTION/SARS SHARES ACQUIRED ON EXERCISABLE/UNEXERCISABLE AT FY-END ($) NAME EXERCISE (#) VALUE REALIZED ($) EXERCISABLE/UNEXERCISABLE Scott Siegel -0- N/A N/A N/A W. Michael Sessions -0- N/A N/A N/A John W. Meyers -0- N/A N/A N/A Marc Douglas -0- N/A N/A N/A
COMPENSATION OF DIRECTORS Directors of the Company receive no compensation as a Director but they are entitled to reimbursement for their travel expenses. The Company does not pay additional amounts for committee participation or special assignments of the Board of Directors. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS KINA'OLE, INC. ACQUISITION On January 31, 2003, TMI Holdings, Inc. (the "Company") acquired 100% of the assets and outstanding stock of Kina'ole Development Corporation, a Hawaii corporation. The Company acquired the Kina'ole shares from William Michael Sessions and John W. Meyers, both of whom were officers and directors of the Company at that time. In exchange for Kina'ole's assets and shares, the Company issued Mr. Sessions and Mr. Meyers each 250,000 shares of the Company's Series B Convertible Preferred Stock. Mr. Sessions and Mr. Meyers resigned as officers and directors of the Company on March 5, 2003. The Company's Series B Convertible Preferred Stock entitles its holders to 30 votes on all matters brought before a vote of the Company's stockholders and each share of Series B Convertible Preferred Stock will be converted into the 30 shares of the Company's common stock as soon as the Company has sufficient authorized but unissued common stock to convert all 500,000 shares of Series B Convertible Preferred Stock. 24 Kina'ole is located in Lihue, Hawaii and is a seller of manufactured homes. Through arrangements with dealerships on each Hawaiian island Kina'ole sells the manufactured homes to retail customers. Kina'ole also delevops subdivisions of manufactured homes and has an installation company that, as a licensed contractor, completes the foundation and site work as well as installing the manufactured homes. SCOTT SIEGEL STOCK PURCHASE AGREEMENT On February 21, 2003, the Company entered into a Stock Purchase Agreement with Scott Siegel, whereby the Company issued 1,050,000 shares of common stock and 250,000 shares of Series A Preferred Stock to Mr. Siegel in exchange for Mr. Siegel agreeing to pay approximately $222,500 in outstanding Company debt. At the time of this transaction Mr. Siegel was not a related party to the Company; however, he became an officer and director of the Company on March 5, 2003. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of April 29, 2003, certain information with respect to the Company's equity securities owned of record or beneficially by (i) each Officer and Director of the Company; (ii) each person who owns beneficially more than 5% of each class of the Company's outstanding equity securities; and (iii) all Directors and Executive Officers as a group.
Common Stock -------------- Name and Address of Amount and Nature of Percent Title of Class Beneficial Owner (1) Beneficial Ownership of Class (2) - -------------- -------------------- -------------------- ------------ Common Stock. Scott Siegel(3) 1,000,000 69.5% Common Stock Neil Dolgin(4) 0 0.0% Common All officers and directors as a group Stock (2 persons) 1,000,000 69.5%
(1) Unless otherwise noted, the address of each beneficial owner is c/o TMI Holdings, Inc., 11924 Forest Hill Blvd., Suite 22-204, Wellington Florida 33414. (2) Based on 1,439,675 shares outstanding as of April 29, 2003. (3) Mr. Siegel is a Director of the Company and the Chief Executive Officer, Chief Financial Officer, and Treasurer of the Company. (4) Mr. Dolgin is a Director of the Company. 25
Series A Preferred Stock(1) --------------------------- Name and Address of Amount and Nature of Percent Title of Class Beneficial Owner Beneficial Ownership of Class - -------------- ---------------- -------------------- --------- Series A Preferred Scott Siegel 250,000 100% Series A All officers and directors as a group Preferred (1 person) 250,000 100%
(1) Each Share of Series A Preferred Stock has 10 to 1 voting rights on any matters properly brought before a the shareholders of the Company for a vote.
Series B Preferred Stock(1) --------------------------- Name and Address of Amount and Nature of Percent Title of Class Beneficial Owner Beneficial Ownership of Class - -------------- ---------------- -------------------- --------- Series B Preferred W. Michael Sessions 250,000 50% Series B Preferred John W. Meyers 250,000 50% Series B. All officers and directors as a group Preferred (0 person) 0 0%
(1) Shares of Series B Preferred Stock do not have voting rights. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than ten percent of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, none of the required parties are delinquent in their 16(a) filings. 26 SHAREHOLDER PROPOSALS Any shareholder desiring to submit a proposal for action at the 2004 Annual Meeting of Shareholders and presentation in the Company's Information or Proxy Statement with respect to such meeting should arrange for such proposal to be delivered to the Company's offices at 11924 Forest Hill Blvd., Suite 22-204, Wellington, Florida 33414, addressed to the corporate Secretary, no later than December 15, 2003 in order to be considered for inclusion in the Company's Information or Proxy Statement relating to the meeting. Matters pertaining to such proposals, including the number and length thereof, eligibility of persons entitled to have such proposals included and other aspects are regulated by the Securities Exchange Act of 1934, Rules and Regulations of the Securities and Exchange Commission and other laws and regulations to which interested persons should refer. The Company anticipates that its next annual meeting will be held in May 2004. On May 21, 1998, the Securities and Exchange Commission adopted an amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of 1934, as amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of its discretionary proxy voting authority with respect to a shareholder proposal which is not addressed in the Company's proxy statement. The new amendment provides that if a proponent of a proposal fails to notify the Company at least 45 days prior to the month and day of mailing of the prior year's proxy statement, then the Company will be allowed to use its discretionary voting authority when the proposal is raised at the meeting, without any discussion of the matter in the proxy statement. OTHER MATTERS The Company has not enclosed a copy of the Annual Report on Form 10-KSB to Shareholders for the year ended December 31, 2002 with this Information Statement because, due to financial constraints, the Annual Report has not been filed. By order of the Board of Directors Scott Siegel, Chief Executive Officer Coral Springs, Florida May __, 2003 27 EX-3.1 3 doc2.txt ARTICLES OF AMENDMENT ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF TMI HOLDINGS, INC. Pursuant to Section 607.1006 of the Business Corporation Act of the State of Florida, the undersigned, being the Chief Executive Officer of TMI Holdings, Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the Business Corporation Act of the State of Florida bearing Document #S68597 does hereby certify: Pursuant to Written Consent of the Board of Directors of said Corporation dated May 2, 2003, the Board of Directors approved the following amendment to the Corporation's Articles of Incorporation authorizing an increase in the number of shares of stock that the Corporation shall have authority to issue. FIRST: Article IV of the Corporation's Articles of Incorporation shall be deleted in its entirety and replaced with the following: "ARTICLE IV SHARES This Corporation is authorized to issue two classes of shares of stock to be designated as "Common Stock" and "Preferred Stock". The total number of shares of Common Stock which this Corporation is authorized to issue is Thirty Million (30,000,000) shares, par value $0.01. The total number of shares of Preferred Stock which this Corporation is authorized to issue is One Million Five Hundred Thousand (1,500,000) shares, par value $0.01. The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the "Board of Directors") is expressly authorized to provide for the issue of all or any of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such shares (a "Preferred Stock Designation") and as may be permitted by the General Corporation Law of the State of Florida. The Board of Directors is also expressly authorized to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series." IN WITNESS WHEREOF, I have hereunto subscribed to and executed this Amendment to Articles of Incorporation on June 10, 2003. - --------------------------------------- Scott Siegel Chief Executive Officer EX-3.2 4 doc3.txt RESTATED ARTICLES RESTATED ARTICLES OF INCORPORATION OF TMI HOLDINGS, INC. Pursuant to Section 607.1006 of the Business Corporation Act of the State of Florida, the undersigned, being the Chief Executive Officer of TMI Holdings, Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the Business Corporation Act of the State of Florida bearing Document #S68597 does hereby certify: Pursuant to Written Consent of the Board of Directors of said Corporation dated May 2, 2003, and approved by the shareholders at the annual meeting held on June 10, 2003, it was voted that the Corporation would amend and restate its articles of incorporation as follows: ARTICLE I The name of this corporation is: TMI HOLDINGS, INC. ARTICLE II Offices for the transaction of any business of the Corporation, and where meetings of the Board of Directors and of Stockholders may be held, may be established and maintained in any part of the State of Florida, or in any other state, territory, or possession of the United States. ARTICLE III The nature of the business is to engage in any lawful activity. ARTICLE IV This Corporation is authorized to issue two classes of shares of stock to be designated as "Common Stock" and "Preferred Stock". The total number of shares of Common Stock which this Corporation is authorized to issue is Thirty Million (30,000,000) shares, par value $0.01. The total number of shares of Preferred Stock which this Corporation is authorized to issue is One Million Five Hundred Thousand (1,500,000) shares, par value $0.01. The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the "Board of Directors") is expressly authorized to provide for the issue of all or any of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such shares (a "Preferred Stock Designation") and as may be permitted by the General Corporation Law of the State of Florida. The Board of Directors is also expressly authorized to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. ARTICLE V The members of the governing board of the corporation shall be styled directors, of which there shall be no less than one (1) or more than ten (10). The Directors of this corporation need not be stockholders. ARTICLE VI This corporation shall have perpetual existence. ARTICLE VII This Corporation shall have a president, secretary, treasurer and a resident agent, to be chosen by the Board of Directors. Any person may hold two or more offices. ARTICLE VIII The Capital Stock of the corporation, after the fixed consideration thereof has been paid or performed, shall not be subject to assessment, and the individual liable for the debts and liabilities of the Corporation, and the Articles of Incorporation shall never be amended as the aforesaid provisions. ARTICLE IX To the fullest extent permitted by law, no director or officer of the Corporation shall be personally liable to the Corporation or its shareholders for damages for breach of any duty owed to the Corporation or its shareholders. In addition, the Corporation shall have the power, in its Bylaws or in any resolution of its stockholders or directors, to undertake to indemnify the officers and directors of this Corporation against any contingency or peril as may be determined to be in the best interests of this Corporation, and in conjunction therewith, to procure, at this Corporation's expense, policies of insurance. --- The number of shares of the corporation outstanding and entitled to vote on this Restated Articles of Incorporation is 1,439,675 shares of common stock; that the said change(s) and the Restated Articles of Incorporation have been consented to and approved by a majority of all the Stockholders of each class of stock outstanding and entitled to vote thereon. The changes set forth herein shall be effective upon the filing of these Restated Articles of Incorporation. - ------------------------------------------------- Scott Siegel, Chief Executive Officer Dated: June 10, 2003 EX-3.3 5 doc4.txt SECOND RESTATED BYLAWS SECOND RESTATED BYLAWS OF TMI HOLDINGS, INC. A FLORIDA CORPORATION SECOND RESTATED BYLAWS OF TMI HOLDINGS, INC. a Florida corporation ARTICLE I 1 OFFICES 1 Section 1. Principal Office 1 ----------------- 1 .. 1 Section 2. Other Offices 1 -------------- ARTICLE II 1 DIRECTORS - MANAGEMENT 1 Section 1. Powers, Standard of Care 1 --------------------------- Section 2. Number and Qualification of Directors 2 ----------------------------------------- Section 3. Election and Term of Office of Directors 2 ---------------------------------------------- Section 4. Vacancies 2 --------- Section 5. Removal of Directors 3 ---------------------- Section 6. Place of Meetings 3 ------------------- Section 7. Annual Meetings 4 ---------------- Section 8. Other Regular Meetings 4 ------------------------ Section 9. Special Meetings/Notices 4 ------------------------- Section 10. Waiver of Notice 4 ------------------ Section 11. Quorums 5 ------- Section 12. Adjournment 5 ----------- Section 13. Notice of Adjournment 5 ----------------------- Section 14. Board of Directors Provided by Articles or Bylaws 5 ------------------------------------------------- Section 15. Directors Action by Unanimous Written Consent 5 ------------------------------------------------- Section 16. Compensation of Directors 5 --------------------------- Section 17. Committees 5 ---------- Section 18. Meetings and Action of Committees 6 ------------------------------------- Section 19. Advisory Directors 6 ------------------- ARTICLE III 6 OFFICERS 6 Section 1. Officers 6 -------- Section 2. Election of Officers 6 ---------------------- Section 3. Subordinate Officers, Etc. 6 ---------------------------- Section 4. Removal and Resignation of Officers 7 --------------------------------------- Section 5. Vacancies 7 --------- Section 6. Chairman of the Board 7 ------------------------ Section 7. President and Chief Executive Officer 7 ----------------------------------------- Section 9. Secretary 7 --------- Section 10. Chief Financial Officer or Treasurer. 8 ---------------------------------------- ARTICLE IV 8 SHAREHOLDERS' MEETINGS 8 Section 1. Place of Meetings 8 ------------------- Section 2. Annual Meeting 8 --------------- Section 3. Special Meetings 9 ----------------- Section 4. Notice of Meetings - Reports 9 -------------------------------- Section 5. Quorum 10 ------ Section 6. Adjourned Meeting and Notice Thereof 10 ---------------------------------------- Section 7. Waiver or Consent by Absent Shareholders 11 --------------------------------------------- Section 8. Maintenance and Inspection of Bylaws 11 ---------------------------------------- Section 9. Annual Report to Shareholders 12 -------------------------------- Section 10. Financial Statements 12 --------------------- Section 11. Annual Statement of General Information 13 ------------------------------------------- ARTICLE IX 13 AMENDMENTS TO BYLAWS 13 Section 1. Amendment by Shareholders 13 --------------------------- Section 2. Amendment by Directors 13 ------------------------ Section 3. Record of Amendments 13 ---------------------- ARTICLE X 13 MISCELLANEOUS 13 Section 1. Shareholders' Agreements 13 ------------------------- Section 2. Effect of Shareholders' Agreements 13 ------------------------------------- Section 3. Subsidiary Corporations 14 ------------------------ Section 4. Accounting Year 14 ---------------- Section 5. Form 14 ---- SECOND RESTATED BYLAWS OF TMI HOLDINGS, INC. a Florida Corporation ARTICLE I OFFICES Section 1. Principal Office. The principal office for the transaction ---------------- of business of the Corporation shall be determined by the Board of Directors. The location may be changed by the Board of Directors in their discretion, and additional offices may be established and maintained at such other place or places, either within or outside of Florida, as the Board of Directors may from time to time designate. Section 2. Other Offices. Branch or subordinate offices may at any -------------- time be established by the Board of Directors at any place or places where the Corporation is qualified to do business. ARTICLE II DIRECTORS - MANAGEMENT Section 1. Powers, Standard of Care. --------------------------- A. Powers: Subject to the provisions of the Florida Corporation ------- Act (hereinafter the "Act"), and subject to any limitations in the Articles of Incorporation of the Corporation relating to action required to be approved by the Shareholders, or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board of Directors may delegate the management of the day-to-day operation of the business of the Corporation to a management company or other persons, provided that the business and affairs of the Corporation shall be managed, and all corporate powers shall be exercised, under the ultimate direction of the Board. B. Standard of Care; Liability: ------------------------------ (i) Each Director shall exercise such powers and otherwise perform such duties, in good faith, in the matters such Director believes to be in the best interests of the Corporation, and with such care, including reasonable inquiry, using ordinary prudence, as a person in a like position would use under similar circumstances. (ii) In performing the duties of a Director, a Director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in which case prepared or presented by: (a) One or more officers or employees of the Corporation whom the Director believes to be reliable and competent in the matters presented, (b) Counsel, independent accountants or other persons as to which the Director believes to be within such person's professional or expert competence, or (c) A Committee of the Board upon which the Director does not serve, as to matters within its designated authority, which committee the Director believes to merit confidence, so long as in any such case the Director acts in good faith, after reasonable inquiry when the need therefore is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted. C. Exception for Close Corporation. Notwithstanding the ---------------------------------- provisions of Section 1 of this Article, in the event that the Corporation shall elect to become a close corporation, its Shareholders may enter into a Shareholders' Agreement. Said Agreement may provide for the exercise of corporate powers and the management of the business and affairs of the Corporation by the Shareholders; provided, however, such agreement shall, to the extent and so long as the discretion or powers of the Board of Directors in its management of corporate affairs is controlled by such agreement, impose upon each Shareholder who is a party hereof, liability for managerial acts performed or omitted by such person pursuant thereto otherwise imposed upon Directors; and the Directors shall be relieved to that extent from such liability. Section 2. Number and Qualification of Directors. The authorized ----------------------------------------- number of Directors of the Corporation shall be at least one (1) but not more than ten (10) until changed by a duly adopted amendment to the Articles of Incorporation or by an amendment to this Section 2 of Article II of these Bylaws, adopted by the vote or written consent of Shareholders entitled to exercise majority voting power as provided in the Act. Section 3. Election and Term of Office of Directors. Directors shall ----------------------------------------- be elected at each annual meeting of the Shareholders to hold office until the next annual meeting. Each Director, including a Director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. Section 4. Vacancies. --------- A. Vacancies on the Board of Directors may be filled by a majority of the re-maining Directors, though less than a quorum, or by a sole remaining Director, except that a vacancy created by the removal of a Director by the vote or written consent of the Shareholders, or by a court order, may be filled only by the vote of a majority of the shares entitled to vote, represented at a duly held meeting at which a quorum is present, or by the written consent of holders of the majority of the outstanding shares entitled to vote. Each Director so elected shall hold office until the next annual meeting of the Shareholders and until a successor has been elected and qualified. B. A vacancy or vacancies on the Board of Directors shall be deemed to exist in the event of the death, resignation or removal of any Director, or if the Board of Directors by resolution declares vacant the office of a Director who has been declared of unsound mind by an order of court or convicted of a felony, or if there shall be at any less than the full number of Directors as set forth Article II, Section 2 of these Bylaws. C. The Shareholders may elect a Director or Directors at any time to fill any vacancy or vacancies not filled by the Directors, but any such election by written consent shall require the consent of a majority of the outstanding shares entitled to vote. D. Any Director may resign, effective on giving written notice to the Chairman of the Board, the President, the Secretary, or the Board of Directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a Director is effective at a future time, the Board of Directors may, prior to the effective date of a Director's resignation, elect a successor to take office when the resignation becomes effective. E. No reduction of the authorized number of Directors shall have the effect of removing any Director before that Director's term of office expires. Section 5. Removal of Directors. ---------------------- A. The entire Board of Directors, or any individual Director, may be removed from office as provided by the Act. In such case, the remaining members, if any, of the Board of Directors may elect a successor Director to fill such vacancy for the remaining unexpired term of the Director so removed. B. No Director may be removed (unless the entire Board is removed) when the votes cast against removal or not consenting in writing to such removal would be sufficient to elect such Director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote, were voted) and the entire num-ber of Directors authorized at the time of the Directors' most recent election were then being elected; and when by the provisions of the Articles of Incorporation the holders of the shares of any class or series voting as a class or series are entitled to elect one or more Directors, any Director so elected may be removed only by the applicable vote of the holders of the shares of that class or series. Section 6. Place of Meetings. Regular meetings of the Board of ------------------- Directors shall be held at any place within or outside the state that has been designated from time to time by resolution of the Board. In the absence of such resolution, regular meetings shall be held at the principal executive office of the Corporation. Special meetings of the Board shall be held at any place within or outside the state that has been designated in the notice of the meeting, or, if not stated in the notice or there is no notice, at the principal executive office of the Corporation. Any meeting, regular or special, may be held by conference telephone or similar communication equipment, so long as all Directors participating in such meeting can hear one another, and all such Directors shall be deemed to have been present in person at such meeting. Section 7. Annual Meetings. Immediately following each annual meeting --------------- of Shareholders, the Board of Directors shall hold a regular meeting for the purpose of organization, the election of officers and the transaction of other business. Notice of this meeting shall not be required. Minutes of any meeting of the Board, or any committee thereof, shall be maintained as required by the Act by the Secretary or other officer designated for that purpose. Section 8. Other Regular Meetings. ------------------------ A. Other regular meetings of the Board of Directors shall be held without call at such time as shall from time to time be fixed by the Board of Directors. Such regular meetings may be held without notice, provided the time and place of such meetings has been fixed by the Board of Directors, and further provided the notice of any change in the time of such meeting shall be given to all the Directors. Notice of a change in the determination of the time shall be given to each Director in the same manner as notice for such special meetings of the Board of Directors. B. If said day falls upon a holiday, such meetings shall be held on the next succeeding day thereafter. Section 9. Special Meetings/Notices. ------------------------- A. Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the Chairman of the Board, the President, any Vice President, the Secretary or any two Directors. B. Notice of the time and place for special meetings shall be delivered personally or by telephone to each Director or sent by first class mail or telegram, charges prepaid, addressed to each Director at his or her address as it is shown in the records of the Corporation. In case such notice is mailed, it shall be deposited in the United States mail at least four days prior to the time of holding the meeting. In case such notice is delivered personally, or by telephone or telegram, it shall be delivered personally or be telephone or to the telegram company at least 48 hours prior to the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated to either the Director or to a person at the office of the Director who the person giving the notice has reason to believe will promptly communicate same to the Director. The notice need not specify the purpose of the meeting, nor the place, if the meeting is to be held at the principal executive office of the Corporation. Section 10. Waiver of Notice. ------------------ A. The transactions of any meeting of the Board of Directors, however called, noticed, or wherever held, shall be as valid as though had at a meeting duly held after the regular call and notice if a quorum be present and if, either before or after the meeting, each of the Directors not present signs a written waiver of notice, a consent to holding the meeting or an approval of the minutes thereof. Waivers of notice or consent need not specify the purposes of the meeting. All such waivers, consents and approvals shall be filed with the corporate records or made part of the minutes of the meeting. B. Notice of a meeting shall also be deemed given to any Director who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such Director. Section 11. Quorums. A majority of the authorized number of Directors ------- shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 12 of this Article II. Every act or decision done or made by a majority of the Directors present at a meeting duly held at which a quorum was present shall be regarded as the act of the Board of Directors, subject to the provisions of the Act. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of Directors, if any action taken is approved by at least a majority of the required quorum for that meeting. Section 12. Adjournment. A majority of the directors present, whether ----------- or not constituting a quorum, may adjourn any meeting to another time and place. Section 13. Notice of Adjournment. Notice of the time and place of the --------------------- holding of an adjourned meeting need not be given, unless the meeting is adjourned for more than 24 hours, in which case notice of such time and place shall be given prior to the time of the adjourned meeting to the Directors who were not present at the time of the adjournment. Section 14. Board of Directors Provided by Articles or Bylaws. In the ------------------------------------------------- event only one Director is required by the Bylaws or the Articles of Incorporation, then any reference herein to notices, waivers, consents, meetings or other actions by a majority or quorum of the Board of Directors shall be deemed or referred as such notice, waiver, etc., by the sole Director, who shall have all rights and duties and shall be entitled to exercise all of the powers and shall assume all the responsibilities otherwise herein described, as given to the Board of Directors. Section 15. Directors Action by Unanimous Written Consent. Any action --------------------------------------------- required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of Directors, if authorized by a writing signed individually or collectively by all members of the Board of Directors. Such consent shall be filed with the regular minutes of the Board of Directors. Section 16. Compensation of Directors. Directors, and members as such, ------------------------- shall not receive any stated salary for their services, but by resolution of the Board of Directors, a fixed sum and expense of attendance, if any, may be allowed for attendance at each regular and special meeting of the Board of Directors; provided, however, that nothing contained herein shall be construed to preclude any Director from serving the Corporation in any other capacity as an officer, employee or otherwise receiving compensation for such services. Section 17. Committees. Committees of the Board of Directors may be ---------- appointed by resolution passed by a majority of the whole Board. Committees shall be composed of two or more members of the Board of Directors. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. Committees shall have such powers as those held by the Board of Directors as may be expressly delegated to it by resolution of the Board of Directors, except those powers expressly made non-delegable by the Act. Section 18. Meetings and Action of Committees. Meetings and action of --------------------------------- committees shall be governed by, and held and taken in accordance with, the provisions of Article II, Sections 6, 8, 9, 10, 11, 12, 13 and 15, with such changes in the context of those Sections as are necessary to substitute the committee and its members for the Board of Directors and its members, except that the time of the regular meetings of the committees may be determined by resolution of the Board of Directors as well as the committee, and special meetings of committees may also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws. Section 19. Advisory Directors. The Board of Directors from time to ------------------- time may elect one or more persons to be Advisory Directors, who shall not by such appointment be members of the Board of Directors. Advisory Directors shall be available from time to time to perform special assignments specified by the President, to attend meetings of the Board of Directors upon invitation and to furnish consultation to the Board of Directors. The period during which the title shall be held may be prescribed by the Board of Directors. If no period is prescribed, the title shall be held at the pleasure of the Board of Directors. ARTICLE III OFFICERS Section 1. Officers. The principal officers of the Corporation shall -------- be a President, a Secretary, and a Chief Financial Officer who may also be called Treasurer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article III. Any number of offices may be held by the same person. Section 2. Election of Officers. The principal officers of the ---------------------- Corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article III, shall be chosen by the Board of Directors, and each shall serve at the pleasure of the Board of Directors, subject to the rights, if any, of an officer under any contract of employment. Section 3. Subordinate Officers, Etc. The Board of Directors may appoint ---------------------------- such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors may from time to time determine. Section 4. Removal and Resignation of Officers. --------------------------------------- A. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by a majority of the Directors at that time in office, at any regular or special meeting of the Board of Directors, or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors. B. Any officer may resign at any time by giving written notice to the Board of Directors. Any resignation shall take effect on the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party. Section 5. Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the Bylaws for regular appointments to that office. Section 6. Chairman of the Board. The Chairman of the Board, if such ---------------------- an officer be elected, shall, if present, preside at the meetings of the Board of Directors and exercise and perform such other powers and duties as may, from time to time, be assigned by the Board of Directors or prescribed by the Bylaws. If there is no President, the Chairman of the Board shall, in addition, be the Chief Executive Officer of the Corporation and shall have the powers and duties prescribed in Section 7 of this Article III. Section 7. President and Chief Executive Officer. Subject to such ----------------------------------------- supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there is such an officer, the President along with the Chief Executive Officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, discretion and control of the business and officers of the Corporation. The President or the Chief Executive Officer shall preside at all meetings of the Shareholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. The President and Chief Executive Officer, jointly, shall have the general powers and duties of management usually vested in the office of President and Chief Executive Officer of a corporation, each shall be ex officio a member of all the standing committees, including the Executive Committee, if any, and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws. Section 8. Secretary. --------- A. The Secretary shall keep, or cause to be kept, a book of minutes of all meetings of the Board of Directors and Shareholders at the principal office of the Corporation or such other place as the Board of Directors may order. The minutes shall include the time and place of holding the meeting, whether regular or special, and if a special meeting, how authorized, the notice thereof given, and the names of those present at Directors' and committee meetings, the number of shares present or represented at Shareholders' meetings and the proceedings thereof. B. The Secretary shall keep, or cause to be kept, at the principal office of the Corporation or at the office of the Corporation's transfer agent, a share register, or duplicate share register, showing the names of the Shareholders and their addresses; the number and classes or shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation. C. The Secretary shall give, or cause to be given, notice of all the meetings of the Shareholders and of the Board of Directors required by the Bylaws or by law to be given. The Secretary shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws. Section 9. Chief Financial Officer or Treasurer. ----------------------------------------- A. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, in accordance with generally accepted accounting principles, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, earnings (or surplus) and shares issued. The books of account shall, at all reasonable times, be open to inspection by any Director. B. The Chief Financial Officer shall deposit all monies and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board of Directors. The Chief Financial Officer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of the transactions of the Chief Financial Officer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws. ARTICLE IV SHAREHOLDERS' MEETINGS Section 1. Place of Meetings. Meetings of the Shareholders shall be ------------------- held at any place within or outside the state of Florida designated by the Board of Directors. In the absence of any such designation, Shareholders' meetings shall be held at the principal executive office of the Corporation. Section 2. Annual Meeting. --------------- A. The annual meeting of the Shareholders shall be held, each year, as follows: Time of Meeting: 10:00 A.M. Date of Meeting: First Tuesday in May B. If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same time. At the annual meeting, the Shareholders shall elect a Board of Directors, consider reports of the affairs of the Corporation and transact such other business as may be properly brought before the meeting. C. If the above date is inconvenient, the annual meeting of Shareholders shall be held each year on a date and at a time designated by the Board of Directors within ninety days of the above date upon proper notice to all Shareholders. Section 3. Special Meetings. ----------------- A. Special meetings of the Shareholders for any purpose or purposes whatsoever, may be called at any time by the Board of Directors, the Chairman of the Board, the President, or by one or more Shareholders holding shares in the aggregate entitled to cast not less than 10% of the votes at any such meeting. Except as provided in paragraph B below of this Section 3, notice shall be given as for the annual meeting. B. If a special meeting is called by any person or persons other than the Board of Directors, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the Chairman of the Board, the President, or the Secretary of the Corporation. The officer receiving such request shall forthwith cause notice to be given to the Shareholders entitled to vote, in accordance with the provisions of Sections 4 and 5 of this Article, indicating that a meeting will be held at the time requested by the person or persons calling the meeting, not less than 35 nor more than 60 days after the receipt of the request. If the notice is not given within 20 days after receipt of the request, the person or persons requesting the meeting may give the notice in the manner provided in these Bylaws. Nothing contained in this paragraph of this Section shall be construed as limiting, fixing or affecting the time when a meeting of Shareholders called by action of the Board of Directors may be held. Section 4. Notice of Meetings - Reports. -------------------------------- A. Notice of any Shareholders meetings, annual or special, shall be given in writing not less than 10 days nor more than 60 days before the date of the meeting to Shareholders entitled to vote thereat by the Secretary or the Assistant Secretary, or if there be no such officer, or in the case of said Secretary or Assistant Secretary's neglect or refusal, by any Director or Shareholder. B. Such notices or any reports shall be given personally or by mail or other means of written communication as provided in the Act and shall be sent to the Shareholder's address appearing on the books of the Corporation, or supplied by the Shareholder to the Corporation for the purpose of notice, and in the absence thereof, as provided in the Act by posting notice at a place where the principal executive office of the Corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. C. Notice of any meeting of Shareholders shall specify the place, the day and the hour of meeting, and (i) in case of a special meeting, the general nature of the business to be transacted and that no other business may be transacted, or (ii) in the case of an annual meeting, those matters which the Board of Directors, at the date of mailing of notice, intends to present for action by the Shareholders. At any meetings where Directors are elected, notice shall include the names of the nominees, if any, intended at the date of notice to be presented for election. D. Notice shall be deemed given at the time it is delivered personally or deposited in the mail or sent by other means of written communication. The officer giving such notice or report shall prepare and file in the minute book of the Corporation an affidavit or declaration thereof. E. If action is proposed to be taken at any meeting for approval of (i) contracts or transactions in which a Director has a direct or indirect financial interest, (ii) an amendment to the Articles of Incorporation, (iii) a reorganization of the Corporation, (iv) dissolution of the Corporation, or (v) a distribution to preferred Shareholders, the notice shall also state the general nature of such proposal. Section 5. Quorum. ------ A. The holders of a majority of the shares entitled to vote at a Shareholders' meeting, present in person, or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by the Act or by these Bylaws. B. The Shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by a majority of the shares required to constitute a quorum. Section 6. Adjourned Meeting and Notice Thereof ---------------------------------------- A. Any Shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at such meeting, either in person or by proxy, but in the absence of a quorum, no other business may be transacted at such meeting. B. When any meeting of Shareholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at a meeting at which the adjournment is taken, unless a new record date for the adjourned meeting is fixed, or unless the adjournment is for more than 45 days from the date set for the original meeting, in which case the Board of Directors shall set a new record date. Notice of any adjourned meeting shall be given to each Shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Section 4 of this Article. At any adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. Section 7. Waiver or Consent by Absent Shareholders. --------------------------------------------- A. The transactions of any meeting of Shareholders, either annual or special, however called and noticed, shall be valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the Shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting or an approval of the minutes thereof. B. The waiver of notice or consent need not specify either the business to be transacted or the purpose of any regular or special meeting of Shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in Section E of Section 4 of this Article, the waiver of notice or consent shall state the general nature of such proposal. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. C. Attendance of a person at a meeting shall also constitute a waiver of notice of such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters not included in the notice. A Shareholder or Shareholders of the Corporation holding at least 5% in the aggregate of the outstanding voting shares of the Corporation may (i) inspect, and copy the records of Shareholders' names and addresses and shareholdings during usual business hours upon five days prior written demand upon the Corporation, and/or (ii) obtain from the transfer agent by paying such transfer agent's usual charges for such a list, a list of the Shareholders' names and addresses who are entitled to vote for the election of Directors, and their shareholdings, as of the most recent record date for which such list has been compiled or as of a date specified by the Shareholders subsequent to the day of demand. Such list shall be made available by the transfer agent on or before the later of five days after the demand is received or the date specified therein as the date as of which the list is to be compiled. The record of Shareholders shall also be open to inspection upon the written demand of any Shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to such holder's interest as a Shareholder or as a holder of a voting trust certificate. Any inspection and copying under this Section may be made in person or by an agent or attorney of such Shareholder or holder of a voting trust certificate making such demand. Section 8. Maintenance and Inspection of Bylaws. The Corporation shall ------------------------------------ keep at its principal executive office, or if not in this state, at its principal business office in this state, the original or a copy of the Bylaws amended to date, which shall be open to inspection by the Shareholders at all reasonable times during office hours. If the principal executive office of the Corporation is outside the state and the Corporation has no principal business office in this state, the Secretary shall, upon written request of any Shareholder, furnish to such Shareholder a copy of the Bylaws as amended to date. Section 9. Annual Report to Shareholders. -------------------------------- A. Provided the Corporation has 100 Shareholders or less, the Annual Report to Shareholders referred to in the Act is expressly dispensed with, but nothing herein shall be interpreted as prohibiting the Board of Directors from issuing annual or other period reports to Shareholders of the Corporation as they deem appropriate. B. Should the Corporation have 100 or more Shareholders, an Annual Report to Shareholders must be furnished not later than 120 days after the end of each fiscal period. The Annual Report to Shareholders shall be sent at least 15 days before the annual meeting of the Shareholders to be held during the next fiscal year and in the manner specified in Section 4 of Article V of these Bylaws for giving notice to Shareholders of the Corporation. The Annual Report to Shareholders shall contain a Balance Sheet as of the end of the fiscal year and an Income Statement and Statement of Changes in Financial Position for the fiscal year, accompanied by any report of independent accountants or, if there is no such report, the certificate of an authorized officer of the Corporation that the statements were prepared without audit from the books and records of the Corporation. Section 10. Financial Statements. --------------------- A. A copy of any annual financial statement and any Income Statement of the Corporation for each quarterly period of each fiscal year, and any accompanying Balance Sheet of the Corporation as of the end of each such period, that has been prepared by the Corporation shall be kept on file at the principal executive office of the Corporation for 12 months from the date of its execution, and each such statement shall be exhibited at all reasonable times to any Shareholder demanding an examination of such statement or a copy shall be made for any such Shareholder. B. If a Shareholder or Shareholders holding at least 5% of the outstanding shares of any class of stock of the Corporation make a written request to the Corporation for an Income Statement of the Corporation for the three month, six month or nine month period of the then current fiscal year ended more than 30 days prior to the date of the request, and a Balance Sheet of the Corporation at the end of such period, the Chief Financial Officer shall cause such statement to be prepared, if not already prepared, and shall deliver personally or mail such statement or statements to the person making the request within 30 days after the receipt of such request. If the Corporation has not sent to the Shareholders its Annual Report for the last fiscal year, this report shall likewise be delivered or mailed to such Shareholder or Shareholders within 30 days after such request. C. The Corporation also shall, upon the written request of any Shareholder, mail to the Shareholder a copy of the last annual, semi-annual or quarterly Income Statement which it has prepared and a Balance Sheet as of the end of such period. This quarterly Income Statement and Balance Sheet referred to in this Section shall be accompanied by the report thereon, if any, of any independent accountants engaged by the Corporation or the certificate of authorized officer of the Corporation such that financial statements were prepared without audit from the books and records of the Corporation. Section 11. Annual Statement of General Information. The Corporation ---------------------------------------- shall, in a timely manner, in each year, file with the Secretary of State of Florida, on the prescribed form, the statement setting forth the authorized number of Directors, the names and complete business or residence addresses of all incumbent Directors, the names and complete business or residence addresses of the Chief Executive Officer, Secretary and Chief Financial Officer, the street address of its principal executive office or principal business office in this state and the general type of business constituting the principal business activity of the Corporation, together with a designation of the agent of the Corporation for the purpose of the service of process, all in compliance with the Act. ARTICLE V AMENDMENTS TO BYLAWS Section 1. Amendment by Shareholders. New Bylaws may be adopted or --------------------------- these Bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the Articles of Incorporation of the Corporation set forth the number of authorized Directors of the Corporation, the authorized number of Directors may be changed only by amendment to the Articles of Incorporation. Section 2. Amendment by Directors. Subject to the rights of the ------------------------ Shareholders to adopt, amend or repeal the Bylaws, as provided in Section 1 of this Article V, and the limitations of the Act, the Board of Directors may adopt, amend or repeal any of these Bylaws other than an amendment to the Bylaws changing the authorized number of Directors. Section 3. Record of Amendments. Whenever an amendment or new Bylaw is -------------------- adopted, it shall be copied in the corporate book of Bylaws with the original Bylaws, in the appropriate place. If any Bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in the corporate book of Bylaws. ARTICLE VI MISCELLANEOUS Section 1. Shareholders' Agreements. Notwithstanding anything ------------------------- contained in this Article VI to the contrary, in the event the Corporation elects to become a close corporation, an agreement between two or more Shareholders thereof, if in writing and signed by the parties thereto, may provide that in exercising any voting rights, the shares held by them shall be voted as provided therein or in the Act, and may otherwise modify the provisions contained in Article IV, herein as to Shareholders' meetings and actions. Section 2. Effect of Shareholders' Agreements. Any Shareholders' ------------------------------------- Agreement authorized by the Act, shall only be effective to modify the terms of these Bylaws if the Corporation elects to become a close corporation with the appropriate filing of an amendment to its Articles of Incorporation as required by the Act and shall terminate when the Corporation ceases to be a close corporation. Any other provisions of the Act or these Bylaws may be altered or waived thereby, but to the extent they are not so altered or waived, these Bylaws shall be applicable. Section 3. Subsidiary Corporations. Shares of the Corporation owned by ----------------------- a subsidiary shall not be entitled to vote on any matter. Section 4. Accounting Year. The accounting year of the Corporation ---------------- shall be fixed by resolution of the Board of Directors, but shall end on December 31st of each year if not otherwise fixed by the Board. Section 5. Form. The corporate seal shall be circular in form, and ---- shall have inscribed thereon the name of the Corporation, the date of its incorporation, and the word "Florida" to indicate the Corporation was incorporated pursuant to the laws of the State of Florida. CERTIFICATE OF SECRETARY I, the undersigned, certify that: 1. I am the duly elected and acting secretary of TMI Holdings, Inc., a Florida corporation; and 2. The foregoing Seconded Amended and Restated Bylaws of TMI Holdings, Inc., consisting of 14 pages, are the Bylaws of this Corporation as adopted by the Board of Directors in accordance with the Florida Corporation Act and that such Bylaws have not been amended and are in full force and effect. IN WITNESS WHEREOF, I have subscribed my name and affixed the seal of this Corporation on June __, 2003. ____________________________________ Scott Siegel, Secretary EX-4.1 6 doc5.txt OMNIBUS SECURITIES PLAN TMI HOLDINGS, INC. 2003 OMNIBUS SECURITIES PLAN ---------------------------- TABLE OF CONTENTS ----------------- Page ---- SECTION 1. PURPOSE. 1 SECTION 2. DEFINITIONS. 1 (a) "Award" 1 (b) "Board of Directors" 1 (c) "Change in Control" 1 (d) "Code" 1 (e) "Committee" 1 (f) "Common-Law Employee" 1 (g) "Company" 2 (h) "Employee" 2 (i) "Exchange Act" 2 (j) "Exercise Price" 2 (k) "Fair Market Value" 2 (l) "Incentive Stock Option" or "ISO" 2 (m) "Nonstatutory Option" or "NSO" 2 (n) "Offeree" 2 (o) "Option" 3 (p) "Optionee" 3 (q) "Outside Director" 3 (r) "Participant" 3 (s) "Plan" 3 (t) "Plan Year" 3 (u) "Purchase Price" 3 (v) "Restricted Share" 3 (w) "Service" 3 (x) "Share" 3 (y) "Stock" 3 (z) "Stock Award Agreement" 3 (aa) "Stock Option Agreement" 3 (bb) "Stock Purchase Agreement" 3 (cc) "Subsidiary" 3 (dd) "Total and Permanent Disability" 3 (ee) "W-2 Payroll" 3 SECTION 3. ADMINISTRATION. 4 (a) Committee Membership 4 (b) Committee Procedures 4 (c) Committee Responsibilities 4 (d) Committee Liability 4 (e) Financial Reports 4 SECTION 4. ELIGIBILITY. 4 (a) General Rule 4 (b) Ten-Percent Shareholders 4 (c) Attribution Rules 5 (d) Outstanding Stock 5 SECTION 5. STOCK SUBJECT TO PLAN. 5 (a) Basic Limitation 5 (b) Additional Shares 5 SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES. 5 (a) Stock Purchase Agreement 5 (b) Duration of Offers 5 (c) Purchase Price 5 (d) Payment for Shares 6 (e) Exercise of Awards on Termination of Service 6 SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED 6 (a) Form and Amount of Award 6 (b) Exercisability 6 (c) Effect of Change in Control 6 (d) Voting Rights 7 SECTION 8. TERMS AND CONDITIONS OF OPTIONS. 7 (a) Stock Option Agreement 7 (b) Number of Shares 7 (c) Exercise Price 7 (d) Exercisability 7 (e) Effect of Change in Control 7 (f) Term 7 (g) Exercise of Options on Termination of Service 7 (h) Payment of Option Shares 8 (i) No Rights as a Shareholder 8 (j) Modification, Extension and Assumption of Options 8 SECTION 9. ADJUSTMENT OF SHARES. 8 (a) General 8 (b) Reorganizations 9 (c) Reservation of Rights 9 SECTION 10. WITHHOLDING TAXES. 9 (a) General 9 (b) Share Withholding 9 (c) Cashless Exercise/Pledge 9 (d) Other Forms of Payment 9 SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS. 9 (a) General 9 (b) Trusts 9 SECTION 12. LEGAL REQUIREMENTS. 10 SECTION 13. NO EMPLOYMENT RIGHTS. 10 SECTION 14. DURATION AND AMENDMENTS. 10 (a) Term of the Plan 10 (b) Right to Amend or Terminate the Plan 10 (c) Effect of Amendment or Termination 10 TMI HOLDINGS, INC. ------------------ 2003 OMNIBUS SECURITES PLAN --------------------------- SECTION 1. PURPOSE. - ----------- ------- The purpose of the TMI Holdings, Inc. 2003 Omnibus Securities Plan (the "Plan") is to offer selected employees, directors and consultants an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, to encourage such selected persons to remain in the employ of the Company, and to attract new employees with outstanding qualifications. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares and Options (which may constitute Incentive Stock Options or Nonstatutory Stock Options) as well as the direct award or sale of Shares of the Company's Common Stock. Awards may be granted under this Plan in reliance upon federal and state securities law exemptions. SECTION 2. DEFINITIONS. - ----------- ----------- (a) "Award" shall mean any award of an Option, Restricted Share or ----- other right under the Plan. (b) "Board of Directors" shall mean the Board of Directors of the -------------------- Company, as constituted from time to time. (c) "Change in Control" shall mean: ------------------- (i) The consummation of a merger, consolidation, sale of the Company's stock, or other reorganization of the Company (other than a reincorporation of the Company), if after giving effect to such merger, consolidation or other reorganization of the Company, the stockholders of the Company immediately prior to such merger, consolidation or other reorganization do not represent a majority interest of the holders of voting securities (on a fully diluted basis) with the ordinary voting power to elect directors of the surviving or resulting entity after such merger, consolidation or other reorganization; or (ii) The sale of all or substantially all of the assets of the Company to a third party who is not an affiliate of the Company. (iii) The term Change in Control shall not include: (a) a transaction the sole purpose of which is to change the state of the Company's incorporation, or (b) the Company's initial public offering. (d) "Code" shall mean the Internal Revenue Code f 1986, as amended. ---- (e) "Committee" shall mean a committee of the Board of Directors --------- which is authorized to administer the Plan under Section 3. (f) "Common-Law Employee" shall mean an individual paid from W-2 -------------------- Payroll of the Company or a Subsidiary. If, during any period, the Company (or Subsidiary, as applicable) has not treated an individual as a Common-Law Employee and, for that reason, has not paid such individual in a manner which results in the issuance of a Form W-2 and withheld taxes with respect to him or her, then that individual shall not be an eligible Employee for that period, even if any person, court of law or government agency determines, retroactively, that that individual is or was a Common-Law Employee during all or any portion of that period. (g) "Company" shall mean TMI Holdings, Inc., a Florida corporation. ------- (h) "Employee" shall mean (i) any individual who is a Common-Law -------- Employee of the Company or of a Subsidiary, (ii) a member of the Board of Directors, including (without limitation) an Outside Director, or an affiliate of a member of the Board of Directors, (iii) a member of the board of directors of a Subsidiary, or (iv) an independent contractor who performs services for the Company or a Subsidiary. Service as a member of the Board of Directors, a member of the board of directors of a Subsidiary or an independent contractor shall be considered employment for all purposes of the Plan except the second sentence of Section 4(a). (i) "Exchange Act" means the Securities and Exchange Act of 1934, ------------- as amended. (j) "Exercise Price" shall mean the amount for which one Share may be --------------- purchased upon exercise of an Option, as specified by the Committee in the applicable Stock Option Agreement. (k) "Fair Market Value" means the market price of Shares, determined ------------------- by the Committee as follows: (i) If the Shares were traded over-the-counter on the date in question but were not traded on the Nasdaq Stock Market or the Nasdaq National Market System, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Shares are quoted or, if the Shares are not quoted on any such system, by the "Pink Sheets" published by the National Quotation Bureau, Inc.; (ii) If the Shares were traded over-the-counter on the date in question and were traded on the Nasdaq Stock Market or the Nasdaq National Market System, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by the Nasdaq Stock Market or the Nasdaq National Market; (iii) If the Shares were traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; and (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons. (l) "Incentive Stock Option" or "ISO" shall mean an employee incentive ------------------------------------ stock option described in Code section 422(b). (m) "Nonstatutory Option" or "NSO" shall mean an employee stock -------------------------------- option that is not an ISO. (n) "Offeree" shall mean an individual to whom the Committee has ------- offered the right to acquire Shares under the Plan (other than upon exercise of an Option). (o) "Option"shall mean an Incentive Stock Option or Nonstatutory ------ Option granted under the Plan and entitling the holder to purchase Shares. (p) "Optionee" shall mean an individual or estate who holds an -------- Option. (q) "Outside Director" shall mean a member of the Board who is not ----------------- a Common-Law Employee of the Company or a Subsidiary. (r) "Participant" shall mean an individual or estate who holds an ----------- Award. (s) "Plan" shall mean this 2003 Omnibus Securities Plan of TMI ---- Holdings, Inc. (t) "Plan Year shall mean any twelve (12) month period (or shorter ---------- period during the final year of this Plan) commencing May 1 during the term of this Plan. (u) "Purchase Price" shall mean the consideration for which one Share --------------- may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee. (v) "Restricted Share" shall mean a Share sold or granted to an ----------------- eligible Employee which is nontransferable and subject to substantial risk of forfeiture until restrictions lapse. (w) "Service" shall mean service as an Employee. ------- (x) "Share" shall mean one share of Stock, as adjusted in accordance ----- with Section 9 (if applicable). (y) "Stock" shall mean the common stock of the Company. ----- (z) "Stock Award Agreement" shall mean the agreement between the ----------------------- Company and the recipient of a Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Share. (aa) "Stock Option Agreement" shall mean the agreement between the ------------------------ Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her Option. (bb) "Stock Purchase Agreement" shall mean the agreement between the -------------------------- Company and an Offeree who acquires Shares under the Plan which contains the terms, conditions and restrictions pertaining to the acquisition of such Shares. (cc) "Subsidiary" means any corporation (other than the Company) in ---------- an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date. (dd) "Total and Permanent Disability" means that the Optionee is --------------------------------- unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment. (ee) "W-2 Payroll" means whatever mechanism or procedure that the ------------ Company or a Subsidiary utilizes to pay any individual which results in the issuance of Form W-2 to the individual. "W-2 Payroll" does not include any mechanism or procedure which results in the issuance of any form other than a Form W-2 to an individual, including, but not limited to, any Form 1099 which may be issued to an independent contractor, an agency employee or a consultant. Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be determined in the absolute discretion of the Company (or Subsidiary, as applicable), and the Company or Subsidiary determination shall be conclusive and binding on all persons. SECTION 3. ADMINISTRATION. - ----------- -------------- (a) Committee Membership. The Plan shall be administered by the --------------------- Compensation Committee (the "Committee") appointed by the Company's Board of Directors and comprised of at least two or more Outside Directors (although Committee functions may be delegated to officers to the extent the awards relate to persons who are not subject to the reporting requirements of Section 16 of the Exchange Act). If no Committee has been appointed, the entire Board shall constitute the Committee. (b) Committee Procedures. The Board of Directors shall designate one --------------------- of the members of the Committee as chairperson. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee. (c) Committee Responsibilities. The Committee has and may exercise --------------------------- such power and authority as may be necessary or appropriate for the Committee to carry out its functions as described in the Plan. The Committee has authority in its discretion to determine eligible Employees to whom, and the time or times at which, Awards may be granted and the number of Shares subject to each Award. Subject to the express provisions of the respective Award agreements (which need not be identical) and to make all other determinations necessary or advisable for Plan administration, the Committee has authority to prescribe, amend, and rescind rules and regulations relating to the Plan. All interpretations, determinations, and actions by the Committee will be final, conclusive, and binding upon all persons. (d) Committee Liability. No member of the Board or the Committee -------------------- will be liable for any action or determination made in good faith by the Committee with respect to the Plan or any Award made under the Plan. (e) Financial Reports. To the extent required by applicable law, and ------------------ not less often than annually, the Company shall furnish to Offerees, Optionees and Shareholders who have received Stock under the Plan its financial statements including a balance sheet regarding the Company's financial condition and results of operations, unless such Offerees, Optionees or Shareholders have duties with the Company that assure them access to equivalent information. Such financial statements need not be audited. SECTION 4. ELIGIBILITY. - ----------- ---------- (a) General Rule. Only Employees shall be eligible for designation ------------- as Participants by the Committee. In addition, only individuals who are employed as Common-Law Employees by the Company or a Subsidiary shall be eligible for the grant of ISOs. (b) Ten-Percent Shareholders. An Employee who owns more than ten ------------------------- percent (10%) of the total combined voting power of all classes of outstanding stock of the Company or any of its Subsidiaries shall not be eligible for designation as an Offeree or Optionee unless (i) the Exercise Price for an ISO (and a NSO to the extent required by applicable law) is at least one hundred ten percent (110%) of the Fair Market Value of a Share on the date of grant, (ii) if required by applicable law, the Purchase Price of Shares is at least one hundred percent (100%) of the Fair Market Value of a Share on the date of grant, and (iii) in the case of an ISO, such ISO by its terms is not exercisable after the expiration of five years from the date of grant. (c) Attribution Rules. For purposes of Subsection (b) above, in ------------------ determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for his brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its shareholders, partners or beneficiaries. Stock with respect to which such Employee holds an Option shall not be counted. (d) Outstanding Stock. For purposes of Subsection (b) above, ------------------ "outstanding stock" shall include all stock actually issued and outstanding immediately after the grant. "Outstanding Stock" shall not include shares authorized for issuance under outstanding Options held by the Employee or by any other person. SECTION 5. STOCK SUBJECT TO PLAN. - ------------------------------------- (a) Basic Limitation. Shares offered under the Plan shall be ----------------- authorized but unissued Shares. Subject to Sections 5(b) and 9 of the Plan, the aggregate number of Shares which may be issued or transferred as common stock pursuant to an Award under the Plan shall not exceed 140,000. In any event, the number of Shares which are subject to Awards or other rights outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. (b) Additional Shares. In the event that any outstanding Option ------------------ or other right for any reason expires or is canceled or otherwise terminated, the Shares allocable to the unexercised portion of such Option or other right shall again be available for the purposes of the Plan. If a Restricted Share is forfeited before any dividends have been paid with respect to such Restricted Share, then such Restricted Share shall again become available for award under the Plan. SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES. - ----------- --------------------------------------------- (a) Stock Purchase Agreement. Each award or sale of Shares under the ------------------------- Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Offeree and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of the various Stock Purchase Agreements entered into under the Plan need not be identical. (b) Duration of Offers. Any right to acquire Shares under the Plan -------------------- (other than an Option) shall automatically expire if not exercised by the Offeree within thirty (30) days after the grant of such right was communicated to the Offeree by the Committee. (c) Purchase Price. Unless otherwise permitted by applicable law, the --------------- Purchase Price of Shares to be offered under the Plan shall not be less than eighty-five percent (85%) of the Fair Market Value of a Share on the date of grant (100% for 10% shareholders), except as otherwise provided in Section 4(b). Subject to the preceding sentence, the Purchase Price shall be determined by the Committee in its sole discretion. The Purchase Price shall be payable in a form described in Subsection (d) below. (d) Payment for Shares. The entire Purchase Price of Shares issued -------------------- under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided below: (i) Surrender of Stock. To the extent that a Stock Option Agreement so ------------------ provides, payment may be made all or in part with Shares which have already been owned by the Optionee or Optionee's representative for any time period specified by the Committee and which are surrendered to the Company in good form for transfer. Such shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. (ii) Promissory Notes. To the extent that a Stock Option Agreement or ---------------- Stock Purchase Agreement so provides, payment may be made all or in part with a full recourse promissory note executed by the Optionee or Offeree. The interest rate and other terms and conditions of such note shall be determined by the Committee. The Committee may require that the Optionee or Offeree pledge his or her Shares to the Company for the purpose of securing the payment of such note. In no event shall the stock certificate(s) representing such Shares be released to the Optionee or Offeree until such note is paid in full. (iii) Cashless Exercise. To the extent that a Stock Option Agreement ------------------ so provides and a public market for the Shares exists, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. (iv) Other Forms of Payment. To the extent provided in the Stock ------------------------- Option Agreement, payment may be made in any other form that is consistent with applicable laws, regulations and rules. (e) Exercise of Awards on Termination of Service. Each Stock Award ----------------------------------------------- Agreement shall set forth the extent to which the recipient shall have the right to exercise the Award following termination of the recipient's Service with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all the Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment. SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES. - ----------- ----------------------------------------------------------- (a) Form and Amount of Award.. Each Stock Award Agreement shall ---------------------------- specify the number of Shares that are subject to the Award. Restricted Shares may be awarded in combination with NSOs and such an Award may provide that the Restricted Shares will be forfeited in the event that the related NSOs are exercised. (b) Exercisability. Each Stock Award Agreement shall specify the -------------- conditions upon which Restricted Shares shall become vested, in full or in installments. To the extent required by applicable law, each Stock Award shall become exercisable no less rapidly than the rate of 20% per year for each of the first five years from the date of grant. Subject to the preceding sentence, the exercisability of any Stock Award shall be determined by the Committee in its sole discretion. (c) Effect of Change in Control. The Committee may determine at ------------------------------- the time of making an Award or thereafter, that such Award shall become fully vested, in whole or in part, in the event that a Change in Control occurs with respect to the Company. (d) Voting Rights. Holders of Restricted Shares awarded under the -------------- Plan shall have the same voting, dividend and other rights as the Company's other stockholders. A Stock Award Agreement, however, may require that the holders invested any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. Such additional Restricted Shares shall not reduce the number of Shares available under Section 5. SECTION 8. TERMS AND CONDITIONS OF OPTIONS. - ----------- ----------------------------------- (a) Stock Option Agreement. Each grant of an Option under the Plan ------------------------ shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. (b) Number of Shares. Each Stock Option Agreement shall specify ------------------ the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 9. The Stock Option Agreement shall also specify whether the Option is an ISO or a Nonstatutory Option. (c) Exercise Price. Each Stock Option Agreement shall specify the --------------- Exercise Price. The Exercise Price of an ISO shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(b). To the extent required by applicable law and except as otherwise provided in Section 4(b), the Exercise Price of a Nonstatutory Option shall not be less than eighty-five percent (85%) of the Fair Market Value of a Share on the date of grant. Subject to the preceding two sentences, the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in a form described in Subsection (h) below. (d) Exercisability. Each Stock Option Agreement shall specify the -------------- date when all or any installment of the Option is to become exercisable. To the extent required by applicable law, an Option shall become exercisable no less rapidly than the rate of 20% per year for each of the first five years from the date of grant. Subject to the preceding sentence, the exercisability of any Option shall be determined by the Committee in its sole discretion. (e) Effect of Change in Control. The Committee may determine, at the ----------------------------- time of granting an Option or thereafter, that such Option shall become fully exercisable as to all Shares subject to such Option in the event that a Change in Control occurs with respect to the Company. (f) Term. The Stock Option Agreement shall specify the term of the ---- Option. The term shall not exceed ten (10) years from the date of grant (or five (5) years for ten percent (10%) shareholders as provided in Section 4(b)). Subject to the preceding sentence, the Committee at its sole discretion shall determine when an Option is to expire. (g) Exercise of Options on Termination of Service. Each Option --------------------------------------------------- shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee's Service with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment. Notwithstanding the foregoing, to the extent required by applicable law, each Option shall provide that the Optionee shall have the right to exercise the vested portion of any Option held at termination for at least sixty (60) days following termination of Service with the Company for any reason, and that the Optionee shall have the right to exercise the Option for at least six (6) months if the Optionee's Service terminates due to death or Disability. (h) Payment of Option Shares. The entire Exercise Price of Shares --------------------------- issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided below: (i) Surrender of Stock. To the extent that a Stock Option Agreement so ------------------ provides, payment may be made all or in part with Shares which have already been owned by the Optionee or Optionee's representative for any time period specified by the Committee and which are surrendered to the Company in good form for transfer. Such shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. (ii) Promissory Notes. To the extent that a Stock Option Agreement or ---------------- Stock Purchase Agreement so provides, payment may be made all or in part with a full recourse promissory note executed by the Optionee or Offeree. The interest rate and other terms and conditions of such note shall be determined by the Committee. The Committee may require that the Optionee or Offeree pledge his or her Shares to the Company for the purpose of securing the payment of such note. In no event shall the stock certificate(s) representing such Shares be released to the Optionee or Offeree until such note is paid in full. (iii) Cashless Exercise. To the extent that a Stock Option Agreement ------------------ so provides and a public market for the Shares exists, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. (iv) Other Forms of Payment. To the extent provided in the Stock ------------------------- Option Agreement, payment may be made in any other form that is consistent with applicable laws, regulations and rules. (i) Modification, Extension and Assumption of Options. Within the ------------------------------------------------------ limitations of the Plan, the Committee may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price or for other consideration. SECTION 9.ADJUSTMENT OF SHARES. - --------------------------------- (a) General. In the event of a subdivision of the outstanding Stock, ------- a declaration of a dividend payable in Shares, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a recapitalization, a reclassification or a similar occurrence, the Committee shall make appropriate adjustments, subject to the limitations set forth in Section 9(c), in one or more of (i) the number of Shares available for future Awards under Section 5, (ii) the number of Shares covered by each outstanding Option or Purchase Agreement or (iii) the Exercise Price or Purchase Price under each outstanding Option or Stock Purchase Agreement. (b) Reorganizations. In the event that the Company is a party to --------------- a merger or reorganization, outstanding Options shall be subject to the agreement of merger or reorganization, provided however, that the limitations set forth in Section 9(c) shall apply. (c) Reservation of Rights. Except as provided in this Section 9, an ----------------------- Optionee or an Offeree shall have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, Exercise Price or Purchase Agreement of Shares subject to an Option or Stock Purchase Agreement. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. SECTION 10. WITHHOLDING TAXES. - ------------ ------------------ (a) General. To the extent required by applicable federal, state, ------- local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Committee for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied. (b) Share Withholding. The Committee may permit a Participant to ------------------ satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. Any payment of taxes by assigning Shares to the Company may be subject to restrictions, including any restrictions required by rules of any federal or state regulatory body or other authority. (c) Cashless Exercise/Pledge. The Committee may provide that if ------------------------- Company Shares are publicly traded at the time of exercise, arrangements may be made to meet the Optionee's withholding obligation by cashless exercise or pledge. (d) Other Forms of Payment. The Committee may permit such other ------------------------- means of tax withholding as it deems appropriate. SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS. - ------------ ------------------------------------ (a) General. An Award granted under the Plan shall not be anticipated, ------- assigned, attached, garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law, except as approved by the Committee. Notwithstanding the foregoing, ISOs may not be transferable. Also notwithstanding the foregoing, Offerees and Optionees may not transfer their rights hereunder except by will, beneficiary designation or the laws of descent and distribution. (b) Trusts. Neither this Section 11 nor any other provision of the ------ Plan shall preclude a Participant from transferring or assigning Restricted Shares to (a) the trustee of a trust that is revocable by such Participant alone, both at the time of the transfer or assignment and at all times thereafter prior to such Participant's death, or (b) the trustee of any other trust to the extent approved by the Committee in writing. A transfer or assignment of Restricted Shares from such trustee to any other person than such Participant shall be permitted only to the extent approved in advance by the Committee in writing, and Restricted Shares held by such trustee shall be subject to all the conditions and restrictions set forth in the Plan and in the applicable Stock Award Agreement, as if such trustee were a party to such Agreement. SECTION 12. LEGAL REQUIREMENTS. - ------------ ------------------ Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange on which the Company's securities may then be listed. SECTION 13. NO EMPLOYMENT RIGHTS. - ------------ ---------------------- No provision of the Plan, nor any right or Option granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Company and its Subsidiaries reserve the right to terminate any person's Service at any time and for any reason. SECTION 14. DURATION AND AMENDMENTS. - ------------ ------------------------- (a) Term of the Plan. The Plan, as set forth herein, shall ------------------- become effective on the date of its adoption by the Board of Directors, subject to the approval of the Company's shareholders. In the event that the shareholders fail to approve the Plan within twelve (12) months after its adoption by the Board of Directors, any grants already made shall be null and void, and no additional grants shall be made after such date. The Plan shall terminate automatically ten (10) years after its adoption by the Board of Directors and may be terminated on any earlier date pursuant to Subsection (b) below. (b) Right to Amend or Terminate the Plan. The Board of Directors ------------------------------------------ may amend the Plan at any time and from time to time. Rights and obligations under any right or Option granted before amendment of the Plan shall not be materially altered, or impaired adversely, by such amendment, except with consent of the person to whom the right or Option was granted. An amendment of the Plan shall be subject to the approval of the Company's shareholders only to the extent required by applicable laws, regulations or rules including the rules of any applicable exchange. (c) Effect of Amendment or Termination. No Shares shall be issued -------------------------------------- or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Shares previously issued or any Option previously granted under the Plan. [END OF PLAN] THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED. TMI HOLDINGS, INC. 2003 OMNIBUS SECURITIES PLAN INCENTIVE STOCK OPTION AGREEMENT TMI Holdings, Inc. (the "Company"), hereby grants an Option to purchase shares of its common stock ("Shares") to the Optionee named below. The terms and conditions of the Option are set forth in this cover sheet, in the attachment and in the Company's 2003 Omnibus Securities Plan (the "Plan"). Date of Grant: ________________________________ Name of Optionee: _______________________________________ Optionee's Social Security Number: _____________________ Number of Shares Covered by Option: __________________ Exercise Price per Share: $__________________ [must be at least 100% fair market value on Date of Grant] Vesting Start Date: ___________________________ ___ Check here if Optionee is a 10% owner (so that exercise price must be 110% of fair market value and term will not exceed 5 years). BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS ALSO ATTACHED. Optionee: __________________________________________ (Signature) Company: ___________________________________________ (Signature) Title: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED. TMI HOLDINGS, INC. 2003 OMNIBUS SECURITIES PLAN INCENTIVE STOCK OPTION AGREEMENT INCENTIVE STOCK This Option is intended to be an incentive stock option OPTION under section 422 of the Internal Revenue Code and will be interpreted accordingly. VESTING No Shares will vest until you have performed _________ (____) months of Service from the commencement of your employment with the Company. Your Option shall vest as to -------- of the Shares on the date _______ (____) months from the Vesting Start Date as shown on the cover sheet. Thereafter, Shares shall vest at the rate of _______ of the Shares at the end of each full month thereafter. After you have completed _________ (____) months of Service, the number of Shares which vest under this Option at the Exercise Price shall be equal to the product of the number of full months of your continuous employment with the Company ("Service") (including any approved leaves of absence) from the Vesting Start Date times the number of Shares covered by this Option times ________. The resulting number of Shares will be rounded to the nearest whole number. No additional Shares will vest after your Service has terminated for any reason. You should note that you may exercise the Option prior to vesting. In that case, the Company has a right to repurchase the unvested shares at the original exercise price if you terminate employment before vesting in all shares you purchased. Also, if you exercise before vesting, you should consider making an 83(b) election. Please see the attached Tax Summary. The 83(b) election must be filed within 30 --------------------------------------------- days of the date you exercise. ---------------------------------- TERM Your Option will expire in any event at the close of business at Company headquarters on the day before the tenth anniversary (fifth anniversary for a 10% owner) of the Date of Grant, as shown on the cover sheet. (It will expire earlier if your Service terminates, as described below.) REGULAR If your Service terminates for any reason except death, TERMINATION Disability or for "Cause," your Option will expire at the close of business at Company headquarters on the 30th day after your termination date. During that 30-day period, you may exercise that portion of your Option that was vested on your termination date. DEATH If you die while in Service with the Company, your Option will expire at the close of business at Company headquarters on the date six months after the date of death. During that six-month period, your estate or heirs may exercise that portion of your Option that was vested on the date of death. DISABILITY If your Service terminates because of your Disability, your Option will expire at the close of business at Company headquarters on the date six months after your termination date. (However, if your Disability is not expected to result in death or to last for a continuous period of at least 12 months, your Option will be eligible for ISO tax treatment only if it is exercised within three months following the termination of your Service.) During that six-month period, you may exercise that portion of your Option that was vested on the date of your Disability. "Disability" means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment. LEAVES OF ABSENCE For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. However, your Service will be treated as terminating 30 days after you went on leave, unless your right to return to active work is guaranteed by law or by a contract. Your Service terminates in any event when the approved leave ends unless you immediately return to active work. The Company determines which leaves count for this purpose, and when your Service terminates for all purposes under the Plan. The Company also determines the extent to which you may exercise the vested portion of your Option during a leave of absence. NOTICE OF EXERCISE When you wish to exercise this Option, you must execute Exhibit A (and, if exercise is prior to vesting, you must ---------- also execute Exhibits B and D). Your exercise will be ------------------ effective when it is received by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. FORM OF PAYMENT When you submit Exhibit A, you must include payment of the --------- Exercise Price for the Shares you are purchasing. Payment may be made in one (or a combination) of the following forms at the discretion of the committee: - Your personal check, a cashier's check or a money order. - Shares which you have owned for six months and which are surrendered to the Company. The value of the Shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price. - To the extent that a public market for the Shares exists as determined by the Company, by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. - Any other form of legal consideration approved by the Committee. WITHHOLDING TAXES You will not be allowed to exercise this Option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise or the sale of Shares acquired upon exercise of this Option. RESTRICTIONS ON By signing this Agreement, you agree not to exercise this RESALE Option or sell any Shares acquired upon exercise of this Option at a time when applicable laws, regulations or Company or underwriter trading policies prohibit exercise or sale. In particular, the Company shall have the right to designate one or more periods of time, each of which shall not exceed 180 days in length, during which this Option shall not be exercisable if the Company determines (in its sole discretion) that such limitation on exercise could in any way facilitate a lessening of any restriction on transfer pursuant to the Securities Act or any state securities laws with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws, or facilitate the perfection of any exemption from the registration or qualification requirements of the Securities Act or any applicable state securities laws for the issuance or transfer of any securities. Such limitation on exercise shall not alter the vesting schedule set forth in this Agreement other than to limit the periods during which this Option shall be exercisable. Furthermore, in respect of any underwritten public offering by the Company, you agree that you will not sell or otherwise transfer or dispose of any Shares covered by this Option during a reasonable and customary period of time as agreed to by the Company and the underwriters, not to exceed the greater of (a) 180 days following the effective date of the registration statement of the Company filed under the Securities Act in respect of such offering and (b) such other period of time as agreed to by holders of a majority of the then outstanding Shares. By signing this Agreement you agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. The Company may impose stop-transfer instructions with respect to the Shares subject to the foregoing restriction until the end of such period. If the sale of Shares under the Plan is not registered under the Securities Act of 1933, as amended (the "Securities Act"), but an exemption is available which requires an investment or other representation, you shall represent and agree at the time of exercise that the Shares being acquired upon exercise of this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel. The Company's In the event that you propose to sell, pledge or otherwise Right of First transfer to a third party any Shares acquired under this Refusal Agreement, or any interest in such Shares, the Company shall have the "Right of First Refusal" with respect to all (and not less than all) of such Shares. If you desire to transfer Shares acquired under this Agreement, you must give a written "Transfer Notice" to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price and the name and address of the proposed transferee. The Transfer Notice shall be signed both by you and by the proposed transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company and its assignees shall have the right to purchase all, and not less than all, of the Shares on the terms described in the Transfer Notice (subject, however, to any change in such terms permitted in the next paragraph) by delivery of a Notice of Exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company. The Company's rights under this Subsection shall be freely assignable, in whole or in part. If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, you may, not later than 60 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by you, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in the paragraph above. If the Company exercises its Right of First Refusal, you and the Company (or its assignees) shall consummate the sale of the Shares on the terms set forth in the Transfer Notice. The Company's Right of First Refusal shall terminate upon the Company's initial public offering. The Company's Right of First Refusal shall inure to the benefit of its successors and assigns and shall be binding upon any transferee of the Shares. RIGHT OF Following termination of your Service for any reason, REPURCHASE the Company shall have the right to purchase all of those vested Shares that you have or will acquire under this Option (unvested Shares which have been exercised are subject to a Repurchase Option set forth in Exhibit A). If --------- the Company fails to provide you with written notice of its intention to purchase such Shares before or within 30 days of the date the Company receives written notice from you of your termination of Service, the Company's right to purchase such Shares shall terminate. If the Company exercises its right to purchase such Shares, the Company will consummate the purchase of such Shares within 60 days of the date of its written notice to you. The purchase price for any Shares repurchased shall be the higher of the fair market value of the Shares on the date of purchase or the aggregate Exercise Price for such Shares and shall be paid in cash. The Company's right of repurchase shall terminate in the event that Stock is listed on an established stock exchange or is quoted regularly on the Nasdaq National Market. The fair market value shall be determined by the Board of Directors in its sole discretion. TRANSFER OF OPTION Prior to your death, only you may exercise this Option. You cannot transfer or assign this Option. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may, however, dispose of this Option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a Notice of Exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual's interest in your Option in any other way. RETENTION RIGHTS This Agreement does not give you the right to be retained by the Company in any capacity. The Company reserves the right to terminate your Service at any time and for any reason. SHAREHOLDER RIGHTS Neither you, nor your estate or heirs, have any rights as a shareholder of the Company until a certificate for the Shares acquired upon exercise of this Option has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in the Plan. ADJUSTMENTS In the event of a stock split, a stock dividend or a similar change in the Company's Stock, the number of Shares covered by this Option and the Exercise Price per share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. LEGENDS All certificates representing the Shares issued upon exercise of this Option shall, where applicable, have endorsed thereon the following legends: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST. SUCH AGREEMENT IMPOSES CERTAIN TRANSFER RESTRICTIONS AND GRANTS CERTAIN REPURCHASE RIGHTS TO THE COMPANY (OR ITS ASSIGNS) UPON THE SALE OF THE SHARES OR UPON TERMINATION OF SERVICE WITH THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF SHARES REPRESENTED BY THIS CERTIFICATE. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED." APPLICABLE LAW This Agreement will be interpreted and enforced under the laws of the State of Florida (without regard to their choice of law provisions). THE PLAN AND OTHER The text of the Plan is incorporated in this Agreement AGREEMENTS by reference. Certain capitalized terms used in this Agreement are defined in the Plan. This Agreement, including its attachments, and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. YOU ALSO ACKNOWLEDGE THAT YOU HAVE READ SECTION 11, "PURCHASER'S INVESTMENT REPRESENTATIONS" OF ATTACHMENT A AND THAT YOU CAN AND HEREBY DO MAKE THE SAME REPRESENTATIONS WITH RESPECT TO THE GRANT OF THIS OPTION. THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED. TMI HOLDINGS, INC. 2003 OMNIBUS SECURITIES PLAN NONSTATUTORY STOCK OPTION AGREEMENT TMI Holdings, Inc. (the "Company"), hereby grants an Option to purchase shares of its common stock ("Shares") to the Optionee named below. The terms and conditions of the Option are set forth in this cover sheet, in the attachment and in the Company's 2003 Omnibus Securities Plan (the "Plan"). Date of Grant: ________________________________ Name of Optionee: _______________________________________ Optionee's Social Security Number: _____________________ Number of Shares Covered by Option: __________________ Exercise Price per Share: $__________________ Vesting Start Date: ___________________________ [must be at least 85% fair market value on Date of Grant] - --- Check here if Optionee is a 10% owner (so that exercise price must be 110% of fair market value and term will not exceed 5 years). BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS ALSO ATTACHED. Optionee: _____________________________________________ (Signature) Company: _____________________________________________ (Signature) Title: ______________________________________ THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED. TMI HOLDINGS, INC. 2003 OMNIBUS SECURITIES PLAN NONSTATUTORY STOCK OPTION AGREEMENT NONSTATUTORY STOCK This Option is not intended to be an incentive stock option OPTION under section 422 of the Internal Revenue Code and will be interpreted accordingly. VESTING No Shares will vest until you have performed ________ (____) months of Service from the commencement of your employment with the Company. Your Option shall vest as to _______ of the Shares on the date _______ (____) months from the Vesting Start Date as shown on the cover sheet. Thereafter, Shares shall vest at the rate of ________ of the Shares at the end of each full month thereafter. After you have completed ________ (____) months of Service, the number of Shares which vest under this Option at the Exercise Price shall be equal to the product of the number of full months of your continuous employment with the Company ("Service") (including any approved leaves of absence) from the Vesting Start Date times the number of Shares covered by this Option times ________. The resulting number of Shares will be rounded to the nearest whole number. No additional Shares will vest after your Service has terminated for any reason. You should note that you may exercise the Option prior to vesting. In that case, the Company has a right to repurchase the unvested shares at the original exercise price if you terminate employment before vesting in all shares you purchased. Also, if you exercise before vesting, you should consider making an 83(b) election. Please see the attached Tax Summary. The 83(b) election must be filed within 30 days ----------------------------------------------- of the date you exercise. ---------------------------- TERM Your Option will expire in any event at the close of business at Company headquarters on the day before the tenth anniversary (fifth anniversary for a 10% owner) of the Date of Grant, as shown on the cover sheet. (It will expire earlier if your Service terminates, as described below.) REGULAR If your Service terminates for any reason except death, TERMINATION Disability, or for "Cause" your Option will expire at the close of business at Company headquarters on the 30th day after your termination date. During such 30-day period, you may exercise that portion of your Option that was vested on your termination date. DEATH If you die while in Service with the Company, your Option will expire at the close of business at Company headquarters on the date six months after the date of death. During that six-month period, your estate or heirs may exercise that portion of your Option that was vested on your date of death. DISABILITY If your Service terminates because of your Disability Disability, your Option will expire at the close of business at Company headquarters on the date six months after your termination date. During that six-month period, you may exercise that portion of your Option that was vested on your date of Disability. "Disability" means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment. LEAVES OF ABSENCE For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. However, your Service will be treated as terminating 30 days after you went on leave, unless your right to return to work is guaranteed by law or by a contract. Your service terminates in any event when the approved leave ends unless you immediately return to Service. The Company determines which leaves count for this purpose, and when your Service terminates for all purposes under the Plan. The Company also determines the extent to which you may exercise the vested portion of your Option during a leave of absence. NOTICE OF EXERCISE When you wish to exercise this Option, you must execute Exhibit A (and if exercise is prior to vesting you must also --------- execute Exhibits B and D). Your Exercise will be effective ----------------- when it is received by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. FORM OF PAYMENT When you submit Exhibit A, you must include payment of the --------- Exercise Price for the Shares you are purchasing. Payment may be made in one (or a combination) of the following forms at the discretion of the committee: - Your personal check, a cashier's check or a money order. - Shares which you have owned for six months and which are surrendered to the Company. The value of the Shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price. - To the extent that a public market for the Shares exists as determined by the Company, by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. - Any other form of legal consideration approved by the Committee. WITHHOLDING TAXES You will not be allowed to exercise this Option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise or the sale of Shares acquired upon exercise of this Option. RESTRICTIONS ON By signing this Agreement, you agree not to exercise this RESALE Option or sell any Shares acquired upon exercise of this Option at a time when applicable laws, regulations or Company or underwriter trading policies prohibit exercise or sale. In particular, the Company shall have the right to designate one or more periods of time, each of which shall not exceed 180 days in length, during which this Option shall not be exercisable if the Company determines (in its sole discretion) that such limitation on exercise could in any way facilitate a lessening of any restriction on transfer pursuant to the Securities Act or any state securities laws with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws, or facilitate the perfection of any exemption from the registration or qualification requirements of the Securities Act or any applicable state securities laws for the issuance or transfer of any securities. Such limitation on exercise shall not alter the vesting schedule set forth in this Agreement other than to limit the periods during which this Option shall be exercisable. Furthermore, in respect of any underwritten public offering by the Company, you agree that you will not sell or otherwise transfer or dispose of any Shares covered by this Option during a reasonable and customary period of time as agreed to by the Company and the underwriters, not to exceed the greater of (a) 180 days following the effective date of the registration statement of the Company filed under the Securities Act in respect of such offering and (b) such other period of time as agreed to by holders of a majority of the then outstanding Shares. By signing this Agreement you agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. The Company may impose stop-transfer instructions with respect to the Shares subject to the foregoing restriction until the end of such period. If the sale of Shares under the Plan is not registered under the Securities Act of 1933, as amended (the "Securities Act"), but an exemption is available which requires an investment or other representation, you shall represent and agree at the time of exercise that the Shares being acquired upon exercise of this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel. THE COMPANY'S In the event that you propose to sell, pledge or otherwise RIGHT OF FIRST transfer to a third party any Shares acquired under this REFUSAL Agreement, or any interest in such Shares, the Company shall have the "Right of First Refusal" with respect to all (and not less than all) of such Shares. If you desire to transfer Shares acquired under this Agreement, you must give a written "Transfer Notice" to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price and the name and address of the proposed transferee. The Transfer Notice shall be signed both by you and by the proposed transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company and its assignees shall have the right to purchase all, and not less than all, of the Shares on the terms described in the Transfer Notice (subject, however, to any change in such terms permitted in the next paragraph) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company. The Company's rights under this Subsection shall be freely assignable, in whole or in part. If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, you may, not later than 60 days following receipt of the Transfer Notice by the Company, conclude a transfer of the Shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by you, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in the paragraph above. If the Company exercises its Right of First Refusal, you and the Company (or its assignees) shall consummate the sale of the Shares on the terms set forth in the Transfer Notice. The Company's Right of First Refusal shall terminate upon the Company's initial public offering. The Company's Right of First Refusal shall inure to the benefit of its successors and assigns and shall be binding upon any transferee of the Shares. RIGHT OF Following termination of your Service for any reason, the REPURCHASE Company shall have the right to purchase all of those vested Shares that you have or will acquire under this Option (unvested Shares which have been exercised are subject to a Repurchase Option set forth in Exhibit A). If the Company --------- fails to provide you with written notice of its intention to purchase such Shares before or within 30 days of the date the Company receives written notice from you of your termination of Service, the Company's right to purchase such Shares shall terminate. If the Company exercises its right to purchase such Shares, the Company will consummate the purchase of such Shares within 60 days of the date of its written notice to you. The purchase price for any Shares repurchased shall be the higher of the fair market value of the Shares on the date of purchase or the aggregate Exercise Price for such Shares and shall be paid in cash. The Company's right of repurchase shall terminate in the event that Stock is listed on an established stock exchange or is quoted regularly on the Nasdaq National Market. The fair market value shall be determined by the Board of Directors in its sole discretion. TRANSFER OF OPTION Prior to your death, only you may exercise this Option. You cannot transfer or assign this Option. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may, however, dispose of this Option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a Notice of Exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual's interest in your Option in any other way. RETENTION RIGHTS This Agreement does not give you the right to be retained by the Company in any capacity. The Company reserves the right to terminate your Service at any time and for any reason. SHAREHOLDER RIGHTS Neither you, nor your estate or heirs, have any rights as a shareholder of the Company until a certificate for the Shares acquired upon exercise of this Option has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in the Plan. ADJUSTMENTS In the event of a stock split, a stock dividend or a similar change in the Company Stock, the number of Shares covered by this Option and the Exercise Price per share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. LEGENDS All certificates representing the Shares issued upon exercise of this Option shall, where applicable, have endorsed thereon the following legends: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST. SUCH AGREEMENT IMPOSES CERTAIN TRANSFER RESTRICTIONS AND GRANTS CERTAIN REPURCHASE RIGHTS TO THE COMPANY (OR ITS ASSIGNS) UPON THE SALE OF THE SHARES OR UPON TERMINATION OF SERVICE WITH THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF SHARES REPRESENTED BY THIS CERTIFICATE. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED." APPLICABLE LAW This Agreement will be interpreted and enforced under the laws of the State of Florida (without regard to their choice of law provisions). THE PLAN AND OTHER The text of the Plan is incorporated in this Agreement AGREEMENTS by reference. Certain capitalized terms used in this Agreement are defined in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN. YOU ALSO ACKNOWLEDGE THAT YOU HAVE READ SECTION 11, "PURCHASER'S INVESTMENT REPRESENTATIONS" OF ATTACHMENT A AND THAT YOU CAN AND HEREBY DO MAKE THE SAME REPRESENTATIONS WITH RESPECT TO THE GRANT OF THIS OPTION. EXHIBIT A TMI HOLDINGS, INC. ------------------ Notice of Exercise and Common Stock Purchase Agreement ------------------------------------------------------ THIS AGREEMENT is dated as of ___________, ____, between TMI Holdings, Inc. (the "Company"), and _________________("Purchaser"). W I T N E S S E T H: WHEREAS, the Company and Purchaser are parties to that certain ___ Incentive ___ Nonstatutory Stock Option Agreement dated as of ___________, ____ (the "Option Agreement") pursuant to which the Purchaser has the right to purchase up to ___________ shares of the Company's common stock (the "Option Shares"); and WHEREAS, the Option is exercisable with respect to certain of the Option Shares as of the date hereof; and WHEREAS, pursuant to the Option Agreement, Purchaser desires to purchase shares of the Company as herein described, on the terms and conditions set forth in this Agreement, the Option Agreement and the TMI Holdings, Inc. 2003 Omnibus Securities Plan (the "Plan"). Certain capitalized terms used in this Agreement are defined in the Plan. NOW, THEREFORE, it is agreed between the parties as follows: SECTION 1: PURCHASE OF SHARES. - ----------------------------------- (a) Pursuant to the terms of the Option Agreement, Purchaser hereby agrees to purchase from the Company and the Company agrees to sell and issue to Purchaser _________ shares of the Company's common stock (the "Stock") for the Exercise Price per share specified in the Option Agreement payable by personal check, cashier's check or money order, if permitted by the Option Agreement, as follows: _______________________________. Payment shall be delivered at the Closing, as such term is hereinafter defined. (b) The closing hereunder (the "Closing") shall occur at the offices of the Company on ________, ______, or such other time and place as may be designated by the Company (the "Closing Date"). SECTION 2: REPURCHASE OPTION - -------------------------------- All unvested shares of the Stock purchased by the Purchaser pursuant to this Agreement (sometimes referred to as the "Repurchase Option Stock") shall be subject to the following option (the "Repurchase Option"): (a) In the event the Purchaser terminates service with the Company ("Service") for any reason, with or without cause, the Company may exercise the Repurchase Option. (b) Purchaser understands that the Stock is being sold in order to induce Purchaser to become and/or remain associated with the Company and to work diligently for the success of the Company and that the Repurchase Option Stock will continue to vest in accordance with the schedule set forth in the Option Agreement. Accordingly, the Company shall have the right at any time within 90 days after the termination of Service to purchase from the Purchaser all shares of Stock purchased hereunder which have not vested in accordance with the terms of such vesting schedule in the Option Agreement. The purchase price for such unvested shares of Repurchase Option Stock shall be the Exercise Price per share paid by Purchaser for such shares pursuant to the Option (the "Option Price"). The purchase price shall be paid by certified or cashier's check or by cancellation of any indebtedness of Purchaser to the Company. (c) Nothing in this Agreement shall be construed as a right by purchaser to be employed by Company, or a parent or subsidiary of Company. SECTION 3: EXERCISE OF REPURCHASE OPTION - ---------------------------------------------- The Repurchase Option shall be exercised by written notice signed by an officer of the Company and delivered or mailed as provided in Section 16 of this Agreement and to the Escrow Agent as provided in Section 16 of the Joint Escrow Instructions attached as Exhibit B to the Option Agreement. SECTION 4: WAIVER, ASSIGNMENT, EXPIRATION OF REPURCHASE OPTION - ---------------------------------------------------------------------- If the Company waives or fails to exercise the Repurchase Option as to all of the shares subject thereto, the Company may, in the discretion of its Board of Directors, assign the Repurchase Option to any other holder or holders of preferred or common stock of the Company in such proportions as such Board of Directors may determine. In the event of such an assignment, the assignee shall pay to the Company in cash an amount equal to the fair market value of the Repurchase Option. The Company shall promptly, upon expiration of the 90-day period referred to in Section 2 above, notify Purchaser of the number of shares subject to the Repurchase Option assigned to such stockholders and shall notify both the Purchaser and the assignees of the time, place and date for settlement of such purchase, which must be made within 90 days from the date of cessation of continuous employment. In the event that the Company and/or such assignees do not elect to exercise the Repurchase Option as to all or part of the shares subject to it, the Repurchase Option shall expire as to all shares which the Company and/or such assignees have not elected to purchase. SECTION 5: ESCROW OF SHARES - -------------------------------- (a) As security for Purchaser's faithful performance of the terms of this Agreement and to ensure the availability for delivery of Purchaser's shares upon exercise of the Repurchase Option herein provided for, Purchaser agrees at the Closing hereunder, to deliver to and deposit with the Escrow Agent named in the Joint Escrow Instructions attached to the Option Agreement as Exhibit B, the certificate or certificates evidencing the Option Stock subject to the Repurchase Option and two Assignments Separate from Certificate duly executed (with date and number of shares in blank) in the form attached to the Option Agreement as Exhibit D. Such documents are to be held by the Escrow Agent and delivered by the Escrow Agent pursuant to the Joint Escrow Instructions, which instructions shall also be delivered to the Escrow Agent at the Closing hereunder. (b) Within 30 days after the last day of each successive completed calendar quarter after the Closing Date, if Purchaser so requests, the Escrow Agent will deliver to Purchaser certificates representing so many shares of Stock as are no longer subject to the Repurchase Option (less such shares as have been previously delivered). Ninety days after cessation of Purchaser's employment with the Company the Company will direct the Escrow Agent to deliver to Purchaser a certificate or certificates representing the number of shares not repurchased by the Company or its assignees pursuant to exercise of the Repurchase Option (less such shares as have been previously delivered). SECTION 6: ADJUSTMENT OF SHARES - ------------------------------------ Subject to the provisions of the Articles of Incorporation of the Company, if, from time to time during the term of the Repurchase Option: (a) there is any stock dividend or liquidating dividend of cash and/or property, stock split or other change in the character or amount of any of the outstanding securities of the Company, or (b) there is any consolidation, merger or sale of all or substantially all, of the assets of the Company, then, in such event, any and all new, substituted or additional securities or other property to which Purchaser is entitled by reason of Purchaser's ownership of the shares shall be immediately subject to such Repurchase Option with the same force and effect as the shares of Option Stock from time to time subject to the Repurchase Option. While the total Option Price shall remain the same after each such event, the Option Price per share of Option Stock upon exercise of the Repurchase Option shall be appropriately and equitably adjusted as determined by the Board of Directors of the Company. SECTION 7: THE COMPANY'S RIGHT OF FIRST REFUSAL. - -------------------------------------------------------- Before any shares of Stock registered in the name of Purchaser and not subject to the Repurchase Option may be sold or transferred, such shares shall first be offered to the Company as set forth in the Option Agreement. SECTION 8: PURCHASER'S RIGHTS AFTER EXERCISE OF REPURCHASE OPTION OR RIGHT OF - -------------------------------------------------------------------------------- FIRST REFUSAL. - --------------- If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Stock to be repurchased in accordance with the provisions of Sections 2 and 7 of this Agreement, then from and after such time the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed to have been repurchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement. SECTION 9: TRANSFER BY PURCHASER TO CERTAIN TRUSTS. - ----------------------------------------------------------- Purchaser shall have the right to transfer all or any portion of Purchaser's interest in the shares issued under this Agreement which have been delivered to Purchaser under the provisions of Section 5 of this Agreement, to a trust established by Purchaser for the benefit of Purchaser, Purchaser's spouse or Purchaser's children, without being subject to the provisions of Section 7 hereof, provided that the trustee on behalf of the trust shall agree in writing to be bound by the terms and conditions of this Agreement. The transferee shall execute a copy of Exhibit C attached to the Option Agreement and file the same with the Secretary of the Company. SECTION 10: LEGEND OF SHARES. - ---------------------------------- All certificates representing the Stock purchased under this Agreement shall, where applicable, have endorsed thereon the legends set forth in the Option Agreement and any other legends required by applicable securities laws. SECTION 11: PURCHASER'S INVESTMENT REPRESENTATIONS. - -------------------------------------------------------- (a) This Agreement is made with Purchaser in reliance upon Purchaser's representation to the Company, which by Purchaser's acceptance hereof Purchaser confirms, that the Stock which Purchaser will receive will be acquired with Purchaser's own funds for investment for an indefinite period for Purchaser's own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and that Purchaser has no present intention of selling, granting participation in, or otherwise distributing the same, but subject, nevertheless, to any requirement of law that the disposition of Purchaser's property shall at all times be within Purchaser's control. By executing this Agreement, Purchaser further represents that Purchaser does not have any contract, understanding or agreement with any person to sell, transfer, or grant participation, to such person or to any third person, with respect to any of the Stock. (b) Purchaser understands that the Stock will not be registered or qualified under federal or state securities laws on the ground that the sale provided for in this Agreement is exempt from registration or qualification under federal or state securities laws and that the Company's reliance on such exemption is predicated on Purchaser's representations set forth herein. (c) Purchaser agrees that in no event will Purchaser make a disposition of any of the Stock (including a disposition under Section 9 of this Agreement), unless and until (i) Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition and (ii) Purchaser shall have furnished the Company with an opinion of counsel satisfactory to the Company to the effect that (A) such disposition will not require registration or qualification of such Stock under federal or state securities laws or (B) appropriate action necessary for compliance with the federal or state securities laws has been taken or (iii) the Company shall have waived, expressly and in writing, its rights under clauses (i) and (ii) of this section. (d) With respect to a transaction occurring prior to such date as the Plan and Stock thereunder are covered by a valid Form S-8 or similar federal registration statement, this subsection shall apply unless the transaction is covered by the exemption in Florida General Corporation Law or a similar broad based exemption. In connection with the investment representations made herein, Purchaser represents that Purchaser is able to fend for himself or herself in the transactions contemplated by this Agreement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of Purchaser's investment, has the ability to bear the economic risks of Purchaser's investment and has been furnished with and has had access to such information as would be made available in the form of a registration statement together with such additional information as is necessary to verify the accuracy of the information supplied and to have all questions answered by the Company. (e) Purchaser understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or if a registration statement covering the Stock (or a filing pursuant to the exemption from registration under Regulation A of the Securities Act of 1933) under the Securities Act of 1933 is not in effect when Purchaser desires to sell the Stock, Purchaser may be required to hold the Stock for an indeterminate period. Purchaser also acknowledges that Purchaser understands that any sale of the Stock which might be made by Purchaser in reliance upon Rule 144 under the Securities Act of 1933 may be made only in limited amounts in accordance with the terms and conditions of that Rule. SECTION 12: ASSISTANCE TO PURCHASER UNDER RULE 144. - ----------------------------------------------------------- The Company covenants and agrees that (a) at all times after it first becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it will use its best efforts to comply with the current public information requirements of Rule 144(c)(1) under the Securities Act of 1933, and that if prior to becoming subject to such reporting requirements an over-the-counter market develops for the Stock, it will make publicly available the information required by Rule 144(c)(2); (b) it will furnish Purchaser, upon request, with all information required for the preparation and filing of Form 144; and (c) it will on a timely basis use its best efforts to file all reports required to be filed and make all disclosures, including disclosures of materially adverse information, required to permit Purchaser to make the required representations in Form 144. SECTION 13: NO DUTY TO TRANSFER IN VIOLATION HEREUNDER. - ---------------------------------------------------------------- The Company shall not be required (a) to transfer on its books any shares of Stock of the Company which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement or (b) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred. SECTION 14: RIGHTS OF PURCHASER. - ------------------------------------- Except as otherwise provided herein, Purchaser shall, during the term of this Agreement, exercise all rights and privileges of a stockholder of the Company with respect to the Stock. SECTION 15: OTHER NECESSARY ACTIONS. - ----------------------------------------- The parties agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement. SECTION 16: NOTICE. - ---------------------- Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon the earliest of personal delivery, receipt or the third full day following deposit in the United States Post Office with postage and fees prepaid, addressed to the other party hereto at the address last known or at such other address as such party may designate by 10 days' advance written notice to the other party hereto. SECTION 17: SUCCESSORS AND ASSIGNS. - ---------------------------------------- This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding upon Purchaser and Purchaser's heirs, executors, administrators, successors and assigns. The failure of the Company in any instance to exercise the Repurchase Option or rights of first offer described herein shall not constitute a waiver of any other Repurchase Option or right of first offer that may subsequently arise under the provisions of this Agreement. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of a like or different nature. SECTION 18: APPLICABLE LAW. - ------------------------------- This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida, as such laws are applied to contracts entered into and performed in such state. SECTION 19: NO STATE QUALIFICATION. - ---------------------------------------- THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF FLORIDA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. SECTION 20: NO ORAL MODIFICATION. - -------------------------------------- No modification of this Agreement shall be valid unless made in writing and signed by the parties hereto. SECTION 21: ENTIRE AGREEMENT. - --------------------------------- This Agreement and the Option Agreement constitute the entire complete and final agreement between the parties hereto with regard to the subject matter hereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. TMI HOLDINGS, INC. PURCHASER By ----------------------------- ---------------------------- EXHIBIT B --------- JOINT ESCROW INSTRUCTIONS ------------------------- -------------, ---- Secretary _____________________ Dear Sir or Madam: As Escrow Agent for both TMI Holdings, Inc. (the "Company"), and ___________________ ("Purchaser"), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Common Stock Purchase Agreement (the "Agreement") of even date herewith, to which a copy of these Joint Escrow Instructions is attached as Exhibit B to a certain Stock Option dated ________ ("Option Agreement"), in accordance with the following instructions: 1. In the event the Company shall elect to exercise the Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice as provided in the Agreement. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice, including prompt delivery of stock certificates. 2. At the closing, you are directed (a) to date the stock assignment form or forms necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate or certificates evidencing the shares to be transferred, to the Company against the simultaneous delivery to you of the purchase price (by certified or bank cashier's check) for the number of shares being purchased pursuant to the exercise of the Repurchase Option. 3. Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as Purchaser's attorney-in-fact and agent for the term of this escrow to execute with respect to such securities all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated. Subject to the provisions of this Section 3, Purchaser shall exercise all rights and privileges, including but not limited to, the right to vote and to receive dividends (if any), of a stockholder of the Company while the shares are held by you. 4. In accordance with the terms of Section 5 of the Agreement, you may from time to time deliver to Purchaser a certificate or certificates representing so many shares as are no longer subject to the Repurchase Option. 5. This escrow shall terminate upon the release of all shares held under the terms and provisions hereof. 6. If at the time of termination of this escrow you should have in your possession any documents, securities or other property belonging to Purchaser, you shall deliver all of same to Purchaser and shall be discharged from all further obligations hereunder. 7. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto. 8. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact of Purchaser while acting in good faith and in the exercise of your own good judgment, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. 9. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 10. You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 11. You shall not be liable for the outlawing of any rights under any statute of limitations with respect to these Joint Escrow Instructions or any documents deposited with you. 12. You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder and may rely upon the advice of such counsel. 13. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be Secretary of the Company or if you shall resign by written notice of each party. In the event of any such termination, the Company shall appoint any officer of the Company as successor Escrow Agent. 14. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 15. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings. 16. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled. 17. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement. 18. This instrument shall be governed by and construed in accordance with the laws of the State of Florida. 19. This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Very truly yours, TMI HOLDINGS, INC. By ___________________________ ESCROW AGENT: PURCHASER: __________________________ _______________________________ EXHIBIT C --------- ACKNOWLEDGMENT OF AND AGREEMENT TO BE BOUND ------------------------------------------- BY THE NOTICE OF EXERCISE AND COMMON STOCK PURCHASE AGREEMENT OF ---------------------------------------------------------------- TMI HOLDINGS, INC. ------------------ The undersigned, as transferee of shares of TMI Holdings, Inc., hereby acknowledges that he or she has read and reviewed the terms of the Notice of Exercise and Common Stock Purchase Agreement of TMI Holdings, Inc. and hereby agrees to be bound by the terms and conditions thereof, as if the undersigned had executed said Agreement as an original party thereto. Dated: ____________________, ____. By ___________________________ EXHIBIT D --------- ASSIGNMENT SEPARATE FROM CERTIFICATE ------------------------------------ FOR VALUE RECEIVED _________________________________ hereby sells, assigns and transfers unto _________________________ ________________________ (________) shares of the Common Stock of TMI Holdings, Inc. (the "Company"), standing in ___________________ name on the books of the Company represented by Certificate No. ___________ herewith and hereby irrevocably constitutes and appoints ________________ Attorney to transfer said stock on the books of the Company with full power of substitution in the premises. Dated: ____________________, ____. EX-4.2 7 doc6.txt NON-QUALIFIED SECURITIES PLAN 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 (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 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. 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. 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 May 2, 2003. TMI Holdings, Inc., a Florida corporation ______________________________ By: Scott Siegel Its: President -----END PRIVACY-ENHANCED MESSAGE-----