EX-10.13

SONIC FOUNDRY, INC.

2008 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN, AS AMENDED

Adopted January 15, 2008

Approved by Stockholders March 16, 2008

Amendment Approved by Stockholders March 7, 2012

Amendment of Plan. The 2008 Non-Employee Directors’ Stock Option Plan was
adopted on January 15, 2008, and approved by the stockholders on March 16, 2008.
An amendment to the Plan was adopted on January 24, 2012, and approved by the
stockholders on March 7, 2012. The amendment increases the number of shares of
common that may be issued pursuant to the Plan from 50,000 to 100,000. All share
numbers set forth in the Plan, as amended, reflect the one-for-ten reverse split
of the Company’s common stock effective November 17, 2009. All references to the
Plan set forth below shall be deemed references to the Plan, as amended hereby.

 

1. Purpose.

The Company, by means of the Plan, seeks to retain the services of its
Non-Employee Directors, to secure and retain the services of new Non-Employee
Directors and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.

Definitions.

 

  (a) “Accountant” means the independent public accountants of the Company.

 

  (b) “Affiliate” means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

 

  (c) “Annual Grant” means an Option granted annually to all Non-Employee
Directors who meet the specified criteria pursuant to Section 5(b).

 

  (d) “Annual Meeting” means the annual meeting of the stockholders of the
Company held during each fiscal year of the Company in accordance with the laws
of the jurisdiction of the Company’s domicile.

 

  (e) “Board” means the Board of Directors of the Company.

 

  (f) “Capitalization Adjustment” has the meaning ascribed to that term in
Section 10(a).

 

  (g) “Change in Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:

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  (i) Any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding voting securities other
than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because the level of Ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;

 

  (ii) There is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, outstanding voting securities representing more than fifty percent
(50%) of the combined outstanding voting power of the surviving Entity in such
merger, consolidation or similar transaction or more than fifty percent (50%) of
the combined outstanding voting power of the parent of the surviving Entity in
such merger, consolidation or similar transaction;

 

  (iii) There is a complete dissolution or liquidation of the Company;

 

  (iv) There is consummated a sale, lease, license or other disposition of all
or substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the Company immediately
prior to such sale, lease, license or other disposition; or

 

  (v) Individuals who, on the date this Plan is adopted by the Board, are
members of the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the members of the Board; (provided, however, that if the
appointment or election (or nomination for election) of any new Board member was
approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member shall, for purposes of this Plan, be
considered as a member of the Incumbent Board).

 

  (h) “Code” means the Internal Revenue Code of 1986, as amended.

 

  (i) “Common Stock” means the common stock of the Company.

 

  (j) “Company” means Sonic Foundry, Inc., a Maryland corporation.

 

  (k) “Consultant” means any person, including an advisor, (i) engaged by the
Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) serving as a member of the Board of
Directors of an Affiliate. However, the term “Consultant” shall not include
either Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director’s fee by the Company for their services as Directors.

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  (l) “Continuous Service” means that the Optionholder’s service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder’s Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the Entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder’s Continuous Service. For example, a change in status from a
Non-Employee Director of the Company to a Consultant of an Affiliate or an
Employee of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

 

  (m) “Corporate Transaction” means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following events:

 

  (i) a sale or other disposition of all or substantially all, as determined by
the Board in its discretion, of the consolidated assets of the Company and its
Subsidiaries;

 

  (ii) a sale or other disposition by the Owners of at least ninety percent
(90%) of the outstanding securities of the Company; or

 

  (iii) a merger, consolidation or similar transaction whether or not the
Company is not the surviving corporation.

 

  (n) “Director” means a member of the Board.

 

  (o) “Disability” means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
that person’s position with the Company or an Affiliate of the Company because
of the sickness or injury of the person.

 

  (p) “Employee” means any person employed by the Company or an Affiliate.
Service as a Director or payment of a director’s fee by the Company or an
Affiliate shall not be sufficient to constitute “employment” by the Company or
an Affiliate.

 

  (q) “Entity” means a corporation, partnership or other entity.

 

  (r) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

  (s) “Exchange Act Person” means any natural person, Entity or “group” (within
the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (A) the Company or any Subsidiary of the
Company, (B) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) an Entity Owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their Ownership of stock of the
Company.

 

  (t) “Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:

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  (i) If the Common Stock is listed on any established stock exchange or traded
on the Nasdaq Global Market, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the Common Stock) on the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

 

  (ii) In the absence of such markets for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.

 

  (u) “Initial Grant” means an Option granted to a Non-Employee Director who
meets the specified criteria pursuant to Section 5(a).

 

  (v) “Non-Employee Director” means a Director who is not an Employee.

 

  (w) “Nonstatutory Stock Option” means an Option not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

 

  (x) “Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

 

  (y) “Option” means a Nonstatutory Stock Option granted pursuant to the Plan.

 

  (z) “Option Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.

 

  (aa) “Optionholder” means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.

 

  (bb) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed
to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

 

  (cc) “Plan” means this Sonic Foundry, Inc. 2008 Non-Employee Directors’ Stock
Option Plan.

 

  (dd) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

 

  (ee) “Securities Act” means the Securities Act of 1933, as amended.

 

  (ff) “Subsidiary” means, with respect to the Company, (i) any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned
by the Company, and (ii) any Entity other than a corporation in which the
Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%).

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2. Administration.

 

  (a) Administration by Board. The Board shall administer the Plan. The Board
may delegate administration of the Plan to a committee in compliance with
applicable laws and any rules or regulations of a stock exchange or quotation
system on which the Common Stock is traded.

 

  (b) Powers of Board. The Board, or any committee to which the Board has
delegated administration of the Plan (all references to the Board shall also
include any committee to which the Board has delegated authority to administer
the Plan) shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:

 

  (i) To determine from time to time which of the Non-Employee Directors shall
be granted Options; when and how each Option shall be granted; the provisions of
each Option granted (which need not be identical), including the time or times
when an Option shall be vested and exercisable; and the number of shares of
Common Stock subject to each Option.

 

  (ii) To determine the terms and provisions of each Option to the extent not
specified in Section 5 and 6 of the Plan.

 

  (iii) To construe and interpret the Plan and Options granted under it, and to
establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.

 

  (iv) To amend the Plan or an Option as provided in Section 11.

 

  (v) Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company and
that are not in conflict with the provisions of the Plan.

 

  (c) Indemnification. Each member of the Board shall be entitled without
further act on his part to indemnity from the Company to the fullest extent
provided by applicable law and the Company’s Articles of Incorporation and/or
By-laws in connection with or arising out of any action, suit or proceeding with
respect to the administration of the Plan or the granting of Options thereunder
in which he or she may be involved by reason of his or her being or having been
a member of the Board, whether or not he or she continues to be a member of the
Board at the time of the action, suit or proceeding.

 

  (d) Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and Entity and shall be final, binding and conclusive on all persons
and Entities.

 

3. Shares Subject to the Plan.

 

  (a) Share Reserve. Subject to the provisions of Section 10 relating to
adjustments upon changes in the Common Stock, the Common Stock that may be
issued pursuant to Options shall not exceed in the aggregate One hundred
Thousand (100,000) shares of Common Stock.

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  (b) Reversion of Shares to the Share Reserve. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such Option
shall revert to and again become available for issuance under the Plan.

 

  (c) Source of Shares. The shares of Common Stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.

 

4. Eligibility.

Non-Employee Directors shall be eligible to receive Options as provided in
Section 5 below.

 

5. Option Grants.

 

  (a) Initial Grants. Without any further action of the Board, each person who
is elected or appointed for the first time to be a Non-Employee Director
automatically shall, upon the date of his or her initial election or appointment
to be a Non-Employee Director, be granted an Initial Grant to purchase Two
Thousand (2,000) shares of Common Stock on the terms and conditions set forth in
Section 6 and elsewhere herein.

 

  (b) Annual Grants. Without any further action of the Board, on the day of and
immediately following each Annual Meeting, commencing with the Annual Meeting in
2008, each person who is then a Non-Employee Director, by reason of having been
elected as such at the Annual Meeting, automatically shall be granted an Annual
Grant to purchase Two Thousand (2,000) shares of Common Stock on the terms and
conditions set forth in Section 6 and elsewhere herein; provided, however, that
a Non-Employee Director shall not receive an Annual Grant within one hundred
eighty (180) days of an Initial Grant.

 

  (c) Other Grants. The Board may, in its discretion, provide for other option
grants to one or more Non-Employee Directors from time to time during any fiscal
year of the Company on the terms and conditions set forth in Section 6 and
elsewhere herein.

 

  (d) Amendment. Pursuant to Section 11, the Board may, in its discretion, amend
the provisions of this Section 5 to change the terms of the Initial Grants and
the Annual Grants, including, without limitation, the number of shares of Common
Stock subject to the Initial Grant and the Annual Grant and the date of such
Initial Grant and the Annual Grant and the conditions for receiving the Initial
Grant and the Annual Grant.

 

6. Option Provisions.

Each Option shall be memorialized in a written agreement in such form and shall
contain such terms and conditions as required by the Plan. Each Option shall
contain such additional terms and conditions, not inconsistent with the Plan, as
the Board deems appropriate. Each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:

 

  (a) Maximum Term. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted. An Option may terminate earlier than
the maximum term if the Optionholder’s Continuous Service ends with the Company
as provided in Section 6(f) below.

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  (b) Exercise Price. The exercise price of each Option shall be one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to
the Option on the date the Option is granted.

 

  (c) Consideration. The purchase price of Common Stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable law, in any
combination of (i) cash or check, (ii) delivery to the Company of other Common
Stock; (iii) any other legal form of consideration acceptable to the Board or
(iv) any combination of the foregoing.

 

  (d) Transferability. An Option is transferable by will or by the laws of
descent and distribution. An Option also may be transferable to an
Optionholder’s “family member” upon written consent of the Company if the
transfer is not for value and at the time of transfer, a Form S-8 registration
statement under the Securities Act is available for the exercise of the Option
and the subsequent resale of the underlying securities after such transfer. In
addition, an Optionholder may, by delivering written notice to the Company, in a
form provided by or otherwise satisfactory to the Company, designate a third
party who, in the event of the death or disability of the Optionholder, the
Optionholder’s estate or guardian will have one (1) year in which to exercise
outstanding options. For purposes hereof, the term “family member” shall have
the meaning assigned to it in the general instructions of a Form S-8
registration statement (or any successor form adopted under the Securities Act).

 

  (e) Vesting. Options shall vest as follows:

  (i) Initial Grants: 100% of the shares of Common Stock subject to the Option
shall vest one (1) year after the date of grant.

 

  (ii) Annual Grants: 100% of the shares of Common Stock subject to the Option
shall vest one (1) year after the date of grant.

 

  (iii) Other Options. Any other Options granted under the Plan shall vest on
such terms determined by the Board, in its discretion.

 

  (iv) Acceleration of Vesting Under Certain Circumstances. Upon termination of
an Optionholder’s Continuous Service by reason of death, Disability or
resignation after reaching age 72, all outstanding Options granted to
Optionholder as of the date of the termination of Continuous Service shall vest
and immediately become exercisable.

 

  (f) Termination of Continuous Service. Unless otherwise provided for in the
Option, no Option or any unexercised portion thereof shall be exercisable after
the first to occur of the following:

 

  (i) Expiration of ten (10) years from the date of grant;

 

  (ii) Expiration of one (1) year from the date the Optionholder’s Continuous
Service ceases for any reason.

 

  (g) Extension of Termination Date. If the exercise of the Option following the
termination of the Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option as set forth in the Option Agreement or
(ii) the expiration of a period of thirty (30) days after the termination of the
Optionholder’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

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7. Securities Law Compliance.

The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to grant
Options and to issue and sell shares of Common Stock upon exercise of the
Options, provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Option or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.

 

8. Use of Proceeds from Stock.

Proceeds from the sale of stock pursuant to Options shall constitute general
funds of the Company.

 

9. Miscellaneous.

 

  (a) Stockholder Rights. No Optionholder shall be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares subject to
such Option unless and until such Optionholder has satisfied all requirements
for exercise of the Option pursuant to its terms.

 

  (b) No Service Rights. Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any Optionholder any right to
continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Optionholder as an Employee with or without notice and with or without cause,
(ii) the service of an Optionholder as a Consultant pursuant to the terms of
such Consultant’s agreement with the Company or an Affiliate or (iii) the
service of an Optionholder as a Director pursuant to the Bylaws of the Company
or an Affiliate, and any applicable provisions of the corporate law of the state
in which the Company or the Affiliate is incorporated, as the case may be.

 

  (c) Investment Assurances. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the Optionholder’s knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Optionholder is acquiring the stock subject to
the Option for the Optionholder’s own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if
(1) the issuance of the shares upon the exercise or acquisition of stock under
the Option has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.

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  (d) Withholding Obligations. The Optionholder may satisfy any federal, state
or local tax withholding obligation relating to the exercise or acquisition of
stock under an Option by any of the following means (in addition to the
Company’s right to withhold from any compensation paid to the Optionholder by
the Company) or by a combination of such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares from the shares of the Common
Stock otherwise issuable to the Optionholder as a result of the exercise or
acquisition of stock under the Option; provided, however, that no shares of
Common Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.

 

10. Adjustments upon Changes in Common Stock.

 

  (a) Capitalization Adjustments. If any change is made in, or other events
occur with respect to, the Common Stock subject to the Plan, or subject to any
Option, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company (each a “Capitalization Adjustment”)), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject both to the
Plan pursuant to Section 3 and to the nondiscretionary Options specified in
Section 5, and the outstanding Options will be appropriately adjusted in the
class(es) and number of securities and price per share of Common Stock subject
to such outstanding Options. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction
“without receipt of consideration” by the Company.)

 

  (b) Dissolution or Liquidation. In the event of a dissolution or liquidation
of the Company, then all outstanding Options shall terminate immediately prior
to the completion of such dissolution or liquidation.

 

  (c) Corporate Transaction. In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation may assume any or all Options
outstanding under the Plan or may substitute similar stock options for Options
outstanding under the Plan (it being understood that similar stock options
include, but are not limited to, options to acquire the same consideration paid
to the stockholders or the Company, as the case may be, pursuant to the
Corporate Transaction). In the event that any surviving corporation or acquiring
corporation in a Corporate Transaction does not assume any or all such
outstanding Options or substitute similar stock options for such outstanding
Options, then with respect to Options that have been neither assumed nor
substituted and that are held by Optionholders whose Continuous Service has not
terminated prior to the effective time of the Corporate Transaction, the vesting
of such Options (and, if applicable, the time at which such Options may be
exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of
such Corporate Transaction as the Board determines (or, if the Board shall not
determine such a date, to the date that is five (5) days prior to the effective
time of the Corporate Transaction), and the Options shall terminate if not
exercised (if applicable) at or prior to such effective time. With respect to
any other Options outstanding under the Plan that have been neither assumed nor
substituted, the vesting of such Options (and, if applicable, the time at which
such Options may be exercised) shall not be accelerated unless otherwise
provided in Section 10(d) or in a written agreement between the Company or any
Affiliate and the holder of such Options, and such Options shall terminate if
not exercised (if applicable) prior to the effective time of the Corporate
Transaction.

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  (d) Change in Control. In the event that an Optionholder is required to resign
his or her position as a Non-Employee Director as a condition of a Change in
Control, or does resign following a Change in Control, the outstanding Options
of such Optionholder shall become fully vested and exercisable immediately prior
to the effectiveness of such resignation.

 

  (e) Parachute Payments. If the acceleration of the vesting and exercisability
of Options provided for in Sections 10(c) or 10(d), together with payments and
other benefits of an Optionholder, (collectively, the “Payment”) (i) constitute
a “parachute payment” within the meaning of Section 280G of the Code, or any
comparable successor provisions, and (ii) but for this Section 10(e) would be
subject to the excise tax imposed by Section 4999 of the Code, or any comparable
successor provisions (the “Excise Tax”), then such Payment shall be either
(1) provided to such Optionholder in full, or (2) provided to such Optionholder
as to such lesser extent that would result in no portion of such Payment being
subject to the Excise Tax, whichever of the foregoing amounts, when taking into
account applicable federal, state, local and foreign income and employment
taxes, the Excise Tax, and any other applicable taxes, results in the receipt by
such Optionholder, on an after-tax basis, of the greatest amount of the Payment,
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax.

Unless the Company and such Optionholder otherwise agree in writing, any
determination required under this Section 10(e) shall be made in writing in good
faith by the Accountant. If a reduction in the Payment is to be made as provided
above, reductions shall occur in the following order unless the Optionholder
elects in writing a different order: reduction of cash payments; cancellation of
accelerated vesting of Options; reduction of employee benefits. If acceleration
of vesting of Options is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of date of grant of Options (i.e., earliest
granted Option cancelled last) unless the Optionholder elects in writing a
different order for cancellation.

For purposes of making the calculations required by this Section 10(e), the
Accountant may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code and other applicable legal authority. The
Company and the Optionholder shall furnish to the Accountant such information
and documents as the Accountant may reasonably request in order to make such a
determination. The Company shall bear all costs the Accountant may reasonably
incur in connection with any calculations contemplated by this Section 10(e).

If, notwithstanding any reduction described above, the Internal Revenue Service
(the “IRS”) determines that the Optionholder is liable for the Excise Tax as a
result of the Payment, then the Optionholder shall be obligated to pay back to
the Company, within thirty (30) days after a final IRS determination or, in the
event that the Optionholder challenges the final IRS determination, a final
judicial determination, a portion of the Payment equal to the “Repayment
Amount.” The Repayment Amount with respect to the Payment shall be the smallest
such amount, if any, as shall be required to be paid to the Company so that the
Optionholder’s net after-tax proceeds with respect to the Payment (after taking
into account the payment of the Excise Tax and all other applicable taxes
imposed on the Payment) shall be maximized. The Repayment Amount with respect to
the Payment shall be zero if a Repayment Amount of more than zero would not
result in the Optionholder’s net after-tax proceeds with respect to the Payment
being maximized. If the Excise Tax is not eliminated pursuant to this paragraph,
the Optionholder shall pay the Excise Tax.

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Notwithstanding any other provision of this Section 10(e), if (i) there is a
reduction in the Payment as described above, (ii) the IRS later determines that
the Optionholder is liable for the Excise Tax, the payment of which would result
in the maximization of the Optionholder’s net after-tax proceeds of the Payment
(calculated as if the Payment had not previously been reduced), and (iii) the
Optionholder pays the Excise Tax, then the Company shall pay or otherwise
provide to the Optionholder that portion of the Payment that was reduced
pursuant to this Section 11(e) contemporaneously or as soon as administratively
possible after the Optionholder pays the Excise Tax so that the Optionholder’s
net after-tax proceeds with respect to the Payment are maximized.

If the Optionholder either (i) brings any action to enforce rights pursuant to
this Section 10(e), or (ii) defends any legal challenge to his or her rights
under this Section 10(e), the Optionholder shall be entitled to recover
attorneys’ fees and costs incurred in connection with such action, regardless of
the outcome of such action; provided, however, that if such action is commenced
by the Optionholder, the court finds that the action was brought in good faith.

 

11. Amendment of the Plan and Options.

 

  (a) Amendment of Plan. The Board, at any time and from time to time, may amend
the Plan. However, except as provided in Section 11 relating to adjustments upon
changes in Common Stock, no amendment will be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to
satisfy the requirements of applicable laws and approvals under any governmental
or regulatory agency or stock exchange.

 

  (b) Stockholder Approval. The Board, in its sole discretion, may submit any
other amendment to the Plan for stockholder approval.

 

  (c) No Impairment of Rights. Rights under any Option granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the Optionholder and (ii) the Optionholder
consents in writing.

 

  (d) Amendment of Options. The Board, at any time, and from time to time, may
amend the terms of any one or more Options; provided, however, that the rights
under any Option shall not be impaired by any such amendment unless the
Optionholder consents in writing.

 

12. Termination or Suspension of the Plan.

 

  (a) Plan Term. The Board may suspend or terminate the Plan at any time. No
Options may be granted under the Plan while the Plan is suspended or after it is
terminated.

 

  (b) No Impairment of Rights. Suspension or termination of the Plan shall not
impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the Optionholder.

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13. Effective Date of Plan.

The Plan shall be effective on the date the Plan is adopted by the Board,
subject to the approval of the Plan by the Company’s stockholders in accordance
with applicable laws and the requirements of any governmental or regulatory
agency or stock exchange. Any Options granted under the Plan prior to
stockholder approval of the Plan are contingent on such approval of the Plan and
may not be exercised prior to the approval of the Plan by the stockholders of
the Company.

 

14. Choice of Law.

The law of the state of Wisconsin shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.