Document:

Addendum to Merger Agreement

 Exhibit 10.1 
  
 ADDENDUM TO 
  
 MERGER AGREEMENT AND PLAN OF REORGANIZATION 
  
 BY AND AMONG 
  
 PAINCARE HOLDINGS, INC., 
  
 PAINCARE ACQUISITION COMPANY X, INC., 
  
 REW MERGER CORP. 
  
 AND

  
 ROBERT E. WRIGHT, M.D. 
  
 AND 
  
 KENNETH M. ALO, M.D. 
  
 DATED AUGUST 27, 2004. 

 ADDENDUM TO MERGER AGREEMENT AND PLAN OF REORGANIZATION 
  
 This Addendum (the “Addendum”) is made and entered into this
27th day of August, 2004 with respect to that certain MERGER AGREEMENT AND PLAN OF REORGANIZATION (the
“Merger Agreement”) entered into on April 29, 2004 (the “Execution Date”) by and among PAINCARE HOLDINGS, INC., a Florida corporation (“PainCare”), PAINCARE ACQUISITION COMPANY X, INC., a Florida
corporation (“Subsidiary” or sometimes the “Surviving Corporation”), in which PainCare and the Subsidiary are sometimes referred to herein as the “Acquiring Companies”, and REW MERGER CORP., a Colorado
corporation formerly known as Denver Pain Management, P.C. (the “Company”), and ROBERT E WRIGHT, M.D., an individual (“Dr. Wright”), KENNETH M. ALO, M.D., an individual (“Dr. Alo”), the WRIGHT
NONGRANTOR TRUST (U/D/T 2004), an Irrevocable Nongrantor Trust (the “Dr. Wright Trust”), the R. E. WRIGHT FLP, a Nevada Limited Partnership (the “Dr. Wright Partnership”), the ALO NONGRANTOR TRUST, an
Irrevocable Non-Grantor Trust (the “Dr. Alo Trust”), and the DELTA KMA TWO, FLP, a Nevada limited partnership (the “Dr. Alo Partnership”). Hereinafter Dr. Wright, the Dr. Wright Trust, the Dr. Wright Partnership, Dr. Alo,
the Dr. Alo Trust and the Dr. Alo Partnership will collectively sometimes be referred to herein as the “Shareholder” or sometimes the “Sellers.” PainCare, the Subsidiary, and the Sellers are sometimes referred to herein
individually as a “Party” and collectively as the “Parties.” 
  
 WHEREAS, the Parties of desirous of amending and modifying certain provisions of the Merger Agreement as hereinafter set forth. 
  

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereby agree as follows: 
  
 1. Transaction Consideration. Section 3 of the Merger Agreement is hereby deleted in
its entirety and the following Section is inserted in its stead: 
  
 3. TRANSACTION CONSIDERATION. 
  
 3.1
Merger Consideration. The aggregate merger consideration (the “Merger Consideration”) shall consist of (i) the Closing Consideration as set forth in Section 3.2 below and (ii) the Earnout Payment, if earned, as determined under
Section 3.3 below. 
  
 3.2 Closing Consideration.
The Closing Consideration which will be paid and delivered to the Sellers shall equal Seven Hundred Thousand and 00/100 Dollars ($700,000), which will be comprised of: (i) One Hundred Thousand and 00/100 Dollars ($100,000) in cash (the “Closing
Cash”), plus (ii) Two Hundred Thousand (200,000) PainCare Shares, valued at Three Dollars and 00/100 Cents ($3.00) per share and having an aggregate value of Six Hundred Thousand and 00/100 Dollars ($600,000)(the “Closing PainCare
Shares”). PainCare shall have the option of paying the Sellers Two Hundred Thousand and 00/100 Dollars ($200,000) in cash in lieu of delivering the Closing PainCare Shares. The Closing Cash shall be paid and delivered to the Shareholder no
later than September 3, 2004 and the Closing PainCare Shares (or, at the election of PainCare $600,000 in cash) shall be paid and delivered to the Shareholder no later than September 3, 2004. 
  

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 3.3 The Earnout Payment. 
  
 (a) General. PainCare hereby agrees to pay the Sellers within 60 days of the end of each of the three (3),
twelve (12) month calendar periods beginning on May 1, 2004 (each such twelve (12) month calendar period shall be referred to herein as a “Formula Period”), such portion of the Merger Consideration that has been earned as calculated in
Section 3.3(b) below. The Sellers hereby acknowledge and agree that the intended Installment Payments (as defined below) to be made by PainCare, if earned, are expressly subordinate to the rights and obligations to the Laurus Master Fund, Ltd.
(‘Laurus”) as provided in those certain Securities Purchase Agreements, Security Agreements and Pledge Agreements between PainCare and Laurus dated February 27, 2004, March 22, 2004 and June 30, 2004. Payment of the Merger Consideration is
secured by a pledge of Subsidiary’s stock pursuant to a Stock Pledge Agreement (the “PainCare Stock Pledge Agreement”). 
  
 (b) The Installment Payments. The amount of the Merger Consideration that PainCare will pay to the Sellers, if any, shall be calculated as
follows: 
  
 (i) First, the consolidated Formula Period Profits
of the Surviving Corporation and Denver Pain Management, P.C. (the “PC”) shall be determined as provided in Section 3.3(e)(ii) below; 
  
 (ii) Next, such Formula Period Profits shall be reduced by the amount of any Management Fees due the Surviving Corporation from PC (as set forth in that
certain Management Services Agreement between the PC and the Subsidiary dated April 29, 2004) for such Formula Period which the independent certified public accountants of PainCare deem to be uncollectible; and 
  
 (iii) Next, if the remainder as calculated in Section 3.3(b)(ii) above is a
positive number then multiply such remainder by 1.67 with the resulting product being the payment due and payable to the Sellers as provided in Section 3.3(c) below (hereinafter the “Installment Payment”). 
  
 An illustration of the forgoing formula is set forth in Exhibit
“A” attached hereto and by this reference incorporated herein. 
  
 (c) Manner of Payment. Within sixty (60) days after the end of each Formula Period, PainCare shall prepare and deliver to Dr. Alo and Dr. Wright a financial statement presenting the consolidated Formula
Period Profits (as defined below) of the Surviving Corporation and PC (the “Formula Period Profits Statement”). Ten (10) business days after delivery of the Formula Period Profits Statement, Dr. Alo and Dr. Wright shall in a written notice
to PainCare either accept or describe in reasonable detail any proposed adjustments to the Formula Period Profits Statement and the reasons therefore, and shall include pertinent calculations. If Dr. Alo and Dr. Wright fail to deliver notice of
acceptance or objection to the Formula Period Profits Statement within such ten (10) business day period, the Sellers shall be deemed to have accepted the Formula Period Profits Statement. If Dr. Alo and Dr. Wright accept or fail to object to the
Formula Period Profits Statement within the ten (10) business day period set forth above, then within sixty (60) days after the end of the Formula Period, PainCare shall pay to the Sellers the Installment Payment (as determined in Section 3.3(b)
above) as follows: (i) fifty percent (50%) of the Installment Payment shall be made in cash via wire transfer to a bank account(s) designated by Dr. Alo and Dr. Wright; and (ii) fifty percent (50%) of the Installment 
  

 3 

 Payment shall be made in PainCare Shares with the number of such shares determined by: dividing 50% of such Installment
Payment by the Fair Market Value (as defined below) of one share of PainCare common stock as of the last day of such Formula Period. If in calculating the number of PainCare Shares such calculation results in a fractional share, such fraction shall
be rounded up to the next nearest whole number. 
  
 In the event PainCare, Dr. Alo and Dr. Wright are not able to agree as to the amount of the Formula Period Profits within thirty (30) days from and after the receipt by PainCare of any objections raised by Dr. Alo and Dr. Wright, PainCare,
Dr. Alo and Dr. Wright shall each have the right to require that such disputed determinations be submitted to an independent certified public accountant or accounting firm that PainCare shall select, for computation or verification in accordance
with the provisions of this Agreement, and the Installment Payment shall be paid by PainCare to the Sellers within fifteen (15) days after receipt of the accountant’s computation or verification. The foregoing provisions for certified public
accounting firm review shall be final and binding upon the Parties and there shall be no right of appeal from such decision. 
  
 (d) Earnout Cap. Notwithstanding anything to the contrary in this Section 3, in no event shall the aggregate amount of the Installment
Payments otherwise earned pursuant to this Section plus the Closing Consideration exceed Seven Million Five Hundred Thousand and 00/100 Dollars ($7,500,000). 
  
 (e) Definitions for Purposes of Section 3. For purposes of Section 3 of this Agreement: 
  
 (i) “Fair Market Value” shall mean: 
  
 (1) if the principal market for PainCare’s common stock is a national
securities exchange, then the “Fair Market Value” of a PainCare Share shall equal the average closing price of such stock for the 30 day period ending on the date of the applicable Formula Period as reported by such exchange or on a
composite tape reflecting transactions on such exchange; or 
  
 (2) if the principal market for PainCare’s common stock is not a national securities exchange, but the price of PainCare’s common stock is quoted on the National Association of Securities Dealers Automated Quotation System
(“NASDAQ”) Stock Market, and (A) actual closing price information is available with respect to such stock, then the “Fair Market Value” of a PainCare Share shall equal the average of the closing prices of such stock for the 30
day period ending on the date of the applicable Formula Period as reported by the NASDAQ Stock Market; or (B) if the actual closing price information is not available with respect to such shares, then the “Fair Market Value” of a
PainCare Share shall equal the average bid prices of such stock for the 30 day period ending on the date of the applicable Formula Period as reported by the NASDAQ Stock Market; or 
  
 (3) if PainCare’s common stock is not trading on a national securities exchange and such stock is not quoted on
NASDAQ, then the “Fair Market Value” of a PainCare Share shall equal average closing ask prices of such stock for the 30 day period ending on the date of the applicable Formula Period as reported by the OTC Bulletin Board Service or by
National Quotation Bureau, Incorporated, or a comparable service selected by PainCare; or 
  

 4 

 (4) if subsections (e)(i)(1)-(3) above are inapplicable or if no trades have been made or no quotes are
available for such period with respect to the PainCare common stock, then the “Fair Market Value” of a PainCare Share shall be determined by an independent third party appraiser selected by PainCare. Within ten (10) days after the
effective date of the appraiser’s appointment, the appraiser shall deliver an appraisal of the Fair Market Value of the PainCare Shares, which shall be binding and conclusive on the Parties. The cost of any appraisal hereunder shall be shared
equally by the Parties, and each Party shall be responsible and financially liable for its or his own attorneys’ fees. 
  
 (5) Notwithstanding the Fair Market Value ascribed to the PainCare Shares pursuant to subsections 3.3(e)(1), (2), (3) or (4) above, in no event shall the
Fair Market Value of a PainCare Share ever be less than Two and 50/00 Dollars ($2.50) per share. 
  
 (ii) “Formula Period Profits” shall mean the consolidated net earnings of the Surviving Corporation and PC before deductions for interest,
taxes, depreciation and amortization (“EBITDA”) as calculated utilizing GAAP by PainCare’s independent certified public accountants for the applicable Formula Period where possible, and as calculated by PainCare for quarterly and less
than quarterly periods for such Formula Period minus $420,000 until such time as the cumulative Formula Period Profits exceeds $420,000 at which point no further reduction shall be required. Notwithstanding the foregoing, the calculation of
the Formula Period Profits shall not include any costs or expenses related to: (i) the corporate overhead of PainCare or other administrative or similar charges that PainCare might impose upon the Subsidiary or the PC, except those charges for
services provided directly to and for the benefit of the Subsidiary or the PC; (ii) any non-recurring charges, losses, profits, gains, or non-cash adjustments not related to the ongoing operations of the Subsidiary’s business, including but not
limited to discontinued operations, extraordinary items, acquisition costs and goodwill charges incurred in connection with the transactions contemplated hereby (excluding the write-off of any goodwill with respect to the Surviving Corporation in
accordance with FASA 142), or unusual or infrequent items as such terms are defined pursuant to generally accepted accounting principles, (iii) any charge related to grants or exercises of options pursuant to employment or independent contractor
agreements. 
  
 (f) Adjustments.
Notwithstanding anything herein to the contrary, the cash portion of any Installment Payment otherwise due the Sellers pursuant to this Section shall be reduced by the amount of any cash payments, loans or advances made to or for the benefit of the
PC by any one or more of the Acquiring Companies. 
  
 3.
Redelivery of PainCare Shares. Pursuant to Section 3.2 of the Merger Agreement PainCare delivered to Arthur Graves, Esq., Six Hundred Sixty Seven Thousand Two Hundred Sixty (667,260) PainCare Shares (the “Closing PainCare Shares”). The
Parties hereby agree and by virtue of this Addendum hereby direct Mr. Graves to redeliver free of all liens, claims and encumbrances to PainCare, for cancellation and return to its treasury, the Closing PainCare Shares. Upon delivery of such Shares,
Mr. Graves shall be relieved of all duties and responsibilities under that certain Escrow Agreement dated April 29, 2004. 
  
 4. Merger Consideration. Except as otherwise provided herein all obligations of PainCare to pay or deliver any Merger or Transaction Consideration
as provided in the Merger Agreement shall be deemed null and void and no Party shall have any right to any such Consideration. 
  

 5 

 5. Registration Rights. Section 2.14(a) of the Merger Agreement is hereby deleted in its entirety
and shall no longer be of any force or effect. PainCare hereby agrees that on or before October 1, 2004 it will file an S-3 Registration Statement with the SEC and in connection with same, PainCare agrees to include in such Registration Statement
the Closing PainCare Shares as well as a sufficient number of additional shares which may be paid to the Sellers pursuant to the Installment Payments, if earned. Notwithstanding the foregoing, the parties acknowledge and agree that PainCare will
not include the PainCare Shares in the S-3 Registration Statement that it contemplates filing within the next several weeks pursuant to which, if effective, First Albany Capital and its syndicate intends to publicly sell on behalf of PainCare
a certain number of PainCare common shares. 
  
 6. Rescission.
Section 13 of the Merger Agreement is hereby deleted in its entirety and shall no longer be of any force or effect. 
  
 7. Administration of PC. The Parties hereby agree to appoint a mutually agreed upon Practice Administrator for the PC. In connection with such
appointment, the following shall take place immediately: 
  

	 	A.	All parties which are presently authorized to withdraw, transfer or otherwise remove funds from the bank accounts and any other depository of PC shall be removed and the following
individuals will be added as the only parties authorized to transact business with respect to such accounts (other than making deposits): The Practice Administrator, Dr. Alo, Dr. Wright, Clayton Swalstead and Katie White.

  

	 	B.	The Practice Administrator shall supervise the billing of all PC patients; 

  

	 	C.	The Practice Administrator shall supervise the collections in the name of PC from all patients, insurance companies and all other payors; 

  

	 	D.	The Practice Administrator or his designee shall take possession of and endorse in the name of PC all cash, notes, checks, money orders, insurance payments, and any other
instruments received as payment on the accounts receivable of PC; 

  

	 	E.	The Practice Administrator or his designee shall deposit all such collections directly into one or more PC or PainCare accounts; 

  

	 	F.	The Practice Administrator shall be entitled to make withdrawals, sign checks or otherwise transfer monies from the PC bank account(s) in amounts up to but not exceeding $2,500. For
all withdrawals, checks or transfers in excess of $2,500, either Dr. Wright, Dr. Alo, Clayton Swalstead or Katie White shall be required to execute checks or drafts to consummate same. All such withdrawals, checks and transfers shall be done
consistent with the provisions of that certain Management Services Agreement between the PC and the Subsidiary dated April 29, 2004 unless the parties shall otherwise agree in writing. 

  

 6 

	 	G.	The Practice Administrator shall use his best efforts to insure that the monies of PC and any other party will not be commingled with or paid to any other party unless approved by
the parties in writing or otherwise allowed pursuant to the Transaction Documents. 

  

	 	H.	The Practice Administrator shall provide the parties with periodic (at least monthly) reporting as to the financial status of PC including, but not limited to, cash flow statements,
billings, collections, cash receipts, accounts payable and other debts.  

  
 8. Audit The parties have retained the services of an independent auditor to audit and reconcile the books and records of PC, Metro Diagnostics and Dr. Wright, if necessary, in order to determine the amounts of
any monies due the PC, PainCare, Dr. Wright, Metro Diagnostics and/or others including amounts owed as a result of the improper use, withdrawal and/or payments of PC funds (hereinafter the “Audit”). The findings of the auditors shall not
be binding upon the parties. All costs and expenses associated with such Audit shall be the obligation of PainCare. Upon the completion of the Audit, the owing party will pay any amounts due within 30 days of the parties agreeing to the audit or
otherwise reaching a final agreement as to the amount of the monies owed. Until such time as the Audit is complete and a determination of whether any monies are due Dr. Wright, Metro Diagnostics or any affiliated party, no payments or transfers of
any monies from any account of PC will be made to Dr. Wright, his spouse, Metro Diagnostics or any affiliated party other than amounts collected by PC with respect to receivables of Metro Diagnostics. Such collections shall be remitted to Metro
Diagnostics within one week of the receipt of same by PC. 
  
 9. Lien Removal. Dr. Wright shall immediately cause KeyBank to release all liens on the assets of PC and PainCare. 
  
 10. Cancellation of Notes. Dr. Wright will immediately cause the cancellation all promissory notes issued by PC in favor of Metro Diagnostics, Dr.
Wright and/or any affiliated party (the “Wright Parties”) and will execute such documents as may be reasonably required to reflect that neither PC or PainCare owes Dr. Wright or any affiliated party any monies other than as may be required
to be paid pursuant to the Transaction Documents or the Audit, if any. 
  
 11. Counterparts. This Addendum may be executed in counterparts, all of which taken together shall be deemed one original. 
  
 12. Effect of Addendum. Except as otherwise provided herein, the terms and conditions of the Merger Agreement, the Management Agreement and all
other transaction documents shall remain unchanged and are hereby republished in their entirety subject to the modifications set forth herein. 
  
 13. Definitions. Unless otherwise specifically stated otherwise, the defined terms in this Addendum shall have the same meaning as the defined
terms in the Merger Agreement. 
  
 14. Termination of Pledge
Agreement. Dr. Wright (as Pledgor) and PainCare (as Pledgee) entered into that certain Security and Pledge Agreement on or about April 29, 2004 (the “Pledge Agreement”). The parties hereby agree that effective as of this date,
the Pledge Agreement shall be effectively terminated and as a result, no party shall 
  

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 hereafter have any rights, duties, obligations, and/or claims with respect to each other with respect to such Pledge
Agreement and PainCare shall have no right, title or interest in or to the collateral described therein. 
  
 [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 
  

 8 

 IN WITNESS WHEREOF, the Parties hereto have executed this Addendum as of the date first above written. 

 

			
	PAINCARE:
	
	 PAINCARE HOLDINGS, INC.,
 a Florida corporation

		
	 By:
	 	 /s/ Randy Lubinsky

	 Print:
	 	 Randy Lubinsky

	 Its:
	 	 CEO

	
	ACQUISITION:
	
	 PAINCARE ACQUISITION COMPANY X, INC.,
 a Florida corporation

		
	 By:
	 	 /s/ Randy Lubinsky

	 Print:
	 	 Randy Lubinsky

	 Its:
	 	 CEO

	
	DENVER PAIN MANAGEMENT, P.C.
		
	 By:
	 	 /s/ Robert E. Wright, M.D.

	 	 	 Robert E. Wright, M.D.

	 	 	 President and Secretary

  

			
	SHAREHOLDERS:	 	 
		
	 /s/ Robert E. Wright, M.D.

	 	 /s/ Kenneth M. Alo, M.D.

	 Robert E. Wright, M.D.
	 	 Kenneth M. Alo, M.D.

		
	R. E. WRIGHT, FLP	 	DELTA KMA TWO, FLP,
	 a Nevada Limited Partnership
	 	 a Nevada Limited Partnership

  

							
	 By:
	 	 /s/ Robert W. Wright, M.D.

	 	 By:
	 	 /s/ Kenneth M. Alo, M.D.

	 	 	 Robert W. Wright, Manager
	 	 	 	 Kenneth Mark Alo, Manager

	 	 	 Of R.E. WRIGHT GROUP, LLC, as
	 	 	 	 Of ALPHA TWO, LLC, as

	 	 	 General Partner
	 	 	 	 General Partner

		
	WRIGHT NONGRANTOR	 	ALO NONGRANTOR TRUST
	TRUST (U/D/T 2004)	 	 a Non-Grantor’s Trust

				
	 By:
	 	 /s/ Arthur A. Graves, III

	 	 By:
	 	 /s/ Robert C. San Luis

	 	 	 Arthur A. Graves, III, President
	 	 	 	 Robert C. San Luis, as Trustee

	 	 	 First Trustee Fiduciary Services, Inc.,
	 	 	 	 
	 	 	 As Trustee
	 	 	 	 

  

 9 

 EXHIBIT “A” 
  

 10Form of Notice of Option Grant for Certain Executive Officers

 Exhibit 10.5 
  
 SABA SOFTWARE, INC. 2000 STOCK INCENTIVE PLAN 
  
 NOTICE OF STOCK OPTION AWARD 
  
 Grantee’s Name and Address: Name 
                               Address 
  
 You have been granted an option to purchase shares of Common Stock, subject
to the terms and conditions of this Notice of Stock Option Award (the “Notice”), the Saba Software, Inc. 2000 Stock Incentive Plan, as amended from time to time (the “Plan”) and the Stock Option Award Agreement (the “Option
Agreement”) attached hereto, as follows. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Notice. 
  

			
	 Award Number:
	  	_________________
		
	 Date of Award :
	  	_________________
		
	 Vesting Commencement Date:
	  	_________________
		
	 Exercise Price per Share:
	  	$________________
		
	 Total Number of Shares subject to the Option:
	  	_________________
		
	 Total Exercise Price:
	  	$________________
		
	 Type of Option:
	  	             Incentive Stock Option
		
	 	  	             Non-Qualified Stock Option
		
	 Expiration Date:
	  	_________________
		
	 Post-Termination Exercise Period:
	  	Three (3) Months

  
 Vesting Schedule: 
  
 Subject to Grantee’s
Continuous Service and other limitations set forth in this Notice, the Plan and the Option Agreement, the Option may be exercised, in whole or in part, in accordance with the following schedule: 
  
 25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date. 1/16 of the Shares subject to the Option shall vest on each quarterly anniversary of the Vesting Commencement Date, beginning at the 15-month anniversary of the Vesting Commencement Date. 
  
 During any authorized leave of absence, the vesting of the Option as provided
in this schedule shall cease after the leave of absence exceeds a period of ninety (90) days. Vesting of the Option shall resume upon the Grantee’s termination of the leave of absence and return to service to the Company or a Related Entity.

  

 1 

 Except as otherwise provided herein with respect to a Corporate Transaction or Change of Control, in the
event of the Grantee’s change in status from Employee to Consultant or from an Employee whose customary employment is 20 hours or more per week to an Employee whose customary employment is fewer than 20 hours per week, vesting of the Option
shall continue only to the extent determined by the Administrator as of such change in status. 
  
 In the event of termination of the Grantee’s Continuous Service for Cause, the Grantee’s right to exercise the Option shall terminate concurrently with the termination of the Grantee’s Continuous
Service. 
  
 Corporate Event 

 
 Notwithstanding the vesting schedule set forth in this Notice, if, in
connection with, and prior to the closing of a Corporate Event (as defined below) agreed to in writing by the Company, or within twelve (12) months following the closing of any Corporate Event, Grantee’s Continuous Service is terminated either:
(i) by the Company or any successor to the Company other than for Good Cause or (ii) by the Grantee for Good Reason (either of (i) or (ii), a “Triggering Event”), then, subject to executing a release of claims agreement provided by the
Company after the Triggering Event, all of the Shares subject to the Option (or any shares subject to options received as a result of the Corporate Event in exchange for the Option) that are not vested immediately prior to such termination shall
automatically vest and become fully exercisable immediately following any such termination. For purposes of this paragraph, the following terms shall have the meanings set forth below: 
  
 “Corporate Event” means any of the following transactions: (1) a merger or consolidation in which the Company is
not the surviving entity (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the stockholders of the
Company); (2) a merger in which the Company is the surviving corporation but after which the owners of the equity of the Company immediately prior to such merger cease to own their shares or other equity interest in the Company; (3) the sale of
substantially all of the assets of the Company; (4) the acquisition, sale or transfer of more than 50% of the outstanding shares or equity interests of the Company by tender offer or similar transaction; or (5) any of the foregoing transactions with
respect to any entity that controls, either directly or through one or more intermediary entities, the Company. 
  
 “Good Cause” means any of the following by or of Grantee: (1) a failure or refusal to comply in any material respect with the reasonable
policies, standards or regulations of the Company or any successor; (2) a good faith determination that performance is unsatisfactory after reasonable notice of the ways in which performance is unsatisfactory and a reasonable opportunity to correct
any such deficiencies; (3) a failure or refusal in any material respect to perform his or her duties (except for any failure due to ill health or disability); (4) unprofessional, unethical or fraudulent conduct or conduct that is materially
detrimental to the reputation, character or standing of the Company or any successor; (5) dishonest conduct or a deliberate attempt to do an injury to the Company or any successor; (6) unauthorized disclosure, misuse or theft of the proprietary
information or intellectual property of the Company or any successor; (7) a criminal act which would reflect badly on the Company or any successor; or (8) death. 
  

 2 

 “Good Reason” means any of the following by the Company or any successor with respect to
Grantee: (1) a reduction in salary or target compensation below that in effect immediately prior to the earlier of the Company’s written agreement to or the closing of a Corporate Event; or (2) the relocation of work location to a location more
than fifty miles from the work location immediately prior to the earlier of the Company’s written agreement to or the closing of a Corporate Event. 
  
 IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement. 
  

			
	 Saba Software, Inc.,

	 a Delaware corporation

		
	 By:
	 	  

	 	 	       Bobby Yazdani

		
	 Title:
	 	 Chief Executive Officer and Chairman of the Board

  
 THE GRANTEE ACKNOWLEDGES AND
AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH
THE GRANTEE’S RIGHT OR THE RIGHT OF THE GRANTEE’S EMPLOYER TO TERMINATE GRANTEE’S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT
AGREEMENT WITH THE COMPANY TO THE CONTRARY, GRANTEE’S STATUS IS AT WILL. 
  
 The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the
terms and provisions hereof and thereof. The Grantee has reviewed this Notice, the Plan, and the Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice, and fully understands all
provisions of this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that all disputes arising out of or relating to this Notice, the Plan and the Option Agreement shall be resolved in accordance with Section 13 of the Option
Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this Notice. 
  

									
	 Dated:
	 	  

	  	 	  	Signed:	  	  

	 	 	 	  	 	  	 	  	[Optionee Name]

  

 3 

 SABA SOFTWARE, INC. 2000 STOCK INCENTIVE PLAN 
  
 STOCK OPTION AWARD AGREEMENT 
  
 1. Grant of Option. Saba Software, Inc., a Delaware corporation (the
“Company”), hereby grants to the Grantee (the “Grantee”) named in the Notice of Stock Option Award (the “Notice”), an option (the “Option”) to purchase the Total Number of Shares of Common Stock subject to the
Option (the “Shares”) set forth in the Notice, at the Exercise Price per Share set forth in the Notice (the “Exercise Price”) subject to the terms and provisions of the Notice, this Stock Option Award Agreement (the “Option
Agreement”) and the Company’s 2000 Stock Incentive Plan, as amended from time to time (the “Plan”), which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Option Agreement. 
  
 If designated in
the Notice as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares
subject to Options designated as Incentive Stock Options which become exercisable for the first time by the Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options, to the
extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair
Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is awarded. 
  
 2. Exercise of Option. 
  
 (a) Right to Exercise. The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan relating to the exercisability or termination of the Option in the event of a Corporate Transaction, Change in
Control or Related Entity Disposition. No partial exercise of the Option may be for less than the lesser of five percent (5%) of the total number of Shares subject to the Option or the remaining number of Shares subject to the Option. In no event
shall the Company issue fractional Shares. 
  
 (b) Method of
Exercise. The Option shall be exercisable only by delivery of an Exercise Notice (attached as Exhibit A) which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, such
other representations and agreements as to the holder’s investment intent with respect to such Shares and such other provisions as may be required by the Administrator. The Exercise Notice shall be signed by the Grantee and shall be delivered
in person, by certified mail, or by such other method as determined from time to time by the Administrator to the Company accompanied by payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such
written notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 3(d), below. 
  

 1 

 (c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to the exercise of
the Option until the Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax, employment tax, and social security tax withholding obligations, including, without limitation,
obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of the Option, the Company or the Grantee’s employer may offset or withhold (from any
amount owed by the Company or the Grantee’s employer to the Grantee) or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations and/or the employer’s withholding obligations. 
  
 3. Method of Payment. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law and, provided further, that the portion of the Exercise Price equal to the par value of
the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law: 
  
 (a) cash; 
  
 (b) check; 
  
 (c) surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including
withholding of Shares otherwise deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being exercised (but only
to the extent that such exercise of the Option would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price); or 
  
 (d) payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written
instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (ii) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.

  
 4. Restrictions on Exercise. The Option may not be
exercised if the issuance of the Shares subject to the Option upon such exercise would constitute a violation of any Applicable Laws. In addition, the Option, if an Incentive Stock Option, may not be exercised until such time as the Plan has been
approved by the stockholders of the Company. 
  
 5. Termination
or Change of Continuous Service. In the event the Grantee’s Continuous Service terminates, the Grantee may, to the extent otherwise so entitled at the date of such termination (the “Termination Date”), exercise the Option during
the Post-Termination Exercise Period. In the event of termination of the Grantee’s Continuous Service for Cause, the Grantee’s right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently
with the termination of the Grantee’s Continuous Service. In no event shall the Option be exercised later than the Expiration Date set forth in the Notice. In the event of 
  

 2 

 the Grantee’s change in status from Employee, Director or Consultant to any other status of Employee, Director or
Consultant, the Option shall remain in effect and, except to the extent otherwise determined by the Administrator, continue to vest; provided, however, that with respect to any Incentive Stock Option that shall remain in effect after a change in
status from Employee to Director or Consultant, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change
in status. Except as provided in Sections 6 and 7 below, to the extent that the Grantee is not entitled to exercise the Option on the Termination Date, or if the Grantee does not exercise the Option within the Post-Termination Exercise Period, the
Option shall terminate. 
  
 6. Disability of Grantee. In
the event the Grantee’s Continuous Service terminates as a result of his or her Disability, the Grantee may, but only within twelve (12) months from the Termination Date (and in no event later than the Expiration Date), exercise the Option to
the extent he or she was otherwise entitled to exercise it on the Termination Date; provided, however, that if such Disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code and the Option is an Incentive
Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the Termination Date. To the extent that the
Grantee is not entitled to exercise the Option on the Termination Date, or if the Grantee does not exercise the Option to the extent so entitled within the time specified herein, the Option shall terminate. 
  
 7. Death of Grantee. In the event of the termination of the
Grantee’s Continuous Service as a result of his or her death, or in the event of the Grantee’s death during the Post-Termination Exercise Period or during the twelve (12) month period following the Grantee’s termination of Continuous
Service as a result of his or her Disability, the Grantee’s estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the Option, but only to the extent the Grantee could exercise the Option at
the date of termination, within twelve (12) months from the date of death (but in no event later than the Expiration Date). To the extent that the Grantee is not entitled to exercise the Option on the date of death, or if the Option is not exercised
to the extent so entitled within the time specified herein, the Option shall terminate. 
  
 8. Transferability of Option. The Option, if an Incentive Stock Option, may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the
lifetime of the Grantee only by the Grantee; provided, however, that the Grantee may designate a beneficiary of the Grantee’s Incentive Stock Option in the event of the Grantee’s death on a beneficiary designation form provided by the
Administrator. The Option, if a Non-Qualified Stock Option may be transferred to any person by will and by the laws of descent and distribution. Non-Qualified Stock Options also may be transferred during the lifetime of the Grantee by gift and
pursuant to a domestic relations order to members of the Grantee’s Immediate Family to the extent and in the manner determined by the Administrator. The terms of the Option shall be binding upon the executors, administrators, heirs,
successors and transferees of the Grantee. 
  
 9. Term of
Option. The Option may be exercised no later than the Expiration Date set forth in the Notice or such earlier date as otherwise provided herein. 
  

 3 

 10. Tax Consequences. Set forth below is a brief summary as of the date of this Option Agreement
of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THE OPTION OR DISPOSING OF THE SHARES. 
  
 (a)
Exercise of Incentive Stock Option. If the Option qualifies as an Incentive Stock Option, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be treated as income for purposes of the alternative minimum tax for federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of exercise. 
  
 (b) Exercise of Incentive Stock Option Following Disability. If the
Grantee’s Continuous Service terminates as a result of Disability that is not total and permanent disability as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Grantee must exercise an Incentive
Stock Option within three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive Stock Option. 
  
 (c) Exercise of Non-Qualified Stock Option. On exercise of a Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be
required to withhold from the Grantee’s compensation or collect from the Grantee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor
the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. 
  
 (d) Disposition of Shares. In the case of a Non-Qualified Stock Option, if Shares are held for more than one year, any gain realized on disposition
of the Shares will be treated as long-term capital gain for federal income tax purposes and subject to tax at a maximum rate of 20%. In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more than one
year after receipt of the Shares and are disposed more than two years after the Date of Award, any gain realized on disposition of the Shares also will be treated as capital gain for federal income tax purposes and subject to the same tax rates and
holding periods that apply to Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year periods, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale
price of the Shares. 
  
 11. Entire Agreement: Governing
Law. The Notice, the Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee
with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Nothing 
  

 4 

 in the Notice, the Plan and this Option Agreement (except as expressly provided therein) is intended to confer any rights
or remedies on any persons other than the parties. The Notice, the Plan and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of California (as permitted by Section 1646.5 of the California
Civil Code, or any similar successor provision) without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the
parties. Should any provision of the Notice, the Plan or this Option Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall
nevertheless remain effective and shall remain enforceable. 
  
 12. Headings. The captions used in the Notice and this Option Agreement are inserted for convenience and shall not be deemed a part of the Option for construction or interpretation. 
  
 13. Dispute Resolution The provisions of this Section 13 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice, the Plan and this Option Agreement. The Company, the Grantee, and the Grantee’s assignees pursuant to Section 8 (the “parties”) shall attempt in good
faith to resolve any disputes arising out of or relating to the Notice, the Plan and this Option Agreement by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either party by notice of
a written statement of the party’s position and the name and title of the individual who will represent the party. Within thirty (30) days of the written notification, the parties shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or relating to the Notice, the Plan or this
Option Agreement shall be brought in the United States District Court, Northern District of California (or should such court lack jurisdiction to hear such action, suit or proceeding, in a California state court in the County of San Mateo) and that
the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court.
THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 13 shall for any reason be held invalid or unenforceable, it is the specific
intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable. 
  
 14. Notices. 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 mail by certified mail (if the parties are within the United States) or upon deposit for delivery by an internationally recognized express mail courier service (for international delivery of notice), with postage
and fees prepaid, addressed to the other party at its address as shown beneath its signature in the Notice, or to such other address as such party may designate in writing from time to time to the other party. 
  

 5 

 EXHIBIT A 
  
 SABA SOFTWARE, INC. 2000 STOCK INCENTIVE PLAN 
  
 EXERCISE NOTICE 
  
 Saba Software, Inc. 
 2400 Bridge Parkway 
 Redwood Shores, CA 94065 
  
 Attention: Secretary 
  
 1. Exercise of Option. Effective as of today,
                    ,          the undersigned (the “Grantee”) hereby elects to
exercise the Grantee’s option to purchase              shares of the Common Stock (the “Shares”) of Saba Software, Inc. (the “Company”) under and pursuant to
the Company’s 2000 Stock Incentive Plan, as amended from time to time (the “Plan”) and the [    ] Incentive [    ] Non-Qualified Stock Option Award Agreement (the “Option Agreement”)
and Notice of Stock Option Award (the “Notice”) dated                     ,         .
Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise Notice. 
  
 2. Representations of the Grantee. The Grantee acknowledges that the Grantee has received, read and understood the Notice, the Plan, and the Option
Agreement and agrees to abide by and be bound by their terms and conditions. 
  
 3. Rights as Stockholder. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company),
no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. 
  
 4. Delivery of Payment. The Grantee herewith delivers to the Company
the full Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 3(d) of the Option Agreement. 

 
 5. Tax Consultation. The Grantee understands that the Grantee may
suffer adverse tax consequences as a result of the Grantee’s purchase or disposition of the Shares. The Grantee represents that the Grantee has consulted with any tax advisors the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for any tax advice. 
  
 6. Taxes. The Grantee agrees to satisfy all applicable federal, state and local income and employment tax withholding obligations and herewith
delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such obligations. In the case of an Incentive Stock Option, the Grantee also agrees, as partial consideration for the
designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Date of
Award or within one (1) year from the date the Shares were transferred to the Grantee. If the Company is required to satisfy any federal, state or local income or employment tax withholding obligations as a result of such an early disposition,
the Grantee agrees to satisfy the amount of such withholding in a manner that the Administrator prescribes. 
  
 7. Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement
shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding upon the Grantee and his or her heirs, executors, administrators, successors and assigns. 
  

 6 

 8. Headings. The captions used in this Exercise Notice are inserted for convenience and shall not
be deemed a part of this agreement for construction or interpretation. 
  
 9. Dispute Resolution. The provisions of Section 13 of the Option Agreement shall be the exclusive means of resolving disputes arising out of or relating to this Exercise Notice. 
  
 10. Governing Law; Severability. This Exercise Notice is to be
construed in accordance with and governed by the internal laws of the State of California (as permitted by Section 1646.5 of the California Civil Code, or any similar successor provision) without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. 
  
 11. Notices. 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 mail by certified mail, (if the parties are within the United States) or upon deposit for delivery by an internationally recognized express mail courier service (for international
delivery of notice) with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party. 
  
 12. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this agreement. 
  
 13. Entire Agreement. The Notice, the Plan, and the Option Agreement are incorporated herein by reference, and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be
modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Nothing in the Notice, the Plan, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended
to confer any rights or remedies on any persons other than the parties. 
  

 7 

									
	 Submitted by:
	 	 	  	 Accepted by:

			
	 GRANTEE:
	 	 	  	 SABA SOFTWARE, INC.

				
	 	 	 	  	 By:
	  	  

				
	  

	 	 	  	 Title:
	  	  

	(Signature)	 	 	  	 	  	 
			
	 Address:
	 	 	  	 Address:

			
	  

	 	 	  	 2400 Bridge Parkway

	  

	 	 	  	 Redwood Shores, CA 94065-1166

				
	 Tel:
	 	  

	 	 	  	 

  

 8 

 SCHEDULE I 
 DEFINITIONS 
  
 For the
purpose of the Notice and the Option Agreement, the following terms have the meanings specified below: 
  
 “Termination Event” shall mean any one of the following events: 
  
 (i) termination by the Company of Grantee’s Continuous Service except for Cause (as defined below); 
  
 (ii) constructive termination by the Company of Grantee’s Continuous
Service by unreasonably reducing Grantee’s responsibilities; or 
  
 (iii) any reduction by the Company in Grantee’s total base salary and bonus plan. 
  
 “Cause” shall mean: 
  
 (i) the willful and continued failure by Grantee to substantially perform the duties associated with the employment position(s) that Grantee then holds
with the Company, other than any such failure resulting from Grantee’s incapacity due to physical or mental illness; 
  
 (ii) the willful engaging by Grantee in gross misconduct materially injurious to the Company; 
  
 (iii) the willful breach by Grantee of the Proprietary Information Agreement
entered into between Grantee and the Company; 
  
 (iv)
Grantee’s refusal or failure to act in accordance with any lawful, reasonable direction of the Chief Executive Officer or President of the Company and such refusal or failure has a material adverse effect on the Company or its business; or

  
 (v) Grantee’s conviction of a felony which conviction has
a material adverse effect on the Company or on Grantee’s ability to serve as an employee of the Company in Grantee’s then-current capacity. 
  
 For purposes of this definition of “Cause,” no act, or failure to act, on Grantee’s part shall be considered willful unless done, or
omitted to be done, by Grantee not in good faith and without reasonable belief that Grantee’s action or omission was in the best interests of the Company. 
  

“Company” shall mean Saba Software, Inc., and following the effective date of a Corporate Transaction or Change of Control, shall also
mean, as appropriate for the context, any assignee or successor of Saba Software, Inc. or any ultimate parent corporation or entity that controls Saba Software, Inc. or any such assignee or successor; provided, however, that in the case of clauses
(i) through (v) of the definition of “Cause” set forth above, the term “Company” shall mean Saba Software, Inc. if that legal entity continues to conduct the business conducted by it immediately prior to the effective date of the
Corporate Transaction or Change of Control, and if not, the term “Company” shall mean the business conducted by Saba Software, Inc. immediately prior to the effective date of the Corporate Transaction or Change of Control, regardless of
which entity may conduct such business after the effective date of the Corporate Transaction or Change of Control. 
  

 9

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