Document:

Exhibit 10.1

 

 

    Exhibit
10.1

 

    BIG 5
    SPORTING GOODS CORPORATION

    2007 EQUITY AND PERFORMANCE INCENTIVE PLAN

 

    BIG 5 SPORTING GOODS CORPORATION, a corporation existing under
    the laws of the State of Delaware (the
    “Company”), hereby establishes and adopts the
    following 2007 Equity and Performance Incentive Plan (the
    “Plan”). Certain capitalized terms used in the
    Plan are defined in Article 2.

 

    RECITALS

 

    WHEREAS, the Company desires to encourage high levels of
    performance by those individuals who are key to the success of
    the Company, to attract new individuals who are highly motivated
    and who are expected to contribute to the success of the Company
    and to encourage such individuals to remain as directors,
    employees, consultants
    and/or
    advisors of the Company and its Affiliates by increasing their
    proprietary interest in the Company’s growth and
    success; and

 

    WHEREAS, to attain these ends, the Company has formulated the
    Plan embodied herein to authorize the granting of Awards to
    Participants whose judgment, initiative and efforts are or have
    been or are expected to be responsible for the success of the
    Company.

 

    NOW, THEREFORE, the Company hereby constitutes, establishes and
    adopts the following Plan and agrees to the following provisions:

 

    ARTICLE I

    

 

    PURPOSE
    OF THE PLAN

 

    1.1  Purpose.  The purpose of the
    Plan is to assist the Company and its Affiliates in attracting
    and retaining selected individuals to serve as directors,
    employees, consultants
    and/or
    advisors of the Company who are expected to contribute to the
    Company’s success and to achieve long-term objectives which
    will inure to the benefit of all stockholders of the Company
    through the additional incentives inherent in the Awards
    hereunder.

 

    ARTICLE II

    

 

    DEFINITIONS

 

    2.1  “Affiliate” shall mean
    (i) any person or entity that directly, or through one or
    more intermediaries, controls, or is controlled by, or is under
    common control with, the Company (including any Parent or
    Subsidiary) or (ii) any entity in which the Company has a
    significant equity interest, as determined by the Committee.

 

    2.2  “Applicable Laws” means the
    legal requirements relating to the administration of and
    issuance of securities under stock incentive plans, including,
    without limitation, the requirements of state corporations law,
    federal and state securities law, federal and state tax law, and
    the requirements of any stock exchange or quotation system upon
    which the Shares may then be listed or quoted. For all purposes
    of this Plan, references to statutes and regulations shall be
    deemed to include any successor statutes and regulations, to the
    extent reasonably appropriate as determined by the Committee.

 

    2.3  “Award” shall mean any Option,
    Stock Appreciation Right, Restricted Stock Award, Performance
    Award, Dividend Equivalent, Other Stock Unit Award or any other
    right, interest or option relating to Shares or other property
    (including cash) granted pursuant to the provisions of the Plan.

 

    2.4  “Award Agreement” shall mean any
    written agreement, contract or other instrument or document
    evidencing any Award granted by the Committee hereunder.

 

    2.5  “Board” shall mean the board of
    directors of the Company.

    

     

 

 

    2.6  “Cause” shall have the meaning
    set forth in a Participant’s employment or consulting
    agreement with the Company (if any), or if not defined therein,
    shall mean (i) acts or omissions by the Participant which
    constitute intentional material misconduct or a knowing
    violation of a material policy of the Company or any of its
    subsidiaries, (ii) the Participant personally receiving a
    benefit in money, property or services from the Company or any
    of its subsidiaries or from another person dealing with the
    Company or any of its subsidiaries, in material violation of
    applicable law or Company policy, (iii) an act of fraud,
    conversion, misappropriation, or embezzlement by the Participant
    or his conviction of, or entering a guilty plea or plea of no
    contest with respect to, a felony, or the equivalent thereof
    (other than DUI), or (iv) any deliberate and material
    misuse or improper disclosure of confidential or proprietary
    information of the Company.

 

    2.7  “Change of Control” shall mean
    the occurrence of any of the following events:

 

    (i) The direct or indirect acquisition by an unrelated
    “Person” or “Group” of “Beneficial
    Ownership” (as such terms are defined below) of more than
    50% of the voting power of the Company’s issued and
    outstanding voting securities in a single transaction or a
    series of related transactions;

 

    (ii) The direct or indirect sale or transfer by the Company
    of substantially all of its assets to one or more unrelated
    Persons or Groups in a single transaction or a series of related
    transactions;

 

    (iii) The merger, consolidation or reorganization of the
    Company with or into another corporation or other entity in
    which the Beneficial Owners of more than 50% of the voting power
    of the Company’s issued and outstanding voting securities
    immediately before such merger or consolidation do not own more
    than 50% of the voting power of the issued and outstanding
    voting securities of the surviving corporation or other entity
    immediately after such merger, consolidation or
    reorganization; or

 

    (iv) During any consecutive two-year period, individuals
    who at the beginning of such period constituted the Board of the
    Company (together with any new Directors whose election to such
    Board or whose nomination for election by the stockholders of
    the Company was approved by a vote of a majority of the
    Directors of the Company then still in office who were either
    Directors at the beginning of such period or whose election or
    nomination for election was previously so approved) cease for
    any reason to constitute a majority of the Board of the Company
    then in office.

 

    None of the foregoing events, however, shall constitute a Change
    of Control if such event is not a “Change in Control
    Event” under Treasury Regulations
    Section 1.409A-3(i)(5).
    For purposes of determining whether a Change of Control has
    occurred, the following Persons and Groups shall not be deemed
    to be “unrelated”: (A) such Person or Group
    directly or indirectly has Beneficial Ownership of more than 50%
    of the issued and outstanding voting power of the Company’s
    voting securities immediately before the transaction in
    question, (B) the Company has Beneficial Ownership of more
    than 50% of the voting power of the issued and outstanding
    voting securities of such Person or Group, or (C) more than
    50% of the voting power of the issued and outstanding voting
    securities of such Person or Group are owned, directly or
    indirectly, by Beneficial Owners of more than 50% of the issued
    and outstanding voting power of the Company’s voting
    securities immediately before the transaction in question. The
    terms “Person,” “Group,” “Beneficial
    Owner,” and “Beneficial Ownership” shall have the
    meanings used in the Exchange Act.

 

    2.8  “Code” shall mean the Internal
    Revenue Code of 1986, as amended from time to time, and any
    successor thereto.

 

    2.9  “Committee” shall mean the
    Committee constituted under Section 4.2 to administer this
    Plan.

 

    2.10  “Company” has the meaning set
    forth in introductory paragraph of the Plan.

 

    2.11  “Consultant” means any person,
    including an advisor, who (i) is a natural person,
    (ii) provides bona fide services to the Company or a Parent
    or Subsidiary, and (iii) provides services that are not in
    connection with the offer or sale of securities in a
    capital-raising transaction, and that do not directly or
    indirectly promote or maintain a market for the securities of
    the Company; provided that the term ’Consultant’ does
    not include (i) Employees or (ii) Directors who are
    paid only a director’s fee by the Company or who are not
    compensated by the Company for their services as Directors.

    

     

 

 

    2.12  “Continuous Status as an Employee,
    Director or Consultant” means that the employment,
    director or consulting relationship is not interrupted or
    terminated by the Company, any Parent or Subsidiary, or by the
    Employee, Director or Consultant. Continuous Status as an
    Employee, Director or Consultant will not be considered
    interrupted in the case of: (i) any leave of absence
    approved by the Board, including sick leave, military leave, or
    any other personal leave, provided, that for purposes of
    Incentive Stock Options, any such leave may not exceed
    90 days, unless reemployment upon the expiration of such
    leave is guaranteed by contract (including certain Company
    policies) or statute; (ii) transfers between locations of
    the Company or between the Company, its Parent, its Subsidiaries
    or its successor; or (iii) in the case of an Award other
    than an Incentive Stock Option, the ceasing of a person to be an
    Employee while such person remains a Director or Consultant, the
    ceasing of a person to be a Director while such person remains
    an Employee or Consultant or the ceasing of a person to be a
    Consultant while such person remains an Employee or Director.

 

    2.13  “Covered Employee” shall mean a
    “covered employee” within the meaning of
    Section 162(m)(3) of the Code, or any successor provision
    thereto.

 

    2.14  “Director” shall mean a
    non-employee member of the Board or a non-employee member of the
    board of directors of a Parent or Subsidiary.

 

    2.15  “Disability” shall mean total
    and permanent disability as defined in Section 22(e)(3) of
    the Code.

 

    2.16  “Dividend Equivalents” shall
    have the meaning set forth in Section 12.5.

 

    2.17  “Employee” shall mean any
    employee of the Company or any Parent or Subsidiary.

 

    2.18  “Exchange Act” shall mean the
    Securities Exchange Act of 1934 and the rules promulgated
    thereunder, as amended.

 

    2.19  “Fair Market Value” shall mean,
    with respect to any property other than Shares, the market value
    of such property determined by such methods or procedures as
    shall be established from time to time by the Committee. The
    Fair Market Value of Shares as of any date shall be determined
    as follows:

 

    (i) If the Shares are listed on any established stock
    exchange or a national market system, including without
    limitation, the National Market System of NASDAQ, the Fair
    Market Value of a Share will be (i) the closing sales price
    for such Shares (or the closing bid, if no sales are reported)
    as quoted on that system or exchange (or the system or exchange
    with the greatest volume of trading in Shares) on the last
    market trading day prior to the day of determination or
    (ii) any sales price for such Shares (or the closing bid,
    if no sales are reported) as quoted on that system or exchange
    (or the system or exchange with the greatest volume of trading
    in Shares) on the day of determination, as the Committee may
    select, in each case as reported in the Wall Street Journal or
    any other source the Committee considers reliable.

 

    (ii) If the Shares are quoted on the NASDAQ System (but not
    on the NASDAQ National Market System) or are regularly quoted by
    recognized securities dealers but selling prices are not
    reported, the Fair Market Value of a Share will be the mean
    between the high bid and low asked prices for the Shares on
    (i) the last market trading day prior to the day of
    determination or (ii) the day of determination, as the
    Committee may select, in each case as reported in the Wall
    Street Journal or any other source the Committee considers
    reliable.

 

    (iii) If the Shares are not traded as set forth above, the
    Fair Market Value will be determined in good faith by the
    Committee with reference to the earnings history, book value and
    prospects of the Company in light of market conditions
    generally, and any other factors the Committee considers
    appropriate, such determination by the Committee to be final,
    conclusive and binding.

 

    2.20  “Family Member” means any
    child, stepchild, grandchild, parent, stepparent, grandparent,
    spouse, former spouse, sibling, niece, nephew,
    mother-in-law,
    father-in-law,
    son-in-law,
    daughter-in-law,
    brother-in-law,
    or
    sister-in-law,
    including adoptive relationships, any person sharing the
    Participant’s household (other than a tenant or employee),
    a trust in which these persons (or the Participant) control the
    management of assets, and any other entity in which these
    persons (or the Participant) own more than 50 percent of
    the voting interests.

 

    2.21  “Incentive Stock Option” means
    an Option intended to qualify as an incentive stock option
    within the meaning of Section 422 of the Code and the
    regulations promulgated thereunder.

    

     

 

 

    2.22  “Limitations” shall have the
    meaning set forth in Section 3.2.

 

    2.23  “Option” shall mean any right
    granted to a Participant under the Plan allowing such
    Participant to purchase Shares at such price or prices and
    during such period or periods as the Committee shall determine.

 

    2.24  “Other Stock Unit Award” shall
    have the meaning set forth in Section 8.1.

 

    2.25  “Parent” means a “parent
    corporation” with respect to the Company, whether now or
    later existing, as defined in Section 424(e) of the Code.

 

    2.26 “Participant” shall mean an Employee,
    Director or Consultant who is selected by the Committee to
    receive an Award under the Plan.

 

    2.27 “Payee” shall have the meaning set forth
    in Section 13.1.

 

    2.28 “Performance Award” shall mean any Award
    of Performance Shares or Performance Units granted pursuant to
    Article 9.

 

    2.29 “Performance Period” shall mean that
    period established by the Committee at the time any Performance
    Award is granted or at any time thereafter during which any
    performance goals specified by the Committee with respect to
    such Award are to be measured.

 

    2.30 “Performance Share” shall mean any grant
    pursuant to Article 9 of a unit valued by reference to a
    designated number of Shares, which value may be paid to the
    Participant by delivery of such property as the Committee shall
    determine, including cash, Shares, other property, or any
    combination thereof, upon achievement of such performance goals
    during the Performance Period as the Committee shall establish
    at the time of such grant or thereafter.

 

    2.31 “Performance Unit” shall mean any grant
    pursuant to Article 9 of a unit valued by reference to a
    designated amount of property (including cash) other than
    Shares, which value may be paid to the Participant by delivery
    of such property as the Committee shall determine, including
    cash, Shares, other property, or any combination thereof, upon
    achievement of such performance goals during the Performance
    Period as the Committee shall establish at the time of such
    grant or thereafter.

 

    2.32 “Prior Plans” shall mean, collectively,
    the Company’s 1997 Management Equity Plan and 2002 Stock
    Incentive Plan, as amended.

 

    2.33 “Restricted Stock” shall mean any Share
    issued with the restriction that the holder may not sell,
    transfer, pledge or assign such Share and with such other
    restrictions as the Committee, in its sole discretion, may
    impose (including any restriction on the right to vote such
    Share and the right to receive any dividends), which
    restrictions may lapse separately or in combination at such time
    or times, in installments or otherwise, as the Committee may
    deem appropriate.

 

    2.34 “Restricted Period” shall have the meaning
    set forth in Section 7.1.

 

    2.35 “Restricted Stock Award” shall have the
    meaning set forth in Section 7.1.

 

    2.36 “Shares” shall mean the shares of common
    stock of the Company, par value $0.10 per share.

 

    2.37 “Stock Appreciation Right” shall mean the
    right granted to a Participant pursuant to Article 6.

 

    2.38 “Subsidiary” shall mean any corporation
    (other than the Company) in an unbroken chain of corporations
    beginning with the Company if, at the time of the granting of
    the Award, each of the corporations other than the last
    corporation in the unbroken chain owns stock possessing 50% or
    more of the total combined voting power of all classes of stock
    in one of the other corporations in the chain.

 

    2.39 “Substitute Awards” shall mean Awards
    granted or Shares issued by the Company in assumption of, or in
    substitution or exchange for, awards previously granted, or the
    right or obligation to make future awards, by a company acquired
    by the Company or any Subsidiary or with which the Company or
    any Subsidiary combines.

    

     

 

 

    ARTICLE III

    

 

    SHARES SUBJECT
    TO THE PLAN

 

    3.1  Number of Shares.

 

    (a) Subject to adjustment as provided in Section 12.2,
    a total of 2,399,250 Shares shall be authorized for grant
    under the Plan, plus any Shares subject to awards granted under
    the Prior Plans, which such awards are forfeited, expire or
    otherwise terminate without issuance of Shares, or are settled
    for cash or otherwise do not result in the issuance of Shares,
    on or after the effective date of this Plan. Any Shares that are
    subject to Awards of Options or Stock Appreciation Rights shall
    be counted against this limit as one Share for every one Share
    granted, regardless of the number of shares actually delivered
    pursuant to such Awards. Any Shares that are subject to Awards
    other than Options or Stock Appreciation Rights (including, but
    not limited to, Shares delivered in satisfaction of Dividend
    Equivalents) shall be counted against this limit as
    2.5 Shares for every one Share granted.

 

    (b) If any Shares subject to an Award or to an award under
    the Prior Plans are forfeited, expire or otherwise terminate
    without issuance of such Shares, or any Award or award under the
    Prior Plans is settled for cash or otherwise does not result in
    the issuance of all or a portion of the Shares subject to such
    Award, the Shares shall, to the extent of such forfeiture,
    expiration, termination, cash settlement or non-issuance, again
    be available for Awards under the Plan, subject to
    Section 3.1(e) below.

 

    (c) In the event that (i) any Option or other Award
    granted under this Plan or any option or award granted under the
    Prior Plans is exercised through the tendering of Shares (either
    actually, by attestation, or by the giving of instructions to a
    broker to remit to the Company that portion of the sales price
    required to pay the exercise price) or by the withholding of
    Shares by the Company, or (ii) withholding tax liabilities
    arising from such Options or Awards under this Plan or options
    or awards under a Prior Plan are satisfied by the tendering of
    Shares (either actually, by attestation, or by the giving of
    instructions to a broker to remit to the Company that portion of
    the sales price required to pay the exercise price) or by the
    withholding of Shares by the Company, then the Shares so
    tendered or withheld shall not again be available for Awards
    under the Plan.

 

    (d) Substitute Awards shall not reduce the Shares
    authorized for issuance under the Plan or authorized for grant
    to a Participant in any calendar year. Additionally, in the
    event that a company acquired by the Company or any Subsidiary,
    or with which the Company or any Subsidiary combines, has shares
    available under a pre-existing plan approved by shareholders and
    not adopted in contemplation of such acquisition or combination,
    the shares available for grant pursuant to the terms of such
    pre-existing plan (as adjusted, to the extent appropriate, using
    the exchange ratio or other adjustment or valuation ratio or
    formula used in such acquisition or combination to determine the
    consideration payable to the holders of common stock of the
    entities party to such acquisition or combination) may be used
    for Awards under the Plan and shall not reduce the Shares
    authorized for issuance under the Plan; provided that Awards
    using such available shares shall not be made after the date
    awards or grants could have been made under the terms of the
    pre-existing plan, absent the acquisition or combination, and
    shall only be made to individuals who were employees, directors
    or consultants of such acquired or combined company before such
    acquisition or combination.

 

    (e) Any Shares that again become available for grant
    pursuant to this Article 3 shall be added back as one Share
    if such Shares were subject to Options or Stock Appreciation
    Rights granted under the Plan or options or stock appreciation
    rights granted under the Prior Plans, and as 2.5 Shares if
    such Shares were subject to Awards other than Options or Stock
    Appreciation Rights granted under the Plan.

 

    3.2  Limitations on Grants to Individual
    Participant.  Subject to adjustment as provided in
    Section 12.2, no Participant may be granted
    (i) Options or Stock Appreciation Rights during any fiscal
    year of the Company with respect to more than
    500,000 Shares, or (ii) Restricted Stock, Performance
    Awards
    and/or Other
    Stock Unit Awards that are denominated in Shares in any fiscal
    year of the Company with respect to more than
    250,000 Shares (the “Limitations”). In
    addition to the foregoing, the maximum dollar value payable to
    any Participant in any fiscal year of the Company with respect
    to Performance Awards
    and/or Other
    Stock Unit Awards that are valued with reference to cash or
    property other than Shares is $2,000,000. If an Award is
    cancelled, the cancelled Award shall continue to be counted
    toward the applicable Limitations.

    

     

 

 

    3.3  Character of Shares.  Any Shares
    issued hereunder may consist, in whole or in part, of authorized
    and unissued shares, treasury shares or shares purchased in the
    open market or otherwise.

 

    ARTICLE IV

    

 

    ELIGIBILITY
    AND ADMINISTRATION

 

    4.1  Eligibility.  Any Employee,
    Director or Consultant shall be eligible to be selected as a
    Participant. Only Employees may receive awards of Incentive
    Stock Options.

 

    4.2  Administration.

 

    (a) The Plan shall be administered by the Committee,
    constituted as follows:

 

    (i) The Committee will consist of the Board, or a committee
    designated by the Board, which Committee will be constituted to
    satisfy Applicable Laws. Once appointed, a Committee will serve
    in its designated capacity until otherwise directed by the
    Board. The Board may increase the size of the Committee and
    appoint additional members, remove members (with or without
    cause) and substitute new members, fill vacancies (however
    caused), and remove all members of the Committee and thereafter
    directly administer the Plan. Notwithstanding the foregoing,
    unless the Board expressly resolves to the contrary, while the
    Company is registered pursuant to Section 12 of the
    Exchange Act, the Plan will be administered only by the
    Compensation Committee of the Board (or such other committee
    designated by the Compensation Committee of the Board),
    consisting of no fewer than two Directors, each of whom is
    (A) a “non-employee director” within the meaning
    of
    Rule 16b-3
    (or any successor rule) of the Exchange Act, (B) an
    “outside director” within the meaning of
    Section 162(m)(4)(C)(i) of the Code, and (C) an
    “independent director” for purpose of the rules and
    regulations of the NASDAQ National Market System or other
    exchange or quotation system on which the Shares are principally
    traded; provided, however, (X) so long as the Committee has
    at least two directors that meet the above requirements, the
    Committee may contain one additional director who is not a
    “non-employee director”, “outside director”
    or “independent director”, but only if such director
    abstains from voting on all grants or awards to Covered
    Employees and to those Participants who have been designated by
    the Board of Directors as being “officers” for
    purposes of Section 16 of the Exchange Act and the rules
    promulgated thereunder and (Y) the failure of the Committee
    to be composed solely of individuals who are “non-employee
    directors,” “outside directors,” and
    “independent directors”, whether pursuant to
    clause (X) above or otherwise, shall not render
    ineffective or void any awards or grants made by, or other
    actions taken by, such Committee.

 

    (ii) The Plan may be administered by different bodies with
    respect to Directors, officers who are not Directors, and
    Employees and Consultants who are neither Directors nor
    officers, and Covered Employees.

 

    (b) The Committee shall have full discretion, power and
    authority, subject to the provisions of the Plan and subject to
    such orders or resolutions not inconsistent with the provisions
    of the Plan as may from time to time be adopted by the Board,
    to: (i) select the Employees, Consultants and Directors to
    whom Awards may from time to time be granted hereunder;
    (ii) determine the type or types of Awards, not
    inconsistent with the provisions of the Plan, to be granted to
    each Participant hereunder; (iii) determine the number of
    Shares to be covered by each Award granted hereunder;
    (iv) determine the terms and conditions, not inconsistent
    with the provisions of the Plan, of any Award granted hereunder
    and the form and content of any Award Agreement;
    (v) determine whether, to what extent and under what
    circumstances Awards may be settled in cash, Shares or other
    property, subject to the provisions of the Plan;
    (vi) determine whether, to what extent and under what
    circumstances any Award shall be modified, amended, canceled or
    suspended; (vii) interpret and administer the Plan and any
    instrument or agreement entered into under or in connection with
    the Plan, including any Award Agreement; (viii) correct any
    defect, supply any omission or reconcile any inconsistency in
    the Plan or any Award in the manner and to the extent that the
    Committee shall deem desirable to carry it into effect;
    (ix) establish such rules and regulations and appoint such
    agents as it shall deem appropriate for the proper
    administration of the Plan; (x) determine whether any Award
    will have Dividend Equivalents; (xi) determine whether, to
    what extent, and under what circumstances cash, Shares, or other
    property payable with respect to an Award shall be deferred
    either automatically or at the election of the Participant;

    

     

 

    provided that the Committee shall take no action that would
    subject the Participant to a penalty tax under Section 409A
    of the Code; and (xii) make any other determination and
    take any other action that the Committee deems necessary or
    desirable for administration of the Plan.

 

    (c) Decisions of the Committee shall be final, conclusive
    and binding on all persons or entities, including the Company,
    any Participant, any stockholder and any Employee or any
    Affiliate. A majority of the members of the Committee may
    determine its actions and fix the time and place of its meetings.

 

    (d) The Committee may delegate to a committee of one or
    more Directors of the Company or, to the extent permitted by
    Applicable Law, to one or more officers or a committee of
    officers, the authority to grant Awards to Employees and
    officers of the Company who are not Directors, Covered
    Employees, or “officers,” as such term is defined by
    Rule 16a-1(f)
    of the Exchange Act, and to cancel or suspend Awards to
    Employees and officers of the Company who are not Directors,
    Covered Employees, or “officers,” as such term is
    defined by
    Rule 16a-1(f)
    of the Exchange Act.

 

    ARTICLE V

    

 

    OPTIONS

 

    5.1  Grant of Options.  Options may
    be granted hereunder to Participants either alone or in addition
    to other Awards granted under the Plan. Any Option shall be
    subject to the terms and conditions of this Article 5 and
    to such additional terms and conditions, not inconsistent with
    the provisions of the Plan, as the Committee shall deem
    desirable.

 

    5.2  Award Agreements.  All Options
    granted pursuant to this Article 5 shall be evidenced by a
    written Award Agreement in such form and containing such terms
    and conditions as the Committee shall determine which are not
    inconsistent with the provisions of the Plan. Granting of an
    Option pursuant to the Plan shall impose no obligation on the
    recipient to exercise such Option. Any individual who is granted
    an Option pursuant to this Article 5 may hold more than one
    Option granted pursuant to the Plan at the same time.

 

    5.3  Option Price.  Other than in
    connection with Substitute Awards, the option price per each
    Share purchasable under any Option granted pursuant to this
    Article 5 shall not be less than 100% of the Fair Market
    Value of such Share on the date of grant of such Option. Other
    than pursuant to Section 12.2, the Committee shall not be
    permitted to (a) lower the option price per Share of an
    Option after it is granted, (b) cancel an Option when the
    option price per Share exceeds the Fair Market Value of the
    underlying Shares in exchange for cash or for another Award
    (other than in connection with Substitute Awards), and
    (c) take any other action with respect to an Option that
    may be treated as a repricing under the rules and regulations of
    the NASDAQ National Market System or other exchange or quotation
    system on which the Shares are principally traded.

 

    5.4  Option Period.  The term of each
    Option shall be fixed by the Committee in its sole discretion;
    provided that no Option shall be exercisable after the
    expiration of ten years from the date the Option is granted.

 

    5.5  Exercise of Options.  Vested
    Options granted under the Plan shall be exercised by the
    Participant or by a Permitted Assignee thereof (or by the
    Participant’s executors, administrators, guardian,
    beneficiary, or legal representative, or Family Members, as may
    be provided in an Award Agreement) as to all or part of the
    Shares covered thereby, by the giving of written notice of
    exercise to the Company or its designated agent, specifying the
    number of Shares to be purchased, accompanied by payment of the
    full purchase price for the Shares being purchased. Unless
    otherwise provided in an Award Agreement, full payment of such
    purchase price shall be made at the time of exercise and shall
    be made (a) in cash or by certified check or bank check or
    wire transfer of immediately available funds, (b) with the
    consent of the Committee, by tendering previously acquired
    Shares (either actually or by attestation, valued at their then
    Fair Market Value) that have been owned for a period of at least
    six months (or such other period to avoid accounting charges
    against the Company’s earnings), (c) with the consent
    of the Committee, by delivery of other consideration (including,
    where permitted by law and the Committee, other Awards) having a
    Fair Market Value on the exercise date equal to the total
    purchase price, (d) with the consent of the Committee, by
    withholding Shares otherwise issuable in connection with the
    exercise of the Option, (e) with the consent of the
    Committee, by delivery of a properly executed exercise notice
    together with any other documentation

    

     

 

    as the Committee and the Participant’s broker, if
    applicable, require to effect an exercise of the Option and
    delivery to the Company of the sale or other proceeds (as
    permitted by Applicable Law) required to pay the exercise price,
    , (f) through any other method specified in an Award
    Agreement, or (g) any combination of any of the foregoing.
    In connection with a tender of previously acquired Shares
    pursuant to clause (b) above, the Committee, in its sole
    discretion, may permit the Participant to constructively
    exchange Shares already owned by the Participant in lieu of
    actually tendering such Shares to the Company, provided that
    adequate documentation concerning the ownership of the Shares to
    be constructively tendered is furnished in form satisfactory to
    the Committee. The notice of exercise, accompanied by such
    payment, shall be delivered to the Company at its principal
    business office or such other office as the Committee may from
    time to time direct, and shall be in such form, containing such
    further provisions consistent with the provisions of the Plan,
    as the Committee may from time to time prescribe. In no event
    may any Option granted hereunder be exercised for a fraction of
    a Share. No adjustment shall be made for cash dividends or other
    rights for which the record date is prior to the date of such
    issuance.

 

    5.6  Form of Settlement.  In its sole
    discretion, the Committee may provide, at the time of grant,
    that the Shares to be issued upon an Option’s exercise
    shall be in the form of Restricted Stock or other similar
    securities, or may reserve the right so to provide after the
    time of grant.

 

    5.7  Incentive Stock Options.  With
    respect to the Options that may be granted by the Committee
    under the Plan, the Committee may grant Options intended to
    qualify as Incentive Stock Options to any Employee of the
    Company or any Parent or Subsidiary, subject to the requirements
    of Section 422 of the Code. The Award Agreement of an
    Option intended to qualify as an Incentive Stock Option shall
    designate the Option as an Incentive Stock Option.
    Notwithstanding anything in Section 3.1 to the contrary and
    solely for the purposes of determining whether Shares are
    available for the grant of Incentive Stock Options under the
    Plan, the maximum aggregate number of Shares with respect to
    which Incentive Stock Options may be granted under the Plan
    shall be 2,399,250 Shares. Notwithstanding the provisions
    of Section 5.3, in the case of an Incentive Stock Option
    granted to an Employee who, at the time the Incentive Stock
    Option is granted, owns stock representing more than ten percent
    of the voting power of all classes of capital stock of the
    Company or any Parent or Subsidiary, the per Share exercise
    price will be no less than 110% of the Fair Market Value per
    Share on the date of grant. Notwithstanding the provisions of
    Section 5.4, in the case of an Incentive Stock Option
    granted to an Employee who, at the time the Incentive Stock
    Option is granted, owns stock representing more than ten percent
    of the voting power of all classes of capital stock of the
    Company or any Parent or Subsidiary, the term of the Incentive
    Stock Option will be five years from the date of grant or any
    shorter term specified in the Award Agreement. Notwithstanding
    the foregoing, if the Shares subject to an Employee’s
    Incentive Stock Options (granted under all plans of the Company
    or any Parent or Subsidiary), which become exercisable for the
    first time during any calendar year, have a Fair Market Value in
    excess of $100,000, the Options accounting for this excess will
    be not be treated as Incentive Stock Options. For purposes of
    the preceding sentence, Incentive Stock Options will be taken
    into account in the order in which they were granted, and the
    Fair Market Value of the Shares will be determined as of the
    time of grant.

 

    5.8  Termination of Employment or Consulting
    Relationship or Directorship.  If a Participant
    holds exercisable Options on the date his or her Continuous
    Status as an Employee, Director or Consultant terminates (other
    than because of termination due to Cause, but including death or
    Disability), the Participant may exercise the Options that were
    vested and exercisable as of the date of termination until the
    end of the original term or for the period set forth in the
    Award Agreement or determined by the Committee, whichever is
    earlier. If the Participant is not entitled to exercise his or
    her entire Option at the date of such termination, the Shares
    covered by the unexercisable portion of the Option will revert
    to the Plan, unless otherwise set forth in the Award Agreement
    or determined by the Committee. The Committee may determine in
    its sole discretion that such unexercisable portion of the
    Option will become exercisable at such times and on such terms
    as the Committee may determine in its sole discretion. If the
    Participant does not exercise an Option within the time
    specified after termination, that Option will expire, and the
    Shares covered by it will revert to the Plan, except as
    otherwise determined by the Committee.

    

     

 

 

    ARTICLE VI

    

 

    STOCK
    APPRECIATION RIGHTS

 

    6.1  Grant and Exercise.  The
    Committee may provide Stock Appreciation Rights either alone or
    in addition to other Awards upon such terms and conditions as
    the Committee may establish in its sole discretion.

 

    6.2  Terms and Conditions.  Stock
    Appreciation Rights shall be subject to such terms and
    conditions, not inconsistent with the provisions of the Plan, as
    shall be determined from time to time by the Committee,
    including the following:

 

    (a) Upon the exercise of a Stock Appreciation Right, the
    holder shall have the right to receive the excess of
    (i) the Fair Market Value of one Share on the date of
    exercise or such other amount as the Committee shall so
    determine at any time during a specified period before the date
    of exercise over (ii) the grant price of the right on the
    date of grant, which, except in the case of Substitute Awards or
    in connection with an adjustment provided in Section 12.2,
    shall not be less than the Fair Market Value of one Share on
    such date of grant of the right.

 

    (b) Upon the exercise of a Stock Appreciation Right,
    payment shall be made in whole Shares or cash as determined by
    the Committee.

 

    (c) The provisions of Stock Appreciation Rights need not be
    the same with respect to each recipient.

 

    (d) The Committee may impose such other conditions or
    restrictions on the terms of exercise and the exercise price of
    any Stock Appreciation Right, as it shall deem appropriate. In
    connection with the foregoing, the Committee shall consider the
    applicability and effect of Section 162(m) of the Code.
    Notwithstanding the foregoing provisions of this
    Section 6.2, but subject to Section 12.2, a Stock
    Appreciation Right shall not have (i) an exercise price
    less than Fair Market Value on the date of grant, or (ii) a
    term of greater than ten years. In addition to the foregoing,
    but subject to Section 12.2, the base amount of any Stock
    Appreciation Right shall not be reduced after the date of grant.

 

    6.3  Termination of Employment or Consulting
    Relationship or Directorship.  If a Participant
    holds exercisable Stock Appreciation Rights on the date his or
    her Continuous Status as an Employee, Director or Consultant
    terminates (other than because of termination due to Cause, but
    including death or Disability), the Participant may exercise the
    Stock Appreciation Rights that were vested and exercisable as of
    the date of termination until the end of the original term or
    for the period set forth in the Award Agreement or determined by
    the Committee, whichever is earlier. If the Participant is not
    entitled to exercise his or her entire Stock Appreciation Right
    at the date of such termination, the Shares covered by the
    unexercisable portion of the Stock Appreciation Right will
    revert to the Plan, unless otherwise set forth in the Award
    Agreement or determined by the Committee. The Committee may
    determine in its sole discretion that such unexercisable portion
    of the Stock Appreciation Right will become exercisable at such
    times and on such terms as the Committee may determine in its
    sole discretion. If the Participant does not exercise a Stock
    Appreciation Right within the time specified after termination,
    that Stock Appreciation Right will expire, and the Shares
    covered by it will revert to the Plan, except as otherwise
    determined by the Committee.

 

    ARTICLE VII

    

 

    RESTRICTED
    STOCK AWARDS

 

    7.1  Grants.  Awards of Restricted
    Stock may be issued hereunder to Participants either alone or in
    addition to other Awards granted under the Plan (a
    “Restricted Stock Award”). A Restricted Stock
    Award shall be subject to restrictions imposed by the Committee
    covering a period of time specified by the Committee (the
    “Restricted Period”); provided, however, that,
    in the case of Restricted Stock as to which restrictions lapse
    based solely on the recipient’s Continuous Status as an
    Employee, Director, or Consultant, the Restricted Period over
    which the restrictions may fully lapse shall not be less than
    three years, but the restrictions may lapse ratably over such
    Restricted Period. The provisions of Restricted Stock Awards
    need not be the same with respect to each recipient. The
    Committee has absolute discretion to determine whether any
    consideration (other than services) is to be received by the
    Company or any Affiliate as a condition precedent to the
    issuance of Restricted Stock.

    

     

 

 

    7.2  Award Agreements.  The terms of
    any Restricted Stock Award granted under the Plan shall be set
    forth in a written Award Agreement which shall contain
    provisions determined by the Committee and not inconsistent with
    the Plan.

 

    7.3  Rights of Holders of Restricted
    Stock.  Except as otherwise provided in the Award
    Agreement, beginning on the date of grant of the Restricted
    Stock Award and subject to execution of the Award Agreement, the
    Participant shall become a shareholder of the Company with
    respect to all Shares subject to the Award Agreement and shall
    have all of the rights of a shareholder, including the right to
    vote such Shares and the right to receive distributions made
    with respect to such Shares; provided, however that the Award
    Agreement may provide that any Shares or any other property
    (including cash) distributed as a dividend or otherwise with
    respect to any Restricted Shares as to which the restrictions
    have not yet lapsed shall be subject to the same restrictions as
    such Restricted Shares.

 

    ARTICLE VIII

    

 

    OTHER
    STOCK UNIT AWARDS

 

    8.1  Other Stock Unit Awards.  Other
    Awards of Shares and other Awards that are valued in whole or in
    part by reference to, or are otherwise based on, Shares or other
    property (“Other Stock Unit Awards”) may be
    granted hereunder to Participants, either alone or in addition
    to other Awards granted under the Plan, and such Other Stock
    Unit Awards shall also be available as a form of payment in the
    settlement of other Awards granted under the Plan. Other Stock
    Unit Awards shall be paid in Shares or cash. Subject to the
    provisions of the Plan, the Committee shall have sole and
    complete authority to determine the Employees, Consultants and
    Directors to whom and the time or times at which such Other
    Stock Unit Awards shall be made, the number of Shares to be
    granted pursuant to such Awards, and all other conditions of the
    Awards; provided, however, that if the vesting of an Other Stock
    Unit Award is based solely on the recipient’s Continuous
    Status as an Employee, Director or Consultant, the period over
    which such Other Stock Unit Award fully vests shall not be less
    than three years, but vesting may occur ratably over such
    vesting period. The provisions of Other Stock Unit Awards need
    not be the same with respect to each recipient.

 

    8.2  Terms and Conditions.  Shares
    (including securities convertible into Shares) subject to Awards
    granted under this Article 8 may be issued for no
    consideration or for such minimum consideration as may be
    required by Applicable Law. Shares (including securities
    convertible into Shares) purchased pursuant to a purchase right
    awarded under this Article 8 shall be purchased for such
    consideration as the Committee shall determine in its sole
    discretion.

 

    ARTICLE IX

    

 

    PERFORMANCE
    AWARDS

 

    9.1  Terms of Performance
    Awards.  Performance Awards may be issued
    hereunder to Participants, for no consideration or for such
    minimum consideration as may be required by Applicable Law,
    either alone or in addition to other Awards granted under the
    Plan. The performance criteria to be achieved during any
    Performance Period and the length of the Performance Period
    shall be determined by the Committee upon the grant of each
    Performance Award; provided, however, that a Performance Period
    shall not be shorter than one year nor longer than five years.
    Except as provided in Article 11 or as may be provided in
    an Award Agreement, Performance Awards will be distributed only
    after the end of the relevant Performance Period. Performance
    Awards may be paid in cash, Shares, other property, or any
    combination thereof, in the sole discretion of the Committee at
    the time of payment. The performance goals to be achieved for
    each Performance Period shall be conclusively determined by the
    Committee and may be based upon the criteria set forth in
    Section 10.2. The amount of the Award to be distributed
    shall be conclusively determined by the Committee. The terms of
    a Performance Award may provide that it will be paid in a lump
    sum or in installments following the close of the Performance
    Period.

    

     

 

 

    ARTICLE X

    

 

    CODE
    SECTION 162(m) PROVISIONS

 

    10.1  Covered
    Employees.  Notwithstanding any other provision of
    the Plan, if the Committee determines at the time Restricted
    Stock, a Performance Award or an Other Stock Unit Award is
    granted to a Participant who is, or is likely to be, as of the
    end of the tax year in which the Company would claim a tax
    deduction in connection with such Award, a Covered Employee, and
    that the deduction limit of Section 162(m) of the Code
    might apply to such Award, then the Committee may provide that
    this Article 10 is applicable to such Award.

 

    10.2  Performance Criteria.  If
    Restricted Stock, a Performance Award or an Other Stock Unit
    Award is subject to this Article 10, then the lapsing of
    restrictions thereon and the distribution of cash, Shares or
    other property pursuant thereto, as applicable, shall be subject
    to the achievement of one or more objective performance goals
    established by the Committee, which shall be based on the
    attainment of specified levels, or growth, of one or any
    combination of the following factors, or an objective formula
    that is determined at the time of the Award that is based on
    modified or unmodified calculations of one or any combination of
    the following factors: net sales; pretax income before or after
    allocation of corporate overhead and bonus; earnings per share;
    net income; division, group or corporate financial goals; return
    on stockholders’ equity; return on assets; attainment of
    strategic and operational initiatives; appreciation in
    and/or
    maintenance of the price of the Shares or any other
    publicly-traded securities of the Company; market share; gross
    profits; earnings before taxes; earnings before interest and
    taxes; earnings before interest, taxes, depreciation and
    amortization (“EBITDA”); an adjusted formula of
    EBITDA determined by the Committee; economic value-added models;
    comparisons with various stock market indices; reductions in
    costs,
    and/or
    return on invested capital of the Company or any Affiliate,
    division or business unit of the Company for or within which the
    Participant is primarily employed. Such performance goals also
    may be based solely by reference to the Company’s
    performance or the performance of an Affiliate, division or
    business unit of the Company, or based upon the relative
    performance of other companies or upon comparisons of any of the
    indicators of performance relative to other companies. Unless
    the Committee specifies otherwise when it sets the performance
    goals for an award, objective adjustments shall be made to any
    of the foregoing measures for items that will not properly
    reflect the Company’s financial performance for these
    purposes, such as the write-off of debt issuance costs,
    pre-opening and development costs, gain or loss from asset
    dispositions, asset or other impairment charges, litigation
    settlement costs, and other non-routine items that the Committee
    foresees may occur during the Performance Period. Also, unless
    the Committee determines otherwise in setting the performance
    goals for an Award, such performance goals shall be applied by
    excluding the impact of (a) restructurings, discontinued
    operations and charges for extraordinary items, (b) an
    event either not directly related to the operations of the
    Company or not within the reasonable control of the
    Company’s management, or (c) a change in accounting
    standards required by generally accepted accounting principles.
    Such performance goals shall be set by the Committee within the
    time period prescribed by, and shall otherwise comply with the
    requirements of, Section 162(m) of the Code, or any
    successor provision thereto, and the regulations thereunder.

 

    10.3  Adjustments.  Notwithstanding
    any provision of the Plan (other than Article 11), with
    respect to any Restricted Stock, Performance Award or Other
    Stock Unit Award that is subject to this Article 10, the
    Committee may adjust downward, but not upward, the amount
    payable pursuant to such Award, and the Committee may not waive
    the achievement of the applicable performance goals, except in
    the case of the death or Disability of the Participant or the
    occurrence of a Change of Control.

 

    10.4  Determination of
    Performance.  Prior to the vesting, payment,
    settlement or lapsing of any restrictions with respect to any
    Restricted Stock, Performance Award or Other Stock Unit Award
    that is subject to this Article 10, the Committee shall
    certify in writing that the applicable performance goals have
    been achieved to the extent necessary for such Award to qualify
    as “performance based compensation” within the meaning
    of Section 162(m)(4)(C) of the Code.

 

    10.5  Restrictions.  The Committee
    shall have the power to impose such other restrictions on Awards
    subject to this Article 10 as it may deem necessary or
    appropriate to ensure that such Awards satisfy all requirements
    for “performance-based compensation” within the
    meaning of Section 162(m)(4)(C) of the Code, or which are
    not inconsistent with such requirements.

    

     

 

 

    ARTICLE XI

    

 

    CHANGE OF
    CONTROL PROVISIONS

 

    11.1  Impact of Change of
    Control.  The terms of any Award may provide in
    the Award Agreement evidencing the Award, or the Committee may
    determine in its discretion, that, upon a Change of Control of
    the Company, (a) Options and Stock Appreciation Rights
    outstanding as of the date of the Change of Control immediately
    vest and become exercisable in full or in part,
    (b) restrictions and deferral limitations on Restricted
    Stock lapse and the Restricted Stock becomes free of some or all
    restrictions and limitations and becomes partially or fully
    vested, (c) Performance Awards shall be considered to be
    earned and payable (either in full or pro-rata based on the
    portion of Performance Period completed as of the date of the
    Change of Control), and any deferral or other restriction shall
    lapse and such Performance Awards shall be immediately settled
    or distributed, (d) the restrictions and deferral
    limitations and other conditions applicable to any Other Stock
    Unit Awards or any other Awards shall lapse in full or in part,
    and such Other Stock Unit Awards or such other Awards shall
    become free of some or all restrictions, limitations or
    conditions and become partially or fully vested and
    transferable, and (e) such other additional benefits,
    changes or adjustments as the Committee deems appropriate shall
    apply, subject in each case to any terms and conditions
    contained in the Award Agreement evidencing such Award.
    Notwithstanding any other provision of the Plan, the Committee,
    in its discretion, may determine that, upon the occurrence of a
    Change of Control of the Company, (a) each Option and Stock
    Appreciation Right shall remain exercisable for only a limited
    period of time determined by the Committee (provided that they
    remain exercisable for at least 30 days after notice of
    such action is given to the Participants), or (b) each
    Option and Stock Appreciation Right outstanding shall terminate
    within a specified number of days after notice to the
    Participant, and such Participant shall receive, with respect to
    each Share subject to such Option or Stock Appreciation Right,
    an amount equal to the excess of the Fair Market Value of such
    Share immediately prior to the occurrence of such Change of
    Control over the exercise price per share of such Option
    and/or Stock
    Appreciation Right; such amount to be payable in cash, in one or
    more kinds of stock or property (including the stock or
    property, if any, payable in the transaction) or in a
    combination thereof, as the Committee, in its discretion, shall
    determine. Notwithstanding the foregoing and the provisions of
    Section 11.2, the Committee will take no action that would
    subject any Participant to a penalty tax under Section 409A
    of the Code.

 

    11.2  Assumption Upon Change of
    Control.  The terms of any Award Agreement may
    also provide that, if in the event of a Change of Control the
    successor company assumes or substitutes for an Option, Stock
    Appreciation Right, Share of Restricted Stock or Other Stock
    Unit Award, then each outstanding Option, Stock Appreciation
    Right, Share of Restricted Stock or Other Stock Unit Award shall
    not be accelerated as described in Sections 11.1(a),
    (b) and (d). For the purposes of this Section 11.2, an
    Option, Stock Appreciation Right, Share of Restricted Stock or
    Other Stock Unit Award shall be considered assumed or
    substituted for if following the Change of Control the award
    confers the right to purchase or receive, for each Share subject
    to the Option, Stock Appreciation Right, Restricted Stock Award
    or Other Stock Unit Award immediately prior to the Change of
    Control, the consideration (whether stock, cash or other
    securities or property) received in the transaction constituting
    a Change of Control by holders of Shares for each Share held on
    the effective date of such transaction (and if holders were
    offered a choice of consideration, the type of consideration
    chosen by the holders of a majority of the outstanding shares);
    provided, however, that if such consideration received in the
    transaction constituting a Change of Control is not solely
    common stock of the successor company, the Committee may, with
    the consent of the successor company, provide that the
    consideration to be received upon the exercise or vesting of an
    Option, Stock Appreciation Right, Restricted Stock Award or
    Other Stock Unit Award, for each Share subject thereto, will be
    solely common stock of the successor company substantially equal
    in fair market value to the per share consideration received by
    holders of Shares in the transaction constituting a Change of
    Control. The determination of such substantial equality of value
    of consideration shall be made by the Committee in its sole
    discretion and its determination shall be conclusive and
    binding. Any assumption or substitution of an Incentive Stock
    Option will be made in a manner that will not be considered a
    “modification” under the provisions of
    Section 424(h)(3) of the Code. Notwithstanding the
    foregoing, an Award Agreement may provide that, in the event of
    a termination of a Participant’s employment in such
    successor company within a specified time period following such
    Change of Control, all or part of any such Award held by such
    Participant at the time of the Change of Control shall be
    accelerated as described in Sections 11.1(a), (b) and
    (d) above.

    

     

 

 

    ARTICLE XII

    

 

    GENERALLY
    APPLICABLE PROVISIONS

 

    12.1  Amendment and Modification of the
    Plan.  The Board may, from time to time, alter,
    amend, suspend or terminate the Plan as it shall deem advisable,
    subject to any requirement for stockholder approval imposed by
    Applicable Law; provided that the Board may not amend the Plan
    in any manner that would result in noncompliance with
    Rule 16b-3
    of the Exchange Act; and further provided that the Board may
    not, without the approval of the Company’s stockholders,
    amend the Plan to (a) increase the number of Shares that
    may be the subject of Awards under the Plan (except for
    adjustments pursuant to Section 12.2), (b) expand the
    types of awards available under the Plan, (c) materially
    expand the class of persons eligible to participate in the Plan,
    (d) amend any provision of Section 5.3,
    (e) increase the maximum permissible term of any Option
    specified by Section 5.4, or (f) amend any provision
    of Section 3.2. In addition, no amendments to, or
    termination of, the Plan (other than by reason of the failure of
    stockholders to approve the Plan in the manner set forth in
    Section 13.12) shall in any way impair the rights of a
    Participant under any Award previously granted without such
    Participant’s consent.

 

    12.2  Adjustments.  In the event of
    any merger, reorganization, consolidation, recapitalization,
    dividend or distribution (whether in cash, shares or other
    property), stock split, reverse stock split, spin-off or similar
    transaction or other change in corporate structure affecting the
    Shares or the value thereof, such adjustments and other
    substitutions shall be made to the Plan and to Awards as the
    Committee, in its sole discretion, deems equitable or
    appropriate, including such adjustments in the aggregate number,
    class and kind of securities that may be delivered under the
    Plan and, in the aggregate or to any one Participant, in the
    number, class, kind and option or exercise price of securities
    subject to outstanding Awards granted under the Plan (including,
    if the Committee deems appropriate, the substitution of similar
    options to purchase the shares of, or other awards denominated
    in the shares of, another company) as the Committee may
    determine to be appropriate in its sole discretion; provided,
    however, that the number of Shares subject to any Award shall
    always be a whole number. Where an adjustment under this
    Section 12.2 is made to an Incentive Stock Option, the
    adjustment will be made in a manner which will not be considered
    a “modification” under the provisions of
    Sections 409A or 424(h)(3) of the Code.

 

    12.3  Transferability of
    Awards.  Except as provided below, no Award, and
    no Shares subject to Awards that have not been issued or as to
    which any applicable restriction, performance or deferral period
    has not lapsed, may be sold, assigned, transferred, pledged or
    otherwise encumbered, other than by will or the laws of descent
    and distribution, and such Award may be exercised during the
    life of the Participant only by the Participant or the
    Participant’s guardian or legal representative.
    Notwithstanding the foregoing, to the extent that the Committee
    so authorizes in the Award Agreement or otherwise, an Award
    other than an Incentive Stock Option may be assigned, in whole
    or in part, during the Participant’s lifetime to one or
    more Family Members of the Participant. Rights under the
    assigned portion may be exercised by the Family Member(s) who
    acquire a proprietary interest in such Award pursuant to the
    assignment. The terms applicable to the assigned portion shall
    be the same as those in effect for the Award immediately before
    such assignment and shall be set forth in such documents issued
    to the assignee as the Committee deems appropriate.

 

    (a) Designation of Beneficiary.  A
    Participant may file a written designation of a beneficiary who
    is to receive any Awards that remain unexercised in the event of
    the Participant’s death. If a Participant is married and
    the designated beneficiary is not the spouse, spousal consent
    will be required for the designation to be effective. The
    Participant may change such designation of beneficiary at any
    time by written notice to the Committee, subject to the above
    spousal consent requirement.

 

    (b) Effect of No Designation.  If a
    Participant dies and there is no beneficiary validly designated
    and living at the time of the Participant’s death, the
    Company will deliver such Participant’s Awards to the
    executor or administrator of his or her estate, or if no such
    executor or administrator has been appointed (to the knowledge
    of the Company), the Company, in its discretion, may deliver
    such Awards to the spouse or to any one or more dependents or
    relatives of the Participant, or if no spouse, dependent or
    relative is known to the Company, then to such other person as
    the Company may designate.

 

    (c) Death of Spouse or Dissolution of
    Marriage.  If a Participant designates his or her
    spouse as beneficiary, that designation will be deemed
    automatically revoked if the Participant’s marriage is
    later dissolved. Similarly, any

    

     

 

    designation of a beneficiary will be deemed automatically
    revoked upon the death of the beneficiary if the beneficiary
    predeceases the Participant. Without limiting the generality of
    the preceding sentence, the interest in Awards of a spouse of a
    Participant who has predeceased the Participant or whose
    marriage has been dissolved will automatically pass to the
    Participant, and will not be transferable by such spouse in any
    manner, including but not limited to such spouse’s will,
    nor will any such interest pass under the laws of intestate
    succession.

 

    12.4  Termination of Employment.  The
    Committee shall determine and set forth in each Award Agreement
    whether any Awards granted in such Award Agreement will continue
    to be exercisable, and the terms of such exercise, on and after
    the date that a Participant’s Continuous Status as an
    Employee, Director, or Consultant ceases, whether by reason of
    death, disability, voluntary or involuntary termination of
    employment or services, or otherwise. The date of termination of
    a Participant’s Continuous Status as an Employee, Director
    or Consultant will be determined by the Committee, which
    determination will be final.

 

    12.5  Dividend Equivalents.  Subject
    to the provisions of the Plan and any Award Agreement, the
    recipient of an Award (including any deferred Award) may, if so
    determined by the Committee, be entitled to receive, currently
    or on a deferred basis, cash, stock or other property dividends,
    or cash payments in amounts equivalent to stock or other
    property dividends on Shares (“Dividend
    Equivalents”) with respect to the number of Shares
    covered by the Award, as determined by the Committee, in its
    sole discretion, and the Committee may provide that such amounts
    (if any) shall be deemed to have been reinvested in additional
    Shares or otherwise reinvested.

 

    ARTICLE XIII

    

 

    MISCELLANEOUS

 

    13.1  Tax Withholding.  The Company
    shall have the right to make all payments or distributions
    pursuant to the Plan to a Participant (or to the
    Participant’s executors, administrators, guardian,
    beneficiary, or legal representative, or Family Members) (any
    such person, a “Payee”) net of any applicable
    Federal, State and local taxes required to be paid or withheld
    as a result of (a) the grant of any Award, (b) the
    exercise of an Option or Stock Appreciation Rights, (c) the
    delivery of Shares or cash, (d) the lapse of any
    restrictions in connection with any Award, or (e) any other
    event occurring pursuant to the Plan. The Company or any
    Affiliate shall have the right to withhold from wages or other
    amounts otherwise payable to such Payee such withholding taxes
    as may be required by law, or to otherwise require the Payee to
    pay such withholding taxes. If the Payee shall fail to make such
    tax payments as are required, the Company or its Affiliates
    shall, to the extent permitted by law, have the right to deduct
    any such taxes from any payment of any kind otherwise due to
    such Payee or to take such other action as may be necessary to
    satisfy such withholding obligations. The Committee shall be
    authorized to establish procedures for election by Participants
    to satisfy such obligation for the payment of such taxes by
    tendering previously acquired Shares (either actually or by
    attestation, valued at their then Fair Market Value) that have
    been owned for a period of at least six months (or such other
    period to avoid accounting charges against the Company’s
    earnings), or by directing the Company to retain Shares (up to
    the employee’s minimum required tax withholding rate)
    otherwise deliverable in connection with the Award. If Shares
    acquired upon exercise of any Incentive Stock Option are
    disposed of in a disposition that, under Section 422 of the
    Code, disqualifies the holder from the application of
    Section 421(a) of the Code, the holder of the Shares
    immediately before the disposition will comply with any
    requirements imposed by the Company in order to enable the
    Company to secure the related income tax deduction to which it
    is entitled in such event.

 

    13.2  Right of Discharge Reserved; Claims to
    Awards.  Nothing in the Plan nor the grant of an
    Award hereunder shall confer upon any Employee, Consultant or
    Director the right to continue in the employment or service of
    the Company or any Affiliate or affect any right that the
    Company or any Affiliate may have to terminate the employment or
    service of (or to demote or to exclude from future Awards under
    the Plan) any such Employee, Consultant or Director at any time
    for any reason. The Company shall not be liable for the loss of
    existing or potential profit from an Award granted in the event
    of termination of an employment or other relationship. No
    Employee or Participant shall have any claim to be granted any
    Award under the Plan, and there is no obligation for uniformity
    of treatment of Employees or Participants under the Plan.

    

     

 

 

    13.3  Prospective Recipient.  The
    prospective recipient of any Award under the Plan shall not,
    with respect to such Award, be deemed to have become a
    Participant, or to have any rights with respect to such Award,
    until and unless such recipient shall have executed an agreement
    or other instrument evidencing the Award and delivered a copy
    thereof to the Company, and otherwise complied with the then
    applicable terms and conditions.

 

    13.4  Cancellation of
    Award.  Notwithstanding anything to the contrary
    contained herein, all outstanding Awards granted to any
    Participant may be canceled in the discretion of the Committee
    if the Participant’s Continuous Status as an Employee,
    Director or Consultant is terminated for Cause, or if, after the
    termination of the Participant’s Continuous Status as an
    Employee, Director, or Consultant, the Committee determines that
    Cause existed before such termination.

 

    13.5  Stop Transfer Orders.  All
    certificates for Shares delivered under the Plan pursuant to any
    Award shall be subject to such stop-transfer orders and other
    restrictions as the Committee may deem advisable under the
    provisions of this Plan, the rules, regulations and other
    requirements of the Securities and Exchange Commission, any
    stock exchange upon which the Shares are then listed, and any
    applicable federal or state securities law, and the Committee
    may cause a legend or legends to be put on any such certificates
    to make appropriate reference to such restrictions.

 

    13.6  Nature of Payments.  All Awards
    made pursuant to the Plan are in consideration of services
    performed or to be performed for the Company or any Affiliate,
    division or business unit of the Company. Any income or gain
    realized pursuant to Awards under the Plan and any Stock
    Appreciation Rights constitute a special incentive payment to
    the Participant and shall not be taken into account, to the
    extent permissible under Applicable Law, as compensation for
    purposes of any of the employee benefit plans of the Company or
    any Affiliate except as may be determined by the Committee or by
    the Board or board of directors of the applicable Affiliate.

 

    13.7  Other Plans.  Nothing contained
    in the Plan shall prevent the Board from adopting other or
    additional compensation arrangements, subject to stockholder
    approval if such approval is required; and such arrangements may
    be either generally applicable or applicable only in specific
    cases.

 

    13.8  Severability.  If any provision
    of the Plan shall be held unlawful or otherwise invalid or
    unenforceable in whole or in part by a court of competent
    jurisdiction, such provision shall (a) be deemed limited to
    the extent that such court of competent jurisdiction deems it
    lawful, valid
    and/or
    enforceable and as so limited shall remain in full force and
    effect, and (b) not affect any other provision of the Plan
    or part thereof, each of which shall remain in full force and
    effect. If the making of any payment or the provision of any
    other benefit required under the Plan shall be held unlawful or
    otherwise invalid or unenforceable by a court of competent
    jurisdiction, such unlawfulness, invalidity or unenforceability
    shall not prevent any other payment or benefit from being made
    or provided under the Plan, and if the making of any payment in
    full or the provision of any other benefit required under the
    Plan in full would be unlawful or otherwise invalid or
    unenforceable, then such unlawfulness, invalidity or
    unenforceability shall not prevent such payment or benefit from
    being made or provided in part, to the extent that it would not
    be unlawful, invalid or unenforceable, and the maximum payment
    or benefit that would not be unlawful, invalid or unenforceable
    shall be made or provided under the Plan.

 

    13.9  Construction.  All references
    in the Plan to “Section,”
    “Sections,” or “Article” are
    intended to refer to the Section, Sections or Article, as the
    case may be, of the Plan. As used in the Plan, the words
    “include” and “including,” and
    variations thereof, shall not be deemed to be terms of
    limitation, but rather shall be deemed to be followed by the
    words “without limitation.”

 

    13.10  Unfunded Status of the
    Plan.  The Plan is intended to constitute an
    “unfunded” plan for incentive and deferred
    compensation. With respect to any payments not yet made to a
    Participant by the Company, nothing contained herein shall give
    any such Participant any rights that are greater than those of a
    general creditor of the Company. In its sole discretion, the
    Committee may authorize the creation of trusts or other
    arrangements to meet the obligations created under the Plan to
    deliver the Shares or payments in lieu of or with respect to
    Awards hereunder; provided, however, that the existence of such
    trusts or other arrangements is consistent with the unfunded
    status of the Plan.

    

     

 

 

    13.11  Governing Law.  The Plan and
    all determinations made and actions taken thereunder, to the
    extent not otherwise governed by the Code or the laws of the
    United States, shall be governed by the laws of the State of
    Delaware and construed accordingly.

 

    13.12  Effective Date of Plan; Termination of
    Plan.  The Plan shall be effective on
    April 24, 2007, subject to the approval of the Plan, within
    12 months thereafter, by affirmative votes representing a
    majority of the votes cast under Applicable Laws at a duly
    constituted meeting of the stockholders of the Company. After
    the adoption of this Plan by the Board, Awards may be made, but
    all such Awards shall be subject to stockholder approval of this
    Plan in accordance with the first sentence of this
    Section 13.12, and no Options or Stock Appreciation Rights
    may be exercised prior to such stockholder approval of the Plan.
    If the stockholders do not approve this Plan in the manner set
    forth in the first sentence of this Section 13.12, this
    Plan, and all Awards granted hereunder, shall be null and void
    and of no effect. Awards may be granted under the Plan at any
    time and from time to time on or prior to the tenth anniversary
    of the effective date of the Plan (unless the Board sooner
    suspends or terminates the Plan under Section 12.1), on
    which date the Plan will expire except as to Awards then
    outstanding under the Plan. Notwithstanding the foregoing,
    unless affirmative votes representing a majority of the votes
    cast under Applicable Laws approve the continuation of
    Article 10 at the first duly constituted meeting of the
    stockholders of the Company that occurs in the fifth year
    following the effective date of this Plan, no Awards other than
    Options or Stock Appreciation Rights, or Restricted Stock that
    is not intended to satisfy the requirements of Article 10,
    shall be made to Covered Employees following the date of such
    meeting. Except as set forth in the third sentence of this
    Section 13.12, outstanding Awards shall remain in effect
    until they have been exercised or terminated, or have expired.

 

    13.13  Foreign Employees.  Awards may
    be granted to Participants who are foreign nationals or employed
    outside the United States, or both, on such terms and conditions
    different from those applicable to Awards to Employees employed
    in the United States as may, in the judgment of the Committee,
    be necessary or desirable in order to recognize differences in
    local law or tax policy. The Committee also may impose
    conditions on the exercise or vesting of Awards in order to
    minimize the Company’s obligation with respect to tax
    equalization for Employees on assignments outside their home
    country.

 

    13.14  Effect on Prior Plans.  On the
    approval of this Plan by the stockholders of the Company in the
    manner set forth in Section 13.12, the Prior Plans shall be
    cancelled and no further grants or awards shall be made under
    the Prior Plans. Grants and awards made under the Prior Plans
    before the date of such cancellation, however, shall continue in
    effect in accordance with their terms.

 

    13.15  Other Company Compensation
    Plans.  Shares available for Awards under the Plan
    may be used by the Company as a form of payment of compensation
    under other Company compensation plans, whether or not existing
    on the date hereof. To the extent any Shares are used as such by
    the Company, such Shares will reduce the then number of Shares
    available under Article 3 of the Plan for future Awards.

 

    13.16  Captions.  The captions in the
    Plan are for convenience of reference only, and are not intended
    to narrow, limit or affect the substance or interpretation of
    the provisions contained herein.Exhibit 10.2

 

Exhibit 10.2

BIG 5 SPORTING GOODS CORPORATION

STOCK OPTION GRANT NOTICE

(2007 Equity and Performance Incentive Plan)

Big 5 Sporting Goods Corporation (the “Company"), pursuant to its 2007 Equity and Performance
Incentive Plan (the “Plan"), hereby grants to Optionee the option to purchase the number of Shares
of the Company set forth below (the “Option"). This Option is subject to all of the terms and
conditions as set forth in this Grant Notice, the Stock Option Agreement (the “Option Agreement”)
and the Plan, all of which are attached hereto and incorporated herein in their entirety.

	 	 	 	 	 	 	 
	Optionee:

	 	 	 	 

	 	 
	Date of Grant:

	 	 	 	 
	 	 
	Number of Shares of Common Stock:

	 	 
	 	 
	Exercise Price Per Share:

	 	 	 	$
	 	 
	Initial Vesting Date:

	 	 	 	 
	 	 
	Type of Option	 	 	 	NQSO or ISO	 	 

Vesting Schedule: Subject to the restrictions and limitations of the Option Agreement and the
Plan, this Option shall vest and become exercisable with respect to 25.00% of the Shares subject to
this Option on the Initial Vesting Date. On each subsequent anniversary of the Initial Vesting
Date, this Option shall become vested and exercisable with respect to an additional 25.00% of the
Shares subject to this Option.

Additional Terms/Acknowledgements: The undersigned Optionee acknowledges receipt of, and has read
and understands and agrees to, the Option Agreement and the Plan. Optionee further acknowledges
that as of the Date of Grant, the Option Agreement and the Plan set forth the entire understanding
between Optionee and the Company regarding the grant by the Company of the Option referred to in
this Grant Notice. Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board or the Administrator upon any questions arising under the Plan.

	 	 	 	 	 	 	 	 	 
	BIG 5 SPORTING GOODS CORPORATION	OPTIONEE:	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Signature
	 	Signature
	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	Date:	 	 	 	 
	 

	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 

ATTACHMENTS: Stock Option Agreement and 2007 Equity and Performance Incentive Plan

SPOUSE OF OPTIONEE:

Spouse has read and understands the Option Agreement and the Plan and is executing this Grant
Notice to evidence Spouse’s consent and agreement to be bound by all of the terms and conditions of
the Option Agreement and the Plan (including those relating to the appointment of the Optionee as
agent for any interest that Spouse may have in the Option Shares).

	 	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 
	Signature
	 	 	 	 
	 
	 

Optionee Address:

 

 

 

BIG 5 SPORTING GOODS CORPORATION

STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT (together with the attached grant notice (the “Grant Notice”), the
“Agreement”) is made and entered into as of the date set forth on the Grant Notice by and between
Big 5 Sporting Goods Corporation, a Delaware corporation (the “Company”), and the individual (the
“Optionee”) set forth on the Grant Notice.

     A. Pursuant to the Big 5 Sporting Goods Corporation 2007 Equity and Performance Incentive Plan
(the “Plan”), the Administrator has determined that it is to the advantage and best interest of the
Company to grant to Optionee an option (the “Option”) to purchase the number of shares of the
Common Stock of the Company (the “Shares” or the “Option Shares”) set forth on the Grant Notice, at
the exercise price determined as provided herein, and in all respects subject to the terms,
definitions and provisions of the Plan, which is incorporated herein by reference.

     B. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the
meanings set forth in the Plan.

     NOW, THEREFORE, in consideration of the mutual agreements contained herein, the Optionee and
the Company hereby agree as follows:

1. Grant and Terms of Stock Option.

     1.1 Grant of Option. Pursuant to the Grant Notice, the Company has granted to the
Optionee the right and option to purchase, subject to the terms and conditions set forth in the
Plan and this Agreement, all or any part of the number of shares of the Common Stock of the Company
set forth on the Grant Notice at a purchase price per share equal to the exercise price per Share
set forth on the Grant Notice. If the Grant Notice indicates (under “Type of Option”) that this
Option is an “ISO”, then this Option is intended by the Company and Optionee to be an Incentive
Stock Option. However, if the Grant Notice indicates that this Option is a “NQSO”, then this
Option is not intended to be an Incentive Stock Option and is instead intended to be a Nonqualified
Stock Option.

     1.2 Vesting and Exercisability. Subject to the provisions of the Plan and the other
provisions of this Agreement, this Option shall vest and become exercisable in accordance with the
schedule set forth in the Grant Notice. Notwithstanding the foregoing, in the event of termination
of Optionee’s Continuous Status as an Employee, Director or Consultant for any reason, with or
without Cause, including as a result of death or Disability, this Option shall immediately cease
vesting and shall be cancelled to the extent of the number of Shares as to which this Option has
not vested as of the date of termination.

     1.3 Term of Option. No portion of this Option may be exercised more than ten years
from the date of this Agreement. In the event of termination of Optionee’s Continuous Status as an
Employee, Director or Consultant, this Option shall be cancelled as
to any unvested Shares as provided in Section 1.2, and shall terminate and be cancelled with respect
to any vested Shares on the earlier of (i) the expiration of the ten year period set forth in the
first sentence of this Section 1.3, or (ii) 90 days after termination of Optionee’s Continuous
Status as an Employee, Director or Consultant (or 12 months in the case of termination as a result
of Optionee’s Disability or death); provided, however, if Optionee’s Continuous Status as an
Employee, Director or Consultant is terminated for Cause, this entire Option shall be cancelled and
terminated as of the date of such termination and shall no longer be exercisable as to any Shares,
whether or not previously vested.

2. Method of Exercise. 

     2.1 Delivery of Notice of Exercise. This Option shall be exercisable by written notice
in the form attached hereto as Exhibit A which shall state the election to exercise this Option,
the number of Shares in respect of which this Option is being exercised, and such other
representations and agreements with respect to such Shares as may be required by the Company
pursuant to the provisions of this Agreement and the Plan. Such written notice shall be signed by
Optionee (or by Optionee’s beneficiary or other person entitled to exercise this Option in the
event of Optionee’s death under the Plan) and shall be delivered to
the Secretary of the Company. The written notice shall be accompanied by payment of the exercise
price. This Option shall not be deemed exercised until the Company receives such written notice
accompanied by the exercise price and any other applicable terms and conditions of this Agreement
are satisfied. This Option may not be exercised for a fraction of a Share.

     2.2 Restrictions on Exercise. No Shares will be issued pursuant to the exercise of
this Option unless and until there shall have been full compliance with all applicable requirements
of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption
conditions), all Applicable Laws, and all applicable listing requirements of any national
securities exchange or other market system on which the Common Stock is then listed. As a
condition to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be necessary or appropriate, in the judgment of
the Administrator, to comply with any Applicable Law.

     2.3 Method of Payment. Payment of the exercise price shall be made in full at the time
of exercise in cash or by check payable to the order of the Company, or, subject in each case to
the advance approval of the Administrator in its sole discretion, (a) by delivery of shares of
Common Stock already owned by Optionee having a Fair Market Value
equal to the exercise price and held for at least six months (or
for such other period as is necessary to avoid accounting charges against the Company’s earnings),
(b) by a “broker’s exercise” involving the sale, at the time of the exercise of the Option, of
Shares having a Fair Market Value equal to the exercise price, and the simultaneous remission of
the exercise price to the Company, or (c) by any combination of the foregoing. Shares of Common
Stock used to satisfy the exercise price of this Option shall be valued at their Fair Market Value
determined on the date of exercise (or if such date is not a business day, as of the close of the
business day immediately preceding such date). In addition, the Administrator may impose such
other conditions in connection with the delivery of shares of Common Stock in satisfaction of the
exercise price as it deems appropriate in its sole discretion, including without limitation a
requirement that the shares

-2-

 

of Common Stock delivered have been
held by the Optionee for a specified period of time.

     2.4 Notice of Disqualifying Disposition of Incentive Stock Option. If this Option is
an Incentive Stock Option and the Optionee sells or otherwise disposes of any of the Shares
acquired upon exercise of this Option on or before the later of (i) two years after the date of
grant, or (ii) one year after the date such Shares were acquired, the Optionee shall immediately
notify the Company in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the taxable income recognized as a result of
such disposition and that the Optionee shall be required to satisfy such withholding obligations
either by making a payment to the Company in cash or by withholding from current earnings of the
Optionee.

3. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution or to a beneficiary designated
pursuant to the Plan, and may be exercised during the lifetime of Optionee only by Optionee.
Subject to all of the other terms and conditions of this Agreement, following the death of
Optionee, this Option may, to the extent it remained unexercised (but vested and exercisable by
Optionee in accordance with its terms) on the date of death, be exercised by Optionee’s beneficiary
or other person entitled to exercise this Option in the event of Optionee’s death under the Plan.
Notwithstanding the first sentence of this Section 3, (i) if this Option is a Nonqualified Stock
Option, this Option may be assigned pursuant to a qualified domestic relations order as defined by
the Code, and exercised by the spouse of the Optionee who obtained such Option pursuant to such
qualified domestic relations order, and (ii) this Option may be assigned, during the Optionee’s
lifetime, to one or more Family Members. Rights under the assigned portion may be exercised by the
person or persons who acquire a proprietary interest in such Option pursuant to the assignment.
The terms applicable to the assigned portion shall be the same as those in effect for the Option
immediately before such assignment and shall be set forth in such documents issued to the assignee
as the Administrator deems appropriate.

4. General.

     4.1 Governing Law. This Agreement shall be governed by and construed under the laws
of the state of Delaware applicable to Agreements made and to be performed entirely in Delaware,
without regard to the conflicts of law provisions of Delaware or any other jurisdiction.

     4.2 Notices. Any notice required or permitted under this Agreement shall be given in
writing by express courier or by postage prepaid, United States registered or certified mail,
return receipt requested, to the address set forth below or to such other address for a party as
that party may designate by 10 days advance written notice to the other parties. Notice shall be
effective upon the earlier of receipt or 3 days after the mailing of such notice.

-3-

 

	 	 	 
	If to the Company:

	 	Big 5 Sporting Goods Corporation

2525 East El Segundo Boulevard

El Segundo, CA 90245

Attention: Senior Vice President and General Counsel
	 
	 	 
	If to Optionee, at the address set forth on the Grant Notice.

     4.3 Community Property. Without prejudice to the actual rights of the spouses as
between each other, for all purposes of this Agreement, the Optionee shall be treated as agent and
attorney-in-fact for that interest held or claimed by his or her spouse with respect to this Option
and the parties hereto shall act in all matters as if the Optionee was the sole owner of this
Option. This appointment is coupled with an interest and is irrevocable.

     4.4 Modifications. This Agreement may be amended, altered or modified only by a
writing signed by each of the parties hereto

     4.5  Application to Other Stock. In the event any capital stock of the Company or any
other corporation shall be distributed on, with respect to, or in exchange for shares of Common
Stock as a stock dividend, stock split, reclassification or recapitalization in connection with any
merger or reorganization or otherwise, all restrictions, rights and obligations set forth in this
Agreement shall apply with respect to such other capital stock to the same extent as they are, or
would have been applicable, to the Option Shares on or with respect to which such other capital
stock was distributed.

     4.6 Additional Documents. Each party agrees to execute any and all further documents
and writings, and to perform such other actions, which may be or become reasonably necessary or
expedient to be made effective and carry out this Agreement.

     4.7 No Third-Party Benefits. Except as otherwise expressly provided in this
Agreement, none of the provisions of this Agreement shall be for the benefit of, or enforceable by,
any third-party beneficiary.

     4.8 Successors and Assigns. Except as provided herein to the contrary, this Agreement
shall be binding upon and inure to the benefit of the parties, their respective successors and
permitted assigns.

     4.9 No Assignment. Except as otherwise provided in this Agreement, the Optionee may
not assign any of his, her or its rights under this Agreement without the prior written consent of
the Company, which consent may be withheld in its sole discretion. The Company shall be permitted
to assign its rights or obligations under this Agreement, but no such assignment shall release the
Company of any obligations pursuant to this Agreement.

     4.10 Severability. The validity, legality or enforceability of the remainder of this
Agreement shall not be affected even if one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable in any respect.

-4-

 

     4.11 Equitable Relief. The Optionee acknowledges that, in the event of a threatened
or actual breach of any of the provisions of this Agreement, damages alone will be an inadequate
remedy, and such breach will cause the Company great, immediate and irreparable injury and damage.
Accordingly, the Optionee agrees that the Company shall be entitled to injunctive and other
equitable relief, and that such relief shall be in addition to, and not in lieu of, any remedies
they may have at law or under this Agreement.

     4.12 Arbitration.

          4.12.1 General. Any controversy, dispute, or claim between the parties to this
Agreement, including any claim arising out of, in connection with, or in relation to the formation,
interpretation, performance or breach of this Agreement shall be settled exclusively by
arbitration, before a single arbitrator, in accordance with this section 4.12 and the then most
applicable rules of the American Arbitration Association. Judgment upon any award rendered by the
arbitrator may be entered by any state or federal court having jurisdiction thereof. Such
arbitration shall be administered by the American Arbitration Association. Arbitration shall be
the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding
the foregoing, either party may in an appropriate matter apply to a court pursuant to California
Code of Civil Procedure Section 1281.8, or any comparable provision, for provisional relief,
including a temporary restraining order or a preliminary injunction, on the ground that the award
to which the applicant may be entitled in arbitration may be rendered ineffectual without
provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take
place in the City of Los Angeles, California.

          4.12.2 Selection of Arbitrator. In the event the parties are unable to agree upon an
arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by
the parties at random from a list of twenty persons (which shall be retired judges or corporate or
litigation attorneys experienced in stock options and buy-sell agreements) provided by the office
of the American Arbitration Association having jurisdiction over Los Angeles, California. If the
parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each
strike names alternately from the list, with the first to strike being determined by lot. After
each party has used four strikes, the remaining name on the list shall be the arbitrator. If such
person is unable to serve for any reason, the parties shall repeat this process until an arbitrator
is selected.

          4.12.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve
any disputes by binding arbitration shall extend to claims against any parent, subsidiary or
affiliate of each party, and, when acting within such capacity, any officer, director, shareholder,
employee or agent of each party, or of any of the above, and shall apply as well to claims arising
out of state and federal statutes and local ordinances as well as to claims arising under the
common law. In the event of a dispute subject to this paragraph the parties shall be entitled to
reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the
arbitrator (which shall include the right to grant injunctive or other equitable relief) shall be
the same as, but no greater than, would be the remedial power of a court having jurisdiction over
the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim
without an evidentiary hearing if the party bringing the motion establishes that he or it would be
entitled to

-5-

 

           summary judgement if the matter had been pursued in court litigation. In the event of a
conflict between the applicable rules of the American Arbitration Association and these procedures,
the provisions of these procedures shall govern.

          4.12.4 Fees and Costs. Any filing or administrative fees shall be borne initially by
the party requesting arbitration. The Company shall be responsible for the costs and fees of the
arbitration, unless the Optionee wishes to contribute (up to 50%) to the costs and fees of the
arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as
determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled,
to the extent permitted by law, to reimbursement from the other party for all of the prevailing
party’s costs (including but not limited to the arbitrator’s compensation), expenses, and
attorneys’ fees.

          4.12.5 Award Final and Binding. The arbitrator shall render an award and written
opinion, and the award shall be final and binding upon the parties. If any of the provisions of
this paragraph, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in
whole or in part, such determination shall not affect the validity of the remainder of this
Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions
to the greatest extent possible and to insure that the resolution of all conflicts between the
parties, including those arising out of statutory claims, shall be resolved by neutral, binding
arbitration. If a court should find that the arbitration provisions of this Agreement are not
absolutely binding, then the parties intend any arbitration decision and award to be fully
admissible in evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.

     4.13 Headings. The section headings in this Agreement are inserted only as a matter
of convenience, and in no way define, limit, extend or interpret the scope of this Agreement or of
any particular section.

     4.14 Number and Gender. Throughout this Agreement, as the context may require, (a)
the masculine gender includes the feminine and the neuter gender includes the masculine and the
feminine; (b) the singular tense and number includes the plural, and the plural tense and number
includes the singular; (c) the past tense includes the present, and the present tense includes the
past; (d) references to parties, sections, paragraphs and exhibits mean the parties, sections,
paragraphs and exhibits of and to this Agreement; and (e) periods of days, weeks or months mean
calendar days, weeks or months.

     4.15 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     4.16 Complete Agreement. The Grant Notice, this Agreement and the Plan constitute the
parties’ entire agreement with respect to the subject matter hereof and supersede all agreements,
representations, warranties, statements, promises and understandings, whether oral or written, with
respect to the subject matter hereof.

-6-

 

EXHIBIT A

NOTICE OF EXERCISE OF STOCK OPTION

Big 5 Sporting Goods Corporation

2525 East El Segundo Boulevard

El Segundo, CA 90245

Attn: Senior Vice President and General Counsel

Ladies and Gentlemen:

     The undersigned hereby elects to exercise the option indicated below:

Option Grant Date: ___

Type of Option: Incentive Stock Option / Nonqualified Stock Option

Number of Shares Being Exercised: ___

Exercise Price Per Share: ___

Total Exercise Price: $___

Method of Payment: ___

     Enclosed herewith is payment in full of the total exercise price and a copy of the Grant
Notice.

     My exact name, current address and social security number for purposes of the stock
certificates to be issued and the shareholder list of the Company are:

	 	 	 	 	 
	Name:

	 	 	 	 
	 	 	 
	Address:

	 	 	 	 
	 	 	 
	 

	 	 	 	 
	 	 	 
	Social Security Number:	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Sincerely,
	Dated:

	 	 
	 	 
	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	(Optionee’s Signature)

-7-

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