Document:

Fourth Amendment to Construction Loan Agreement

 Exhibit 10.60 

FOURTH AMENDMENT TO CONSTRUCTION LOAN AGREEMENT AND AMENDMENT 

TO OTHER LOAN DOCUMENTS 

LOAN TO TPG/P&A 2101 MARKET, L.P. 

THIS FOURTH AMENDMENT TO CONSTRUCTION LOAN AGREEMENT AND AMENDMENT TO OTHER LOAN DOCUMENTS (this “Amendment”), dated for
reference purposes only as of July 1, 2010, is by and between TPG/P&A 2101 Market, L.P., a Pennsylvania limited partnership (“Borrower”) and Corus Construction Venture, LLC, a Delaware limited liability company, as
successor-in-interest to CORUS Bank, N.A. (“Lender”). 
 RECITALS: 

A. Borrower and Lender entered into the Construction Loan Agreement, dated for reference purposes only as of July 12, 2006, as
amended by the First Amendment to Construction Loan Agreement, dated for reference purposes only as of June 25, 2008, as amended by the Second Amendment to Construction Loan Agreement, dated for reference purposes only as of June 25, 2009,
and as amended by the Third Amendment to Construction Loan Agreement and Amendment to Other Loan Documents, dated for reference purposes only as of July 31, 2009 (collectively, the “Existing Agreement”), pursuant to which
Lender agreed to make loans and other financial accommodations to Borrower for the Property (as defined in the Existing Agreement). Capitalized terms that are not otherwise defined in this Amendment shall have the meanings ascribed to such terms
in the Existing Agreement. 
 B. Borrower has requested, and subject to the conditions of this Amendment, Lender has agreed
to: (i) extend the Maturity Date, and (ii) provide two additional six-month extensions. 
 NOW THEREFORE, in
consideration of the foregoing Recitals, each of which is made a contractual part hereof, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and accepted, Borrower and Lender hereby agree as
follows: 
 1. Definitions. 

1.1. Corus Construction Venture, LLC is the successor-in-interest to CORUS Bank, N.A. so any reference to “Lender” in the
Existing Agreement or the other Loan Documents shall be deemed to mean Corus Construction Venture, LLC. 
 1.2. The following
definition of “Loan Exposure” is hereby added to the Existing Agreement: 
 “Loan Exposure”: the
outstanding principal balance of the Loan divided by the sum of: (i) the Saleable Square Footage of all Residential Units that are not under Sales Contracts, plus (ii) the Saleable Square Footage of all Residential Units that are
under Sales Contracts for which Lender has not yet received the Minimum Release Price. 
 2. Extension of Maturity
Date. Subject to the conditions of this Paragraph 2 and provided the other terms of this Amendment are satisfied, Lender hereby extends the Maturity Date to July 31, 2011. Upon the effectiveness of said extension, any reference to Maturity
Date in any of the other Loan Documents shall be deemed to mean July 31, 2011, as such date may be further extended as provided in Paragraph 3 below or as such date may be accelerated in accordance with the terms of the Existing Agreement. In
addition to the other terms and conditions set forth in this Amendment, as a condition precedent to the extension Borrower shall be obligated to pay to Lender an extension fee, in immediately available funds, equal to 1% of the unpaid principal
balance as of July 1, 2010. The amount of the extension fee is $275,648.87, unless Borrower pays the interest for the period of June 1, 2010 through June 30, 2010 on or before July 10, 2010 in which event the extension
fee shall be $274,041.94. Such fee shall be paid no later than July 10, 2010 and shall be deemed fully earned and non-refundable, regardless of the date of the payment in full of the Loan by Borrower. In the event Borrower fails to timely pay
the aforesaid fee, the Maturity Date shall not be extended to July 31, 2011, and Borrower shall have no further options or rights to extend the Maturity Date beyond July 31, 2010. 

 3. Additional Extension Options. Borrower may elect to extend the term by two
(2) six-month extensions; the first for the period of August 1, 2011 to January 31, 2012 and the second for the period of February 1, 2012 to July 31, 2012; provided that the following conditions are satisfied: (a) with
respect to the first extension, Borrower fulfilled its obligations set forth in Paragraph 2 above; (b) with respect to the first extension, the Loan Exposure shall be no greater than $150 per Saleable Square Foot on the date of delivery of the
election notice or on the commencement of the first extension period; (c) with respect to the first extension period, Borrower shall have paid to Lender the Minimum Interest Earnings (as defined in and in accordance with the terms set forth in
Paragraph 5 below); (d) in all cases, Borrower has given Lender written notice of its election to extend, which notice is delivered to Lender no later than thirty (30) days prior to the then applicable maturity date; (e) in all cases,
the Loan is not matured and no Event of Default or Unmatured Default shall have occurred and be continuing either on the date of delivery of any election notice or commencement of the extension period; (f) in all cases, the provider of the
Preferred Equity Investment has agreed to extend the maturity / repayment date for a like time period; (g) with respect to the first extension, Borrower shall have paid to Lender on or before July 10, 2011 an extension fee, in immediately
available funds, equal to 1% of the unpaid principal balance as of July 1, 2011; (h) with respect to the second extension, Borrower shall have paid to Lender on or before January 10, 2012 an extension fee, in immediately available
funds, equal to 1% of the unpaid principal balance as of January 1, 2012. Once paid, the extension fees shall be deemed fully earned and non-refundable, regardless of the date of the payment in full of the Loan by Borrower. 

With each extension, Borrower and Lender shall execute an agreement acknowledging the extension of the applicable maturity date. During
the extension periods, interest only payments shall continue to be due and payable on the first day of the month according to the Interest Rate (or Default Rate, if applicable) then in effect on the principal balance outstanding during the
applicable extension period. 
 4. Interest Rate. The first sentence of Section 4.4 of the Existing Agreement is
hereby deleted in its entirety, and the following is substituted therefor: 
 Subject to the provisions of
Section 4.7, the outstanding principal balance of the Loan, from time to time, shall bear interest at a rate (the “Interest Rate”) equal to the greater of: (i) 9.5% per annum or (ii) the sum of: (A) the
three (3) month London Interbank Offered Rate (“LIBOR Adjustment Index”) as quoted in the Money Rates Section of the The Wall Street Journal on the morning of the date of the initial Disbursement or the applicable
Adjustment Date plus (B) three and one-quarter percent (3.25%) (the “Applicable Percentage”). 

In addition to the modification of Section 4.4 set forth above, the later reference to 7.0% in Section 4.4 is hereby deleted
and 9.5% is substituted therefor. 
 5. Minimum Interest Earnings. On or before July 15, 2011, Lender shall deliver
to Borrower notice of interest paid for the period from August 1, 2010 through July 10, 2011 (the “MIE Period”). In the event the notice reveals that Lender has not received interest payments from Borrower totaling
$1,100,000 (“Minimum Interest Earnings”) for the MIE Period, then Borrower shall be obligated to pay to Lender by the earlier of (a) July 31, 2011 or (b) repayment of the Loan, the difference between the Minimum
Interest Earnings and the actual interest amount paid during the MIE Period (the “MIE Deficiency”). The Minimum Interest Earnings and, if applicable, the MIE Deficiency shall be part of the Secured Obligations. Lender’s failure
to deliver the notice set forth above shall not relieve Borrower from its obligation to pay the Minimum Interest Earnings and/or, if applicable, the MIE Deficiency. 

6. Notice Provision. Section 11.7 of the Existing Agreement is hereby amended to delete the notice address for Corus
Bank, and the following is substituted therefor: 
  

			
	To Lender:	  	Corus Construction Venture, LLC
		  	175 West Jackson Boulevard
		  	Suite 540
		  	Chicago, Illinois 60604
		  	Attn: Chris Barkidjija, Senior Vice President
		
	With a copy to:	  	Corus Construction Venture, LLC
		  	175 West Jackson Boulevard
		  	Suite 540
		  	Chicago, Illinois 60604
		  	Attn: Rick Mathews, Esq.

  

 2 

 7. Price List. Exhibit K of the Existing Agreement is hereby deleted in its
entirety, and the Exhibit K attached hereto shall be substituted therefor. Borrower represents and warrants that the Price List represents an average of $665 per Saleable Square Foot for the Residential Units. 

8. Representations and Warranties. 

8.1. Borrower hereby remakes and ratifies all of the representations and warranties set forth in the Existing Agreement, as amended
hereby, and each of the Loan Documents to which Borrower is a party. Borrower hereby represents and warrants that as of the date of this Amendment, there is no Event of Default or Unmatured Default under the Existing Agreement or any other Loan
Document. Borrower further represents and warrants that, except as set forth on Schedule 6.1, all representations and warranties in the Existing Agreement and the other Loan Documents are true and correct as of the date made and to the extent
they are continuing representations and warranties, as of the date hereof. 
 8.2. Borrower acknowledges and agrees that the
outstanding principal balance, together with all accrued and unpaid interest as of July 1, 2010 is $27,564,887.03, which includes interest for the period of June 1, 2010 through June 30, 2010. Assuming the interest for the period of
June 1, 2010 through June 30, 2010 were paid, the principal balance would be $27,404,194.40. 
 9. Conditions
Precedent. The following shall be additional conditions precedent to the effectiveness of this Amendment. 
 9.1. Borrower
shall have delivered to Lender two fully executed originals of this Amendment, the Reaffirmation of each Guarantor’s obligations attached hereto, and such other documents, instruments and agreements requested by Lender. 

9.2. Borrower shall have delivered to Lender all appropriate authorizations and consents of Borrower, General Partner and Guarantors
authorizing the execution and delivery of this Amendment and such other documents required by Lender. 
 9.3. Borrower shall
have delivered to Lender a title report showing: (a) that real estate taxes are not past due or delinquent; (b) that sewer and water fees are not past due and delinquent; (c) no mechanics liens or other exceptions, other than the
Permitted Exceptions and evidence of the recording of the Condominium Documents. 
 9.4. Borrower shall have paid all reasonable
expenses, and costs and fees due Lender or Lender’s attorneys. 
 9.5. Borrower shall have delivered evidence to Lender
that the recipients of the Preferred Equity Partner Initial Special Distribution, the Preferred Equity Partner Subsequent Special Distribution, and other equity pay outs have all agreed to defer such pay outs until after the Maturity Date, as such
date may be extended in accordance with Paragraph 2 above. 
 10. Lender Acknowledgement. Lender acknowledges and agrees
the Work has been Finally Completed. 
 11. Amendment Supplementary. This Amendment is supplementary to the Existing
Agreement. All of the provisions of the Existing Agreement, including without limitation, the right to declare principal and accrued interest due for any cause specified in the Existing Agreement, as amended hereby, shall remain in full force and
effect. The Existing Agreement and all rights and powers created thereby and thereunder or under such other documents are in all respects ratified and confirmed. From and after the date hereof, the Existing Agreement shall be deemed to be amended
and modified as herein provided, but, except as so amended and modified, the Existing Agreement shall continue in full force and effect and the Existing Agreement and this Amendment shall be read, taken and construed as one and the same instrument.
In the event of any conflict between the terms of this Amendment and the terms of the Existing Agreement or any other Loan Document, this Amendment shall control. 

 

 3 

 12. Waiver of Claims. Borrower hereby acknowledges, agrees and affirms that Borrower
does not possess any claims, defenses, offsets, recoupment or counterclaims of any kind or nature against or with respect to the enforcement of the Existing Agreement, as amended hereby, or any other Loan Document (collectively, the
“Claims”). Borrower further acknowledges and agrees that it has no knowledge of any facts that would or might give rise to any Claims. If facts now exist which would or could give rise to any Claim against or with respect to the
enforcement of the Existing Agreement, as amended hereby, or any other Loan Document, Borrower hereby unconditionally, irrevocably and unequivocally waives and fully releases any and all such Claims as if such Claims were the subject of a lawsuit,
adjudicated to final judgment from which no appeal could be taken and therein dismissed with prejudice. 
 13.
Counterparts. This Amendment may be signed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one agreement, binding on all of the parties hereto notwithstanding that all of the
parties hereto are not signatories to the same counterpart. For purposes of negotiating and finalizing this Amendment (including any subsequent amendments thereto), any signed document transmitted by facsimile machine shall be treated in all manner
and respects as an original document. 
 The remainder of this page is intentionally left blank. 

 

 4 

 IN WITNESS WHEREOF, the parties have executed this Fourth Amendment to Construction Loan
Agreement and Amendment to Other Loan Documents dated as of the date first above written. 
  

					
		 	BORROWER:
		
		 	TPG/P&A 2101 Market, L.P., a
		 	Pennsylvania limited partnership
			
		 	By:    	 	 TPG/P&A 2101 Market, L.L.C., a Pennsylvania limited liability company,

its General Partner

 

			
	By:	 	 /s/ Peter Shaw

		 	Peter Shaw, Manager

  

					
		 	LENDER:
		
		 	Corus Construction Venture, LLC, a Delaware
		 	limited liability company
			
		 	By:    	 	ST Residential, LLC, a Delaware limited liability company, its managing member

 

			
	By:	 	 /s/ John Barkidjija

		 	John Barkidjija, Executive Vice President

  

 5 

 THE UNDERSIGNED PARTIES, as guarantors to induce Lender to enter into the foregoing Fourth
Amendment to Construction Loan Agreement and Amendment to Other Loan Documents (the “Amendment”), and with the express understanding that Lender would not enter into such Amendment without such undertaking by the undersigned
parties, hereby acknowledge the terms and conditions set forth in the Amendment, and hereby expressly ratify, reaffirm and remake their respective liabilities and obligations as set forth in the (i) Guaranty of Completion and Indemnification
Agreement, dated for reference purposes as of July 12, 2006, by Thomas Properties Group, L.P., Peter Shaw and Alan Casnoff in favor of Lender, and (ii) Environmental Indemnity Agreement, dated for reference purposes as of July 12,
2006, by Borrower, Thomas Properties Group, L.P., Peter Shaw and Alan Casnoff in favor of Lender, after giving effect to said Amendment, as if the terms of said Guaranty of Completion and Indemnification Agreement and Environmental Indemnity
Agreement were set forth in their entirety herein. 
 Each of the undersigned hereby acknowledges, agrees and affirms that it /
he does not possess any claims, defenses, offsets, recoupment or counterclaims of any kind or nature against or with respect to the enforcement of the Loan Documents, as amended hereby (collectively, the “Claims”) to which each of
the undersigned is a party. Each of the undersigned further acknowledges and agrees that it / he has no knowledge of any facts that would or might give rise to any Claims. If facts now exist which would or could give rise to any Claim against or
with respect to the enforcement of the Loan Documents, as amended hereby, each of the undersigned hereby unconditionally, irrevocably and unequivocally waives and fully releases any and all such Claims as if such Claims were the subject of a
lawsuit, adjudicated to final judgment from which no appeal could be taken and therein dismissed with prejudice. 
 Lender
hereby acknowledges that the Work has been Finally Completed. 
 Thomas Properties Group, L.P., a Maryland limited 

partnership 
  

			
	By:    	 	Thomas Properties Group, Inc., a Delaware corporation,
	Its:    	 	General Partner

  

			
	By:	 	 /s/ Paul S. Rutter

		 	 Paul S. Rutter

Co-COO

  

	
	 /s/ Peter Shaw

	Peter Shaw
	
	 /s/ Alan Casnoff

	Alan Casnoff

  

 6 

 SCHEDULE 6.1 

Exceptions to Representations and Warranties 

Section 2.4 Litigation. Borrower currently has the following buyer litigation matters: (1) Tom Lennon has filed to suit to get his
earnest money deposit back. Borrower is defending that claim and Borrower’s counsel feels very confident for multiple reasons that Borrower will prevail. The court ruled on Borrower’s preliminary objections dismissing all but the contract
claim. (2) Patty Shin has sued for return of half of her earnest money deposit. This matter has been resolved and Borrower will be paying $23,000 in full settlement. (3) A group of purchasers have filed a summons but no complaint. Their
claim is not set forth in the summons; however, Borrower believes that it is based on the theory that the purchasers’ units are not worth as much as the purchasers paid because they were misled as to the percentage of units that had been sold
and also because of the auction of certain of the unsold units. 
 Section 2.5(a) Approved Budget. The Approved Budget has changed
since the date of the Existing Agreement. Borrower represents that there have been no changes to the Approved Budget which have not been approved by Lender. 

Section 2.5(e) Encroachments. The following encroachments exist: (i) a caisson extends 8 inches over the property line on Market Street,
which is permitted by City code; and (ii) a portion of the foundation extends 8 inches over the property line to meet the bridge abutment on Kennedy Boulevard all as permitted by City code and as required by the Philadelphia Streets Department.

  

 7 

 EXHIBIT K 

Price List 

Casnoff/Shaw/Thomas Properties-Murano  

2101-2119 Market Street 

Philadelphia, PA 
  

																			
	 Count
	 	Unit*	  	S/F	 	Sold SF	  	 BR/BA Count
	  	Revised List
Prices	  	Revised
List

Price/SF	  	Buyer	  	Status
	 1
	 	4304	  	1,659	 		  	2 BR/2 BA	  	$	2,338,000	  	$	1,409	  		  	AFS
	 2
	 	4303	  	1,902	 		  	2 BR/2.5 BA	  	$	2,762,000	  	$	1,452	  		  	AFS
	 3
	 	4302	  	2,254	 		  	2 BR/3 BA	  	$	2,635,000	  	$	1,169	  		  	AFS
	 4
	 	4301	  	2,626	 		  	3 BR/3.5 BA	  	$	3,226,000	  	$	1,228	  		  	AFS
	 5
	 	4206	  	1,257	 		  	2 BR/2 BA	  	$	1,024,000	  	$	815	  		  	AFS
	 6
	 	4205	  	1,254	 		  	2 BR/2 BA	  	$	977,000	  	$	779	  		  	AFS
	 7
	 	4204	  	1,498	 		  	2 BR/2.5 BA	  	$	1,190,000	  	$	794	  		  	AFS
	 8
	 	4203	  	1,709	 		  	2 BR/2.5 BA	  	$	1,849,000	  	$	1,082	  		  	AFS
	 9
	 	4202	  	1,960	 		  	2 BR/2.5 BA	  	$	2,338,000	  	$	1,193	  		  	AFS
	 10
	 	4201	  	1,455	 		  	2 BR/2.5 BA	  	$	1,105,000	  	$	759	  		  	AFS
	 11
	 	4106	  	1,257	 		  	2 BR/2 BA	  	$	1,024,000	  	$	815	  		  	AFS
	 12
	 	4105	  	1,254	 		  	2 BR/2 BA	  	$	977,000	  	$	779	  		  	AFS
	 13
	 	4104	  	1,498	 		  	2 BR/2.5 BA	  	$	1,105,000	  	$	738	  		  	AFS
	 14
	 	4103	  	1,709	 		  	2 BR/2.5 BA	  	$	1,785,000	  	$	1,044	  		  	AFS
	 15
	 	4102	  	1,960	 		  	2 BR/2.5 BA	  	$	1,913,000	  	$	976	  		  	AFS
	 16
	 	4101	  	1,455	 		  	2 BR/2.5 BA	  	$	1,020,000	  	$	701	  		  	AFS
	 17
	 	4006	  	1,257	 		  	2 BR/2 BA	  	$	949,000	  	$	755	  		  	AFS
	 18
	 	4005	  	1,254	 		  	2 BR/2 BA	  	$	949,000	  	$	757	  		  	AFS
	 19
	 	4004	  	1,435	 		  	2 BR/2.5 BA	  	$	1,020,000	  	$	711	  		  	AFS
	 20
	 	4003	  	1,709	 		  	2 BR/2.5 BA	  	$	1,300,000	  	$	761	  		  	AFS
	 21
	 	4002	  	1,960	 		  	2 BR/2.5 BA	  	$	1,466,000	  	$	748	  		  	AFS
	 22
	 	4001	  	1,392	 		  	2 BR/2.5 BA	  	$	935,000	  	$	672	  		  	AFS
	 23
	 	3908	  	758	 		  	1 BR/1 BA	  	$	409,500	  	$	540	  		  	AFS
	 24
	 	3907	  	1,257	 		  	2 BR/2 BA	  	$	720,000	  	$	573	  		  	AFS
	 25
	 	3905	  	810	 		  	1 BR/1 BA	  	$	459,000	  	$	567	  		  	AFS
		 	3904	  	 	 	 	  	 	  	 	 	  			  		  	
	 26
	 	3903	  	2,339	 	 	  	3 BR/3 BA	  	$	1,620,000	  	$	693	  		  	AFS
	 27
	 	3808	  	761	 		  	1 BR/1 BA	  	$	400,500	  	$	526	  		  	AFS
	 28
	 	3807	  	1,254	 		  	2 BR/2 BA	  	$	711,000	  	$	567	  		  	AFS
	 29
	 	3805	  	822	 		  	1 BR/1 BA	  	$	450,000	  	$	547	  		  	AFS
		 	3804	  	 	 	 	  	 	  	 	 	  			  		  	
	 30
	 	3803	  	2,351	 	 	  	3 BR/3 BA	  	$	1,593,000	  	$	678	  		  	AFS
	 31
	 	3801	  	1,126	 		  	1 BR/1.5 BA	  	$	621,000	  	$	552	  		  	AFS
	 32
	 	3708	  	761	 		  	1 BR/1 BA	  	$	391,500	  	$	514	  		  	AFS
	 33
	 	3705	  	822	 		  	1 BR/1 BA	  	$	441,000	  	$	536	  		  	AFS
	 34
	 	3704	  	943	 		  	1 BR/1 BA	  	$	522,000	  	$	554	  		  	AFS
	 35
	 	3703	  	1,408	 		  	2 BR/2 BA	  	$	819,000	  	$	582	  		  	AFS
	 36
	 	3702	  	1,408	 		  	2 BR/2 BA	  	$	819,000	  	$	582	  		  	AFS
	 37
	 	3701	  	1,126	 		  	1 BR/1.5 BA	  	$	616,500	  	$	548	  		  	AFS
	 38
	 	3608	  	761	 		  	1 BR/1 BA	  	$	382,500	  	$	503	  		  	AFS
	 39
	 	3607	  	876	 		  	1 BR/1 BA	  	$	450,000	  	$	514	  		  	AFS
	 40
	 	3606	  	1,634	 		  	2 BR/3 BA	  	$	918,000	  	$	562	  		  	AFS
		 	3605	  	 	 	 	  	 	  	 	 	  			  		  	
	 41
	 	3604	  	1,765	 	 	  	3 BR/3 BA	  	$	945,000	  	$	535	  		  	AFS
	 42
	 	3602	  	1,408	 		  	2 BR/2 BA	  	$	810,000	  	$	575	  		  	AFS
	 43
	 	3601	  	1,126	 		  	1 BR/1.5 BA	  	$	612,000	  	$	544	  		  	AFS
	 44
	 	3508	  	761	 		  	1 BR/1 BA	  	$	373,500	  	$	491	  		  	AFS
	 45
	 	3507	  	876	 		  	1 BR/1 BA	  	$	441,000	  	$	503	  		  	AFS
	 46
	 	3506	  	1,634	 		  	2 BR/3 BA	  	$	909,000	  	$	556	  		  	AFS
	 47
	 	3505	  	822	 		  	1 BR/1 BA	  	$	423,000	  	$	515	  		  	AFS
		 	3504	  	 	 	 	  	 	  	 	 	  			  		  	
	 48
	 	3503	  	2,351	 	 	  	3 BR/3 BA	  	$	1,512,000	  	$	643	  		  	AFS
	 49
	 	3502	  	1,408	 		  	2 BR/2 BA	  	$	801,000	  	$	569	  		  	AFS
	 50
	 	3501	  	1,126	 		  	1 BR/1.5 BA	  	$	607,500	  	$	540	  		  	AFS

  

 8 

																			
	 Count
	  	Unit*	  	S/F	  	Sold SF	  	 BR/BA Count
	  	Revised List
Prices	  	Revised
List
Price/SF	  	Buyer	  	Status
	 51
	  	3408	  	761	  		  	1 BR/1 BA	  	$	364,500	  	$	479	  		  	AFS
	 52
	  	3407	  	876	  		  	1 BR/1 BA	  	$	432,000	  	$	493	  		  	AFS
	 53
	  	3406	  	1,634	  		  	2 BR/3 BA	  	$	900,000	  	$	551	  		  	AFS
	 54
	  	3405	  	810	  		  	1 BR/1 BA	  	$	414,000	  	$	511	  		  	AFS
		  	3404	  	 	  	 	  	 	  	 	 	  			  		  	
	 55
	  	3403	  	2,339	  	 	  	3 BR/3 BA	  	$	1,485,000	  	$	635	  		  	AFS
	 56
	  	3307	  	876	  		  	1 BR/1 BA	  	$	423,000	  	$	483	  		  	AFS
	 57
	  	3306	  	1,634	  		  	2 BR/3 BA	  	$	891,000	  	$	545	  		  	AFS
		  	3304	  	 	  	 	  	 	  	 	 	  			  		  	
	 58
	  	3303	  	2,351	  	 	  	3 BR/3 BA	  	$	1,458,000	  	$	620	  		  	AFS
	 59
	  	3301	  	1,126	  		  	1 BR/1.5BA	  	$	598,500	  	$	532	  		  	AFS
	 60
	  	3208	  	743	  		  	1 BR/1 BA	  	$	346,500	  	$	466	  		  	AFS
	 61
	  	3207	  	876	  		  	1 BR/1 BA	  	$	414,000	  	$	473	  		  	AFS
	 62
	  	3206	  	1,634	  		  	2 BR/3 BA	  	$	882,000	  	$	540	  		  	AFS
		  	3204	  	 	  	 	  	 	  	 	 	  			  		  	
	 63
	  	3203	  	2,351	  	 	  	3 BR/3 BA	  	$	1,431,000	  	$	609	  		  	AFS
	 64
	  	3202	  	1,408	  		  	2 BR/2 BA	  	$	774,000	  	$	550	  		  	AFS
	 65
	  	3201	  	1,091	  		  	1 BR/1.5 BA	  	$	594,000	  	$	544	  		  	AFS
	 66
	  	3107	  	876	  		  	1 BR/1 BA	  	$	405,000	  	$	462	  		  	AFS
	 67
	  	3104	  	943	  		  	1 BR/1 BA	  	$	477,000	  	$	506	  		  	AFS
	 68
	  	3101	  	1,091	  		  	1 BR/1.5 BA	  	$	589,500	  	$	540	  		  	AFS
	 69
	  	3007	  	876	  		  	1 BR/1 BA	  	$	396,000	  	$	452	  		  	AFS
	 70
	  	3006	  	1,634	  		  	2 BR/3 BA	  	$	864,000	  	$	529	  		  	AFS
		  	3004	  	 	  	 	  	 	  	 	 	  			  		  	
	 71
	  	3003	  	2,351	  	 	  	3 BR/3 BA	  	$	1,377,000	  	$	586	  		  	AFS
		  	2604	  		  		  		  		 	  			  		  	
	 72
	  	2603	  	2,351	  	 	  	3 BR/3 BA	  	$	1,200,000	  	$	510	  		  	AFS
		  	2504	  		  		  		  		 	  			  		  	
	 73
	  	2503	  	2,339	  	 	  	3 BR/3 BA	  	$	1,150,000	  	$	492	  		  	AFS
	 74
	  	1003	  	1,408	  		  	2 BR/2 BA	  	$	550,000	  	$	391	  		  	AFS
	 75
	  	803	  	1,408	  		  	2 BR/2 BA	  	$	540,000	  	$	384	  		  	AFS
	 76
	  	402	  	1,408	  		  	2 BR/2 BA	  	$	520,000	  	$	369	  		  	AFS
	 77
	  	303	  	1,408	  		  	2 BR/2 BA	  	$	515,000	  	$	366	  		  	AFS
	 78
	  	302	  	1,408	  		  	2 BR/2 BA	  	$	515,000	  	$	366	  		  	AFS
	 79
	  	203	  	1,408	  		  	2 BR/2 BA	  	$	515,000	  	$	366	  		  	AFS
	 80
	  	202	  	1,408	  		  	2 BR/2 BA	  	$	515,000	  	$	366	  		  	AFS
	 
		  		  	113,035	  	0	  		  	$	75,200,500	  	$	665	  		  	

  

			
	Gray Box	  	Signifies units boxed together on this spreadsheet have been combined at the Property

 

						
	 	  	 	  	Wtd Avg of
		  	 
	 NSF Available
	  	113,035	  	$	665

  

 9exhibit_10-1.htm

EXHIBIT 10.1

CAMELOT ENTERTAINMENT GROUP, INC.

 

2010 STOCK OPTION/STOCK ISSUANCE PLAN

 

 

ARTICLE ONE

 

GENERAL PROVISIONS

 

	 	
I.

	
PURPOSE OF THE PLAN

 

This 2010 Stock Option/Stock Issuance Plan is intended to promote the interests of Camelot Entertainment Group, Inc., a California corporation, by providing eligible persons in the Corporation’s employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service.

 

Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.

 

	 	
II.

	
STRUCTURE OF THE PLAN

 

A.           The Plan shall be divided into two separate equity programs:

 

(i)           the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock, and

 

(ii)           the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary).

 

B.           The provisions of Articles One and Four shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.

 

	 	
III.

	
ADMINISTRATION OF THE PLAN

 

A.           The Plan shall be administered by the Board.  However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee.  Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time.  The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

 

B.           The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issuances thereunder as it may deem necessary or advisable.  Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option grant or stock issuance thereunder.

 

 

  

1

  

 

 

	 	
IV.

	
ELIGIBILITY

 

A.           The persons eligible to participate in the Plan are as follows:

 

(i)           employees,

 

(ii)           non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and

 

(iii)           consultants and other independent advisors who provide Services to the Corporation (or any Parent or Subsidiary).

 

B.           The Plan Administrator shall have full authority to determine, (i) with respect to the grants made under the Option Grant Program, which eligible persons are to receive such  grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding, and (ii) with respect to stock issuances made under the Stock Issuance Program, which eligible persons are to receive such issuances, the time or times when those issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares.

 

C.           The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program.

 

	 	
V.

	
STOCK SUBJECT TO THE PLAN

 

A.           The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock.  The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 1,500,000 shares.

 

B.           Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent: (i) the options expire or terminate for any reason prior to exercise in full; or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two.  Unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the option exercise or direct issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan.

 

 

  

2

  

 

C.           Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to: (i) the maximum number and/or class of securities issuable under the Plan; and (ii) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder.  The adjustments determined by the Plan Administrator shall be final, binding and conclusive.  In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation’s preferred stock into shares of Common Stock.

 

ARTICLE TWO

 

OPTION GRANT PROGRAM

 

	 	
I.

	
OPTION TERMS

 

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below.  Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

 

A.           Exercise Price.

 

1.           The exercise price per share shall be fixed by the Plan Administrator in accordance with the following provisions:

 

(i)           The exercise price per share shall not be less than 100% of the Fair Market Value per share of Common Stock on the option grant date.

 

(ii)           If the person to whom the option is granted is a 10% Stockholder, then the exercise price per share shall not be less than 110% of the Fair Market Value per share of Common Stock on the option grant date.

 

2.           The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation.  Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may also be paid as follows:

 

(i)           in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or

 

(ii)           to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (A) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (B) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

 

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

 

 

  

3

  

 

 

B.           Exercise and Term of Options.  Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant.  However, no option shall have a term in excess of ten years measured from the option grant date.

 

C.           Effect of Termination of Service.

 

1.           The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

 

(i)           Should the Optionee cease to remain in Service for any reason other than death, Disability or Misconduct, then the Optionee shall have a period of three months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

 

(ii)           Should Optionee’s Service terminate by reason of Disability, then the Optionee shall have a period of 12 months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

 

(iii)           If the Optionee dies while holding an outstanding option, then the personal representative of his or her estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or the Optionee’s designated beneficiary or beneficiaries of that option shall have a 12 month period following the date of the Optionee’s death to exercise such option.

 

(iv)           Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term.

 

(v)           During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service.  Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised.  However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding with respect to any and all option shares for which the option is not otherwise at the time exercisable or in which the Optionee is not otherwise at that time vested.

 

 

 

  

4

  

 

 

(vi)           Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while holding one or more outstanding options under the Plan, then all those options shall terminate immediately and cease to remain outstanding.

 

2.           The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

 

(i)           extend the period of time for which the option is to remain exercisable following Optionee’s cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term; and/or

 

(ii)           permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service.

 

D.           Stockholder Rights.  The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares.

 

E.           Unvested Shares.  The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock.  Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares.  The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.  The Plan Administrator may not impose a vesting schedule upon any option grant or the shares of Common Stock subject to that option which is more restrictive than 20% per year vesting, with the initial vesting to occur not later than one year after the option grant date.  However, such limitation shall not be applicable to any option grants made to individuals who are officers of the Corporation, non-employee Board members or independent consultants.

 

F.           Limited Transferability of Options.  An Incentive Stock Option shall be exercisable only by the Optionee during his or her lifetime and shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee’s death. A Non-Statutory Option may be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s family or to a trust established exclusively for one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order.  The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the Non-Statutory Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.  Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under the Plan, and  those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options.  Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death.

 

 

  

5

  

 

 

	 	
II.

	
INCENTIVE OPTIONS

 

The terms specified below shall be applicable to all Incentive Options.  Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options.  Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.

 

A.           Eligibility.  Incentive Options may only be granted to Employees.

 

B.           Exercise Price.  The exercise price per share shall not be less than 100% of the Fair Market Value per share of Common Stock on the option grant date.

 

C.           Dollar Limitation.  The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum of $1,000,000.  To the extent the Employee holds two or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

 

	 	
III.

	
CORPORATE TRANSACTION

 

A.           The shares subject to each option outstanding under the Plan at the time of a Corporate Transaction shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock.  However, the shares subject to an outstanding option shall not vest on such an accelerated basis if and to the extent:  (i) such option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and any repurchase rights of the Corporation with respect to the unvested option shares are concurrently assigned to such successor corporation (or parent thereof); or (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested option shares; or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant.

 

 

 

  

6

  

 

 

B.           All outstanding repurchase rights under the Option Grant Program shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction; or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

 

C.           Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

 

D.           Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction, had the option been exercised immediately prior to such Corporate Transaction.  Appropriate adjustments shall also be made to: (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate Transaction; and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding options under this Plan, substitute one or more shares of its own Common Stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction.

 

E.           The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure one or more options so that those options shall automatically accelerate and vest in full (and any repurchase rights of the Corporation with respect to the unvested shares subject to those options shall immediately terminate) upon the occurrence of a Corporate Transaction, whether or not those options are to be assumed in the Corporate Transaction.

 

F.           The Plan Administrator shall also have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure such option so that the shares subject to that option will automatically vest on an accelerated basis should the Optionee’s Service terminate by reason of an Involuntary Termination within a designated period (not to exceed 18 months) following the effective date of any Corporate Transaction in which the option is assumed and the repurchase rights applicable to those shares do not otherwise terminate.  Any option so accelerated shall remain exercisable for the fully-vested option shares until the expiration or sooner termination of the option term.  In addition, the Plan Administrator may provide that one or more of the Corporation’s outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest at that time.

 

 

 

  

7

  

 

 

G.           The portion of any Incentive Option accelerated in connection with a Corporate Transaction shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded.  To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.

 

H.           The grant of options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

	 	
IV.

	
CANCELLATION AND REGRANT OF OPTIONS

 

The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefor new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new option grant date.

 

ARTICLE THREE

 

STOCK ISSUANCE PROGRAM

 

	 	
I.

	
STOCK ISSUANCE TERMS

 

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants.  Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.

 

A.           Purchase Price.

 

1.           The purchase price per share shall be fixed by the Plan Administrator but shall not be less than 100% of the Fair Market Value per share of Common Stock on the issue date.  However, the purchase price per share of Common Stock issued to a 10% Stockholder shall not be less than 110% of such Fair Market Value.

 

 

  

8

  

 

2.           Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

 

(i)           cash or check made payable to the Corporation; or

 

(ii)           past Services rendered to the Corporation (or any Parent or Subsidiary).

 

B.           Vesting Provisions.

 

1.           Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives.  However, the Plan Administrator may not impose a vesting schedule upon any stock issuance effected under the Stock Issuance Program which is more restrictive than 20% per year vesting, with initial vesting to occur not later than one year after the issuance date.  Such limitation shall not apply to any Common Stock issuances made to the officers of the Corporation, non-employee Board members or independent consultants.

 

2.           Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

 

3.           The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested.  Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

 

4.           Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares.  To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares.

 

  

9

  

 

5.           The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to those shares.  Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies.  Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.

 

	 	
II.

	
CORPORATE TRANSACTION

 

A.           Upon the occurrence of a Corporate Transaction, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction; or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

 

B.           The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation’s repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed 18 months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor corporation (or parent thereof).

 

	 	
III.

	
SHARE ESCROW/LEGENDS

 

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

 

ARTICLE FOUR

 

MISCELLANEOUS

 

	 	
I.

	
FINANCING

 

The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Option Grant Program or the purchase price for shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments and secured by the purchased shares.  However, any promissory note delivered by a consultant must be secured by collateral in addition to the purchased shares of Common Stock.  In no event may the maximum credit available to the Optionee or Participant exceed the sum of: (i) the aggregate option exercise price or purchase price payable for the purchased shares; plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

 

 

  

10

  

 

 

	 	
II.

	
EFFECTIVE DATE AND TERM OF PLAN

 

A.           The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation’s stockholders.  If such stockholder approval is not obtained within 12 months after the date of the Board’s adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan.  Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.

 

B.           The Plan shall terminate upon the earliest of: (i) the expiration of the ten year period measured from the date the Plan is adopted by the Board; (ii) the date on which all shares available for issuance under the Plan shall have been issued as vested shares; or (iii) the termination of all outstanding options in connection with a Corporate Transaction.  All options and unvested stock issuances outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the documents evidencing those options or issuances.

 

	 	
III.

	
AMENDMENT OF THE PLAN

 

A.           The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects.  However, no such amendment or modification shall adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification.  In addition, certain amendments may require stockholder approval pursuant to applicable laws and regulations.

 

B.           Options may be granted under the Option Grant Program and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan.  If such stockholder approval is not obtained within 12 months after the date the first such excess grants or issuances are made, then: (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding; and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding.

 

 

  

11

  

 

 

	 	
IV.

	
USE OF PROCEEDS

 

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

 

	 	
V.

	
WITHHOLDING

 

The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.

 

	 	
VI.

	
REGULATORY APPROVALS

 

The implementation of the Plan, the granting of any options under the Plan and the issuance of any shares of Common Stock: (i) upon the exercise of any option; or (ii) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it.

 

	 	
VII.

	
NO EMPLOYMENT OR SERVICE RIGHTS

 

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

 

	 	
VII. 

	
FINANCIAL REPORTS

 

The Corporation shall deliver a balance sheet and an income statement at least annually to each individual holding an outstanding option under the Plan, unless such individual is a key Employee whose duties in connection with the Corporation (or any Parent or Subsidiary) assure such individual access to equivalent information.

 

  

12

  

APPENDIX

 

The following definitions shall be in effect under the Plan:

 

A.           Board shall mean the Corporation’s Board of Directors.

 

B.           Code shall mean the Internal Revenue Code of 1986, as amended.

 

C.           Committee shall mean a committee of two or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.

 

D.           Common Stock shall mean the Corporation’s common stock.

 

E.           Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party:

 

(i)           a merger or consolidation in which securities possessing more than 50% of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction; or

 

(ii)           the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

 

F.           Corporation shall mean Camelot Entertainment Group, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Camelot Entertainment Group, Inc. which shall by appropriate action adopt the Plan.

 

G.           Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.

 

H.           Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

I.           Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

 

J.           Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

 

 

  

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(i)           If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(ii)           If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(iii)           If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.

 

K.           Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

 

L.           Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of:

 

(i)           such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct; or

 

(ii)           such individual’s voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than 15% or (C) a relocation of such individual’s place of employment by more than 50 miles, provided and only if such change, reduction or relocation is effected without the individual’s consent.

 

M.           Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee or Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.

 

 

 

  

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N.           1934 Act shall mean the Securities Exchange Act of 1934, as amended.

 

O.           Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

 

P.           Option Grant Program shall mean the option grant program in effect under the Plan.

 

Q.           Optionee shall mean any person to whom an option is granted under the Plan.

 

R.           Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

S.           Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.

 

T.           Plan shall mean the Corporation’s 2010 Stock Option/Stock Issuance Plan, as set forth in this document.

 

U.           Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan.

 

V.           Service shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant.

 

W.           Stock Exchange shall mean the Nasdaq Stock Exchange, American Stock Exchange or the New York Stock Exchange.

 

X.           Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

 

Y.           Stock Issuance Program shall mean the stock issuance program in effect under the Plan.

 

Z.           Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

AA.           10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than 10% of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary). 

 

  

15

  

 

CAMELOT ENTERTAINMENT GROUP, INC.

 

NOTICE OF GRANT OF STOCK OPTION

 

Notice is hereby given of the following option grant (the “Option”) to purchase shares of the Common Stock of Camelot Entertainment Group, Inc. (the “Corporation”):

 

Optionee:                                                                                                                     

 

Grant Date:                                                                                                                     

 

Vesting Commencement Date (if applicable):                                                                                                                     

 

Exercise Price:  $_________________________ per share

 

Number of Option Shares:  _________________ shares of Common Stock

 

Expiration Date:                                                                                                                     

 

	
Type of Option:

	  	
Incentive Stock Option

	  	  	
Non-Statutory Stock Option

 

Date Exercisable:  Immediately Exercisable

 

	
Type of Vesting:

	  	
Immediately Vested

	  	  	
Subject to Vesting Schedule

 

Vesting Schedule:  The Option Shares shall initially be unvested and subject to repurchase by the Corporation at the Exercise Price paid per share.  Optionee shall acquire a vested interest in, and the Corporation’s repurchase right shall accordingly lapse with respect to: (i) 25% of the Option Shares upon Optionee’s completion of one year of Service measured from the Vesting Commencement Date;  and (ii) the balance of the Option Shares in a series of 36 successive equal monthly installments upon Optionee’s completion of each additional month of Service over the 36 month period measured from the first anniversary of the Vesting Commencement Date.  In no event shall any additional Option Shares vest after Optionee’s cessation of Service.

 

Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the Camelot Entertainment Group, Inc. 2010 Stock Option/Stock Issuance Plan (the “Plan”).  Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A.

 

Optionee understands that any Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit B.

 

  

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Optionee hereby acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit C.

 

REPURCHASE RIGHTS.  OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS.  THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT.

 

At Will Employment.  Nothing in this notice or in the attached Stock Option Agreement or Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

 

Definitions.  All capitalized terms in this notice shall have the meaning assigned to them in this notice or in the attached Stock Option Agreement.

 

DATED: __________________,  ___________

 

	
CAMELOT ENTERTAINMENT GROUP, INC.

 

 

 

	
BY:

	  
	
ITS:

	  
	  	  
	  	
OPTIONEE

	  	  
	
Address:

	  
	  	  

Attachments:

Exhibit A - Stock Option Agreement

Exhibit B - Stock Purchase Agreement

Exhibit C - 2010 Stock Option/Stock Issuance Plan

  

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EXHIBIT A

 

CAMELOT ENTERTAINMENT GROUP, INC.

 

STOCK OPTION AGREEMENT

 

RECITALS

 

A.           The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary and consultants and other independent advisors in the service of the Corporation (or any Parent or Subsidiary).

 

B.           Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.

 

C.           All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.           Grant of Option.  The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice.  The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.

 

2.           Option Term.  This option shall have a term of ten years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

 

3.           Limited Transferability.

 

(a)           This option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee.  However, Optionee may  designate one or more persons as the beneficiary or beneficiaries of this option, and  this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding this option.  Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

 

(b)           If this option is designated a Non-Statutory Option in the Grant Notice, then this option may be assigned in whole or in part during Optionee’s lifetime to one or more members of Optionee’s family or to a trust established for the exclusive benefit of one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order.  The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment.  The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment.

 

  

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4.           Dates of Exercise.  This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice.  As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6.

 

5.           Cessation of Service.  The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

 

(a)           Should Optionee cease to remain in Service for any reason (other than death, Disability or Misconduct) while holding this option, then Optionee shall have a period of three months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.

 

(b)           Should Optionee die while holding this option, then the personal representative of Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance shall have the right to exercise this option.  However, if Optionee has designated one or more beneficiaries of this option, then those persons shall have the exclusive right to exercise this option following Optionee’s death.  Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the 12 month period measured from the date of Optionee’s death or (ii) the Expiration Date.

 

(c)           Should Optionee cease Service by reason of Disability while holding this option, then Optionee shall have a period of 12 months (commencing with the date of such cessation of Service) during which to exercise this option.  In no event shall this option be exercisable at any time after the Expiration Date.

 

Note:  Exercise of this option on a date later than three months following cessation of Service due to Disability will result in loss of favorable Incentive Option treatment, unless such Disability constitutes Permanent Disability.  In the event that Incentive Option treatment is not available, this option will be taxed as a Non-Statutory Option upon exercise.

 

(d)           During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares in which Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to the Vesting Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6.  Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any vested Option Shares for which the option has not been exercised.  To the extent Optionee is not vested in one or more Option Shares at the time of Optionee’s cessation of Service, this option shall immediately terminate and cease to be outstanding with respect to those shares.

 

  

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(e)           Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.

 

6.           Accelerated Vesting.

 

(a)           In the event of any Corporate Transaction, the Option Shares at the time subject to this option but not otherwise vested shall automatically vest in full so that this option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares.  However, the Option Shares shall not vest on such an accelerated basis if and to the extent:  (i) this option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Corporation’s repurchase rights with respect to the unvested Option Shares are assigned to such successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Option Shares at the time of the Corporate Transaction (the excess of the Fair Market Value of those Option Shares over the Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same Vesting Schedule applicable to those unvested Option Shares as set forth in the Grant Notice.

 

(b)           Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

 

(c)           If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction.

 

(d)           This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

  

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7.           Adjustment in Option Shares.  Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to: (i) the total number and/or class of securities subject to this option; and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

 

8.           Stockholder Rights.  The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become the record holder of the purchased shares.

 

9.           Manner of Exercising Option.

 

(a)           In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

 

(i)           Execute and deliver to the Corporation a Purchase Agreement for the Option Shares for which the option is exercised.

 

(ii)           Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

 

(A)           cash or check made payable to the Corporation; or

 

(B)           a promissory note payable to the Corporation, but only to the extent authorized by the Plan Administrator in accordance with Paragraph 14.

 

Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the Exercise Price may also be paid as follows:

 

(C)           in shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or

 

(D)           to the extent the option is exercised for vested Option Shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (a) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

 

  

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Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Purchase Agreement delivered to the Corporation in connection with the option exercise.

 

(iii)           Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

 

(iv)           Execute and deliver to the Corporation such written representations as may be requested by the Corporation in order for it to comply with the applicable requirements of Federal and state securities laws.

 

(v)           Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

 

(b)           As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto.

 

(c)           In no event may this option be exercised for any fractional shares.

 

10.           REPURCHASE RIGHTS.  ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT.

 

11.           Compliance with Laws and Regulations.

 

(a)           The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.

 

  

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(b)           The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.  The Corporation, however, shall use its best efforts to obtain all such approvals.

 

12.           Successors and Assigns.  Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs and legatees of Optionee’s estate.

 

13.           Notices.  Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices.  Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice.  All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

 

14.           Financing.  The Plan Administrator may, in its absolute discretion and without any obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by delivering a full-recourse, interest-bearing promissory note secured by those Option Shares.  The payment schedule in effect for any such promissory note shall be established by the Plan Administrator in its sole discretion.

 

Note:   If the Optionee is a consultant, then the promissory note delivered in payment of the Exercise Price must be secured by collateral other than the purchased Option Shares.

15.           Construction.  This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan.  All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

 

16.           Governing Law.  The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

 

17.           Exclusive Jurisdiction and Venue.  The Parties agree that the Courts of the County of Orange, State of California shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein.

 

  

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18.           Stockholder Approval.  If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may be issued under the Plan as last approved by the stockholders, then this option shall be void with respect to such excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.

 

19.           Additional Terms Applicable to an Incentive Option.  In the event this option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant:

 

(a)           This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares: (i) more than three months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (ii) more than 12 months after the date Optionee ceases to be an Employee by reason of Permanent Disability.

 

(b)           This option shall not become exercisable in the calendar year in which granted if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this option would otherwise first become exercisable in such calendar year would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock and any other securities for which one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed $1,000,000 in the aggregate.  To the extent the exercisability of this option is deferred by reason of the foregoing limitation, the deferred portion shall become exercisable in the first calendar year or years thereafter in which the $1,000,000 limitation of this Paragraph 18(b) would not be contravened, but such deferral shall in all events end immediately prior to the effective date of a Corporate Transaction in which this option is not to be assumed, whereupon the option shall become immediately exercisable as a Non-Statutory Option for the deferred portion of the Option Shares.

 

(c)           Should Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

 

 

(SIGNATURE PAGE IMMEDIATELY FOLLOWS)

  

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

 

	
CAMELOT ENTERTAINMENT GROUP, INC.

 

 

	
BY:

	  
	
ITS:

	  
	  	  
	
Address:

	  
	  	  
	  	  
	  	
OPTIONEE

	  	  
	
Address:

	  
	  	  

  

25

  

APPENDIX

 

The following definitions shall be in effect under the Agreement:

 

A.           Agreement shall mean this Stock Option Agreement.

 

B.           Board shall mean the Corporation’s Board of Directors.

 

C.           Code shall mean the Internal Revenue Code of 1986, as amended.

 

D.           Common Stock shall mean the Corporation’s common stock.

 

E.           Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party:

 

(i)           a merger or consolidation in which securities possessing more than 50% of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

 

(ii)           the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

 

F.           Corporation shall mean Camelot Entertainment Group, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Camelot Entertainment Group, Inc. which shall be appropriate action assume this option.

 

G.           Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.  Disability shall be deemed to constitute Permanent Disability in the event that such Disability is expected to result in death or has lasted or can be expected to last for a continuous period of 12 months or more.

 

H.           Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

I.           Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

 

J.           Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant Notice.

 

K.           Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

 

 

  

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L.           Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

 

(i)           If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as the price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(ii)           If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(iii)           If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.

 

M.           Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

 

N.           Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

 

O.           Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

 

P.           Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss the Optionee or any other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan or this Agreement, to constitute grounds for termination for Misconduct.

 

Q.           1934 Act shall mean the Securities Exchange Act of 1934, as amended.

 

 

  

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R.           Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

 

S.           Option Shares shall mean the number of shares of Common Stock subject to the option.

 

T.           Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

 

U.           Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

V.           Plan shall mean the Corporation’s 2010 Stock Option/Stock Issuance Plan.

 

W.           Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

 

X.           Purchase Agreement shall mean the stock purchase agreement in substantially the form of Exhibit B to the Grant Notice.

 

Y.           Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or an independent consultant.

 

Z.           Stock Exchange shall mean the Nasdaq Stock Exchange, American Stock Exchange or the New York Stock Exchange.

 

AA.           Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

BB.           Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service.

 

  

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ADDENDUM

 

TO

 

STOCK OPTION AGREEMENT

 

The following provisions are hereby incorporated into, and are hereby made a part of, that certain Stock Option Agreement (the “Option Agreement”) by and between Camelot Entertainment Group, Inc. (the “Corporation”) and ________________________ (“Optionee”) evidencing the stock option (the “Option”) granted on this date to Optionee under the terms of the Corporation’s 2010 Stock Option/Stock Issuance Plan, and such provisions shall be effective immediately.  All capitalized terms in this Addendum, to the extent not otherwise defined herein, shall have the meanings assigned to them in the Option Agreement.

 

INVOLUNTARY TERMINATION FOLLOWING

CORPORATE TRANSACTION

 

1.           If the Option is to be assumed by the successor corporation (or the parent thereof) in connection with a Corporate Transaction, then none of the Option Shares shall, in accordance with Paragraph 6 of the Option Agreement, vest on an accelerated basis upon the occurrence of that Corporate Transaction, and Optionee shall accordingly continue, over his or her period of Service following the Corporate Transaction, to vest in the Option Shares in one or more installments in accordance with the provisions of the Option Agreement.  However, upon an Involuntary Termination of Optionee’s Service within 18 months following such Corporate Transaction, all the Option Shares at the time subject to the Option shall automatically vest in full on an accelerated basis so that the Option shall immediately become exercisable for all the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares.  The Option shall remain so exercisable until the earlier of: (i) the Expiration Date; or (ii) the expiration of the one year period measured from the date of the Involuntary Termination.

 

2.           For purposes of this Addendum, an Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

 

(i)              Optionee’s involuntary dismissal or discharge by the Corporation for reasons other than for Misconduct; or

 

(ii)              Optionee’s voluntary resignation following: (A) a change in Optionee’s position with the Corporation (or Parent or Subsidiary employing Optionee) which materially reduces Optionee’s duties and responsibilities or the level of management to which he or she reports; (B) a reduction in Optionee’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based incentive programs) by more than 15%; or (C) a relocation of Optionee’s place of employment by more than 50 miles, provided and only if such change, reduction or relocation is effected by the Corporation without Optionee’s consent.

 

  

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3.           The provisions of Paragraph 1 of this Addendum shall govern the period for which the Option is to remain exercisable following the Involuntary Termination of Optionee’s Service within 18 months after the Corporate Transaction and shall supersede any provisions to the contrary in Paragraph 5 of the Option Agreement.  The provisions of this Addendum shall also supersede any provisions to the contrary in Paragraph 18 of the Option Agreement concerning the deferred exercisability of the Option.

IN WITNESS WHEREOF, Camelot Entertainment Group, Inc. has caused this Addendum to be executed by its duly authorized officer as of the Effective Date specified below.

 

	
CAMELOT ENTERTAINMENT GROUP, INC.

 

 

 

	
BY:

	  
	
ITS:

	  

 

EFFECTIVE DATE:  ________________ , _______

 

  

30

  

 

EXHIBIT B

CAMELOT ENTERTAINMENT GROUP, INC.

 

STOCK PURCHASE AGREEMENT

 

AGREEMENT made this _____ day of ___________________, _____ by and between Camelot Entertainment Group, Inc., a Delaware corporation, and _____________________, Optionee under the Corporation’s 2010 Stock Option/Stock Issuance Plan.

 

All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix.

 

A.           EXERCISE OF OPTION

 

1.           Exercise.  Optionee hereby purchases _______ shares of Common Stock (the “Purchased Shares”) pursuant to that certain option (the “Option”) granted Optionee on ____________________, _______ (the “Grant Date”) to purchase up to _______________ shares of Common Stock (the “Option Shares”) under the Plan at the exercise price of $___________ per share (the “Exercise Price”).

 

2.           Payment.  Concurrently with the delivery of this Agreement to the Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in accordance with the provisions of the Option Agreement and shall deliver whatever additional documents may be required by the Option Agreement as a condition for exercise, together with a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares.

 

3.           Stockholder Rights.  Until such time as the Corporation exercises the Repurchase Right, Optionee (or any successor in interest) shall have all the rights of a stockholder (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C.

 

B.           SECURITIES LAW COMPLIANCE

 

1.           Restricted Securities.  The Purchased Shares have not been registered under the 1933 Act and are being issued to Optionee in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan.  Optionee hereby confirms that Optionee has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available.  Accordingly, Optionee hereby acknowledges that Optionee is prepared to hold the Purchased Shares for an indefinite period and that Optionee is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act.

 

  

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2.           Restrictions on Disposition of Purchased Shares.  Optionee shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements:

 

(i)           Optionee shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition.

 

(ii)           Optionee shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares.

 

(iii)           Optionee shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.

 

The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement.

 

3.           Restrictive Legends.  The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends:

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933.  The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a “no action” letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer.”

 

“The shares represented by this certificate are subject to certain repurchase rights and rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated ____________, ______ between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares).  A copy of such agreement is maintained at the Corporation’s principal corporate offices.”

 

C.           TRANSFER RESTRICTIONS

 

1.           Restriction on Transfer.  Except for any Permitted Transfer, Optionee shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right.  In addition, Purchased Shares which are released from the Repurchase Right shall not be transferred, assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off.

 

  

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2.           Transferee Obligations.  Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) the Repurchase Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Optionee.

 

3.           Market Stand-Off.

 

(a)           In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation’s initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters.  Such restriction (the “Market Stand-Off”) shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters.  In no event, however, shall such period exceed 180 days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two years after the effective date of the Corporation’s initial public offering.

 

(b)           Owner shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions.

 

(c)           Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions.

 

(d)           In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period.

 

D.           REPURCHASE RIGHT

 

1.           Grant.  The Corporation is hereby granted the right (the “Repurchase Right”), exercisable at any time during the 60 day period following the date Optionee ceases for any reason to remain in Service or (if later) during the 60 day period following the execution date of this Agreement, to repurchase at the Exercise Price any or all of the Purchased Shares in which Optionee is not, at the time of his or her cessation of Service,  vested in accordance with the Vesting Schedule applicable to those shares or the special vesting acceleration provisions of Paragraph D.6 of this Agreement (such shares to be hereinafter referred to as the “Unvested Shares”).

 

2.           Exercise of the Repurchase Right.  The Repurchase Right shall be exercisable by written notice delivered to each Owner of the Unvested Shares prior to the expiration of the 60 day exercise period.  The notice shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than 30 days after the date of such notice.  The certificates representing the Unvested Shares to be repurchased shall be delivered to the Corporation on the closing date specified for the repurchase.  Concurrently with the receipt of such stock certificates, the Corporation shall pay to Owner, in cash or cash equivalents (including the cancellation of any purchase-money indebtedness), an amount equal to the Exercise Price previously paid for the Unvested Shares which are to be repurchased from Owner.

 

  

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3.           Termination of the Repurchase Right.  The Repurchase Right shall terminate with respect to any Unvested Shares for which it is not timely exercised under Paragraph D.2.  In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Purchased Shares in which Optionee vests in accordance with the Vesting Schedule.  All Purchased Shares as to which the Repurchase Right lapses shall, however, remain subject to: (i) the First Refusal Right; and (ii) the Market Stand-Off.

 

4.           Aggregate Vesting Limitation.  If the Option is exercised in more than one increment so that Optionee is a party to one or more other Stock Purchase Agreements (the “Prior Purchase Agreements”) which are executed prior to the date of this Agreement, then the total number of Purchased Shares as to which Optionee shall be deemed to have a fully-vested interest under this Agreement and all Prior Purchase Agreements shall not exceed in the aggregate the number of Purchased Shares in which Optionee would otherwise at the time be vested, in accordance with the Vesting Schedule, had all the Purchased Shares (including those acquired under the Prior Purchase Agreements) been acquired exclusively under this Agreement.

 

5.           Recapitalization.  Any new, substituted or additional securities or other property (including cash paid other than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the Repurchase Right and any escrow requirements hereunder, but only to the extent the Purchased Shares are at the time covered by such right or escrow requirements.  Appropriate adjustments to reflect such distribution shall be made to the number and/or class of Purchased Shares subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such Recapitalization upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same.

 

6.           Corporate Transaction.

 

(a)           The Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of any Corporate Transaction, except to the extent the Repurchase Right is to be assigned to the successor entity in such Corporate Transaction.

 

(b)           To the extent the Repurchase Right remains in effect following a Corporate Transaction, such right shall apply to any new securities or other property (including any cash payments) received in exchange for the Purchased Shares in consummation of the Corporate Transaction, but only to the extent the Purchased Shares are at the time covered by such right.  Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect of the Corporate Transaction upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same.  The new securities or other property (including any cash payments) issued or distributed with respect to the Purchased Shares in consummation of the Corporate Transaction shall be immediately deposited in escrow with the Corporation (or the successor entity) and shall not be released from escrow until Optionee vests in such securities or other property in accordance with the same Vesting Schedule in effect for the Purchased Shares.

 

  

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E.           SPECIAL TAX ELECTION

 

The acquisition of the Purchased Shares may result in adverse tax consequences which may be avoided or mitigated by filing an election under Code Section 83(b).  Such election must be filed within 30 days after the date of this Agreement.  A description of the tax consequences applicable to the acquisition of the Purchased Shares and the form for making the Code Section 83(b) election are set forth in Exhibit II.  OPTIONEE SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b) ELECTION.  OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE’S SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.

 

F.           GENERAL PROVISIONS

 

1.           Assignment.  The Corporation may assign the Repurchase Right and/or the First Refusal Right to any person or entity selected by the Board, including (without limitation) one or more stockholders of the Corporation.

 

2.           At Will Employment.  Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

 

3.           Notices.  Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten days advance written notice under this paragraph to all other parties to this Agreement.

 

4.           No Waiver.  The failure of the Corporation in any instance to exercise the Repurchase Right or the First Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Optionee.  No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

 

  

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5.           Cancellation of Shares.  If the Corporation shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement).  Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement.

 

G.           MISCELLANEOUS PROVISIONS

 

1.           Optionee Undertaking.  Optionee hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Optionee or the Purchased Shares pursuant to the provisions of this Agreement.

 

2.           Agreement is Entire Contract.  This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof.  This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan.

 

3.           Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without resort to that State’s conflict-of-laws rules.

 

4.           Exclusive Jurisdiction and Venue.  The Parties agree that the Courts of the County of Orange, State of California shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein.

 

5.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

6.           Successors and Assigns.  The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Optionee, Optionee’s permitted assigns and the legal representatives, heirs and legatees of Optionee’s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.

 

(SIGNATURE PAGE IMMEDIATELY FOLLOWS)

  

36

  

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

 

	
CAMELOT ENTERTAINMENT GROUP, INC.

 

	
BY:

	  
	
ITS:

	  
	  	  
	
Address:

	  
	  	  
	  	  
	  	
OPTIONEE

	  	  
	
Address:

	  
	  	  

  

37

  

SPOUSAL ACKNOWLEDGMENT

 

The undersigned spouse of Optionee has read and hereby approves the foregoing Stock Purchase Agreement.  In consideration of the Corporation’s granting Optionee the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement, including (without limitation) the right of the Corporation (or its assigns) to purchase any Purchased Shares in which Optionee is not vested at time of his or her cessation of Service.

 

	  	  
	  	
OPTIONEE’S SPOUSE

	  	  
	
Address:

	  
	  	  

  

38

  

EXHIBIT I

 

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED  ____________ hereby sell(s), assign(s) and transfer(s) unto Camelot Entertainment Group, Inc. (the “Corporation”), _______________ (_________) shares of the Common Stock of the Corporation standing in his or her name on the books of the Corporation represented by Certificate No. ________________  herewith and do(es) hereby irrevocably constitute and appoint _____________________  Attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

 

Dated: ____________________

 

 

Signature  __________________________  

 

 

Instruction:  Please do not fill in any blanks other than the signature line.  Please sign exactly as you would like your name to appear on the issued stock certificate.  The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Optionee.

 

  

39

  

EXHIBIT II

 

 

FEDERAL INCOME TAX CONSEQUENCES AND

 

SECTION 83(b) TAX ELECTION

 

I.           Federal Income Tax Consequences and Section 83(b) Election For Exercise of Non-Statutory Option.  If the Purchased Shares are acquired pursuant to the exercise of a Non-Statutory Option, as specified in the Grant Notice, then under Code Section 83, the excess of the Fair Market Value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Exercise Price paid for those shares will be reportable as ordinary income on the lapse date.  For this purpose, the term “forfeiture restrictions” includes the right of the Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right.  However, Optionee may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions.  Such election must be filed with the Internal Revenue Service within 30 days after the date of the Agreement.  Even if the Fair Market Value of the Purchased Shares on the date of the Agreement equals the Exercise Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future.  The form for making this election is attached as part of this exhibit.  FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE 30-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS LAPSE.

 

II.           Federal Income Tax Consequences and Conditional Section 83(b) Election For Exercise of Incentive Option.  If the Purchased Shares are acquired pursuant to the exercise of an Incentive Option, as specified in the Grant Notice, then the following tax principles shall be applicable to the Purchased Shares:

 

(i)         For regular tax purposes, no taxable income will be recognized at the time the Option is exercised.

 

(ii)         The excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions applicable to the Purchased Shares lapse over (b) the Exercise Price paid for the Purchased Shares will be includible in Optionee’s taxable income for alternative minimum tax purposes.

 

(iii)         If Optionee makes a disqualifying disposition of the Purchased Shares, then Optionee will recognize ordinary income in the year of such disposition equal in amount to the excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions applicable to the Purchased Shares lapse over (b) the Exercise Price paid for the Purchased Shares.  Any additional gain recognized upon the disqualifying disposition will be either short-term or long-term capital gain depending upon the period for which the Purchased Shares are held prior to the disposition.

 

 

  

40

  

(iv)         For purposes of the foregoing, the term “forfeiture restrictions” will include the right of the Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right.  The term “disqualifying disposition” means any sale or other disposition1 of the Purchased Shares within two years after the Grant Date or within one year after the exercise date of the Option.

 

(v)         In the absence of final Treasury Regulations relating to Incentive Options, it is not certain whether Optionee may, in connection with the exercise of the Option for any Purchased Shares at the time subject to forfeiture restrictions, file a protective election under Code Section 83(b) which would limit Optionee’s ordinary income upon a disqualifying disposition to the excess of the Fair Market Value of the Purchased Shares on the date the Option is exercised over the Exercise Price paid for the Purchased Shares. Accordingly, such election if properly filed will only be allowed to the extent the final Treasury Regulations permit such a protective election.

 

(vi)         The Code Section 83(b) election will be effective in limiting the Optionee’s alternative minimum taxable income to the excess of the Fair Market Value of the Purchased Shares at the time the Option is exercised over the Exercise Price paid for those shares.

 

Page 2 of the attached form for making the election should be filed with any election made in connection with the exercise of an Incentive Option.

 

  

1  Generally, a disposition of shares purchased under an Incentive Option includes any transfer of legal title, including a transfer by sale, exchange or gift, but does not include a transfer to the Optionee’s spouse, a transfer into joint ownership with right of survivorship if Optionee remains one of the joint owners, a pledge, a transfer by bequest or inheritance or certain tax ­free exchanges permitted under the Code.

 

  

41

  

SECTION 83(b) ELECTION

 

This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

 

	
(1)

	
The taxpayer who performed the services is:

 

	
  

	
Name:

 

	
  

	
Address:

 

	
  

	
Taxpayer Ident. No.:

 

	
(2)

	
The property with respect to which the election is being made is _____________ shares of the common stock of Camelot Entertainment Group, Inc.

 

	
(3)

	
The property was issued on ______________, _____.

 

	
(4)

	
The taxable year in which the election is being made is the calendar year _____.

 

	
(5)

	
The property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer’s service with the issuer terminates.  The issuer’s repurchase right will lapse in a series of annual and monthly installments over a four year period ending on ___________, 200__.

 

	
(6)

	
The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $__________per share.

 

	
(7)

	
The amount paid for such property is $___________ per share.

 

	
(8)

	
A copy of this statement was furnished to Camelot Entertainment Group, Inc. for whom taxpayer rendered the services underlying the transfer of property.

 

	
(9)

	
This statement is executed on _________________, ______.

 

	  	 	  
	
Spouse (if any)

	 	
Taxpayer

This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within 30 days after the execution date of the Stock Purchase Agreement.  This filing should be made by registered or certified mail, return receipt requested.  Optionee must retain two copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records.

 

  

42

  

The property described in the above Section 83(b) election is comprised of shares of common stock acquired pursuant to the exercise of an incentive stock option under Section 422 of the Internal Revenue Code (the “Code”).  Accordingly, it is the intent of the Taxpayer to utilize this election to achieve the following tax results:

 

1.           One purpose of this election is to have the alternative minimum taxable income attributable to the purchased shares measured by the amount by which the fair market value of such shares at the time of their transfer to the Taxpayer exceeds the purchase price paid for the shares.  In the absence of this election, such alternative minimum taxable income would be measured by the spread between the fair market value of the purchased shares and the purchase price which exists on the various lapse dates in effect for the forfeiture restrictions applicable to such shares.

 

2.           Section 421(a)(1) of the Code expressly excludes from income any excess of the fair market value of the purchased shares over the amount paid for such shares.  Accordingly, this election is also intended to be effective in the event there is a “disqualifying disposition” of the shares, within the meaning of Section 421(b) of the Code, which would otherwise render the provisions of Section 83(a) of the Code applicable at that time.  Consequently, the Taxpayer hereby elects to have the amount of disqualifying disposition income measured by the excess of the fair market value of the purchased shares on the date of transfer to the Taxpayer over the amount paid for such shares.  Since Section 421(a) presently applies to the shares which are the subject of this Section 83(b) election, no taxable income is actually recognized for regular tax purposes at this time, and no income taxes are payable, by the Taxpayer as a result of this election. The foregoing election is to be effective to the full extent permitted under the Code.

 

 

THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS.

  

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APPENDIX

 

The following definitions shall be in effect under the Agreement:

 

A.           Agreement shall mean this Stock Purchase Agreement.

 

B.           Board shall mean the Corporation’s Board of Directors.

 

C.           Code shall mean the Internal Revenue Code of 1986, as amended.

 

D.           Common Stock shall mean the Corporation’s common stock.

 

E.           Corporate Transaction shall mean either of the following stockholder-approved transactions:

 

(i)           a merger or consolidation in which securities possessing more than 50% of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction; or

 

(ii)           the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

 

F.           Corporation shall mean Camelot Entertainment Group, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Camelot Entertainment Group, Inc. which shall by appropriate action adopt the Plan.

 

G.           Disposition Notice shall have the meaning assigned to such term in Paragraph E.2.

 

H.           Exercise Price shall have the meaning assigned to such term in Paragraph A.1.

 

I.           Fair Market Value of a share of Common Stock on any relevant date, prior to the initial public offering of the Common Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate.

 

J.           Grant Date shall have the meaning assigned to such term in Paragraph A.1.

 

K.           Grant Notice shall mean the Notice of Grant of Stock Option pursuant to which Optionee has been informed of the basic terms of the Option.

 

L.           Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

 

M.           Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.3.

 

 

  

44

  

 

N.           1933 Act shall mean the Securities Act of 1933, as amended.

 

O.           1934 Act shall mean the Securities Exchange Act of 1934, as amended.

 

P.           Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

 

Q.           Option shall have the meaning assigned to such term in Paragraph A.1.

 

R.           Option Agreement shall mean all agreements and other documents evidencing the Option.

 

S.           Optionee shall mean the person to whom the Option is granted under the Plan.

 

T.           Owner shall mean Optionee and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Optionee.

 

U.           Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

V.           Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Optionee obtains the Corporation’s prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Optionee’s will or the laws of inheritance following Optionee’s death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Optionee in connection with the acquisition of the Purchased Shares.

 

W.           Plan shall mean the Corporation’s 2010 Stock Option/Stock Issuance Plan.

 

X.           Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

 

Y.           Prior Purchase Agreement shall have the meaning assigned to such term in Paragraph D.4.

 

Z.           Purchased Shares shall have the meaning assigned to such term in Paragraph A.1.

 

AA.           Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation’s outstanding Common Stock as a class without the Corporation’s receipt of consideration.

 

 

  

45

  

 

BB.           Reorganization shall mean any of the following transactions:

 

(i)           a merger or consolidation in which the Corporation is not the surviving entity;

 

(ii)           a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

 

(iii)           a reverse merger in which the Corporation is the surviving entity but in which the Corporation’s outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger; or

 

(iv)           any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure.

 

CC.           Repurchase Right shall mean the right granted to the Corporation in accordance with Article D.

 

DD.           SEC shall mean the Securities and Exchange Commission.

 

EE.           Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of the board of directors or an independent consultant.

 

FF.           Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

GG.           Target Shares shall have the meaning assigned to such term in Paragraph E.2.

 

HH.           Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service.

 

II.           Unvested Shares shall have the meaning assigned to such term in Paragraph D.1.

 

  

46

  

 

EXHIBIT C

 

ADDENDUM

TO

STOCK PURCHASE AGREEMENT

The following provisions are hereby incorporated into, and are hereby made a part of, that certain Stock Purchase Agreement (the “Purchase Agreement”) by and between Camelot Entertainment Group, Inc. (the “Corporation”) and _____________________________ (“Optionee”) evidencing the shares of Common Stock purchased on this date by Optionee under the Corporation’s 2010 Stock Option/Stock Issuance Plan, and such provisions shall be effective immediately.  All capitalized terms in this Addendum, to the extent not otherwise defined herein, shall have the meanings assigned to such terms in the Purchase Agreement.

 

INVOLUNTARY TERMINATION FOLLOWING

 

CORPORATE TRANSACTION

 

1.           To the extent the Repurchase Right is assigned to the successor corporation (or parent thereof) in connection with a Corporate Transaction, no accelerated vesting of the Purchased Shares shall occur upon such Corporate Transaction, and the Repurchase Right shall continue to remain in full force and effect in accordance with the provisions of the Purchase Agreement.  Optionee shall, over his or her period of Service following the Corporate Transaction, continue to vest in the Purchased Shares in one or more installments in accordance with the provisions of the Purchase Agreement.  However, upon an Involuntary Termination of Optionee’s Service within 18 months following the Corporate Transaction, the Repurchase Right shall terminate automatically, and all the Purchased Shares shall immediately vest in full at that time.  Any unvested escrow account maintained on Optionee’s behalf pursuant to Paragraph D.6 of the Purchase Agreement shall also vest at the time of such Involuntary Termination and shall be paid to Optionee promptly thereafter.

 

2.           For purposes of this Addendum, the following definitions shall be in effect:

 

An Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

 

(i)                      Optionee’s involuntary dismissal or discharge by the Corporation for reasons other than for Misconduct, or

 

(ii)                      Optionee’s voluntary resignation following (A) a change in his or her position with the Corporation (or Parent or Subsidiary employing Optionee) which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in Optionee’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based incentive programs) by more than 15% or (C) a relocation of Optionee’s place of employment by more than 50 miles, provided and only if such change, reduction or relocation is effected by the Corporation without Optionee’s consent.

 

  

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Misconduct shall mean the termination of Optionee’s Service by reason of Optionee’s commission of any act of fraud, embezzlement or dishonesty, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss the Optionee or any other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan or this Addendum, to constitute grounds for termination for Misconduct.

 

IN WITNESS WHEREOF, Camelot Entertainment Group, Inc. has caused this Addendum to be executed by its duly authorized officer as of the Effective Date specified below.

 

 

	
CAMELOT ENTERTAINMENT GROUP, INC.

 

 

 

	
BY:

	  
	
ITS:

	  

 

EFFECTIVE DATE:  _____________, ______

 

  

48

  

CAMELOT ENTERTAINMENT GROUP, INC.

 

STOCK ISSUANCE AGREEMENT

 

AGREEMENT made as of this ____ day of ______________________, _____ by and between Camelot Entertainment Group, Inc., a Delaware corporation, and _____________________, Participant in the Corporation’s 2010 Stock Option/Stock Issuance Plan.

 

All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix.

 

A.      PURCHASE OF SHARES

 

1.           Purchase.  Participant hereby purchases ___________________ shares of Common Stock (the “Purchased Shares”) pursuant to the provisions of the Stock Issuance Program at the purchase price of $_____________ per share (the “Purchase Price”); it being understood that the issuance of any stock under this Agreement shall be subject to the terms and conditions of the Shareholders Agreement between Participant and the Corporation.

 

2.           Payment.  Concurrently with the delivery of this Agreement to the Corporation,  Participant shall pay the Purchase Price for the Purchased Shares in cash or cash equivalent.

 

3.           Stockholder Rights.  Until such time as the Corporation exercises the First Refusal Right, Participant (or any successor in interest) shall have all stockholder rights (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C.

 

B.      SECURITIES LAW COMPLIANCE

 

1.           Restricted Securities.  The Purchased Shares have not been registered under the 1933 Act and are being issued to Participant in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan.  Participant hereby confirms that Participant has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available.  Accordingly, Participant hereby acknowledges that Participant is prepared to hold the Purchased Shares for an indefinite period and that Participant is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act.

 

2.           Disposition of Purchased Shares.  Participant shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements:

 

  

49

  

(i)           Participant shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition.

 

(ii)           Participant shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares.

 

(iii)           Participant shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.

 

The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement.

 

3.           Restrictive Legends.  The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends:

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933.  The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a “no action” letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer.”

 

“The shares represented by this certificate are subject to certain rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated __________, ______, between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares).  A copy of such agreement is maintained at the Corporation’s principal corporate offices.”

 

C.      TRANSFER RESTRICTIONS

 

1.           Restriction on Transfer.  Except for any Permitted Transfer, Participant shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares in contravention of the First Refusal Right or the Market Stand-Off.

 

2.           Transferee Obligations.  Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) the First Refusal Right and (ii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Participant.

 

  

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3.           Market Stand-Off.

 

(a)           In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation’s initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters.  Such restriction (the “Market Stand-Off”) shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters.  In no event, however, shall such period exceed 180 days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two years after the effective date of the Corporation’s initial public offering.

 

(b)           Owner shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions.

 

(c)           Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions.

 

(d)           In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period..

 

D.      SPECIAL TAX ELECTION

 

1.           Section 83(b) Election .  Under Code Section 83, the excess of the Fair Market Value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Purchase Price paid for those shares will be reportable as ordinary income on the lapse date.  Participant may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions.  Such election must be filed with the Internal Revenue Service within 30 days after the date of this Agreement.  Even if the Fair Market Value of the Purchased Shares on the date of this Agreement equals the Purchase Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future.

 

THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT I HERETO.  PARTICIPANT UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE 30 DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS LAPSE.

 

  

51

  

2.           FILING RESPONSIBILITY.  PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.

 

E.      GENERAL PROVISIONS

 

1.           Assignment.  The Corporation may assign the First Refusal Right to any person or entity selected by the Board, including (without limitation) one or more stockholders of the Corporation.

 

2.           At Will Employment.  Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant’s Service at any time for any reason, with or without cause.

 

3.           Notices.  Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement.

 

4.           No Waiver.  The failure of the Corporation in any instance to exercise the First Refusal Right shall not constitute a waiver of any other rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Participant.  No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

 

5.           Cancellation of Shares.  If the Corporation shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement).  Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement.

 

F.      MISCELLANEOUS PROVISIONS

 

1.           Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without resort to that State’s conflict-of-laws rules.

 

  

52

  

2.           Exclusive Jurisdiction and Venue.  The Parties agree that the Courts of the County of Orange, State of California shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein.

 

3.           Participant Undertaking.  Participant hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Participant or the Purchased Shares pursuant to the provisions of this Agreement.

 

4.           Agreement is Entire Contract.  This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof.  This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the  terms of the Plan.

 

5.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

6.           Successors and Assigns.  The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Participant, Participant’s assigns and the legal representatives, heirs and legatees of Participant’s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

 

	
CAMELOT ENTERTAINMENT GROUP, INC.

 

	
BY:

	  
	
ITS:

	  
	  	  
	
Address:

	  
	  	  
	  	  
	  	
PARTICIPANT

	  	  
	
Address:

	  
	  	  

  

53

  

SPOUSAL ACKNOWLEDGMENT

 

The undersigned spouse of Participant has read and hereby approves the foregoing Stock Issuance Agreement.  In consideration of the Corporation’s granting Participant the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement,.

 

	  	  
	  	
PARTICIPANT’S SPOUSE

	  	  
	
Address:

	  
	  	  

  

54

  

EXHIBIT I

 

SECTION 83(b) TAX ELECTION

 

This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

 

	
(1)

	
The taxpayer who performed the services is:

 

Name:

Address:

Taxpayer Ident. No.:

 

	
(2)

	
The property with respect to which the election is being made is ______________ shares of the common stock of Camelot Entertainment Croup, Inc.

 

 

	
(3)

	
The property was issued on __________________, _____.

 

 

	
(4)

	
The taxable year in which the election is being made is the calendar year _____.

 

 

	
(5)

	
The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $_____ per share.

 

 

	
(6)

	
The amount paid for such property is $ _______ per share.

 

 

	
(7)

	
A copy of this statement was furnished to Camelot Entertainment Croup, Inc. for whom taxpayer rendered the services underlying the transfer of property.

 

 

	
(8)

	
This statement is executed on _______________, _____.

 

	  	 	  
	
Spouse (if any)

	 	
Taxpayer

This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within 30 days after the execution date of the Stock Issuance Agreement.  This filing should be made by registered or certified mail, return receipt requested.  Participant must retain two copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records.

 

  

55

  

EXHIBIT II

 

2010 STOCK OPTION/STOCK ISSUANCE PLAN

ADDENDUM

 

TO

 

STOCK ISSUANCE AGREEMENT

 

The following provisions are hereby incorporated into, and are hereby made a part of, that certain Stock Issuance Agreement (the “Issuance Agreement”) by and between Camelot Entertainment Group, Inc. (the “Corporation”) and _________________ (“Participant”) evidencing the shares of Common Stock purchased on this date by Participant under the Corporation’s 2010 Stock Option/Stock Issuance Plan, and such provisions shall be effective immediately.  All capitalized terms in this Addendum, to the extent not otherwise defined herein, shall have the meanings assigned to such terms in the Issuance Agreement.

 

INVOLUNTARY TERMINATION FOLLOWING

 

CORPORATE TRANSACTION

 

1.           To the extent the Repurchase Right is assigned to the successor corporation (or parent thereof) in connection with a Corporate Transaction, no accelerated vesting of the Purchased Shares shall occur upon such Corporate Transaction, and the Repurchase Right shall continue to remain in full force and effect in accordance with the provisions of the Issuance Agreement.  Participant shall, over his or her period of Service following the Corporate Transaction, continue to vest in the Purchased Shares in one or more installments in accordance with the provisions of the Issuance Agreement.  However, upon an Involuntary Termination of Participant’s Service within 18 months following the Corporate Transaction, the Repurchase Right shall terminate automatically, and all the Purchased Shares shall immediately vest in full at that time.  Any unvested escrow account maintained on Participant’s behalf pursuant to Paragraph D.5 of the Issuance Agreement shall also vest at the time of such Involuntary Termination and shall be paid to Participant promptly thereafter.

 

2.           For purposes of this Addendum, the following definitions shall be in effect:

 

An Involuntary Termination shall mean the termination of Participant’s Service by reason of:

 

(a)           Participant’s involuntary dismissal or discharge by the Corporation for reasons other than for Misconduct; or

 

(b)           Participant’s voluntary resignation following (A) a change in his or her position with the Corporation (or Parent or Subsidiary employing Participant) which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in Participant’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based incentive programs) by more than 15% or (C) a relocation of Participant’s place of employment by more than 50 miles, provided and only if such change, reduction or relocation is effected by the Corporation without Participant’s consent.

 

  

56

  

Misconduct shall include the termination of Participant’s Service  by reason or Participant’s commission of any act of fraud, embezzlement or dishonesty, any unauthorized use or disclosure by Participant of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Participant adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss the Participant or any other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan or this Addendum, to constitute grounds for termination for Misconduct.

 

IN WITNESS WHEREOF, Camelot Entertainment Group, Inc. has caused this Addendum to be executed by its duly authorized officer as of the Effective Date specified below.

 

 

	
CAMELOT ENTERTAINMENT GROUP, INC.

 

 

	
BY:

	  
	
ITS:

	  

EFFECTIVE DATE:                        , ________

  

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APPENDIX

 

The following definitions shall be in effect under the Agreement:

 

A.           Agreement shall mean this Stock Issuance Agreement.

 

B.           Board shall mean the Corporation’s Board of Directors.

 

C.           Code shall mean the Internal Revenue Code of 1986, as amended.

 

D.           Common Stock shall mean the Corporation’s common stock.

 

E.           Corporation shall mean Camelot Entertainment Croup, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Camelot Entertainment Croup, Inc. which shall by appropriate action adopt the Plan.

 

F.           Fair Market Value of a share of Common Stock on any relevant date, prior to the initial public offering of the Common Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate.

 

G.           Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.4.

 

H.           1933 Act shall mean the Securities Act of 1933, as amended.

 

I.           Owner shall mean Participant and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Participant.

 

J.           Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

K.           Participant shall mean the person to whom shares are issued under the Stock Issuance Program.

 

L.           Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Participant obtains the Corporation’s prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Participant’s will or the laws of inheritance following Participant’s death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Participant in connection with the acquisition of the Purchased Shares.

 

M.           Plan shall mean the Corporation’s 2010 Stock Option/Stock Issuance Plan attached hereto as Exhibit II.

 

 

  

58

  

 

N.           Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

 

O.           Purchase Price shall have the meaning assigned to such term in Paragraph A.1.

 

P.           Purchased Shares shall have the meaning assigned to such term in Paragraph A.1.

 

Q.           Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation’s outstanding Common Stock as a class without the Corporation’s receipt of consideration.

 

R.           Reorganization shall mean any of the following transactions:

 

(i)           a merger or consolidation in which the Corporation is not the surviving entity;

 

(ii)           a sale, transfer or other disposition of all or substantially all of the Corporation’s assets;

 

(iii)           a reverse merger in which the Corporation is the surviving entity but in which the Corporation’s outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger; or

 

(iv)           any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure.

 

S.           SEC shall mean the Securities and Exchange Commission.

 

T.           Service shall mean the Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of the board of directors or an independent consultant.

 

U.           Stock Issuance Program shall mean the Stock Issuance Program under the Plan.

 

V.            Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

59

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