Document:

exv10w1

 

Exhibit 10.1

GOLFSMITH INTERNATIONAL HOLDINGS, INC.

ANNUAL MANAGEMENT INCENTIVE PROGRAM

§ 1

PURPOSE

     The purpose of this Program is to give each Participant the opportunity to receive a bonus for
each Bonus Period payable in cash if, and to the extent, the Committee determines that the Company
Performance Goals and Participant Performance Goals set by the Committee for Golfsmith and for such
Participant for such Bonus Period have been met.

§ 2

DEFINITIONS

     2.1. Base Salary. The term “Base Salary” for purposes of this Program means for each
Participant for each Bonus Period his or her base salary for such period as determined under
Golfsmith’s standard payroll policies and practices.

     2.2. Bonus Period. The term “Bonus Period” for purposes of this Program means
Golfsmith’s fiscal year or the first one-half or the second one-half of any such fiscal year.

     2.3. Committee. The term “Committee” for purposes of this Program means the
Compensation Committee of the Board of Directors of Golfsmith.

     2.4. Company Performance Goal. The term “Company Performance Goal” for purposes of
any Bonus Period means Golfsmith’s goal for earnings and/or other financial targets as defined by
the Compensation Committee.

     2.5. Eligible Employee. The term “Eligible Employee” for purposes of any Bonus Period
means an employee of Golfsmith, its parent company, or one of its wholly owned subsidiaries who is
paid on the salaried payroll and who is expected to work at least 35 hours per week during such
Bonus Period.

     2.6. Golfsmith. The term “Golfsmith” for purposes of this Program means Golfsmith
International, Inc. and any successor to Golfsmith International, Inc.

     2.7. Participant. The term “Participant” for purposes of this Program means for each
Bonus Period an Eligible Employee who is designated as a Participant by the Committee under § 3.

     2.8. Participant Performance Goal. The term “Participant Performance Goal” for
purposes of this Program means one, or more than one, personal performance goal, department
specific performance goal or facility specific goal or other goal as the Committee deems
appropriate, all as set under § 4 by the Committee for each Participant for each Bonus Period.

     2.9. Potential Bonus. The term “Potential Bonus” for purposes of this Program means a
Participant’s maximum possible bonus, if any, for a Bonus Period as determined under § 4.

     2.10. Program. The term “Program” means this Golfsmith Annual Management Incentive
Program as in effect from time to time.

     2.11. Target Bonus. The term “Target Bonus” for purposes of this Program means for
each Participant for each Bonus Period his or her target bonus for such Bonus Period, which target
shall be set by the Committee and shall be expressed as a percentage of a Participant’s Base Salary
for such Bonus Period.

 

 

§ 3

PARTICIPATION

     The Committee for each Bonus Period shall designate each Eligible Employee who will be a
Participant for such Bonus Period. An Eligible Employee’s status as a Participant for any Bonus
Period automatically shall terminate if (1) he or she fails to be employed as an Eligible Employee
for at least 90 consecutive days in such period, (2) he or she receives a termination warning,
orally or in writing, pursuant to Golfsmith’s personnel policies and practices, at any time in the
3 month period which ends on the date of the payment of any bonus for such Bonus Period or (3) his
or her employment terminates for any reason before bonuses are paid for such period.

§ 4

PERFORMANCE GOALS AND TARGET BONUS

     The Committee shall set a Company Performance Goal for Golfsmith for each Bonus Period and a
Participant Performance Goal and Target Bonus for each Participant for each Bonus Period no later
than 90 days after the beginning of such Bonus Period. The Committee shall have the right in its
absolute discretion to set a different Participant Performance Goal and a different Target Bonus
for each Participant. The Committee shall have the right in its absolute discretion thereafter to
adjust (1) the Company Performance Goal for any Bonus Period as the Committee deems necessary or
appropriate to fairly reflect any acquisitions, dispositions or other extra-ordinary events which
were not taken into account in establishing the original Company Performance Goal and (2) any
Participant Performance Goal or Target Bonus to fairly reflect any promotion or demotion or change
in Base Salary for the Participant. The Committee after the end of each Bonus Period shall
determine the extent to which the Company Performance Goal has been met and the extent to which
each Participant Performance Goal has been met and thus his or her Potential Bonus, if any, for
such Bonus Period.

§ 5

BONUS POOL

     The Committee shall establish a bonus pool for each Bonus Period either before, after or
during a Bonus Period based on such criteria as the Committee deems appropriate under the
circumstances. If the bonus pool for a Bonus Period equals or exceeds the sum of the Potential
Bonuses for each Participant for such Bonus Period, each Participant will be paid his or her
Potential Bonus. If the bonus pool for a Bonus Period is less than the sum of the Potential
Bonuses for each Participant for such Bonus Period, each Participant will be paid a portion of his
or her Potential Bonus, which portion shall be determined by multiplying such bonus pool by a
fraction, the numerator of which is the Participant’s Potential Bonus and the denominator of which
is the sum of the Potential Bonus for such Bonus Period for all Participants.

§ 6

AMENDMENT AND TERMINATION

     The Committee shall have the right in its sole and absolute discretion to amend the terms of
this Program in any respect from time to time or to terminate this Program at any time by a vote of
a majority of the members of the Committee.

§ 7

MISCELLANEOUS

     7.1 Withholding. Golfsmith shall have the right to take such action as it deems
necessary or appropriate to satisfy any federal and state income tax withholding requirements
applicable to any bonus payable under this Program.

 

 

     7.2. Governing Law. This Program shall be construed in accordance with the laws of
the State of Texas.

     7.3. General Creditor Status. The payments called for under this Program shall be
made from Golfsmith’s general assets and the status of each Participant with respect to his or her
claim for a payment under this Program shall be the same as the status of a general and unsecured
creditor of Golfsmith.

     7.4. No Assignment. No Participant shall have the right to assign or otherwise
alienate or commute all or any part of a bonus which might be payable to such Participant under
this Program, and any attempt to do so shall be null and void.

     7.5. No Contract of Employment. The designation of any Eligible Employee as a
Participant in this Program shall not constitute an agreement by Golfsmith to employ any such
individual for any period of time or affect Golfsmith’s right to terminate his or her employment at
any time and for any reason or for no reason.exv10w2

 

Exhibit 10.2

Form Individual Notice of Award

Name:

Title:

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Year	 	 	Spring	 	 	Fall	 	 	Annual	 
	 	(Percent of Award Available)	 	 	X% of Total	 	 	Y% of Total	 	 	Z% of Total	 
	 	Level 1 Corporate Goal
	 	 	 	 	 	 	 	 	 	 
	 	Level 2 Corporate Goal
	 	 	 	 	 	 	 	 	 	 
	 	Level 3 Corporate Goal
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Level 1	 	 	Level 2	 	 	Level 3	 
	 	Annual Comp

	 	 	Insert Employee Compensation Here	 
	 	Potential Award %
 of Annual

Compensationexv4w4

 

EXHIBIT 4.4

Scrittura, Inc.

2005 Stock Option Plan

     1. Purpose. Scrittura, Inc., a Delaware corporation (the “Corporation”), desires to
retain, and to encourage the highest level of performance from its most valuable employees. The
Scrittura 2005 Stock Option Plan (the “Plan”) is intended to contribute significantly to the
attainment of these objectives, by affording its most valuable employees of the Corporation and its
wholly-owned subsidiaries (each, an “Affiliate”) the opportunity to acquire a greater proprietary
interest in the Corporation through the grant of stock options (“Options”) to purchase shares of
Series D Preferred Stock, US$0.001 par value per share, of the Corporation (the “Series D Preferred
Stock”).

     2. Administration. The Plan shall be administered by, and in the sole discretion of,
the Corporation’s board of directors, or its designee, including the compensation committee;
notwithstanding the foregoing, the Board (or, as applicable the compensation committee) may
designate a committee to administer the Plan (the “Compensation Committee”). The Compensation
Committee shall have plenary authority in its discretion to the maximum extent permissible by law,
subject to and not inconsistent with the express provisions of the Plan (i) to make all awards of
Options under the Plan, (ii) to select from among the individuals (each, a “Person”) eligible for
grants under the Plan, those Persons who will be awarded Options (each an “Optionee”), (iii) to
determine the number of shares of Series D Preferred Stock covered by each Option, the exercise
price per share of Series D Preferred Stock covered by each Option (and, if necessary in connection
therewith, to determine the Series D Preferred Stock’s Fair Market Value (as defined in Section 20
hereof)) for purposes of the Plan, the terms and conditions of each Option, and the restrictions,
if any, which shall apply to the shares of Series D Preferred Stock subject to an Option, (iv) to
approve the form of each agreement awarding Options and setting the terms of their vesting and
exercise (an “Option Agreement”), (v) accelerate the time at which any outstanding Option may be
exercised, (vi) to define the effect, if any, on an Option, of the death, disability, retirement or
termination of employment or services of an Optionee, (vii) to amend any such Option Agreement from
time to time, (viii) to administer, construe and interpret the Plan and all Option Agreements
executed thereunder, and (ix) to make all other determinations necessary or advisable for the
administration of the Plan. Any interpretation or determination made by the pursuant to the
foregoing shall be conclusive and binding upon any Person having or claiming any interest under the
Plan.

     3. Liability of Compensation Committee. Neither the Compensation Committee nor any
member thereof shall be liable for any action or omission whatsoever in connection with the
administration of the Plan, other than for gross negligence or willful misconduct. In the
performance of its functions with respect to the Plan, the Compensation Committee shall be entitled
to rely upon information and advice furnished by the Corporation’s officers, accountants, legal
counsel and any other party the Compensation Committee deems necessary or advisable, and neither
the Compensation Committee nor any member thereof shall be liable for any action taken or not
taken in reliance upon any such advice.

 

 

     With respect to administration of the Plan, the Corporation shall indemnify each present and
future member of the Compensation Committee against, and each member of the Compensation Committee
shall be entitled without further act on his part (except as otherwise expressly provided herein)
to indemnity from the Corporation against, all expenses (including attorney’s fees, the amount of
judgments and the amount of approved settlements with a view to the curtailment of costs of
litigation, other than amounts paid to the Corporation itself) reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may be involved by
reason of his being or having been a member of the Compensation Committee, whether or not he
continues to be a member of the Compensation Committee at the time of incurring the expenses –
including, without limitation, matters as to which he shall be finally adjudged in any action, suit
or proceeding to have been negligent in the performance of his duty as a member of the Compensation
Committee. However, this indemnity shall not include any expenses incurred by any member of the
Compensation Committee in respect of matters other than with respect to administration of the Plan
or as to which he shall be finally adjudged in any action, suit or proceeding to have been guilty
of gross negligence or willful misconduct in the performance of his duty as a member of the
Compensation Committee. In addition, no right of indemnification under the Plan shall be available
or enforceable by any member of the Compensation Committee unless, within sixty (60) days after
institution of any action, suit or proceeding, he shall have offered the Corporation, in writing,
the opportunity to handle and defend the same at its own expense. This right of indemnification
shall inure to the benefit of the heirs, executors or administrators of each member of the
Compensation Committee and shall be in addition to all other rights to which a member of the
Compensation Committee may be entitled as a matter of law, contract or otherwise.

     4. Type of Options. Options granted under the Plan shall be nonqualified stock
options, which are not intended to meet the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).

     5. Eligible Persons. Options may be awarded only to employees of the Corporation. In
determining the Persons to whom awards shall be made and the number of shares to be covered by each
Option, the Compensation Committee shall take into account the duties of the respective Persons,
their present and potential contributions to the success of the Corporation and such other factors
as the Compensation Committee, in its discretion, shall deem relevant in connection with
accomplishing the purposes of the Plan.

     6. Shares of Stock Subject to the Plan; Registration. Options for no more than
800,000 shares of Series D Preferred Stock, in the aggregate, shall be issued pursuant to the Plan.

     7. Option Terms. (a) The terms of each Option shall be fixed by the Compensation
Committee and specified in the applicable Option Agreement. Option Agreements may vary from one
another. Each Option Agreement shall specify (i) the number of shares of Series D Preferred Stock
to be covered by the Option, (ii) the exercise price per share of Series D Preferred Stock covered
by the Option, (iii) the conditions and limitations applicable to the exercise of the Option,
including any applicable vesting schedule, (iv) the restrictions, if

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any, applicable to the shares of Series D Preferred Stock issuable thereunder, and (v) that
the Option is subject to the terms and provisions of the Plan and that, in the event of any
conflict between the Option Agreement and the Plan, the Plan shall control. An Option Agreement
may also contain such other terms and conditions as the Compensation Committee determines to be
necessary or advisable; provided, however, that (A) in no event shall an Option be
exercisable more than ten years from the relevant date of grant, (B) in no event shall an Option be
exercisable on or after an event which results in mandatory Option termination as provided in the
Plan or the relevant Option Agreement, and (C) it shall be a condition to exercise of any Option
that the relevant Optionee (if not already a party thereto) agrees in writing to be bound (upon
terms satisfactory to the Corporation in its sole discretion) by the terms of any stockholders
agreement between the Corporation and any of its stockholders, as the same may be amended from time
to time (which may provide, among other things, for restrictions on transfer and voting of
securities held by the relevant Optionee) which may be required by the Corporation. Subject to
clauses (A) and (B) above, the Compensation Committee may extend the option period of an Option or
change the terms upon which such Option is terminated.

     (b) Notwithstanding anything to the contrary in the Plan and except as otherwise provided in
the terms of the relevant Option Agreement or as approved on a case by case basis by the
Compensation Committee, (A) any portion of an Option granted to an Optionee which has vested shall
be exercised by the last day of the calendar year in which such vesting occurred, unless additional
time is permitted by the Compensation Committee consistent with Section 409A of the Code; if not so
exercised, any vested but unexercised portion of an Option shall immediately and automatically,
without requirement of notice or other action, terminate, and (B) any portion of an Option granted
to an Optionee which has not vested as of the termination of such Optionee’s employment, shall
immediately and automatically, without requirement of notice or other action, terminate and any
vested portion of an Option granted to an Optionee shall terminate, to the extent not previously
exercised, upon the earliest to occur of the following events (provided, that in no event shall an
Option remain exercisable beyond the last day of the year in which it vests, unless additional time
is permitted by the Compensation Committee consistent with Section 409A of the Code): (i) three
(3) months following the termination of such Optionee’s employment by the Corporation or an
Affiliate for any reason other than for Cause or by the Optionee for any reason , (ii) twelve (12
months following the death or Disability (as defined below), of such Optionee (or twelve (12)
months following the death or Disability of such Optionee which occurs within three (3) months
after the termination of the Service Relationship other than for Cause or because of Disability),
(iii) immediately upon termination of such Optionee’s employment by the Corporation or an Affiliate
for Cause, or (iv) immediately upon the breach by the Optionee of the terms of any agreement with,
or for the benefit of the Corporation or an Affiliate relating to (a) the confidentiality of
confidential or proprietary information of the Corporation or an Affiliate, (b) any covenant or
agreement not to compete with the Corporation or an Affiliate, (c) any covenant or agreement not to
solicit, contract with or hire the Corporation’s or an Affiliate’s, directors, officers, employees,
consultants, suppliers, vendors and/or customers, (d) the non-disparagement of the Corporation or
an Affiliate or (e) the ownership and/or assignment of intellectual property and proprietary
information, or (v) the appropriate date provided in Section 7(b)(A). The term “Disability” shall
mean a disability whether temporary or permanent, partial or total, as determined by the
Compensation Committee. The term “Cause” shall mean the commission of an act of theft,

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embezzlement, fraud or dishonesty involving the Corporation or an Affiliate or a breach of a
fiduciary duty to the Corporation or an Affiliate.

     The determination of the Compensation Committee with respect to the basis for a termination
shall be binding and conclusive on the relevant Optionee.

     8. Exercise of Options.

     (a) An Option shall be exercised as to all full shares of Series D Preferred Stock as to which
the Option is then exercisable; provided, however, that if so specified in the
Option Agreement, the Option may not, in a single exercise, be exercised for fewer than the minimum
number of shares of Series D Preferred Stock specified in the Option Agreement, unless the exercise
is for all of the shares of Series D Preferred Stock as to which the Option is then exercisable.
An Option may not be exercised with respect to a fractional share. If an Option is exercised with
respect to all of the whole shares as to which the Option is then exercisable, and the Option
remains exercisable with respect to less than one full share of Series D Preferred Stock, the
Corporation shall pay the Optionee the excess of (i) the Fair Market Value (as defined in Section
20 below) of such remaining fractional share, over (ii) the proportional exercise price of the
Option for such remaining fractional share, and the Option shall terminate with respect to such
fractional share upon remittance of such payment. An Optionee (or other Person who or which may
exercise the Option pursuant to the terms of the Plan and/or the relevant Option Agreement) shall
exercise the Option by delivering to the Corporation, at the address provided in the relevant
Option Agreement, a written, signed notice of exercise, stating the number of shares of Series D
Preferred Stock with respect to which the Option exercise is being made, and by satisfying the
requirements of Section 7(a)(C) and paragraphs (c) and (d) of this Section 8, as well as any
further conditions to exercise set forth in the relevant Option Agreement. Except with the consent
of the Compensation Committee, the exercise of an Option by tendering a notice of exercise as
provided herein shall be irrevocable. Notwithstanding anything to the contrary in the Option
Agreement or this Plan, in the event an applicable vesting date falls on the last day of a year
(i.e., December 31st), the Optionee may, as permitted by the Compensation Committee,
provide notice to the Company of the Optionee’s desire to conditionally exercise the Option on such
last day of the year.

     (b) Except as otherwise provided in an Option Agreement and except as otherwise determined by
the Compensation Committee at the time of the grant thereof, granted Options shall vest on the
following schedule:

          (i) On the date which is six (6) months following the Grant Date, twenty-five percent (25%) of
the total number of Options granted shall vest and become immediately exercisable;

          (ii) On the last day of each of the next eighteen (18) consecutive calendar months beginning
on the last day of the month which is seven (7) months following the Grant Date and ending on the
second anniversary of the Grant Date, an equal portion of the remaining seventy-five percent (75%)
of the Options shall vest and become immediately exercisable.

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     (c) Upon exercise of an Option, the Optionee (or other Person who or which may exercise the
Option pursuant to the terms of the Plan and/or the relevant Option Agreement) shall pay to the
Corporation the Option exercise price per share of Series D Preferred Stock multiplied by the
number of shares of Series D Preferred Stock as to which the Option is then being exercised. An
Optionee (or other Person who or which may exercise the Option pursuant to the terms of the Plan
and/or the relevant Option Agreement) may pay the Option exercise price by tendering or causing to
be tendered to the Corporation cash (by wire transfer or certified or official bank check), through
a broker-assisted exercise if available, or other property or transaction acceptable to the
Compensation Committee, or any combination thereof, except as otherwise provided in the relevant
Option Agreement. Other property tendered as payment for the exercise of an Option shall be valued
by the Corporation at its fair market value as of the date upon which such property is tendered (as
determined in good faith by the Compensation Committee).

     (d) An Optionee (or other Person who or which may exercise the Option pursuant to the terms of
the Plan and/or the relevant Option Agreement) shall, upon notification of the amount due and prior
to or concurrently with delivery of the certificate representing the shares of Series D Preferred
Stock as to which the Option has been exercised, promptly pay or cause to be paid the amount
determined by the Compensation Committee as necessary to satisfy all applicable tax withholding
requirements. The Corporation shall be entitled to deduct from other compensation or amounts
payable to any Person any sums required by federal, state, or local tax law to be withheld with
respect to the grant or exercise of an Option. The Corporation may require any Person exercising
an Option to pay the sum directly to the Corporation. The Corporation shall have no obligation
upon exercise of any Option until payment has been received and unless withholding (or offset
against a cash payment) as of or prior to the date of exercise is sufficient to cover all sums due
with respect to that exercise. Notwithstanding the foregoing, the Corporation shall not be
obligated to advise any Person of the existence of the tax or the amount which the Corporation will
be required to withhold.

     (e) The certificate representing the shares of Series D Preferred Stock as to which an Option
has been exercised shall bear an appropriate legend setting forth the restrictions, if any,
applicable to such shares of Series D Preferred Stock.

     9. No Stockholder Rights. No Optionee shall have the rights of a stockholder with
respect to shares of Series D Preferred Stock covered by an Option until such Person becomes the
holder of record of such shares of Series D Preferred Stock.

     10. Nontransferability.

     (a) Except as provided in paragraph (b) below, Options granted under the Plan shall not be
assignable or transferable other than by will or the laws of descent and distribution, and Options
may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee’s
guardian or legal representative.

     (b) Notwithstanding paragraph (a), to the extent otherwise provided in the

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relevant Option Agreement or approved by the Compensation Committee, an Optionee shall be
permitted to transfer an Option (or any portion thereof) to a member of such Optionee’s immediate
family, to the spouse of any such family member or to a trust, family limited partnership or
similar estate planning entity for the benefit of one or more of such family members (any such
Person, a “Family Member”). If an Option (or any portion thereof) is transferred in accordance
with this paragraph, the Option shall be exercisable by the transferee only (to the extent
transferred), but the determination of the exercisability of the Option shall be based solely on
the activities and state of affairs of the Optionee. Thus, for example, if under the terms of the
Option, the unvested portion of the Option is forfeited if the Optionee terminates employment and
after a transfer of the Option pursuant to this paragraph (b), the Optionee ceases to be an
employee of the Corporation, such termination shall result in the forfeiture of the unvested
portion of the Option. Conversely, if after a transfer of the Option, the transferee ceases to be
an employee of the Corporation, such termination shall not result in the forfeiture of the unvested
portion of the Option.

     11. Compliance with Law; Registration of Shares of Series D Preferred Stock.

     (a) The Plan and any grant hereunder shall be subject to all applicable laws, rules, and
regulations of any applicable jurisdiction or authority or agency thereof (including, without
limitation, all federal and state securities laws) and to such approvals by any regulatory or
governmental agency which, in the opinion of the Board, may be necessary or advisable. The
Corporation shall not be required to sell or issue any Series D Preferred Stock under any Option if
issuing that Series D Preferred Stock would constitute or result in a violation by the Optionee or
the Corporation of any provision of any law, statute, or regulation of any governmental authority.

     (b) Notwithstanding any other provision of this Plan or of any Option Agreements made pursuant
hereto, the Corporation shall not be required to issue or deliver any certificate or certificates
for shares of Series D Preferred Stock under this Plan prior to fulfillment of all of the following
conditions:

          (i) Effectiveness of any registration or other qualification of such shares of Series D
Preferred Stock of the Corporation under any law or regulation of any applicable jurisdiction or
authority or agency thereof which the Compensation Committee shall, in its absolute discretion or
upon the advice of counsel, deem necessary or advisable; provided, that, the Corporation
shall use its best efforts to achieve the effectiveness of any such registration or qualification
as promptly as possible; and

          (ii) Grant of any other consent, approval or permit from any applicable jurisdiction or
authority or agency thereof or securities exchange which the Compensation Committee shall, in its
absolute discretion or upon the advice of counsel, deem necessary or advisable. The Corporation
shall use its best efforts to obtain any consent, approval or permit described above as promptly as
possible.

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     12. No Restriction on the Right of Corporation to Effect Corporate Changes. None of
the Plan, any Option Agreement or the Options granted pursuant hereto or thereto shall affect or
limit in any way the right or power of the Corporation or its stockholders to make or authorize any
adjustments, recapitalization, reorganization or other changes in the Corporation’s capital
structure or its business, or any merger or consolidation of the Corporation, or any issue of stock
or of options, warrants or rights to purchase stock or bonds, debentures, preferred or prior
preference stocks the rights of which are superior to or affect the Series D Preferred Stock or the
rights of holders thereof, or which are convertible into or exchangeable for shares of Series D
Preferred Stock, or the dissolution or liquidation of the Corporation, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

     13. Certain Adjustments. Subject to the second proviso of Section 16:

     (a) An Option Agreement may provide, or the Compensation Committee may determine, that in the
event that the Corporation or any Affiliate for which an Optionee performs services, or with which
an Optionee maintains another relationship, is sold (whether by sale of capital stock or
substantially all of the assets), merged, consolidated, reorganized, liquidated, dissolved or
wound-up (i) the relevant Option shall be assumed, or a substantially equivalent Option shall be
substituted, by an acquiring or succeeding corporation (or an affiliate thereof) on such terms as
the Compensation Committee determines to be appropriate; (ii) upon written notice to the Optionee,
the relevant Option shall terminate immediately prior to the consummation of the transaction unless
exercised by the Optionee within a specified period following the date of the notice; (iii) in the
event of a sale or similar transaction under the terms of which holders of Series D Preferred Stock
receive a cash payment for each share of Series D Preferred Stock surrendered in the transaction
(the “Sales Price”), make or provide for a cash payment to the Optionee equal to the amount by
which (A) the product of the Sales Price multiplied by the number of shares of Series D Preferred
Stock subject to the vested but unexercised portion of the Option exceeds (B) the aggregate
exercise price for all such shares of Series D Preferred Stock; or may make such other adjustments,
if any, as it determines to be necessary or advisable to provide the Optionee with a benefit
substantially similar to that to which the Optionee would have been entitled had such event not
occurred (as determined in the sole discretion of the Compensation Committee); and/or (iv) that the
unvested portion of the relevant Option shall terminate.

     (b) In the event of any Series D Preferred Stock dividend or split, recapitalization,
reorganization, combination, exchange or similar change affecting the Series D Preferred Stock, or
any other increase or decrease in the number of issued shares of Series D Preferred Stock effected
without receipt of consideration by the Corporation, the Compensation Committee shall make, in its
sole discretion, any or all of the following adjustments as it deems appropriate to equitably
reflect such event: (i) adjust the aggregate number of shares of Series D Preferred Stock (or such
other security as is designated by the Compensation Committee) which are reserved or may be
acquired pursuant to the Plan, (ii) adjust the exercise price to be paid upon exercise of the then
outstanding Options, (iii) adjust the number of shares of Series D Preferred Stock (or such other
security as is designated by the Compensation Committee) subject to any or all of the then
outstanding Options, and (iv) make any other equitable adjustments or

7

 

take such other equitable action as the Compensation Committee, in its discretion, shall deem
necessary or advisable. For purposes hereof, the conversion or exchange of any convertible or
exchangeable securities of the Corporation, and the issuance of shares upon exercise of any option,
warrant or similar right, shall not be deemed to have been “effected without receipt of
consideration.”

     (c) Any and all adjustments or actions taken by the Compensation Committee pursuant to this
Section shall be conclusive and binding for all purposes and on all Persons.

     14. Foreign Nationals. Options may be granted to eligible individuals who are foreign
nationals or employed outside the United States on such terms and conditions different from those
specified in the Plan as the Compensation Committee considers necessary or advisable to achieve the
purposes of the Plan and comply with applicable foreign laws (including, receiving favorable tax
treatment under foreign law).

     15. No Right to Continued Employment. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee or other Optionee any right to continue in the employ or
service of, or other service relationship with, the Corporation or any Affiliate, or affect the
right of the Corporation or any Affiliate, to terminate such Person’s employment or other service
relationship with the Corporation or such Affiliate at any time.

     16. Amendment; Early Termination. The Compensation Committee may at any time and from
time to time, alter, amend, suspend or terminate the Plan in whole or in part; provided,
however, that no amendment requiring stockholder approval by law or by the rules of any
stock exchange, inter-dealer quotation system, or other market in which shares of Series D
Preferred Stock are traded, shall be effective unless and until such stockholder approval has been
obtained in compliance with such rule or law; provided, further, that no amendment
having a material adverse impact on the rights of an Optionee with respect to an Option previously
granted and then outstanding may be adopted without the Optionee’s written consent.

     17. Effective Date. The Plan shall be effective as of the date of its adoption by the
Compensation Committee (the “Effective Date”), subject to the approval thereof by the Corporation’s
stockholders entitled to vote thereon within 12 months of such date, provided such approval is
required. In the event that such stockholder approval is not obtained within such time period, the
Plan and any Options granted under the Plan on or prior to the expiration of such 12 month period
shall be void and of no further force and effect. Any Options granted under the Plan on or prior
to the date of such stockholder approval shall expressly provide that such Options are subject to
the approval of the Plan by the stockholders of the Corporation within 12 months of the Effective
Date.

     18. Termination of Plan. Unless terminated earlier in accordance with Sections 16 or
17 above, the Plan shall terminate on, and no further Options may be granted pursuant to the Plan,
following the tenth anniversary of the Effective Date, and the Plan shall terminate after all
Options granted under the Plan have expired, terminated, or been exercised.

8

 

     19. Severability. In the event that any one or more provisions of the Plan or an
Option Agreement, or any action taken pursuant to the Plan or an Option Agreement, should, for any
reason, be unenforceable or invalid in any respect under the laws of the United States, any state
of the United States or any other jurisdiction, such unenforceability or invalidity shall not
affect any other provision of the Plan or Option Agreement, but in such particular jurisdiction and
instance the Plan and/or Option Agreement, as applicable, shall be construed as if such
unenforceable or invalid provision had not been contained therein or if the action in question had
not been taken thereunder.

     20. Definition of “Fair Market Value”. The term “Fair Market Value” of a share of
Series D Preferred Stock on any given date shall be: (i) if the Series D Preferred Stock is listed
for trading on one or more national securities exchanges, the mean of the high and low sales prices
on the principal such exchange on the date in question, or, if the Series D Preferred Stock shall
not have been traded on such principal exchange on such date, the mean of the high and low sales
prices on such principal exchange on the first day prior thereto on which the Series D Preferred
Stock was so traded; (ii) if the Series D Preferred Stock is not listed for trading on a national
securities exchange but is traded on the over-the-counter market, the mean of the highest and
lowest bid prices for the Series D Preferred Stock on the date in question, or, if there are no
such bid prices for the Series D Preferred Stock on such date, the mean of the highest and lowest
bid prices on the first day prior thereto on which such prices appear; or (iii) such other amount
as may be determined by the Compensation Committee by any fair and reasonable means.

     21. Substitution Options. Options may be granted under this Plan from time to time in
substitution for stock options held by employees of other corporations who are about to become
employees of or affiliated with the Corporation as the result of a merger or consolidation of the
employing corporation with the Corporation, or the acquisition by the Corporation or of the assets
of the employing corporation, or the acquisition by the Corporation of stock of the employing
corporation as the result of which it becomes an Affiliate of the Corporation. The terms and
conditions of the substitute Options granted may vary from the terms and conditions set out in this
Plan to the extent the Plan Committee (subject to the approval of the Compensation Committee), at
the time of grant, may deem appropriate to conform, in whole or in part, to the provisions of the
stock options in substitution for which they are granted.

     22. Other Compensation Plans. The adoption of the Plan shall not affect any other
stock option, incentive or other compensation or benefit plans in effect for the Corporation, nor
shall the Plan preclude the Corporation from establishing any other forms of incentive or other
compensation for employees of the Corporation.

     23. Other Options or Awards. The grant of an Option shall not confer upon an employee
the right to receive any future or other Options under the Plan, whether or not Options may be
granted to similarly situated employees, or the right to receive future Options upon the same terms
or conditions as previously granted.

     24. Headings. The headings of sections and subsections herein are included solely for
convenience of reference and shall not affect the meaning of any of the provisions of

9

 

the Plan.

     25. Governing Law. This Plan and all rights hereunder shall be construed in
accordance with and governed by the laws of the State of Delaware.

* * *

10

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