Document:

Incentive Compensation Plan for Senior Management

Exhibit 10.3 
 
Vice Presidents and 
Executive Officers 
 
BORLAND SOFTWARE CORPORATION 
 
INCENTIVE COMPENSATION PLAN 
 
FOR SENIOR MANAGEMENT 
 

	 	I.	 	PURPOSE OF THE PLAN 

 
This Incentive Compensation Plan is intended to promote the interests of Borland Software Corporation, a Delaware corporation (the
“Corporation”), by providing eligible individuals in the Corporation’s employ with the opportunity to participate in a cash bonus program tied to the attainment of personal and corporate performance objectives which will provide them
with a meaningful incentive to remain in the Corporation’s employ and contribute to the Corporation’s financial success. 
 

	 	II.	 	DEFINITIONS 

 
Actual Bonus shall mean the bonus actually earned by the Participant for one or more Fiscal Quarters in the Year in question
and may in the aggregate be more than, less than or equal to his or her Target Bonus for that Year. 
 
Base Salary shall mean the annual rate of base salary in effect for the Participant at the start of each Year in which he or
she participates in the Plan. For an individual who first becomes a Participant after the start of the Year, his or her Base Salary shall be the annual rate of base salary in effect for him or her on the date of entry into the Plan. In the event a
Participant’s Base Salary is increased or decreased during the Year, such adjusted salary shall be reflected in the Fiscal Quarter following the Fiscal Quarter in which such adjustments took effect, for purposes of calculating the subsequent
bonus entitlements of such Participant under the Plan. Base Salary shall be calculated before deduction of (i) any income or employment tax withholdings, (ii) any contributions made by the Participant to any Code Section 401(k) salary deferral plan
or Code Section 125 cafeteria benefit plan now or hereafter established by the Corporation, (iii) any contributions made by the Participant to the Corporation’s Employee Stock Purchase Plan (“ESPP”), and (iv) any reduction to the
Participant’s rate of base salary as a result of any salary reduction election for the Year made by such Participant pursuant to the Salary Investment Option Grant Program in effect under the Corporation’s 2002 Stock Incentive Plan. The
following items of compensation shall not be included in Base Salary: (i) all overtime payments, bonuses, commissions, profit-sharing distributions and other incentive-type payments, including cash bonuses received under this Plan, (ii) the
matching contributions or deferred profit-sharing contributions made by the Corporation under any Code Section 401(a) or 401(k) plan now or hereafter established and (iii) any and all other contributions (other than Internal Revenue Code Section
401(k) or Section 125 contributions) made on the Participant’s behalf by the Corporation under any employee benefit or welfare plan now or hereafter established. 
 
Board shall mean the Corporation’s Board of Directors. 
 
Code shall mean the U.S. Internal Revenue Code
of 1986, as amended from time to time. 

 
Corporate Performance Component shall mean the portion of the Target Bonus which is contingent upon the Corporation’s attainment of the Corporate Performance Objectives for the Year. 
 
Corporate Performance Objectives shall mean the
financial or other performance milestones the Corporation must attain as a condition to the Participant’s entitlement to the Corporate Performance Component of his or her Target Bonus for the applicable period. Corporate Performance Objectives
may be tied to operating income, worldwide revenue, earnings per share, net profit, return on equity, return on sales, capital or assets, earnings before interest expense, taxes, depreciation and amortization and other milestones established by the
Plan Administrator. 
 
Disability
shall mean the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to continue for a period of twelve (12) consecutive months
or more. 
 
Earn-Out Date shall, for
the Quarterly Target Bonus, mean the last business day of each Fiscal Quarter in the Year in question and shall be the date on which the Participant’s entitlement (if any) to a payout of the Personal Performance Component of his or her Actual
Bonus for that Fiscal Quarter shall first accrue. “Earn-Out Date” shall, for the Corporate Performance Component of the Target Bonus, mean the last business day of the Year in question and shall be the date on which the Participant’s
entitlement (if any) to a payout of the Corporate Performance Component of his or her Actual Bonus for that Year shall first accrue. 
 
Employee Status shall mean the individual’s performance of services for the Corporation or any Participating Subsidiary
as a regular full-time or part-time employee. 
 
Executive Officer shall mean each executive officer of the Corporation who is subject to the reporting and short-swing liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended. For purposes
of this Plan, “Executive Officer” shall not include the Chief Executive Officer. 
 
Fiscal Quarter shall mean each of the fiscal quarters within the Year in question under the Plan. 
 
Participant shall mean any (i) Executive Officer
or (ii) Vice President of the Corporation who participates in the Plan in accordance with the eligibility provisions of Article IV. 
 
Participating Subsidiary shall mean any Subsidiary which has, with the written authorization of the Board, extended the
benefits of the Plan to its eligible Executives. The Participating Subsidiaries are listed in the attached Schedule I, which may be amended from time to time by the Plan Administrator. 
 
Personal Performance Component shall mean the
portion of the Target Bonus which is contingent upon the Participant’s attainment of the Personal Performance Objectives in effect for one or more Fiscal Quarters. 
 

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Personal
Performance Objectives shall mean the performance goals which the Participant must personally attain or the performance milestones which his or her business unit must attain as a condition to the Participant’s entitlement to the
Personal Performance Component of his or her Target Bonus for the applicable period. 
 
Plan shall mean this Borland Software Corporation Incentive Compensation Plan, as amended from time to time. 
 
Plan Administrator shall mean (i) the Compensation Committee of the Board in its capacity as
administrator of the Plan or (ii) any person or persons to whom the Compensation Committee delegates responsibility and authority to administer one or more aspects of the Plan. 
 
Quarterly Target Bonus shall mean the dollar amount that comprises the Personal Performance
Component of the Target Bonus for the Fiscal Quarter. 
 
Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each such corporation (other than the last corporation) in the unbroken
chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
 
Target Bonus shall mean the bonus opportunity
provided each Participant for each Year the Plan remains in effect. The Target Bonus shall be stated in terms of a specific percentage of the Participant’s Base Salary and shall be earned in part on the basis of the Corporation’s
attainment of the applicable Corporate Performance Objectives for the Year in question and in part on the basis of the Participant’s achievement of the applicable Personal Performance Objectives (if any) established for him or her for each
Fiscal Quarter within that Year. 
 
Year shall mean each fiscal year of the Corporation for which the Plan remains in effect. 
 

	 	III.	 	ADMINISTRATION OF THE PLAN 

 
A.      The Compensation Committee as 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 plan administration and to make such determinations under, and issue such interpretations of, the Plan as it may deem advisable. Decisions of the
Plan Administrator shall be final and binding on all parties with an interest in the Plan. 
 
B.    Prior to the start of each Year, the senior management of the Corporation shall submit recommendations concerning the Corporate Performance Objectives upon which the Corporate
Performance Component of each Participant’s Target Bonus for that Year will be based, and the Plan Administrator shall, on the basis of those recommendations, establish the actual Corporate Performance Objectives which shall serve as the
Corporate Performance Component of each Participant’s Target Bonus for the Year. The Corporate Performance Objectives shall be established within forty-five (45) days after the start of the Year. The Plan 

 

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Administrator shall have the discretionary authority to adjust the established Corporate Performance Objectives during the course of the Year
should the Plan Administrator determine, in its sole discretion, that extraordinary or unexpected events require such adjustments in order to maintain the objectives and purposes of the Plan. 
 
C.    The Plan Administrator shall have
the sole and exclusive responsibility to administer all aspects of the Plan with respect to the Executive Officers who are Participants; provided, however, that the Plan Administrator may delegate any or all of those responsibilities to the Chairman
of the Compensation Committee, in which event such Chairman shall have the authority to administer the Plan with respect to the delegated responsibilities. Except with respect to (i) the establishment of the Corporate Performance Objectives for the
Year and (ii) the initial level placement of each Participant for the Year, the Plan Administrator may delegate one or more of its duties and responsibilities under the Plan as they relate to Participants who are not Executive Officers
to any officer or officers of the Corporation as the Plan Administrator deems advisable. 
 

	 	IV.	 	ELIGIBILITY 

 
Each individual who is an Executive Officer or a Vice President of the Corporation at the start of the Year or who is hired in such
capacity within the first twenty-one (21) days of that Year shall qualify as a Participant for that Year. Any individual hired as an Executive Officer by the Corporation or a Participating Subsidiary or as a Vice President by the Corporation after
the first twenty-one (21) days of the Year shall commence participation in the Plan on the first day of the first Fiscal Quarter in that Year in which he or she is such an Executive Officer or Vice President with at least twenty one (21) days of
service in such capacity. 
 

	 	V.	 	DETERMINATION OF TARGET BONUS 

 
A.    There shall be up to six (6) separate levels of participation in the Plan each Year, and the level at which each
Participant is placed shall determine the size of his or her Target Bonus for the Year. The Plan Administrator shall have complete discretion, exercisable up until the forty-fifth (45th) day of each Year, to determine the number of levels of participation for that Year and the percentage of Base Salary which is to serve as the Target Bonus
for each level. 
 
B.    The
Plan Administrator shall determine the level placement of each Participant on the basis of recommendations submitted by the Corporation’s Human Resources Department. Each Participant shall be informed of his or her level placement for the Year
within forty-five (45) days after the start of that Year or, for a Participant who enters the Plan after the start of the Year, within forty-five (45) after the start of the first Fiscal Quarter of his or her participation. 
 
C.    The Plan Administrator may change a
Participant’s level of participation for a particular Year to take into account any promotion, demotion or substantial change in job responsibilities. Such changes shall be made on the basis of recommendations submitted by the
Corporation’s Human Resources Department. Any such change to a Participant’s level 

 

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placement shall, at the Plan Administrator’s sole discretion, be made either retroactive to the start of the Fiscal Quarter in which
such change to Participant’s status occurs or prospective to the start of the next Fiscal Quarter. 
 
D.    The Target Bonus of each Participant may be tied solely to the Corporation’s attainment of the Corporate
Performance Objectives for the applicable period or may in addition contain a Personal Performance Component established in accordance with the following procedure: 
 
Within thirty (30) days after the start of one or more Fiscal Quarters of participation, the
Personal Performance Objectives for each Participant (if any) for that Fiscal Quarter shall be established by his or her individual manager, subject to review by the Plan Administrator at its discretion. Personal Performance Objectives shall be tied
to the individual’s personal attainment of objectives which must be specified performance targets for the Participant or for his or her business unit. On the basis of recommendations submitted by the Corporation’s Human Resources
Department, the Plan Administrator shall determine the percentage of the Participant’s Target Bonus to serve as his or her Personal Performance Component, and that percentage shall be allocated among the individual performance objectives in
such percentage as the Participant’s individual manager shall deem appropriate. 
 

	 	VI.	 	DETERMINATION OF ACTUAL BONUS 

 
A.    The Actual Bonus earned by a Participant under the Plan for a particular Year shall be determined in accordance
with the following procedures: 
 
The dollar amount
of the Personal Performance Component for each Fiscal Quarter shall be calculated as follows: 
 
First, the Participant’s Target Bonus for the Year shall be divided into the Corporate Performance and Personal Performance Components in accordance with the procedures set forth in Section V.

 
Then, the Personal Performance Component of the
Target Bonus for the Year shall be divided by four (4) to determine the portion allocable to each Fiscal Quarter in that Year. That dollar amount shall comprise the Quarterly Target Bonus. 
 
Determination of Quarterly Target Bonus: 
 
Following is an example for calculating the Quarterly Target
Bonus based on an annual base salary of $100,000: 
 

	

	 Target Bonus
Percentage
(10%)
	 	 x
	 	 Participant’s Base
Salary ($100,000)
	  	 =
	  	 Target Bonus
 ($10,000)

	

 

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	 Target Bonus
 ($10,000)
	 	 x
	 	 Personal
Performance
Component
 (50%)
	  	 =
	  	 Dollar
Amount of
Personal Performance Component
 ($5,000)

	

 

	

	 Dollar Amount
of Personal
Performance
Component
 ($5,000)
	 	 ÷
	 	 4
	  	 =
	  	 Quarterly Target Bonus
 ($1,250)

	

 
Determination of Actual Bonus Attributable to Quarterly Target Bonus: 
 
Then, the dollar amount of the Quarterly Target Bonus shall be reallocated among the various individual performance objectives
comprising the Personal Performance Component of that Quarterly Target Bonus, with the dollar amount allocated to each individual performance objective to be in proportion to the percentage of the Personal Performance Component previously assigned
to that objective. The dollar amount so assigned to each such performance objective shall then be multiplied by the percentage attainment of that performance objective for the Fiscal Quarter, based on the evaluation of the Participant’s
performance by his or her individual manager. The dollar amount obtained for each individual performance objective shall then be aggregated to determine the total dollar amount of the Actual Bonus earned for such Fiscal Quarter on the basis of the
Quarterly Target Bonus established for that quarter. 
 
Following is an example for calculating the Actual Bonus attributable to the percentage attainment of the Personal Performance Component to which the Quarterly Target Bonus of $1,250 is tied: 
 

	 Individual
Personal Objective

	    	 % Allocation Per Project

	    	 Reallocation of Personal Performance Component of the
$1,250 Quarterly Target Bonus

	    	 Actual % Achieved

	    	 Dollar Amount of Actual Bonus Earned

	 Project A
	    	 25%
	    	 $   312.50
	    	   25%
	    	 $
	 78.125

	 Project B
	    	 25%
	    	 $   312.50
	    	   50%
	    	 $
	 156.25

	 Project C
	    	 50%
	    	 $   625.00
	    	 100%
	    	 $
	 625.00

	 Total
	    	 	    	 $1,250.00
	    	 	    	 $
	 859.38

 

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The Corporate
Performance Component shall be calculated as follows: 
 
First, the Target Bonus shall be multiplied by the percentage representing the Corporate Performance Component tied to the attainment of the designated Corporate Performance Objectives for the Year. The resulting dollar amount shall
comprise the Corporate Performance Component of the Target Bonus for the Year. However, if the individual becomes a Participant after the start of the Year, then the dollar amount of his or her Corporate Performance Component for that Year shall be
pro-rated by multiplying such dollar amount by a fraction, the numerator of which is the number of calendar months of Employee Status completed by the Participant individual in such Year (rounded to the nearest whole month), and the denominator is
twelve (12). 
 
Then, the dollar amount of the
Corporate Performance Component (as pro-rated, if applicable) shall be multiplied by the percentage of the Corporate Performance Objectives attained for that Year to determine the portion of the Participant’s Actual Bonus for such Year
attributable to the Corporate Performance Component. The Plan Administrator shall determine within the first forty-five (45) days after the start of the Year, the algorithm for measuring the attainment of the Corporate Performance Objectives for
that Year. 
 

	 	VII.	 	ELIGIBILITY FOR ACTUAL BONUS AND PAYOUT 

 
A.        A Participant shall not earn or otherwise become entitled to any Actual Bonus for a
particular Fiscal Quarter or Year unless such Participant continues in Employee Status through the Earn-Out Date for that Fiscal Quarter or Year. However, should a Participant cease Employee Status before the Earn-Out Date in a particular Fiscal
Quarter or Year by reason of death or Disability, then the Participant (or his or her estate) shall accordingly, receive a dollar amount, payable in accordance with the payment schedule set forth in Paragraph B below, equal to (i) the portion of the
Actual Bonus (if any) such Participant would have otherwise earned for that Fiscal Quarter based on his or her personal performance for the portion of the Fiscal Quarter preceding his or her death or Disability, and (ii) a portion of the Actual
Bonus he or she would have otherwise earned for such Year on the basis of the actual percentage attainment of the Corporate Performance Objectives for that Year, prorated from the beginning of that particular Year to the date in which the
Participant ceases Employee Status. 
 
B.        The Actual Bonus Payment to which each Participant becomes entitled under the Plan shall be paid as follows: 
 
(i)     The Personal Performance Component (if any) shall be paid within
forty-five (45) days after the close of the Fiscal Quarter for which that portion of the Actual Bonus is earned. 
 
(ii)    The Corporate Performance Component shall be paid in one payment within forty-five (45) days
after the close of the Year for which that portion of the Actual Bonus is earned. 
 

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Each payment
shall be subject to the collection by the Corporation (or the Participating Subsidiary) of all applicable federal, state and local income and employment taxes, and the Participant shall only be paid the amount which remains after the collection of
those taxes. 
 

	 	VIII.	 	PLAN DURATION AND AMENDMENT 

 
The Plan shall be in effect for the 2002 Year and for each subsequent fiscal year of the Corporation until the Plan Administrator by
appropriate resolution terminates the Plan. No Participant shall accrue any rights to receive an Actual Bonus for a particular Fiscal Quarter or Year for which the Plan is outstanding until the Earn-Out Date for that Fiscal Quarter or Year.
Accordingly, the Plan Administrator in its sole discretion may amend or terminate the Plan at any time prior to the Earn-Out Date in effect for a particular Fiscal Quarter or Year, and any such amendment or termination shall be applicable for that
Fiscal Quarter or Year and each subsequent Fiscal Quarter in that Year. 
 

	 	IX.	 	NON-TRANSFERABILITY 

 
The right to receive an Actual Bonus under the Plan may not be transferred, assigned, pledged or encumbered. Should a Participant die
before receipt of any Actual Bonus to which he or she becomes entitled under the Plan, then that bonus shall be paid to the Participant’s estate. 
 

	 	X.	 	OTHER INCENTIVE PLANS 

 
The Plan shall, effective with the 2002 Year, replace all other existing cash incentive or bonus plans for all Executives of the
Corporation and the Participating Subsidiaries. 
 

	 	XI.	 	NO EMPLOYMENT RIGHTS 

 
Nothing in the Plan shall confer upon a Participant any right to continue in Executive or Employee Status for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the Corporation or any Participating Subsidiary or of the Participant, which rights are hereby expressly reserved by each, to terminate the Executive or Employee Status of the
Participant at any time for any reason, with or without cause. 
 

	 	XII.	 	GOVERNING LAW 

 
The provisions of the Plan shall be governed by and construed in accordance with the laws of the State of California without resort to the
conflict-of-laws rules thereof or of any other jurisdiction. 
 

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IN WITNESS WHEREOF, Borland Software Corporation has caused this instrument to be
executed on by its behalf by it duly-authorized officer as of the 22nd day of January, 2003. 
 

	 BORLAND SOFTWARE CORPORATION

	
	 By:    /s/    KEITH
E. GOTTFRIED

	 Name:  Keith E. Gottfried

	 Title:  Senior Vice President, Law and Corporate
 Affairs, General Counsel, Chief Legal Officer

 and Corporate Secretary.

 

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Vice Presidents and 
Executive Officers 
 
SCHEDULE I 
 
LIST OF PARTICIPATING SUBSIDIARIES 
 
None1985 Stock Option Plan

Exhibit 10.4 
 
BORLAND SOFTWARE CORPORATION 
 
1985 STOCK OPTION PLAN 
 

	1.	 	PURPOSE 

 
This 1985 Stock Option Plan of Borland Software Corporation, a Delaware corporation, and its eligible Subsidiaries is intended to
encourage employee proprietary interest in the Corporation and its Subsidiaries and to encourage employees to remain in the employ of the Corporation and its Subsidiaries. 
 

	2.	 	DEFINITIONS 

 
“Board” shall mean the Board of Directors of the Corporation. 
 
“Code” shall mean the Internal Revenue Code of 1986. 
 
“Committee” shall mean the committee appointed by the Board
in accordance with Section 4 of the Plan. 
 
“Common
Stock” shall mean the Common Stock of the Corporation, or any stock into which such Common Stock may be converted. 
 
“Corporation” shall mean Borland Software Corporation, a Delaware corporation. 
 
“Date of Grant” shall mean the date on which the Committee
grants an Option. 
 
“Disability” shall mean the
condition of an Employee who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. 
 
“Employee” shall mean an individual employed (within the meaning of Code section 3401 and the regulations thereunder) by the Corporation or a Subsidiary. 
 
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
 
“Exercise Price” shall mean the price per Share of Common
Stock, determined by the Committee, at which an Option may be exercised. 
 
“Fair Market Value” shall mean the value of one (1) Share of Common Stock, determined as follows: (i) if the Shares are traded on an exchange or on the NASDAQ 
 

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National Market System, the
reported “closing price” on the date of valuation; (ii) if the Shares are traded over-the-counter on the NASDAQ System (other than on the NASDAQ Market System), the mean between the bid and the ask prices on said System at the close of
business on the date of valuation; and (iii) if neither (i) nor (ii) applies, the fair market value as determined by the Committee in good faith. Such determination shall be conclusive and binding on all persons. 
 
“Incentive Stock Option” shall mean an Option described in
Code section 422A(b). 
 
“Nonstatuatory Stock
Option” shall mean an Option not described in Code sections 422(b), 422A(b), 432(b) or 424(b). 
 
“Option” shall mean any stock option granted pursuant to the Plan. 
 
“Option Agreement” shall mean the written agreement entered into between the Corporation and the Optionee with respect to which an Option
or Options are granted under the Plan. 
 
“Optionee” shall mean the grantee of an Option pursuant to the Plan. 
 
“Parent” shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation if each of the corporations, other than the
Corporation, owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
 
“Plan” shall mean this stock option plan. 
 
“Purchase Price” shall mean the Exercise Price times the number of Shares with respect to which an Option
is exercised. 
 
“Share” shall mean one (1)
share of Common Stock, adjusted in accordance with Section 12 of the Plan (if applicable). 
 
“Subsidiary” shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if each of the corporations, other than the
last corporation in the unbroken chain, owns stock processing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
 

	3.	 	EFFECTIVE DATE 

 
The Plan was adopted by the Board effective October 28, 1985. 
 

	4.	 	ADMINISTRATION 

 

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The Plan shall
be administered by the Committee. The Committee shall be appointed by the Board and shall consist of not less than three (3) members of the Board. All members of the Committee shall be Disinterested Persons, as defined herein below. The Board may
from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, shall be filled by the Board. The Committee shall hold meetings at such times and places as it may determine. Acts of a majority of
the Committee at a meeting at which a quorum is present, or acts approved in writing by all of the members of the Committee, shall be the valid acts of the Committee. 
 
For the purposes of this Section 4, “Disinterested Person” shall mean a member of
the Committee who is not during the one year prior to service as an administrator of the Plan, been granted or awarded equity securities pursuant to the Plan or any other plan of the Corporation or any of its affiliates. Participation in a formula
plan meeting the conditions of Rule 16(b)(3)(c)(2)(ii) of the Exchange Act or in an ongoing securities acquisition plan meeting the conditions in Rule 16(b)(3)(d)(2)(i) of the Exchange Act shall not disqualify a member of the Committee from being a
Disinterested Person. In addition, an election to receive an annual retainer fee in either cash or an equivalent amount of securities, or partly in cash and partly securities, shall not disqualify a member of the Committee from being a Disinterested
Person. 
 
The Committee shall from
time to time at its discretion select the Employees who are to be granted Options, determine the number of Shares to be optioned to each Optionee and designate such Options as Incentive Stock Options or Nonstatuatory Stock Options. A Committee
member shall in no event participate in any determination relating to Options held by or to be granted to such Committee member. The interpretation and construction by the Committee of any provision of the Plan or of the Options granted thereunder
shall be final. No Committee member shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted thereunder. 
 

	5.	 	STOCK OPTION ELIGIBILITY 

 
All Employees shall be eligible for grant of Options. Grantees of Incentive Stock Options and Nonstatuatory Options pursuant to the Plan
shall be those Employees (who may be officers, whether or not they are directors) as the Committee shall select subject to the terms and conditions set forth below. 
 
(a)    Ten Percent (10%) Stockholders.  Any Employee who owns, directly or indirectly,
more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Corporation, its Parent, or any of its Subsidiaries shall not be eligible to receive an Incentive Stock Option or Nonstatuatory Stock Option
pursuant to the Plan unless, at the time such Option is granted to him or her, the Exercise Price of the Shares subject to such Option to such Employee is at least one hundred ten percent (110%) of the Fair Market Value of such Shares on the Date of
Grant, and such Option 
 

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by its terms is not exercisable after the expiration of five (5) years from the Date of Grant. 
 
(b)    Stock Ownership.  For purposes of
this Section 5, in determining stock ownership, an Employee shall be considered as owning the stock owned, directly or indirectly, by or for his or her brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly,
by or for a corporation, partnership, estate or trust shall be considered as being owned proportionately by or for its shareholders, partners or beneficiaries. Stock with respect to which such Employee holds an Option shall not be counted.

 
(c)    Outstanding
Stock.  For purposes of this Section 5, “outstanding stock” shall include all stock issued and outstanding immediately after the grant of the Option to the Optionee, but shall not include shares authorized for issue under
outstanding Options held by the Optionee or by any other person. 
 
(d)    Number of Options.  An Optionee may hold more than one (1) Option, but only on the terms and subject to the restrictions hereinafter set forth. 
 

	6.	 	STOCK 

 
The stock subject to Options granted under the Plan shall be Shares of the Corporation’s authorized but unissued Common Stock. The
aggregate number of Shares which may be issued under Options exercised under the Plan shall not exceed Eight Million, Nine Hundred Eighty Two Thousand (8,982,000) shares. As long as Options issued pursuant to the Plan remain outstanding, the
Corporation shall reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan. In the event that any outstanding Option under the Plan for any reason expires or is terminated, Options may again be
granted as to the Shares allocable to the unexercised portion of such expired or terminated Option. 
 
The limitations established by this Section 6 shall be subject to adjustment upon the occurrence of the events specified and in the manner
provided in Section 12 hereof. 
 

	7.	 	TERMS AND CONDITIONS OF OPTIONS 

 
Any Option granted pursuant to the Plan shall be evidenced by an Option Agreement which, for an Incentive Stock Option, shall be in a form
substantially as that set forth in Exhibit A hereto or in such other form as the Committee shall from time to time determine and which, for a Nonstatuatory Stock Option, shall be in a form substantially as that set forth in Exhibit B hereto or in
such other form as the Committee shall from time to time determine. The Option Agreement shall state and/or be subject to the following terms and conditions: 
 
(a)    Number of Shares.  Each Option Agreement shall state the number of Shares to 
 

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which the Option pertains and shall provide for the adjustment thereof in accordance with the provisions of Section 12 hereof. 
 
(b)    Exercise Price.  Each Option
Agreement shall state the Exercise Price of the Option, which price shall not be less than: (i) in the case of an Incentive Stock Option, the Fair Market Value of a Share on the Date of Grant; (ii) in the case of a Nonstatutory Stock Option,
eighty-five percent (85%) of the Fair Market Value of a Share on the Date of Grant; and (iii) in the case of an Incentive Stock Option or Nonstatutory Stock Option granted to an Optionee described in Section 5(a) hereof, one hundred ten percent
(110%) of the Fair Market Value of a Share on the Date of Grant. 
 
(c)    Vesting.  Each Option Agreement shall state the vesting schedule for the Options granted thereunder. The Committee may, in its discretion, order that any or all Options previously granted
to some or all Optionees shall vest at an accelerated rate. 
 
(d)    Form and Time of Payment.  An Optionee may exercise an Option by giving signed, written notice to the Corporation in care of the corporate secretary or assistant secretary of the
Corporation, or to such other person as the Corporation may designate, specifying the election to exercise the Option and the number of shares for which the Option is being exercised. 
 
Shares eligible for use in payment of the Purchase Price shall be any shares that were previously acquired by
an Optionee, including shares acquired upon any previous exercise of any option granted to the Optionee. 
 
No share shall be issued until full payment has been received by the Corporation. The Corporation shall thereafter caused to be issued a
certificate or certificates for the shares for which an Option has been exercised, registered in the name of the Optionee, and shall cause such certificate or certificates to be delivered to the Option. 
 
(e)    Withholding Taxes.  In the event
the Corporation determines that it is required to withhold state or Federal income tax as a result of the exercise of any Option or in connection with a disqualifying disposition of stock previously issued pursuant to the exercise of any Incentive
Stock Option, the Option Agreement shall require the Optionee, as a condition to the exercise of the Option or such a disposition of stock, to make arrangements satisfactory to the Corporation to enable the Corporation to satisfy such withholding
requirements. 
 
(f)    Term and Exercise of
Options; Nontransferability of Options.  No Option shall be exercisable after the expiration of ten (10) years from the Date of Grant, and no Stock Option granted to an Optionee described in Section (a) hereof shall be exercisable
after the expiration of five (5) years from the Date of Grant. During the lifetime of the Optionee, the Option shall be exercisable by the Optionee and shall not be assignable or transferable except pursuant to a qualified domestic relations order
as defined by the Code. 
 

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An option
shall be transferable only upon the Optionee’s death, by will or the laws of descent and distribution. 
 
(g)    Termination of Employment Except for Death, Disability or Discharge for Cause.  In the event that an Optionee shall cease to be employed by the Corporation
or any of its Subsidiaries for any reason other than his or her death, Disability or Discharge for Cause, his or her right to exercise any outstanding Option shall terminate; provided, however, that such Optionee shall have the right, subject to the
restrictions of Subsection (f) hereof, to exercise an otherwise outstanding Option at any time within three (3) months after such termination of employment to the extent that, at the date of such termination of employment, such Optionee’s right
to exercise such Option had vested pursuant to the terms of the Option Agreement with respect thereto and had not previously been exercised. 
 
An employment relationship shall be treated as continuing intact while the Optionee is on military leave, sick leave, or other bona fide
leave of absence. Notwithstanding the foregoing, in the case of an Incentive Stock Option, an employment relationship shall not be deemed to continue intact beyond the ninetieth (90th) day after the Optionee ceases active employment, unless the Optionee’s reemployment rights are guaranteed by statute or by contract. 
 
(h)    Death or Disability of
Optionee.  If the Optionee shall die or suffer a Disability while in the employ of the Corporation or a Subsidiary, his or her right to exercise any outstanding Option shall terminate; provided, however, that, to the extent that it has
not previously been exercised, and subject to the restrictions of Subsection (f) hereof, an otherwise outstanding Option may be exercised (to the extent that it would have been exercisable on the date of death or the date of termination of
employment) for a period of twelve (12) months from the date of his or her death or the date of the termination of his or her employment as a result of his or her Disability. 
 
In any case in which exercise is to take place after the Optionee’s death, such exercise may be made by
the executors or administrators of the Optionee’s estate or by any person or persons who shall have acquired the Option directly form the Optionee by bequest or inheritance. 
 
(i)    Termination of Employment by Discharge for Cause.  In the event that an Optionee
shall be Discharged for Cause from employment with the Corporation or any of its subsidiaries, his or her right to exercise any outstanding Option shall terminate; provided, however, that such Optionee shall have the right, subject to the
restrictions of Subsection (f) hereof, to exercise an outstanding Option at any time within thirty (30) days after such Discharge for Cause to the extent that such Optionee’s right to exercise such Option had vested pursuant to the terms of the
Option Agreement with respect thereto and had not previously been exercised. “Discharge for Cause” shall mean termination on account of conviction of the Optionee for Commission of any felony or misdemeanor (excluding minor traffic
violations), or termination on account of commission by Optionee of other acts, whether or not any crime is alleged, charged or 

 

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proven, which commission may, in the opinion of the Board, damage the Corporation or any of its Subsidiaries or the reputation or reputations
thereof, whether or not such acts relate to Optionee’s work performance; or termination on account of misconduct or gross negligence by Optionee’s work performance or nonperformance of assigned duties; provided, however, that
“Discharge for Cause” shall not include termination for any reason solely related to other Optionee deficiencies in work, including ordinary negligence in performance of assigned duties. Nothing herein shall limit the right of the
Corporation or its Subsidiaries, acting through the Board, to be the sole judge of what constitutes Discharge for Cause. Any determination by the Board that Optionee was terminated for cause shall be final and binding upon Optionee for all purposes
and shall not be subject to review by any governmental agency or court of law. 
 
(j)    Other Provisions.  Option Agreements authorized under the Plan shall contain such other provisions not inconsistent with the terms of the Plan, including, without limitation, restrictions
upon the exercise of the Option, as the Committee shall deem advisable. 
 

	8.	 	RIGHTS AS A STOCKHOLDER. 

 
An Optionee or transferee of an Optionee shall have no rights as a stockholder with respect to any Shares covered by his or her Option
until the date of the issuance of a stock certificate for such Shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in Section 12 hereof. 
 

	9.	 	MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. 

 
Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Options
granted under the Plan, or accept the exchange of outstanding Options (to the extent not theretofore exercised) for the grant of new Options in substitution therefor. Notwithstanding the foregoing, however, no modification of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations under any Option theretofore granted under the Plan. 
 

	10.	 	LIMITATION ON ANNUAL AWARDS 

 
The aggregate Fair Market Value (determined as of the date an option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar year under this Plan and all other plans maintained by the Corporation, its parent or its Subsidiaries shall not exceed $100,000. 
 

	11.	 	TERM OF PLAN 

 
Options may be granted pursuant to the Plan until the termination of the Plan on October 27, 1995. 
 

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	12.	 	RECAPITALIZATION 

 
Subject to any required action by the stockholders, the number of Shares in the Plan as provided in Section 6 hereof and the number of
Shares and the Exercise Price of each outstanding Option shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding Shares resulting from a subdivision or consolidation of Shares or the payment of a stock
dividend (but only of Common Stock) or any other increase or decrease in the number or such Shares effected without receipt of consideration by the Corporation. 
 
If the Corporation merges with or into another corporation each outstanding Option shall be assumed by the
surviving or successor Corporation. 
 
To the
extent that the foregoing adjustments relate to stock or securities of the Corporation, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. 
 
Except as expressly provided in this Section 12, the Optionee
shall have no rights by reason of any subdivision, consolidation or change of any of the rights or privileges of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger or consolidation or spinoff of assets or stock of another corporation, and any issuance by the Corporation of shares of stock of any class, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Exercise Price of Shares subject to the Option. 
 
The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. 
 

	13.	 	SECURITIES LAW REQUIREMENTS 

 
The Corporation shall not be under any obligation to issue any Shares upon the exercise of any Option unless and until the Corporation has
determined that: (i) it and the Optionee have taken all actions required to register the Shares under the Securities Act of 1933, or to perfect an exemption form the registration requirements thereof; (ii) any applicable listing requirement of any
stock exchange on which the Common Stock is listed has been satisfied; and (iii) all other applicable provisions of state and Federal law have been satisfied. 
 

	14.	 	AMENDMENT OF THE PLAN 

 
The board may, insofar as permitted by law, from time to time, with respect to any Shares at the time not subject to Options, suspend or
discontinue the Plan or revise or 
 

8 

amend it in any respect whatsoever except that, without approval of the stockholders, no such revision or amendment shall: 
 

	(a)	 	Increase the number of Shares subject to the Plan other than an adjustment under Section 12 of the Plan; 

 

	(b)	 	Materially modify the requirements as to eligibility for participation in the Plan set forth in Section 5 hereof; 

 

	(c)	 	Materially increase the benefits accruing to Optionees under the Plan; or 

 

	(d)	 	Amend this Section 14 to defeat its purpose. 

 

	15.	 	APPLICATION OF FUNDS 

 
The proceeds received by the Corporation from the sale of Common Stock pursuant to the exercise of an Option will be used for general
corporate purposes. 
 

	16.	 	NO OBLIGATION TO EXERCISE OPTION 

 
The granting of an Option shall impose no obligation upon the Optionee to exercise such Option. 
 

	17.	 	APPROVAL OF STOCKHOLDERS 

 
The Plan and any amendment described in clause (a), (b), (c), or (d) of Section 14 hereof shall be subject to approval by the affirmative
vote of the holders of a majority of the outstanding shares present and entitled to vote at a meeting of the stockholders of the Corporation, to be held not more than twelve (12) months before or after the adoption of the Plan or any of such
amendments, or by the written consent of the stockholders of the Corporation, as allowed by Delaware Law and the Corporation’s Certificate of Incorporation and Bylaws. 
 

	17.	 	CALIFORNIA LAW 

 
The Plan shall be interpreted and governed by the laws of the State of California applicable to transactions between residents of such
state wholly performed in such state. 
 

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