Document:

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EXHIBIT 10.11

PROMISSORY NOTE

	 	 	 
	$280,000

	 	 Louisville, Kentucky
	 

	 	June 23, 2006

          FOR VALUE RECEIVED, the undersigned New Era Studios, Inc. (the “Obligor”) promises to pay to
the order of the Edward Brian O’Dwyer Separate Property Trust (the “Lender”), its successors and
assigns at 400 West Market Street, Suite 1800, Louisville, Kentucky 40202 Attn: Alex P. (Mike)
Herrington, Jr. on September 23, 2006 or at such other place as the Lender may from time to time
designate in writing, the principal sum of Two Hundred Eighty Thousand Dollars ($280,000), in
lawful money of the United States, together with interest on the outstanding principal thereof at
the rate (the “Interest Rate”) equal to Seven Percent (7%) per annum. If an “Event of Default”
(as hereinafter defined) shall exist, the rate of interest shall at the option of the Lender
increase to a rate (the “Default Rate”) equal to Five Percent (5%) in excess of the Interest Rate
and shall continue at such rate during the period such Event of Default shall exist.

          Principal and interest shall be payable as follows: Interest and principal shall be due and
payable on September 23, 2006 in full.

          All interest shall be computed based on the actual number of days in the month and an assumed
year of three hundred and sixty (360) days.

          This Note may be prepaid in whole or in part without penalty.

          At the election of the Lender, and without notice, the outstanding principal balance hereof,
together with accrued interest hereon shall become at once due and payable at the place herein
provided for payment upon the occurrence of any Event of Default. For purposes of this Note,
“Event of Default” shall be the death or incapacity of James R. Simpson.

          The undersigned:

          (a) agrees to remain and continue bound for the payment of the principal of and interest on
this Note notwithstanding any extension or extensions of the time of the payment of said principal
or interest, or any change or changes in the amount or amounts to be paid under and by virtue of
the obligation to pay provided for in this Note, and waive all and every kind of notice of such
extension or extensions, change or changes, and agree that same may be made without the joinder of
any such persons;

          (b) waives presentment, notice of dishonor, protest, notice of protest and diligence in
collection, and all exemptions, whether homestead or otherwise, to which the Obligor may now or
hereafter be entitled under the laws of the Commonwealth of Kentucky or any other state;

          (c) agrees, upon default, to pay all costs of collecting, securing or attempting to collect,
or secure this Note, including a reasonable attorney’s fee, whether same be collected or

 

 

secured by suit or otherwise, providing the collection of such costs and fees are permitted by
applicable law.

          None of the terms and provisions contained in this Note or any other document or instrument
hereafter securing same, or any other document or instrument hereafter securing the indebtedness
evidenced hereby or related hereto shall ever be construed to create a contract for the use,
forbearance or detention of money requiring payment of interest at a rate in excess of the maximum
interest rate permitted to be charged by the laws of the Commonwealth of Kentucky. The Obligor
shall not ever be required to pay interest on this Note at a rate in excess of the maximum interest
rate that may be lawfully charged under the laws of the Commonwealth of Kentucky, and the
provisions of this paragraph shall control over all other provisions hereof and of any other
instrument executed in connection herewith or executed to secure the indebtedness evidenced hereby
which may be in apparent conflict with this paragraph. In the event the Lender shall collect
monies which are deemed to constitute payments in the nature of interest which would otherwise
increase the effective interest rate on this Note to a rate in excess of that permitted to be
charged by the laws of the Commonwealth of Kentucky, all such sums deemed to constitute interest in
excess of the maximum rate shall be refunded to the Obligor in cash and the Obligor hereby agrees
to accept such refund.

          If any provision, or portion thereof, of this Note, or the application thereof to any persons
or circumstances shall to any extent be invalid or unenforceable, the remainder of this Note, or
the application of such provision, or portion thereof, to any other person or circumstances shall
not be affected thereby, and each provision of this Note shall be valid and enforceable to the
fullest extent permitted by law. In the event of any inconsistency between the terms hereof and
those of any instrument securing payment hereof, the Lender shall have the sole option to elect
which of such provisions shall govern.

     WAIVER OF TRIAL BY JURY; ARBITRATION. THE OBLIGOR HEREBY AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO, THOSE
RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN THE LENDER AND THE OBLIGOR; (B)
USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE ACTS, DECEPTIVE TRADE
PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF COMMERCIAL REASONABLENESS, OR SPECIAL
RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION,
CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE,
INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH PRESENT OR PROSPECTIVE
BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY THE OBLIGOR, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS HEREBY

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AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY THE OBLIGOR.

     IT IS PROVIDED, HOWEVER, THAT THE OBLIGOR AND LENDER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE, ARISING FROM THIS NOTE OR
OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT AND TORT DISPUTE, SHALL BE ARBITRATED PURSUANT TO
THE CODE OF PROCEDURE OF THE NATIONAL ARBITRATION FORUM IN EFFECT AT THE TIME THE CLAIM IS FILED,
UPON REQUEST OF EITHER PARTY. ANY DISPUTES, CLAIMS, OR CONTROVERSIES CONCERNING THE LAWFULNESS OR
REASONABLENESS OF ANY ACT, OR EXERCISE OF ANY RIGHT, SHALL ALSO BE ARBITRATED PROVIDED HOWEVER THAT
NO ARBITRATOR SHALL HAVE THE RIGHT OR THE POWER TO ENJOIN OR RESTRAIN ANY ACT OF ANY PARTY.
JUDGMENT UPON ANY AWARD RENDERED BY ANY ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.
NOTHING IN THIS PROVISION SHALL PRECLUDE ANY PARTY FROM SEEKING EQUITABLE RELIEF FROM A COURT OF
COMPETENT JURISDICTION. THE STATUTE OF LIMITATIONS, ESTOPPEL, WAIVER, LACHES, AND SIMILAR
DOCTRINES WHICH WOULD OTHERWISE BE APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE APPLICABLE
IN ANY ARBITRATION PROCEEDING, AND THE COMMENCEMENT OF AN ARBITRATION PROCEEDING SHALL BE DEEMED
THE COMMENCEMENT OF AN ACTION FOR THESE PURPOSES. THE FEDERAL ARBITRATION ACT SHALL APPLY TO THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT OF THIS ARBITRATION PROVISION.

          This Note shall be governed by, and construed in accordance with, the laws of the Commonwealth
of Kentucky.

          IN WITNESS WHEREOF, the Obligor has caused this instrument to be effective as of the date
first above written.

	 	 	 	 	 	 	 
	 	 	NEW ERA STUDIOS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ James R. Simpson
 

   James R. Simpson

   Chief Executive Officer
	 	 

3exv10w12

 

EXHIBIT
10.12

SILVERGRAPH INTERNATIONAL, INC.

2006 STOCK OPTION PLAN

§1. Background And Purpose

     The purpose of this Plan is to promote the interest of Silvergraph through grants to Key
Employees and Directors of Options to purchase Stock in order (1) to attract Key Employees and
Directors, (2) to provide an additional incentive to each Key Employee and Director to work to
increase the value of Stock, and (3) to provide each Key Employee and Director with a stake in the
future of Silvergraph which corresponds to the stake of each of Silvergraph’s stockholders.

§2. Definitions

     Each term set forth in this §2 shall have the meaning set forth opposite such term for
purposes of this Plan and, for purposes of such definitions, the singular shall include the plural
and the plural shall include the singular.

	 	2.1.	 	Board — means the board of directors of Silvergraph.
	 
	 	2.2.	 	Change in Control — means (1) the individuals who, as of the date this Plan is
effective, constitute the Board cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director subsequent to
the date this Plan is effective whose election or nomination for election by
Silvergraph’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Board shall be considered as though such individual were
a member of the Board as of the date this Plan is effective, or (2) the acquisition,
directly or indirectly, of legal or beneficial ownership of or the power to vote more
than 25% of the outstanding Stock by any person or by two or more persons acting
together, except an acquisition from Silvergraph or by Silvergraph, Silvergraph’s
management or a Silvergraph sponsored employee benefit plan, where (3) the term
“person” means a natural person, corporation, partnership, joint venture, trust,
government or instrumentality of a government, and (4) customary agreements with or
between underwriters and selling group members with respect to a bona fide public
offering of Stock shall be disregarded for purposes of this definition.
	 
	 	2.3.	 	Code — means the Internal Revenue Code of 1986, as amended.
	 
	 	2.4.	 	Committee — means the committee appointed by the Board to administer this Plan
which at all times shall consist of two or more members of the Board. Each member of
the Committee shall be a “Non-employee Director,” as defined under Rule 16b-3.
	 
	 	2.5.	 	Director — means any member of the Board who is not an employee of Silvergraph
or a Subsidiary or any affiliate of Silvergraph and who is designated in writing by the
Board as eligible to receive an Option under this Plan.
	 
	 	2.6.	 	Exchange Act — means the Securities Exchange Act of 1934, as amended.

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	 	2.7.	 	Fair Market Value — means (1) the closing price on any date for a share of
Stock as reported by The Wall Street Journal under the New York Stock Exchange
Composite Transactions quotation system (or under any successor quotation system)
or, if Stock is not traded on the New York Stock Exchange, under the quotation
system under which such closing price is reported or, if The Wall Street Journal no
longer reports such closing price, such closing price as reported by a newspaper or
trade journal selected by the Committee or, if no such closing price is available on
such date, (2) such closing price as so reported or so quoted in accordance with
subsection (l) above for the immediately preceding business day, or, if no newspaper
or trade journal reports such closing price or if no such price quotation is
available, or (3) the price which the Committee, acting in good faith determines
through any reasonable valuation method that a share of Stock might change hands
between a willing buyer and a willing seller, neither being under any compulsion to
buy or to sell and both having reasonable knowledge of the relevant facts.
	 
	 	2.8.	 	Insider — means any individual who is subject to §16(a) of the Exchange Act.
	 
	 	2.9.	 	ISO — means an option granted under this Plan to purchase Stock which is
intended to satisfy the requirements of §422 of the Code.
	 
	 	2.10.	 	Key Employee — means a full time employee of Silvergraph or any Subsidiary or
any affiliate of Silvergraph designated by the Committee who, in the judgment of the
Committee, acting in its absolute discretion, is key, directly or indirectly, to the
success of Silvergraph.
	 
	 	2.11.	 	NQO— means an option granted under this Plan to purchase Stock which is
intended to fail to satisfy the requirements of §422 of the Code.
	 
	 	2.12.	 	Option — means an ISO or a NQO.
	 
	 	2.13.	 	Option Certificate — means the written certificate which sets forth the terms
of an Option granted to a Key Employee or Director under §7 of this Plan.
	 
	 	2.14.	 	Option Price — means the price which shall be paid to purchase one share of
Stock upon the exercise of an option granted under this Plan.
	 
	 	2.15.	 	Parent Corporation — means any corporation which is a parent of Silvergraph
within the meaning of §424(e) of the Code.
	 
	 	2.16.	 	Plan — means this Silvergraph International, Inc. 2006 Stock Option Plan, as
amended from time to time.
	 
	 	2.17.	 	Rule 16b-3 — means Rule 16b-3 as promulgated pursuant to §16(b) of the
Exchange Act or any successor to such rule.
	 
	 	2.18.	 	Stock — means $.001 par value common stock of Silvergraph.

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	 	2.19.	 	Subsidiary — means a corporation which is a subsidiary corporation (within
the meaning of §424(f) of the Code) of Silvergraph.
	 
	 	2.20.	 	Surrendered Shares — means the shares of Stock described in §11 which (in
lieu of being purchased) are surrendered for cash or Stock, or for a combination of
cash and Stock, in accordance with §11.
	 
	 	2.21.	 	Ten Percent Shareholder — means a person who owns (after taking into account
the attribution rules of §424(d) of the Code) more than ten percent of the total
combined voting power of all classes of stock of either Silvergraph, a Subsidiary or a
Parent Corporation.
	 
	 	2.22.	 	Silvergraph — means Silvergraph International, Inc., a Nevada corporation,
and any successor to such corporation.

§3. Shares Reserved Under Plan

     There shall be one million (1,000,000) shares of Stock reserved for use under this Plan. All
such shares of Stock shall be reserved to the extent that Silvergraph deems appropriate from
authorized but unissued shares of Stock and from shares of Stock which have been reacquired by
Silvergraph. Furthermore, any shares of Stock subject to an Option which remain unissued after the
cancellation, expiration or exchange of such Option thereafter shall again become available for use
under this Plan, but any Surrendered Shares which remain unissued after the surrender of an Option
under §11 and any shares of Stock used to satisfy the Option Price or a withholding obligation
under §17.3 shall not again become available for use under this Plan.

§4. Effective Date

     The effective date of this Plan shall be June 26, 2006, provided the Board has adopted the
Plan as of such date and provided the shareholders of Silvergraph (acting at a duly called meeting
of such shareholders) approve such adoption within twelve (12) months of such effective date and
such approval satisfies the requirements for shareholder approval under Rule 16b-3. If any Options
are granted under this Plan before the date of such shareholder approval, such Options
automatically shall be granted subject to such approval.

§5. Committee

     This Plan shall be administered by the Committee. The Board may from time to time remove
members from, or add members to, the Committee. Vacancies on the Committee shall be filled by the
Board. The Committee shall select one of its members as Chairman and shall hold meetings at such
times and places as it shall determine. The Committee acting in its absolute discretion shall
exercise such powers and take such action as expressly called for under this Plan and, further, the
Committee shall have the power to interpret this Plan and (subject to §14, §15 and §16 of this Plan
and, if applicable, Rule 16b-3) to take such other action in the administration and operation of
this Plan as the Committee deems equitable under the circumstances, which action shall be binding
on Silvergraph, on each affected Key Employee, on each affected Director and on each other person
directly or indirectly affected by such action.

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§6. Eligibility

     Eligibility for the grant of NQOs shall be limited to Key Employees and Directors. Eligibility
for the grant of ISOs shall be limited to Key Employees who are employed by Silvergraph or a Parent
Corporation or a Subsidiary.

§7. Options

	 	7.1.	 	Committee Action. The Committee acting in its absolute discretion shall have
the right to grant Options to Key Employees and Directors under this Plan from time to
time to purchase shares of Stock and, further, shall have the right to grant new
Options in exchange for outstanding Options which have a higher or lower Option Price;
provided, however, that no grants of ISOs shall be made to Key Employees who are not
employed by Silvergraph or a Parent Corporation or a Subsidiary. Each grant of an
Option to a Key Employee or Director shall be evidenced by an Option Certificate, and
each Option Certificate shall set forth whether the Option is an ISO or a NQO and
shall set forth such other terms and conditions of such grant as the Committee acting
in its absolute discretion deems consistent with the terms of this Plan; however, if
the Committee grants an ISO and a NQO to a Key Employee on the same date, the right of
the Key Employee to exercise or surrender one such Option shall not be conditioned on
his or her failure to exercise or surrender the other such Option.
	 
	 	7.2.	 	$100,000 Limit. To the extent that the aggregate Fair Market Value of Stock
(determined as of the date the ISO is granted) with respect to which ISOs first become
exercisable in any calendar year exceeds $100,000, such Options shall be treated as
NQOs. The Fair Market Value of Stock subject to any other option (determined as the
date such option was granted) which (1) satisfies the requirements of §422 of the Code
and (2) is granted to a Key Employee under a plan maintained by Silvergraph, a
Subsidiary or a Parent Corporation shall be treated (for purposes of this $100,000
limitation) as if granted under this Plan. The Committee shall interpret and administer
the limitation set forth in this §7.2 in accordance with §422(d) of the Code.

§8. Option Price

     The Option Price for each share of Stock subject to an ISO which is granted to a Key Employee
shall be no less than the Fair Market Value of a share of Stock on the date the ISO is granted;
provided, however, if the Option is an ISO granted to a Key Employee who is a Ten Percent
Shareholder, the Option Price for each share of Stock subject to such ISO shall be no less than
110% of the Fair Market Value of a share of Stock on the date such ISO is granted. The Option Price
for each share of Stock subject to an NQO which is granted to a Key Employee or Director may (in
the absolute discretion of the Committee) be more or less than or equal to the Fair Market Value of
a share of Stock on the date the NQO is granted; however, that in no event shall the Option Price
be less than adequate consideration as determined by the Committee. The Option Price shall be
payable in full upon the exercise of any Option, and at the discretion of the Committee, an Option
Certificate can provide for the payment of the Option Price either in cash,

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by check or in Stock acceptable to the Committee, or in any combination of cash, check and
Stock acceptable to the Committee. Any payment made in Stock shall be treated as equal to the Fair
Market Value of such Stock on the date the properly endorsed certificate for such Stock is
delivered to the Committee or its delegate. Any payment made in Stock shall be made either by
tendering shares of Stock held by the Key Employee or Director or, to the extent allowed by the
Committee, in its sole discretion, by having Silvergraph withhold Stock (that otherwise would be
transferred to the Key Employee or Director upon the exercise of such Option).

§9. Exercise Period

     Each Option granted under this Plan to a Key Employee or Director shall be exercisable in
whole or in part at such time or times as set forth in the related Option Certificate, but no
Option Certificate shall make an Option granted to a Key Employee or Director exercisable after the
earlier of (1) the date such Option is exercised in full; (2) the date which is the fifth
anniversary of the date the Option is granted, if the Option is an ISO and the Key Employee is a
Ten Percent Shareholder on the date the Option is granted, or (3) the date which is the tenth
anniversary of the date the Option is granted, if the Option is (a) an NQO or (b) an ISO which is
granted to a Key Employee who is not a Ten Percent Shareholder on the date the Option is granted.
An Option Certificate may provide for the exercise of an Option after the employment of a Key
Employee has terminated for any reason whatsoever, including death or disability. Also, an Option
Certificate may provide for the exercise of an Option after a Director has ceased to serve as such
(or has ceased to serve in the same capacity on the Board as when the Option was granted) for any
reason whatsoever, including death or disability.

§10. Nontransferability

     Neither an Option granted under this Plan nor any related surrender rights under §11 shall be
transferable by a Key Employee or Director other than by will or by the laws of descent and
distribution, and any such Option and any such surrender rights shall be exercisable during the
lifetime of a Key Employee or Director only by such Key Employee or Director. The person or persons
to whom an Option or any related surrender rights is transferred by will or by the laws of descent
and distribution thereafter shall be treated as the Key Employee or Director under this Plan.

§11. Surrender Of Options

	 	11.1.	 	General Rule. The Committee acting in its absolute discretion may incorporate
a provision in an Option Certificate to allow a Key Employee or Director to surrender
his or her Option in whole or in part in lieu of the exercise in whole or in part of
that Option on any date that (1) the Fair Market Value of the Stock subject to such
Option exceeds the Option Price for such Stock, and (2) the Option to purchase such
Stock is otherwise exercisable.
	 
	 	11.2.	 	Procedure. The surrender of an Option in whole or in part shall be effected by
the delivery of the Option Certificate to the Committee (or to its delegate) together
with a statement signed by the Key Employee or Director which specifies the number of
shares of Stock as to which the Key Employee or Director surrenders

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	 	 	 	his or her Option and (at the Key Employee’s or Director’s option) how he or she
desires payment be made for such Surrendered Shares.
	 
	 	11.3.	 	Payment. A Key Employee or Director in exchange for his or her Surrendered
Shares shall (to the extent consistent with the exemption under Rule 16b-3, if
applicable) receive a payment in cash or in Stock, or in a combination of cash and
Stock, equal in amount on the date such surrender is effected to the excess of the Fair
Market Value of the Surrendered Shares on such date over the Option Price for the
Surrendered Shares. The Committee acting in its absolute discretion shall determine the
form and timing of such payment, and the Committee shall have the right (1) to take
into account whatever factors the Committee deems appropriate under the circumstances,
including any written request made by the Key Employee or Director and delivered to the
Committee (or to its delegate) and (2) to forfeit a Key Employee’s or Director’s right
to payment of cash in lieu of a fractional share of stock if the Committee deems such
forfeiture necessary in order for the surrender of his or her Option under this §11 to
come within the exemption under Rule 16b-3.
	 
	 	11.4.	 	Restrictions. Any Option Certificate which incorporates a provision to allow a
Key Employee or Director to surrender his or her Option in whole or in part also shall
incorporate such additional restrictions, if any, as the Committee deems necessary to
satisfy the conditions to the exemption under Rule 16b-3.

§12. Securities Registration

     Each Option Certificate shall provide that, upon the receipt of shares of Stock as a result of
the surrender or exercise of an Option, the Key Employee or Director shall, if so requested by
Silvergraph, hold such shares of Stock for investment and not with a view of resale or distribution
to the public and, if so requested by Silvergraph, shall deliver to Silvergraph a written statement
satisfactory to Silvergraph to that effect. Silvergraph shall not have any obligation to take any
action to register the Plan or the issuance of Stock pursuant to this Plan under the Securities Act
of 1933, as amended, or under any other applicable securities laws or to qualify such Stock for an
exemption under any such laws. Each Option Certificate also shall provide that, if so requested by
Silvergraph, the Key Employee or Director shall make a written representation to Silvergraph that
he or she will not sell or offer to sell any of such Stock unless a registration statement shall be
in effect with respect to such Stock under the Securities Act of 1933, as amended, and the
applicable state securities laws, or unless he or she shall furnish to Silvergraph an opinion, in
form and substance satisfactory to Silvergraph, of legal counsel acceptable to Silvergraph, that
such registration is not required. Certificates representing the Stock transferred upon the
exercise of an Option under this Plan may at the discretion of Silvergraph bear a legend to the
effect that such Stock has not been registered under the Securities Act of 1933, as amended, or any
applicable state securities law, and that such Stock may not be sold or offered for sale in the
absence of an effective registration statement as to such Stock under such act and any applicable
state securities law or an opinion, in form and substance satisfactory to Silvergraph, of legal
counsel acceptable to Silvergraph, that such registration is not required.

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§13. Life Of Plan

     No Option shall be granted under this Plan on or after the earlier of (1) the tenth
anniversary of the effective date of this Plan (as determined under §4 of this Plan), in which
event this Plan shall continue in effect until all outstanding Options have been surrendered or
exercised in full or no longer are exercisable, or (2) the date on which all of the Stock reserved
under §3 of this Plan has (as a result of the surrender or exercise of Options granted under this
Plan) been issued or no longer is available for use under this Plan, in which event this Plan also
shall terminate on such date.

§14. Adjustment

     The number, kind or class (or any combination thereof) of shares of Stock reserved under §3 of
this Plan, and the number, kind or class (or any combination thereof) of shares of Stock subject to
Options granted under this Plan and the Option Price of such options shall be adjusted by the Board
in an equitable manner to reflect any change in the capitalization of Silvergraph, including, but
not limited to, such changes as stock dividends or stock splits. Furthermore, the Board shall have
the right to adjust (in a manner which satisfies the requirements of §424(a) of the Code) the
number, kind or class (or any combination thereof) of shares of Stock reserved under §3 of this
Plan, and the number, kind or class (or any combination thereof) of shares subject to Options
granted under this Plan and the Option Price of such Options in the event of any corporate
transaction described in §424(a) of the Code which provides for the substitution or assumption of
such Option grants in order to take into account on an equitable basis the effect of such
transaction. If any adjustment under this §14 would create a fractional share of Stock or a right
to acquire a fractional share of Stock, such fractional share shall be disregarded and the number
of shares of Stock reserved under this Plan and the number subject to any Options granted under
this Plan shall be the next lower number of shares of Stock, rounding all fractions downward. An
adjustment made under this §14 by the Board shall be conclusive and binding on all affected persons
and, further, shall not constitute an increase in “the number of shares reserved under §3” within
the meaning of §16(a) of this Plan.

§15. Sale Or Merger Of Silvergraph; Change In Control

	 	15.1.	 	Sale or Merger. If Silvergraph agrees to sell all or substantially all of its
assets for cash or property or for a combination of cash and property or agrees to any
merger, consolidation, reorganization, division or other corporate transaction in which
Stock is converted into another security or into the right to receive securities or
property and such agreement does not provide for the assumption or substitution of the
Options granted under this Plan in accordance with §14 on a basis that is fair and
equitable to holders of such Options as determined by the Board, each Option granted to
a Key Employee or Director at the direction and discretion of the Board (a) may
(subject to such conditions, if any, as the Board deems appropriate under the
circumstances) be cancelled unilaterally by Silvergraph (i) in exchange for (A) a
transfer to such Key Employee or Director of the number of whole shares of Stock, if
any, which he or she would have received if he or she had the right to surrender his or
her outstanding Option in full under §11 of this Plan and he or she exercised that
right on the date set by the

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	 	 	 	Board exclusively for Stock or (B) the right to exercise his or her outstanding
Option in full on any date before the date as of which the Board unilaterally
cancels such Option in full or, if the exchange described in this §15.1(i) would
result in a violation of §16 of the Exchange Act for a Key Employee or Director,
(ii) may be cancelled unilaterally by Silvergraph after advance written notice to
such Key Employee or Director or (b) may be cancelled unilaterally by Silvergraph if
the Option Price equals or exceeds the Fair Market Value of a share of Stock on a
date set by the Board. The Board may exercise its discretion to vest an Option in
full upon a transaction described in this §15.1 either at the time the Option is
granted (by including such vesting provision in the Option Certificate given to the
affected Key Employee or Director) or at the time such transaction occurs.
	 
	 	15.2.	 	Change in Control. If there is a Change in Control of Silvergraph or a tender
or exchange offer is made for Stock other than by Silvergraph, the Board thereafter
shall have the right to take such action with respect to any unexercised Options
granted to Key Employees or Directors, or all such Options, as the Board deems
appropriate under the circumstances to protect the interest of Silvergraph in
maintaining the integrity of such grants under this Plan, including following the
procedure set forth in §15.1 for a sale or merger of Silvergraph with respect to such
Options. At the time an Option is granted, the Board may, in its discretion, provide
for full vesting of such Option upon a transaction described in this §15.2 by including
such a provision in the Option Certificate given to the affected Key Employee or
Director. The Board shall have the right to take different action under this §15.2 with
respect to different Key Employees, different Directors or different groups of Key
Employees, as the Board deems appropriate under the circumstances. The Board shall have
the right to take different action under this §15.2 with respect to Key Employees on
the one hand and Directors on the other hand and/or with respect to different Directors
or different groups of Directors, as the Board deems appropriate under the
circumstances.

§16. Amendment Or Termination

     This Plan may be amended by the Board from time to time to the extent that the Board deems
necessary or appropriate; provided, however, no such amendment shall be made absent the approval of
the shareholders of Silvergraph required under §422 of the Code (a) to increase the number of
shares of stock reserved under §3, or (b) to change the class of employees eligible for Option
grants under §6. Any amendment which specifically applies to NQOs shall not require shareholder
approval unless such approval is necessary to comply with §16 of the Exchange Act. The Board also
may suspend the granting of Options under this Plan at any time and may terminate this Plan at any
time; provided, however, the Board shall not have the right unilaterally to modify, amend or cancel
any Option granted before such suspension or termination unless (1) the Key Employee or Director
consents in writing to such modification, amendment or cancellation or (2) there is a dissolution
or liquidation of Silvergraph or a transaction described in §14 or §15 of this Plan.

8

 

§17. Miscellaneous

	 	17.1.	 	Shareholder Rights. No Key Employee or Director shall have any rights as a
shareholder of Silvergraph as a result of the grant of an Option under this Plan or his
or her exercise or surrender of such Option pending the actual delivery of the Stock
subject to such Option to such Key Employee or Director.
	 
	 	17.2.	 	No Contract of Employment or Right to Service. The grant of an Option to a Key
Employee or Director under this Plan shall not constitute a contract of employment or a
right to continue to serve on the Board and shall not confer on a Key Employee or
Director any rights upon his or her termination of employment or service in addition to
those rights, if any, expressly set forth in the Option Certificate, which evidences
his or her Option.
	 
	 	17.3.	 	Withholding. The exercise or surrender of any Option granted under this Plan
shall constitute a Key Employee’s or Director’s full and complete consent to whatever
action the Board or the Committee, as applicable, deems necessary to satisfy the
federal and state tax withholding requirements, if any, which the Board or the
Committee, as applicable, in its discretion deems applicable to such exercise or
surrender. The Board or the Committee, as applicable, also shall have the right to
provide in an Option Certificate that a Key Employee or Director may elect to satisfy
federal and state tax withholding requirements through a reduction in the number of
shares of Stock actually transferred to him or to her under this Plan, and if the Key
Employee or Director is subject to the reporting requirements under §16 of the Exchange
Act, any such election shall be effected so as to satisfy the conditions to the
exemption under Rule 16b-3.
	 
	 	17.4.	 	Construction. This Plan shall be construed under the laws of the State of
Nevada.
	 
	 	17.5.	 	Other Conditions. Each Option Certificate may require that a Key Employee or
Director (as a condition to the exercise of an Option) enter into any agreement or make
such representations prepared by Silvergraph, including any agreement which restricts
the transfer of Stock acquired pursuant to the exercise of an Option or provides for
the repurchase of such Stock by Silvergraph under certain circumstances.

9

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