Document:

exv10w2

 

Exhibit 10.2

STOCK PLAN FOR NON-MANAGEMENT DIRECTORS

OF

PAYLESS SHOESOURCE, INC.

I. GENERAL

     1. Purpose. The purpose of the Plan is to provide certain compensation to eligible directors
of the Corporation and to encourage the highest level of performance of non-management directors by
providing those directors with a proprietary interest in the
Corporation’s success and
progress by granting them shares of the Corporation’s common stock or rights to purchase
shares of the Corporation’s common stock subject to the terms and conditions set forth below.

     2. Definitions. Whenever used herein, the following terms shall have the meanings set forth
below:

          (a)
“Award” means an initial or annual grant of equity , as described in Section 6
of Part I of the Plan.

          (b) “Award Agreement” means a document setting forth the terms and conditions applicable to
the Award granted to the Participant.

          (c) “Board” means the Board of Directors of the Corporation.

          (d) “Committee” means the Board or such committee as may be designated by the
Board from time to time. Any such Committee must be comprised of at least one employee member of
the Board and two or more outside directors who are “non-employee directors” within the meaning of
Rule 16b-3 under the Exchange Act.

          (e) “Corporation” means Payless ShoeSource, Inc., a Delaware corporation and any
successor thereto.

          (f) “Disability” means a medically determinable physical or mental impairment
which renders a Participant substantially unable to function as a director of the Corporation.

          (g) “Dividend Equivalent” means an amount equal to the amount payable with respect to a share
of Stock after the date an Award is granted.

 

 

          (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended. References to a
particular section of the Exchange Act include references to successor provisions.

          (i) “Fair Market Value” of Stock means the average of the high and low prices of the Stock on
the New York Stock Exchange Composite Transaction Tape on the date in question (or if the Stock is
not then so traded, the average of the highest and lowest sale prices of the Stock on the stock
exchange or over-the-counter market on which the Stock is principally trading on such date) or, if
no sale or sales of the Stock occurred on such exchange on that day, the average of the high and
low prices of the Stock on the last preceding day when the Stock was sold on the exchange. If
Stock, as later defined, is no longer traded on the New York Stock Exchange and if there is no
public market for the Stock, “Fair Market Value” shall be determined in good faith by the Committee
using other reasonable means.

          (j) “Option Award” means an option granted to a Participant pursuant to Section 6 of Part I of
the Plan.

          (k) “Participant” means a member of the Board (i) who is not at the time of grant
an officer or employee of the Corporation (ii) who has not during the immediately preceding 12
month period been, an officer or employee of the Corporation or any subsidiary of the Corporation
and (iii) to whom an Award is made under the Plan.

          (l) “Plan” means the Restricted Stock Plan for Non-Management Directors of Payless
ShoeSource, Inc., amended, restated and renamed May 25, 2006 or such other date as approved by the
stockholders of the Corporation, as the Stock Plan for Non-Management Directors of Payless
ShoeSource, Inc.

          (m) “Restricted Period” means the period from the vesting of the Stock Award or
the receipt of shares of Stock upon exercise of an Option Award until the earlier of (i) the
cessation of the Participant’s membership on the Board by reason of death or Disability and
(ii) the later of (a) the expiration of the six month period immediately following the Award grant
or (b) the date the Participant satisfies their stock ownership requirements as set forth in the
Stock Ownership Guidelines for Directors, as such guidelines may be amended from time to time.

          (n) “Stock” means the common stock of the Corporation, $.01 par value, or any
other equity securities of the Corporation designated by the Committee, including any attached
rights.

          (o) “Stock Award” means a grant of Stock or of a right to receive Stock or its cash equivalent
(or both).

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          (p) “Stock Ownership Guidelines” means the Stock Ownership Guidelines for Directors adopted by
the Company and as amended from time to time.

     3. Administration. The Plan shall be administered by the Committee. Subject to all the
applicable provisions of the Plan, the Committee is authorized: (i) to exercise all of the powers
granted to it under the Plan, (ii) to construe and interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, (iii) to make all determinations and take all
actions necessary or advisable for the Plan’s administration, (iv) to correct any defect,
supply any omission and reconcile any inconsistency in the Plan, (v) to authorize any person to
execute on behalf of the Corporation, any instrument required to effect the grant of an Award made
by the Committee and (vi) to determine whether, to what extent and under what circumstances Awards
may be settled or exercised in cash, shares of Stock, other securities, other Awards or other
property, or canceled, forfeited or suspended and the method or methods by which Awards may be
settled, canceled, forfeited or suspended. The Committee shall act by vote or written consent of a
majority of its members. Whenever the Plan authorizes or requires the Committee to take any action,
make any determination or decision or form any opinion, then any such action, determination,
decision or opinion by or of the Committee shall be conclusive and binding on all persons. The
Committee may obtain such advice or assistance as it deems appropriate from persons not serving on
the Committee including but not limited to accountants and counsel. The Committee and others to
whom the Committee has allocated or delegated authority or duties shall keep a record of all their
proceedings and actions and shall maintain all such books of account, records and other data as
shall be necessary for the proper administration of the Plan.

     4. Shares of Stock Available Under the Plan. Effective May 25, 2006, if this amended and
restated Plan is approved by the stockholders of the Company, the Plan provides that there may be
granted under the Plan, subsequent to May 25, 2006, an aggregate of not more than 350,000 shares of
Stock (the Maximum Limit”), subject to adjustment as provided in Section 3 of Part II of the Plan.
 

     For each Option Award issued, the Maximum Limit shall be decreased based on the term of the
grant as follows for each such Option Award granted:

EXCHANGE RATIO TABLE

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Term of Grant	 	5 year	 	6 year	 	7 year
	Option Award
	 	 	.549	 	 	 	.598	 	 	 	.641	 

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Dividends or Dividend Equivalents, if any, shall be paid in shares of Stock, and shall be deducted
from the Plan Maximum Limit if such shares are available. If such shares to pay dividends are not
available under the Plan Maximum Limit, but are payable, then such dividends will be paid in cash.
Amounts paid entirely in cash shall not be counted against the Maximum Limit. Shares of Stock
covered by the unexercised or terminated or forfeited portion of any Award that did not result in
the delivery of Stock shall be available for further Awards. For Stock Awards, if less than the
maximum number of shares issuable are actually issued, such difference shall be available for
future Awards.

     Subject to Section 3 or Part II of the Plan, additional rules for determining the number of
shares of Stock granted under an Award may be adopted by the Committee, as it deems necessary and
appropriate and consistent with the overall limits set forth in the Plan. Shares of Stock granted
under the Plan shall be authorized and issued Stock held in the Corporation’s treasury or
previously authorized but unissued Stock. If any shares of Stock shall be returned to the
Corporation pursuant to the termination provisions described in Sections 7(b) & (g) of Part I of
the Plan, or in the instruments evidencing the making of Awards, such shares may again be granted
under the Plan.

5. Eligibility.

          The Committee may grant one or more Awards to any Participant designated by it to receive an
Award.

6. Awards.

     The Committee may grant any one or more of the following types of Awards, either
singly, or in tandem:

	 	a.	 	Option Award. An Option is a right or rights to
purchase a specific number of shares of Stock exercisable at such time or
times and subject to such terms and conditions, including vesting schedule, as
the Committee may determine and specify in the applicable Award Agreement.
Options shall be settled in cash or Stock.
	 
	 	b.	 	Stock Award. Stock Awards may be granted either
alone, in addition to, or in tandem with other Awards granted under the Plan.
Stock Awards are subject to such terms and conditions, including vesting
schedules, as the Committee may determine and specify in the applicable Award
Agreement. Stock Awards shall be settled in Stock.

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7. General Terms and Conditions

	 	a.	 	Term. The term of an Option Award shall not exceed seven years.
	 
	 	b.	 	Restrictions. Unless otherwise provided under the Plan or by the Committee,
during the Restricted Period, no Award shall be sold, exchanged, transferred,
assigned, pledged, hypothecated, or otherwise disposed of (other than upon the death
of the Participant, by beneficiary designation, by last will and testament or by the
laws of descent and distribution) and shall be exercisable and/or subject to receipt
during the Restricted Period only by the Participant. Each certificate evidencing shares of Stock granted pursuant to a Stock Award or shares of Stock received upon
exercise of an Option shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Award. Any attempt to dispose of such shares of Stock in contravention of such terms, conditions and restrictions shall be
ineffective. The Corporation itself will hold such shares in custody, until the
restrictions thereon shall have lapsed. The Corporation may delay the issuance of shares of Stock covered by any Award and the delivery of a certificate for such shares
of Stock until the shares of Stock to be issued in connection with the grant or
exercise of an Award, as applicable, are effectively registered under applicable
federal securities laws now in force or hereafter amended or until counsel for the
Corporation shall have given an opinion, which opinion shall not be unreasonably
conditioned or withheld, that such shares of Stock are exempt from registration under
applicable federal securities laws now in force or hereafter amended.
	 
	 	c.	 	Exercise Price. The exercise price of an Option Award shall not be less than
100% of the Fair Market Value of the Stock on the date such Option Award is granted
and the exercise opportunity may be capped if the Committee determines appropriate and
so specifies in the Award Agreement pertaining thereto.
	 
	 	d.	 	Repricing Prohibited. There shall be no grant of an Option Award to a
Participant in exchange for a Participant’s agreement to cancellation of a
higher-priced Option Award that was previously granted to such Participant.
	 
	 	e.	 	Payment of Taxes Related to Stock and Option Awards. The Corporation shall
have the right to require the payment (through withholding from any amount payable
from the Corporation to Participant) of any withholding taxes required by federal,
state or local law, if at all, in respect of an Award.

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	 	f.	 	Rights of Holders of Stock. A Participant shall have, after a certificate or
certificates for the number of shares of Stock granted have been issued in his or her
name, absolute ownership of such shares including the right to vote the same, subject,
however, to the terms, conditions and restrictions described in the Plan and in the
Award Agreement to such Participant. The Corporation will hold all certificates until
all restrictions on them have lapsed.
	 
	 	g.	 	Death, Disability & Termination. Any provision of Section 7(h) of Part I of
the Plan to the contrary notwithstanding, if a Participant who has been a member of
the Board continuously since the date as of which an Award was made and such
Participant shall cease to be such a member of the Board by reason of death or
Disability, then an Option Award granted to such Participant may be exercised to the
extent exercisable on the date of death or Disability, within the earlier of (x) 360
days after the death or Disability of such person and (y) the date on which the Option
expires by its terms, by the estate of such person, or by any person or persons who
acquired the right to exercise such Option Award by beneficiary designation, will or
by the laws of descent and distribution. Unless the Committee determines otherwise, a
Stock Award Agreement shall provide for the forfeiture of the non-vested shares of
Stock underlying such Stock Award upon the Participant ceasing to be a Participant for
any reason, including death or Disability.
	 
	 	h.	 	Terms of Award Agreement. After the Committee determines that it will offer
an Option Award or Stock Award, it will advise the Participant in writing or
electronically, by means of an Award Agreement, of the terms, conditions and
restrictions, including vesting, if any, related to the Award grant, including the
number of shares of Stock that the Participant shall be entitled to receive or
purchase, the price to be paid, if any, and, if applicable, the time within which the
Participant must accept the Award grant. The Award grant shall be accepted by
execution of an Award Agreement in the manner determined by the Committee. Unless the
Committee determines otherwise, the Award Agreement shall provide for the forfeiture
of the non-vested shares of Stock underlying such Stock Award and for any such shares
of Stock that remain non-vested at the time the Participant ceases to be a
Participant, the cessation of Participant status shall cause an immediate sale of such
non-vested shares of Stock to the Corporation at the original price per share of
Stock, if any, paid by the Participant.
	 
	 	i.	 	No Future Entitlements. No Participant shall have any claim or right to be
granted an Award under this Plan. Having received an Award under this Plan

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	 	 	 	shall not give a Participant any right to receive any other Award under this Plan
and the Committee may determine that any or all Participant(s) are not eligible to
receive an Award under this Plan for an indefinite period or for a specified year
or years.

	 	j.	 	Other. The Committee may establish such other terms and conditions for an
Award as it deems appropriate.

II. MISCELLANEOUS

     1. Effective Date. The Plan became effective on May 4, 1996, was first amended on April 20,
1998 and if so approved by the stockholders of the Corporation, is amended and restated effective
on May 25, 2006.

     2. Duration of Plan. Unless terminated pursuant to Section 5 of Part II, the Plan shall remain
in effect.

     3. Changes in Capital Structure. In the event of any change in the outstanding shares of Stock
by reason of a stock dividend greater than 5% of the Stock price, stock split or reverse stock
split, recapitalization, merger or consolidation (whether or not the Company is a surviving
Company), reorganization, combination, exchange or reclassification of shares, spin-off or other
similar corporate changes or an extraordinary dividend payable in cash or property, (i) the number
of shares of Stock (or other securities) then remaining subject to this Plan, including those that
are then covered by outstanding Awards, and the maximum number of shares of Stock that may be
issued, or with respect to which Awards may be granted, to any single Participant or in the
aggregate pursuant to this Plan, (ii) the price or exercise price for each share or right then
covered by an outstanding Award and (iii) the terms and conditions of each other outstanding Award
may be proportionally adjusted as the Committee deems equitable in its absolute discretion to
prevent dilution or enlargement of the rights of a Participant. Any adjustment made by the
Committee under this Section shall be final, binding and conclusive on all persons.

     4 Expenses of Plan. The expenses of the Plan shall be borne by the Corporation.

     5. Amendment or Termination. The Corporation may at any time amend, suspend or
terminate the Plan, in whole or in part, and the Committee may, subject to the Plan, at any time
alter or amend any or all Award Agreements to the extent permitted by applicable law and the Plan;
provided that no such action shall impair the rights of any holder of an Award without the holder’s
consent. For purposes of the Plan, any action of the Committee that alters or affects the tax
treatment of any Award shall not be

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considered to materially impair any rights of any holder. Notwithstanding the foregoing,
neither the Corporation nor the Committee shall (except pursuant to Section 3 of Part II) amend the
Plan or any Award Agreement, without the approval of the stockholders of the Company to (i)
increase the number of shares of Stock available for Awards as set forth in Section 4 of Part I or
(ii) decrease the exercise price of any Award or (iii) make any other amendments to the Plan or
Award Agreement which would require stockholder approval under the General Corporation Law of the
State of Delaware, New York Stock Exchange Rules or such other rules as may govern the trading or
quotation of the Company’s Stock or Rule 16b-3 of the Securities Exchange Act of 1934, as amended.

     6. Nothing in this Plan shall be deemed to create any obligation on the part of the Board to
nominate any director for reelection as a director by the shareholders of the Corporation.

     7. Effective Date and Term. The amended and restated Plan was adopted by the Board of
Directors effective as of May 25, 2006, subject to approval by the Company’s stockholders. The
Committee may grant Awards prior to stockholder approval, provided, however, that Awards granted
prior to such stockholder approval are automatically canceled if stockholder approval is not
obtained at or prior to the period ending twelve months after the date the Plan is effective and
provided further that no Award may be settled prior to the date stockholder approval is obtained.
Unless sooner terminated, the Plan shall remain in effect until May 25, 2016. Termination of the
Plan shall not affect any Award previously made.

8<PAGE>

                                   EXHIBIT 4.1

                          THIRD WAVE TECHNOLOGIES, INC.

                                 2000 STOCK PLAN

     1. Purposes of the Plan. The purposes of this 2000 Stock Plan are:

          -    to attract and retain the best available personnel for positions
               of substantial responsibility,

          -    to provide additional incentive to Employees, Directors and
               Consultants, and

          -    to promote the success of the Company's business.

          Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.

          The Plan is hereby amended and restated effective June 2, 2006 as set
forth herein to make certain changes to reflect changes in applicable law and
certain other desirable changes.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.

          (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

          (c) "Board" means the Board of Directors of the Company.

          (d) "Code" means the Internal Revenue Code of 1986, as amended.

          (e) "Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.

          (f) "Common Stock" means the common stock of the Company.

          (g) "Company" means Third Wave Technologies, Inc., a Delaware
corporation.

          (h) "Consultant" means any person, including an advisor, engaged by
the Company or a Subsidiary to render services to such entity.

                                      -1-

<PAGE>

          (i) "Director" means a member of the Board.

          (j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

          (k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Subsidiary of the Company. A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.

          (l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (m) "Fair Market Value" means, as of any date, unless otherwise
required by the Code or any regulation thereunder,

               (i) If the Common Stock is listed on a national securities
exchange or traded on Nasdaq, the last reported official closing sales price for
the last preceding date upon which a sale was reported prior to the date of
grant;

               (ii) If the Common Stock is not listed or traded, the last
reported sales price for the last preceding date upon which a sale was reported
prior to the date of grant; or

               (iii) If not so reported, as reported by the OTC Bulletin Board,
and if not reported on the OTC Bulletin Board, then as reported on
www.pinksheets.com or other recognized financial reporting service, as
applicable, or in the absence of any established market for the Common Stock, as
determined in good faith by the Administrator pursuant to any reasonable
valuation method.

          (n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          (o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

          (p) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement or Restricted Stock
Purchase Agreement, as applicable.

          (q) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

                                      -2-

<PAGE>

          (r) "Option" means a stock option granted pursuant to the Plan.

          (s) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

          (t) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

          (u) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.

          (v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.

          (w) "Parent" means a "parent corporation" of the Company whether now
or hereafter existing, as defined in Section 424(e) of the Code.

          (x) "Plan" means this Third Wave Technologies, Inc. 2000 Stock Plan,
as set forth herein and as may be amended from time to time.

          (y) "Prior Plans" means collectively, the Company's 1995 Incentive
Stock Option Plan, 1997 Incentive Stock Option Plan, 1997 Nonqualified Stock
Option Plan, 1998 Incentive Stock Option Plan, 1999 Incentive Stock Option Plan,
and 1999 Nonqualified Stock Option Plan.

          (z) "Restricted Stock" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 of the Plan.

          (aa) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

          (bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

          (cc) "Section 16(b)" means Section 16(b) of the Exchange Act.

          (dd) "Service Provider" means an Employee, Director or Consultant.

          (ee) "Share" means a share of Common Stock, as adjusted in accordance
with Section 13 of the Plan.

          (ff) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

          (gg) "Subsidiary" means a "subsidiary corporation" of the Company
whether now or hereafter existing, as defined in Section 424(f) of the Code.

                                      -3-

<PAGE>

     3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be issued or
transferred under the Plan is 4,285,200 Shares plus (a) any Shares which were
reserved but unissued under the Prior Plans as of the date of stockholder
approval of the original adoption of this Plan, (b) any Shares that have been
returned or will be returned to the Prior Plans as a result of termination of
options or repurchase of Shares issued under the Prior Plans, and (c) an annual
increase to be added on the first day of the Company's fiscal year beginning in
2001, equal to the lesser of (i) 2,571,600 shares, (ii) 4.5% of the outstanding
shares on such date or (iii) an amount determined by the Board (the "Annual
Increase"). The Shares may be authorized, but unissued, or reacquired Common
Stock.

          If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

     4. Administration of the Plan.

          (a) Procedure.

               (i) Multiple Administrative Bodies. Different Committees with
respect to different groups of Service Providers may administer the Plan.

               (ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

               (iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.

               (iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;

                                      -4-

<PAGE>

               (iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;

               (iv) to approve forms of agreement for use under the Plan;

               (v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;

               (vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option or Stock Purchase Right shall have declined
since the date the Option or Stock Purchase Right was granted;

               (vii) to institute an Option Exchange Program;

               (viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

               (ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

               (x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;

               (xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;

               (xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;

               (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

                                      -5-

<PAGE>

          (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.

     5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees. All grants made under the Plan shall be made conditional upon the
Service Provider's acknowledgement, in writing or by acceptance of the Grant,
that all decisions and determinations of the Administrator shall be final and
binding on the Service Provider, his beneficiaries and any other person having
or claiming an interest under such grant. Grants need not be uniform as among
the grantees.

     6. Limitations.

          (a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

          (b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.

          (c) The following limitations shall apply to grants of Options:

               (i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 500,000 Shares.

               (ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 1,000,000
Shares, which shall not count against the limit set forth in subsection (i)
above.

               (iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.

               (iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

     7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.

                                      -6-

<PAGE>

     8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.

     9. Option Exercise Price and Consideration.

          (a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator and shall be no less than 100% of the Fair Market Value per Share
on the date of Grant except that in the case of an Incentive Stock Option
granted to an Employee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.

          (b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.

          (c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

               (i) cash;

               (ii) check;

               (iii) other Shares which (A) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

               (iv) in cash, on the T+3 settlement date (trade date plus three
days) that occurs after the exercise date specified in the notice of exercise,
provided that the Optionee exercises the Option through an irrevocable agreement
with a registered broker and the payment is made in accordance with procedures
permitted by Regulation T of the Federal Reserve Board and such procedures do
not violate applicable laws;

               (v) any combination of the foregoing methods of payment; or

               (vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

                                      -7-

<PAGE>

     10. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

               Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

          (b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

          (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not

                                      -8-

<PAGE>

exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

          (d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

          (e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

     11. Stock Purchase Rights.

          (a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

          (b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.

          (c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

          (d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company.

                                      -9-

<PAGE>

No adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 13 of the Plan.

     12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.

     13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

          (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

          (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

          (c) Merger or Asset Sale. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Option and Stock Purchase Right shall be assumed
or an equivalent option or right substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the

                                      -10-

<PAGE>

successor corporation refuses to assume or substitute for the Option or Stock
Purchase Right, the Optionee shall fully vest in and have the right to exercise
the Option or Stock Purchase Right as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
or Stock Purchase Right becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of at least fifteen (15) days from the date of such notice, which such
notice shall be provided at least fifteen (15) days prior to the closing of such
merger or asset sale, and the Option or Stock Purchase Right shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

          (d) Other Definition. The Committee may modify the effect of this
Section 13 for a particular grant as the Committee deems appropriate to comply
with Applicable Laws.

     14. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.

     15. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

          (b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

          (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

                                      -11-

<PAGE>

     16. Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

          (b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.

     17. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     18. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     19. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

                                      -12-

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