Document:

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EXHIBIT 10.14.1

OPTION AGREEMENT - CONSUMER PORTFOLIO SERVICES, INC.

THIS OPTION AGREEMENT (THIS "AGREEMENT") IS THE "OPTION AGREEMENT" REFERRED TO
ON THE REVERSE SIDE OF THIS PAGE. THE REVERSE SIDE OF THIS PAGE IS CAPTIONED
"NOTICE OF GRANT OF STOCK OPTIONS AND OPTION AGREEMENT" (HEREIN, THE "NOTICE").

The Notice and this Agreement are to be read and interpreted as ONE DOCUMENT and
are hereafter referred to, together, as "this Option."

This Option is by and between Consumer Portfolio Services, Inc., a California
corporation (referred to herein, together with its subsidiaries, as the
"Company" or "Consumer Portfolio Services") and the "Optionee." This Option is
issued pursuant to the Company's 2006 Long-Term Equity Incentive Plan (referred
to herein as the "Plan" or "Company's Stock Option Plan") and is designated by
the Option Number recorded on the Notice. Capitalized terms used in this Option
and not otherwise defined have the meanings given in the Plan. As used in this
Option, the following terms have the meanings given below:

    "Optionee" means the individual named on the Notice

    "Date of Grant"means the date recorded next to the word "Effective" on the
    Notice

    "Expiration Date" means the date recorded one or more times under the word
    "Expiration" in the Notice

    "Maximum Grant"means the number preceding the word "shares" in the first
    paragraph of the Notice

    "Option Price" means the price per share of the stock as recorded in the
    first paragraph of the Notice

1. GRANT OF OPTION. The Company hereby grants to Optionee the option to
purchase, upon and subject to the terms and conditions of this Option and of the
Plan, all or any part of the Maximum Grant of the Company's common stock (also
referred to in the Notice as "stock"), at the Option Price specified above. The
shares so purchased or available for purchase are referred to herein as the
"Option Shares." This Option is not intended to qualify as an incentive option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.

2. EXERCISABILITY. (a) This Option shall become exercisable in a single
installment, in full on the date specified on the Notice. This Option shall
remain exercisable as to all shares until the Expiration Date, at which time it
shall expire in its entirety, unless this Option has expired or terminated
earlier in accordance with the provisions hereof or of the Plan. In all events,
the number of shares that may be purchased at any time under this Option is
reduced by the number of shares previously so purchased.

     (b) Notwithstanding paragraph (a), upon the occurrence of a Change of
Control (as such term is defined in the Plan), any and all installments of
shares that have not become exercisable according to the vesting schedule on the
Notice shall automatically become exercisable on such date. This Option shall
remain exercisable as to all of such shares until the Expiration Date, at which
time it shall expire in its entirety, unless this Option has expired or
terminated earlier in accordance with the provisions hereof or of the Plan. In
all events, the number of shares that may be purchased at any time under this
Option is reduced by the number of shares previously so purchased.

                                      -1-
<PAGE>

3. EXERCISE OF OPTION. This Option may be exercised by written notice delivered
to the Company stating the number of Option Shares with respect to which this
Option is being exercised, together with the full Option Price of such shares in
cash, bank cashier's check, or such other form of payment as may be permitted by
resolution of the board of directors of the Company or the committee of said
board charged with administration of the Plan (said board or committee, the
"Administrator"). Not less than ten (10) Option Shares may be purchased at any
one time unless the number purchased is the total number that remains to be
purchased under this Option, and in no event may this Option be exercised with
respect to fractional shares. Upon exercise, the Optionee shall make appropriate
arrangements and shall be responsible for the withholding of any federal or
state income or employment taxes then due. Optionee agrees that the Company may
decline to permit exercise in the absence of such withholding arrangements.

4. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any person acquiring
Option Shares upon exercise of this Option, will notify the Company in writing
not more than one (1) business day after any sale or other disposition of such
shares.

5. CESSATION OF SERVICE. Except as provided in Paragraphs 7, 8 or 12 hereof, if
the Optionee ceases to serve as a director of the Company or any Subsidiary of
the Company, this Option shall expire three months thereafter, but not later
than the Expiration Date specified in Paragraph 2 hereof; provided, however,
that if the termination of service is the result of Optionee's death or
disability, then this Option shall expire one year after the termination of
service, but not later than the Expiration Date specified in Paragraph 2 hereof.
During such period or extended period after termination of service, this Option
shall be exercisable only to the extent, if any, that it had become exercisable
on the date of termination, and any rights of Optionee with respect to Option
Shares not exercisable as of such date shall expire and terminate automatically
on such date.

6. REDUCTION IN STATUS. [not applicable]

7. TERMINATION FOR CAUSE. If the Optionee should be removed from the board of
directors of the Company or any Subsidiary of the Company for cause, this Option
shall automatically expire unless reinstated by the Administrator within thirty
(30) days of such termination by giving written notice of such reinstatement to
the Optionee. In the event of such reinstatement, the Optionee may exercise this
Option only to such extent, for such time, and upon such terms and conditions as
in the case of the a termination for a reason other than cause, disability or
death. Termination for cause shall include, but not be limited to: (a) gross
neglect or willful failure to perform fully Optionee's duties and obligations to
the Company; (b) indictment for or conviction of a felony or any other crime
involving moral turpitude; (c) the commission of any fraudulent or dishonest
acts affecting the business or assets of the Company or others with whom the
Company has a business or client relationship; and (d) drug or alcohol abuse or
dependency so as to adversely affect Optionee's ability to perform fully
Optionee's duties and obligations to the Company. The determination of the
Administrator with respect to the existence of cause for termination shall be
final and conclusive.

8. DISABILITY OR DEATH OF OPTIONEE. If the Optionee's service to the Company or
any Subsidiary of the Company is terminated by reason of death or disability or
if the Optionee dies or becomes permanently and totally disabled (within the
meaning of Section 22 of the Internal Revenue Code) during the period referred
to in Paragraph 5 hereof, this Option shall automatically expire and terminate
twelve (12) months after the date of the Optionee's disability or death, but no
later than the Expiration Date specified in Paragraph 2 hereof. After Optionee's

                                      -2-
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death but before such expiration, the person or persons to whom the Optionee's
rights under this Option shall have passed by order of a court of competent
jurisdiction or by will or the applicable laws of descent and distribution, or
the executor, administrator or conservator of the Optionee's estate, shall have
the right to exercise this Option to the extent, if any, that it had become
exercisable as of the date of termination of employment.

9. NONTRANSFERABILITY. This Option shall not be transferable except by will or
by the laws of descent and distribution, and shall be exercisable during the
Optionee's lifetime only by the Optionee.

10. EMPLOYMENT. [not applicable]

11. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a
stockholder with respect to the Option Shares unless and until said Option
Shares are issued to the Optionee as provided in the Plan. Except as provided in
Section 7(c) of the Plan, no adjustment will be made for dividends or other
rights in respect of which the record date is prior to the date such stock
certificates are issued.

12. MODIFICATION AND TERMINATION BY BOARD OF DIRECTORS. The rights of the
Optionee are subject to modification and termination upon the occurrence of
certain events as provided in Section 5 of the Plan (relating to stock splits
and other corporate reorganization or recapitalization transactions) and Section
9 (relating to a Change in Control). Any such modification, to the extent
authorized by the Plan, shall be effective at such time and upon such terms and
conditions as may be specified in a notice sent to Optionee in accordance with
Paragraph 13 hereof.

13. NOTICES. All notices to the Company provided for in this Option shall be
addressed to the Company in care of its President at its principal office and
all notices to the Optionee shall be addressed to the address appearing in
Optionee's personnel file maintained by the Company, or to such other address as
either may designate to the other in writing. Notice to the Company shall be
effective upon receipt, and notice to the Optionee shall be effective on the
second business day after mailing, or upon receipt, whichever is earlier.

14. GOVERNING LAW. This Agreement shall be governed by the internal laws of the
State of California.

15. ENTIRE AGREEMENT; AMENDMENTS. This Option (together with the Plan) contains
the entire understanding of the parties with respect to the subject matter
hereof and may not be amended except by a written amendment signed by the party
to be charged, or pursuant to Sections 5, 9 or 14 of the Plan. "The subject
matter hereof" is any and all options to purchase Company securities that
Optionee has earned or has any right to receive.

16. INCORPORATION OF PLAN. ALL OF THE PROVISIONS OF THE PLAN ARE INCORPORATED
HEREIN BY REFERENCE AS IF SET FORTH IN FULL HEREIN. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THE PLAN AND ANY PROVISION CONTAINED HEREIN, THE TERMS OF
THE PLAN SHALL BE CONTROLLING AND THE CONFLICTING PROVISIONS HEREIN SHALL BE
DISREGARDED.

                                      -3-
<PAGE>

OPTION AGREEMENT - CONSUMER PORTFOLIO SERVICES, INC.

THIS OPTION AGREEMENT (THIS "AGREEMENT") IS THE "OPTION AGREEMENT" REFERRED TO
ON THE REVERSE SIDE OF THIS PAGE. THE REVERSE SIDE OF THIS PAGE IS CAPTIONED
"NOTICE OF GRANT OF STOCK OPTIONS AND OPTION AGREEMENT" (HEREIN, THE "NOTICE").

The Notice and this Agreement are to be read and interpreted as ONE DOCUMENT and
are hereafter referred to, together, as "this Option."

This Option is by and between Consumer Portfolio Services, Inc., a California
corporation (referred to herein, together with its subsidiaries, as the
"Company" or "Consumer Portfolio Services") and the "Employee." This Option is
issued pursuant to the Company's 2006 Long-Term Equity Incentive Plan (referred
to herein as the "Plan" or "Company's Stock Option Plan") and is designated by
the Option Number recorded on the Notice. Capitalized terms used in this Option
and not otherwise defined have the meanings given in the Plan. As used in this
Option, the following terms have the meanings given below:

    "Employee" means the individual named on the Notice

    "Date of Grant"means the date recorded next to the word "Effective" on the
    Notice

    "Expiration Date" means the date recorded one or more times under the word
    "Expiration" in the Notice

    "Maximum Grant"means the number preceding the word "shares" in the first
    paragraph of the Notice

    "Option Price" means the price per share of the stock as recorded in the
    first paragraph of the Notice

1. GRANT OF OPTION. The Company hereby grants to Employee the option to
purchase, upon and subject to the terms and conditions of this Option and of the
Plan, all or any part of the Maximum Grant of the Company's common stock (also
referred to in the Notice as "stock"), at the Option Price specified above. The
shares so purchased or available for purchase are referred to herein as the
"Option Shares." This Option is intended to qualify as an incentive option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.

2. EXERCISABILITY. (a) This Option shall become exercisable in installments. The
number of shares exercisable at any particular time is determined according to
the vesting schedule on the Notice, which outlines the timing (as recorded under
the words "Full Vest") and number of shares (as recorded under the word
"Shares") of each installment. This Option shall remain exercisable as to all of
such shares until the Expiration Date, at which time it shall expire in its
entirety, unless this Option has expired or terminated earlier in accordance
with the provisions hereof or of the Plan. In all events, the number of shares
that may be purchased at any time under this Option is reduced by the number of
shares previously so purchased.

     (b) Notwithstanding paragraph (a), upon the occurrence of a Change of
Control (as such term is defined in the Plan), any and all installments of
shares that have not become exercisable according to the vesting schedule on the
Notice shall automatically become exercisable on such date. This Option shall
remain exercisable as to all of such shares until the Expiration Date, at which
time it shall expire in its entirety, unless this Option has expired or
terminated earlier in accordance with the provisions hereof or of the Plan. In
all events, the number of shares that may be purchased at any time under this
Option is reduced by the number of shares previously so purchased.

                                      -4-
<PAGE>

3. EXERCISE OF OPTION. This Option may be exercised by written notice delivered
to the Company stating the number of Option Shares with respect to which this
Option is being exercised, together with the full Option Price of such shares in
cash, bank cashier's check, or such other form of payment as may be permitted by
resolution of the board of directors of the Company or the committee of said
board charged with administration of the Plan (said board or committee, the
"Administrator"). Not less than ten (10) Option Shares may be purchased at any
one time unless the number purchased is the total number that remains to be
purchased under this Option, and in no event may this Option be exercised with
respect to fractional shares. Upon exercise, the Employee shall make appropriate
arrangements and shall be responsible for the withholding of any federal or
state income or employment taxes then due. Employee agrees that the Company may
decline to permit exercise in the absence of such withholding arrangements.

4. NOTIFICATION OF SALE. Employee agrees that Employee, or any person acquiring
Option Shares upon exercise of this Option, will notify the Company in writing
not more than one (1) business day after any sale or other disposition of such
shares.

5. CESSATION OF EMPLOYMENT. Except as provided in Paragraphs 7, 8 or 12 hereof,
if the Employee ceases to be employed by the Company or any Subsidiary of the
Company, this Option shall expire three months thereafter, but not later than
the Expiration Date specified in Paragraph 2 hereof; provided, however, that if
the termination of employment is the result of Employee's death or disability,
then this Option shall expire one year after the termination of employment, but
not later than the Expiration Date specified in Paragraph 2 hereof. During such
period or extended period after termination of employment, this Option shall be
exercisable only to the extent, if any, that it had become exercisable on the
date of termination, and any rights of Employee with respect to Option Shares
not exercisable as of such date shall expire and terminate automatically on such
date.

6. REDUCTION IN STATUS. This Option is granted based on Employee's position or
status within the Company at the Date of Grant. Should Employee at any time no
longer be employed in such position, but rather in a position of substantially
less responsibility, as determined by the Administrator, then from and after the
date of such change in status ("Change Date") the number of shares as to which
this Option shall be exercisable shall be the greater of (i) the number of
shares as to which this Option was exercisable on the Change Date, and (ii) the
number of shares as to which this Option would be exercisable if the Maximum
Grant specified in Paragraph 1 hereof were a lesser number, determined by the
Administrator, that would be equal to the maximum grant that the Company then
customarily grants to individuals in positions similar to Employee's new
position. Such lesser number may be zero. In no event shall such a change in
terms of this Option result in either (i) an increase in the Maximum Grant, or
(ii) Employee's losing the right to exercise this Option as to the Option Shares
that Employee had the right to purchase on the Change Date.

                                      -5-
<PAGE>

7. TERMINATION FOR CAUSE. If the Employee's employment by the Company or any
Subsidiary of the Company is terminated for cause, this Option shall
automatically expire unless reinstated by the Administrator within thirty (30)
days of such termination by giving written notice of such reinstatement to the
Employee. In the event of such reinstatement, the Employee may exercise this
Option only to such extent, for such time, and upon such terms and conditions as
in the case of the a termination for a reason other than cause, disability or
death. Termination for cause shall include, but not be limited to: (a) gross
neglect or willful failure to perform fully Employee's duties and obligations to
the Company; (b) indictment for or conviction of a felony or any other crime
involving moral turpitude; (c) the commission of any fraudulent or dishonest
acts affecting the business or assets of the Company or others with whom the
Company has a business or client relationship; and (d) drug or alcohol abuse or
dependency so as to adversely affect Employee's ability to perform fully
Employee's duties and obligations to the Company. The determination of the
Administrator with respect to the existence of cause for termination shall be
final and conclusive.

8. DISABILITY OR DEATH OF EMPLOYEE. If the Employee's employment by the Company
or any Subsidiary of the Company is terminated by reason of death or disability
or if the Employee dies or becomes permanently and totally disabled (within the
meaning of Section 22 of the Internal Revenue Code) during the period referred
to in Paragraph 5 hereof, this Option shall automatically expire and terminate
twelve (12) months after the date of the Employee's disability or death, but no
later than the Expiration Date specified in Paragraph 2 hereof. After Employee's
death but before such expiration, the person or persons to whom the Employee's
rights under this Option shall have passed by order of a court of competent
jurisdiction or by will or the applicable laws of descent and distribution, or
the executor, administrator or conservator of the Employee's estate, shall have
the right to exercise this Option to the extent, if any, that it had become
exercisable as of the date of termination of employment.

9. NONTRANSFERABILITY. This Option shall not be transferable except by will or
by the laws of descent and distribution, and shall be exercisable during the
Employee's lifetime only by the Employee.

10. EMPLOYMENT. This Option shall not obligate the Company to employ Employee
for any period, nor shall it interfere in any way with the right of the Company
to increase or reduce the Employee's compensation, or to promote, demote or
reassign Employee.

11. PRIVILEGES OF STOCK OWNERSHIP. Employee shall have no rights as a
stockholder with respect to the Option Shares unless and until said Option
Shares are issued to the Employee as provided in the Plan. Except as provided in
Section 7(c) of the Plan, no adjustment will be made for dividends or other
rights in respect of which the record date is prior to the date such stock
certificates are issued.

12. MODIFICATION AND TERMINATION BY BOARD OF DIRECTORS. The rights of the
Employee are subject to modification and termination upon the occurrence of
certain events as provided in Section 5 of the Plan (relating to stock splits
and other corporate reorganization or recapitalization transactions) and Section
9 (relating to a Change in Control). Any such modification, to the extent
authorized by the Plan, shall be effective at such time and upon such terms and
conditions as may be specified in a notice sent to Employee in accordance with
Paragraph 13 hereof.

                                      -6-
<PAGE>

13. NOTICES. All notices to the Company provided for in this Option shall be
addressed to the Company in care of its President at its principal office and
all notices to the Employee shall be addressed to the address appearing in
Employee's personnel file maintained by the Company, or to such other address as
either may designate to the other in writing. Notice to the Company shall be
effective upon receipt, and notice to the Employee shall be effective on the
second business day after mailing, or upon receipt, whichever is earlier.

14. GOVERNING LAW. This Agreement shall be governed by the internal laws of the
State of California.

15. ENTIRE AGREEMENT; AMENDMENTS. This Option (together with the Plan) contains
the entire understanding of the parties with respect to the subject matter
hereof and may not be amended except by a written amendment signed by the party
to be charged, or pursuant to Sections 5, 9 or 14 of the Plan. "The subject
matter hereof" is any and all options to purchase Company securities that
Employee has earned or has any right to receive.

16. INCORPORATION OF PLAN. All of the provisions of the Plan are incorporated
herein by reference as if set forth in full herein. In the event of any conflict
between the terms of the Plan and any provision contained herein, the terms of
the Plan shall be controlling and the conflicting provisions herein shall be
disregarded.

                                      -7-exv10w1

 

Exhibit 10.1

Replidyne, Inc.

Variable Incentive Bonus Plan

Effective Calendar Year 2007

1. Purpose of the Plan. The purpose of the Replidyne, Inc. Variable Incentive Bonus Plan (the
“Plan”) is to promote the interests of the Company and its stockholders by rewarding Company
executives based upon the level of achievement of financial, business and other performance
objectives established in accordance with this Plan.

2. Administration. The Plan will be administered by the Compensation Committee of the Company’s
Board of Directors (the “Compensation Committee”) and the Chief Executive Officer; provided that
any action permitted to be taken by the Committee may be taken by the Board, in its discretion.
The Compensation Committee may correct any defect or omission or reconcile any inconsistency in the
Plan in the manner and to the extent the Compensation Committee deems necessary or desirable. Any
decision of the Compensation Committee in the interpretation and administration of the Plan, as
described herein, shall lie within its sole and absolute discretion and shall be final, conclusive
and binding on all parties concerned. The Compensation Committee generally sets a one-year
performance period under the Plan to run from January 1 through December 31 (the “Plan Year”). The
Compensation Committee is responsible for approving any incentive compensation for executive
officers, as that term is defined in Section 16 of the Securities Exchange Act of 1934, as amended
(the “Executive Officers”), and for recommending to the Company’s Board of Directors (the “Board”)
the incentive compensation for the President and Chief Executive Officer. The President and Chief
Executive Officer is responsible for any incentive compensation for employees who are not Executive
Officers (the “Non-Executive Officer Employees”) within annual budgets approved by the Compensation
Committee.

3. Eligibility. Replidyne executives serving on the Executive Committee and reporting to the
President and Chief Executive Officer are eligible to participate in the Plan (“Participant”). In
order to receive an award, a Participant must (i) be of regular status and scheduled to work a
minimum of 32 hours per week; (ii) have entered into Plan eligibility prior to October
1st of the applicable Plan Year; (iii) be on the Company’s payroll on the last day of
the applicable Plan Year; (iv) must receive at least a “Meets Expectations” rating on the
employee’s performance review for the Plan Year and; (v) not be subject to a formal performance
improvement plan at the time bonus determinations are made.

Participants with at least three (3), but less than twelve (12), months of active service during a
Plan Year may be eligible for a prorated bonus for such Plan Year, depending on their length of
service for that period.

3. Determination and Weighting of Objectives. Bonus awards for each Plan Year shall be determined
based on the level of achievement of corporate and individual objectives.

     (a) Corporate Objectives. On or about the beginning of each Plan Year, the President and CEO
will develop a list of corporate objectives for the Plan Year, which shall be subject to the
approval of the Compensation Committee. The corporate objectives shall include such financial,
business and other performance objectives as the Compensation Committee may, in its sole
discretion, approve.

     (b) Individual Objectives. After approval of the corporate objectives, the Company, in
consultation with the Participants, will develop individual objectives for the Plan Year that are
consistent with and support the corporate objectives or are otherwise intended to contribute to the
success of the Company. Individual objectives for each Participant will vary. Participants should
expect that the Company will request the Participant to develop specific written objectives for the
Plan Year, which will be subject to the approval of the President and CEO and the Compensation
Committee.

 

 

     (c) Weighting of Objectives. Bonus awards for each Participant shall be weighted between
corporate objectives and individual objectives based on the Participant’s position within the
organization. The weighting will be reviewed annually and may be adjusted by the Compensation
Committee, as necessary or appropriate. The weighting will be as follows:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Position	 	Corporate	 	Individual
	President and CEO

	 	 	100	%	 	—

	CCO — Chief Commercial Officer

	 	 	80	%	 	 	20	%
	CSO — Chief Scientific Officer

	 	 	80	%	 	 	20	%
	CMO — Chief Medical Officer

	 	 	80	%	 	 	20	%
	CFO — Chief Financial Officer

	 	 	80	%	 	 	20	%
	Senior Vice President

	 	 	75	%	 	 	25	%
	Vice President

	 	 	75	%	 	 	25	%
	Executive Director

	 	 	60	%	 	 	40	%

3. Target Award Multipliers. Target Bonus awards for each Participant will be determined by
applying a “target award multiplier” to the Participant’s Base Salary. The target award
multipliers will be reviewed annually and may be adjusted by the Compensation Committee, as
necessary or appropriate. The target award multipliers will be as follows:

	 	 	 	 	 
	 	 	Target Award
	Position	 	Multiplier
	President and CEO

	 	 	50	%
	Chief Functional Officer

	 	 	40	%
	Senior Vice President

	 	 	35	%
	Vice President

	 	 	30	%
	Executive Director

	 	 	30	%

4. Determination of Bonus Amounts.

     (a) Executive Officers. As soon as practicable after the end of each Plan Year, the
Compensation Committee shall determine the Bonus amount for each Executive Officer by determining
(i) the performance multiplier for the corporate component of the Executive Officers’ Bonus awards
based on the Committee’s assessment of the Company’s performance against corporate objectives for
the Plan Year (the “Corporate Performance Multiplier”), and (ii) the performance multiplier for the
individual component of each Executive Officer’s Bonus award based on the Compensation Committee’s
assessment (which may be based on the recommendation of the President and CEO) of the Executive
Officer’s performance against his or her individual objectives for the Plan Year (the “Individual
Performance Multiplier”). The same Corporate Performance Multiplier shall be used for all
Executive Officers and all other Participants under the Plan for any particular Plan Year. If the
Committee determines that corporate or individual performance for the Plan Year exceeded objectives
or was excellent in view of prevailing conditions, the Committee may approve Corporate or
Individual Performance Multipliers, as the case may be, up to 150%.

     (b) Non-Executive Officer Participants. As soon as practicable after the end of each Plan
Year, the President and CEO shall determine the Bonus amount for each Non-Executive Officer
Participant by (i) applying the Corporate Performance Multiplier, and (ii) determining the
performance multiplier for the individual component of each Participant’s Bonus award based the
President and CEO’s assessment of the Participant’s performance against his or her individual
objectives for the Plan Year (the “Individual Performance Multiplier”). If the President and CEO
determines that a Participant’s individual performance

2

 

for the Plan Year exceeded objectives or was excellent in view of prevailing conditions, the
President and CEO may approve an Individual Performance Multiplier up to 150%.

     (c) Calculation of Bonus Amount. The example below illustrates a sample Bonus calculation
under the Plan. First, a total target award is calculated by multiplying a Participant’s Base
Salary by the target award multiplier for the Participant’s position. This total target award
amount is then divided between corporate and individual components based on the relative weighting
of performance factors for the Participant’s position. This calculation establishes specific
target awards for both the individual and corporate components of the Participant’s bonus award.

At the end of the Plan Year, the actual Corporate Performance Multiplier and Individual Performance
Multiplier will be established for each Participant using the process described above. The
Corporate Performance Multiplier, which is based on overall corporate performance, will be used to
calculate the corporate component of all Participants’ Bonus awards. This is accomplished by
multiplying each Participant’s target award based on corporate performance by the actual Corporate
Performance Multiplier approved by the Compensation Committee. The Individual Performance
Multiplier, which is based on a Participant’s performance against his or her individual objectives,
is used in the same way to calculate the individual component of the Participant’s Bonus award.

Example: Cash Award Calculation

	 	 	 
	Position:	 	Vice President
	Base salary:

	 	$200,000
	Target award multiplier:

	 	30%
	Total target award:

	 	$60,000
	 
	 	 
	Target award components (based on performance factor mix):
	 	 
	Target award based on corporate performance (75%):

	 	$45,000
	Target award based on individual performance (25%):

	 	$15,000
	 
	 	 
	Actual cash award calculation:
	 	 
	Assumed payment multipliers based on performance assessment:
	 	 
	Corporate Performance Multiplier:

	 	75%
	Individual Performance Multiplier:

	 	125%
	Cash award:
	 	 
	Corporate component:

	 	$33,750
	Individual component:

	 	$18,750
	Total cash award earned:

	 	$52,500

     (d) Adjustments to Bonuses. Notwithstanding any other provision of this Plan, the
Compensation Committee (with respect to any Officer’s Bonus) or the President and CEO (with respect
to a Non-Officer Participant’s Bonus) shall have the authority, in their sole discretion and in
such circumstances as they may deem appropriate, to approve any adjustments to a Participant’s
Bonus with respect to any particular Plan Year.

5. Payment of Bonuses. Payment of a Bonus to a Participant shall be made as soon as practicable
after determination of the amount of the Bonus, and will occur within 75 days after the end of the
Plan Year. Any such payment shall be in cash or cash equivalent, subject to any applicable
withholding requirements. Awards under the Plan are subject to applicable withholdings.
Participants who have elected to participate in the Company’s 401(k) Plan will have the applicable
funds withheld from their bonus payment unless appropriate authorization is received to opt out of
the deferral. Notwithstanding the foregoing, if the payment of any award at the time specified
herein would be result in the adverse tax consequences described in Section 409A(a)(1) of the
Internal Revenue Code (the “Code”) as a result of the recipient’s status as a “specified employee”
(within the

3

 

meaning of Section 409A of the Code), the time of such payment shall be automatically delayed to
the minimum extent necessary so that Section 409A(a)(1) of the Code will not apply.

6. Termination of Employment; Changes in Status.

     (a) Unless the terms of an applicable severance plan or employment agreement provide
otherwise, the payment of a Bonus with respect to a specific Plan Year requires that the employee
be on the Company’s payroll as of the last day of such Plan Year. An employee whose employment
with the Company is terminated, either voluntarily or involuntarily, prior to the last day of the
Plan Year will not be eligible to receive a Bonus with respect to such Plan Year. An employee who
terminates after the last day of the Plan Year but prior to the normal delivery of Bonuses for such
Plan Year shall be eligible to receive his or her Bonus at the same time Bonuses are paid to all
other Participants generally.

     (b) If a Participant transfers from one eligible position to another prior to the end of a
Plan Year, the Participant’s Bonus will be based on (i) the target award multipliers prorated for
the length of time spent in each position, and (ii) the weighting of goals effective on the last
day of the Plan Year, and (iii) the Participant’s performance results as determined to reflect the
entire performance period.

7. Other Provisions 

The Company reserves the right to interpret, modify, suspend or terminate this Plan at any time.

No Participant will have the right to alienate, assign, encumber, hypothecate or pledge his or her
interest in any award under the Plan, voluntarily or involuntarily, and any attempt to so dispose
of any such interest will be void.

Participants who engage in an activity that violates applicable local, state or federal laws, or
who violate Company policies, may be subject to having their awards reduced or eliminated in the
sole discretion of the Compensation Committee, except in the case of the Chief Executive Officer
where the Board shall make the final determination after considering the Compensation Committee’s
recommendation.

Neither this Plan nor any action taken hereunder shall be construed as giving any employee or
Participant the right to be retained in the employ of the Company. Employees of the Company are
employed “at will” unless they have an agreement signed by the Chief Executive Officer or a member
of the Board providing for other than at-will employment.

The Company shall not be required to fund or otherwise segregate any cash or any other assets which
may at any time be paid to Participants under the Plan. The Plan shall constitute an “unfunded”
plan of the Company.

In the event of any conflict between a Participant’s employment agreement with the Company and this
Plan, the terms of the Participant’s employment agreement will control.

The provisions contained in this Plan set forth the entire understanding of the Company with
respect to the Plan and supersede any and all prior communications between the Company and any
employee with respect to the Plan. This Plan supersedes and replaces the Company’s previous Annual
Incentive Plan.

4

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