Document:

EXHIBIT 10.1

 

ELECTRONICS
BOUTIQUE HOLDINGS CORP.

MERGER BONUS PLAN

 

The Compensation Committee of the Board of Directors
of Electronics Boutique Holdings Corp. has established this Merger Bonus
Plan.  The purpose of the plan is to
reward employees for their years of service and for creating value for
stockholders by performing their duties capably through the closing of the
merger with GameStop Corp.

 

1.1 – Definitions

 

Various
terms used in the plan are defined as follows:

 

Award
Calculation:  As set forth in Exhibit A
attached hereto.

 

Award
Distribution:  Award expressed as cash.

 

Board
of Directors:  The Board of Directors of
Electronics Boutique Holdings Corp.

 

Compensation
Committee:  The Compensation Committee of
the Board of Directors of Electronics Boutique Holdings Corp.

 

The
Company:  Electronics Boutique Holdings
Corp. and its subsidiaries and affiliates.

 

Merger
Closing Date:  The date upon which the
transactions contemplated by the Agreement and Plan of Merger, dated as of April 17,
2005, by and among GameStop Corp., GameStop, Inc., GSC Holdings Corp.,
Cowboy Subsidiary LLC, Eagle Subsidiary LLC and the Company and any amendment,
thereto (the “Merger Agreement”) are consummated.

 

Plan
Participant:  Active associates of the
Company who meet the eligibility criteria established in Exhibit A.

 

Residual
Distributions: Award amounts that are not designated or that are designated for
particular associates of the Company who terminate their employment with the
Company prior to the Merger Closing Date that may be redistributed for
pre-closing retention purposes at the discretion of the Chief Executive Officer
to those associates receiving less than $15,000 under this plan in an amount
not to exceed $15,000 per individual at any time prior to the Merger Closing
Date.

 

1.2 – Eligibility to Participate

 

All participants must remain employed with the
Company through the Merger Closing Date without tendered resignation in order
to be eligible for the award provided for herein (and in specific amounts
determined by the Compensation Committee).

 

 

Employees
who voluntarily quit or who are terminated prior to the Merger Closing Date
will be ineligible for such awards.  If
the active full-time service with the Company of a Plan Participant is
terminated by death, disability or retirement, the Compensation Committee may,
at their complete and absolute discretion, approve an award to a Plan
Participant.  If a Plan Participant is on
an approved leave of absence, he/she will receive an award based on the time
he/she was in active service with the Company.

 

1.3 – Award Calculations

 

Award Calculations for Plan Participants (depending
on classification) is based on many factors including, but not limited to, the
following:  years of service, job
performance, long term contributions to the Company and efforts involved in
completing the transactions contemplated by the Merger Agreement.  The total amount of Award Distributions which
may be made under this plan shall not exceed $10 million.

 

1.4 – Redistribution of Forfeited Bonuses

 

In the event an employee voluntarily quits or is
terminated prior to the Merger Closing Date, the award that the employee would
have been otherwise eligible for shall be returned to the bonus pool for
redistribution.  Residual Distributions
may be made for pre-closing retention purposes at the discretion of the Chief
Executive Officer to those associates receiving less than $15,000 under this
plan in an amount not to exceed $15,000 per individual at any time prior to the
Merger Closing Date.

 

1.5 – Award Distribution 

 

Distribution of all awards will be made within 15
days following the Merger Closing Date. 
Award Distributions will be in cash.

 

1.6 – Plan Administration

 

The Compensation Committee shall, with respect to
this plan, have full power and authority to construe, interpret and manage,
control and administer this plan, and to decide upon cases in conformity with
the objectives of this plan under such rules as the Compensation Committee
may establish.

 

Any decision made or action taken by the Board of
Directors or the Compensation Committee arising out of, or in connection with
the administration, interpretation and effect of this plan shall be at their
complete and absolute discretion and will be conclusive and binding on all
parties.  In the event of any conflict
between this plan and a Plan Participant’s employment agreement with the
Company, the Plan Participant’s employment agreement with the Company shall
control.

 

No member of the Board of Directors or the
Compensation Committee shall be liable for any act or action hereunder, whether
of omission or commission, by a Plan Participant or employee or by any agent to
whom duties in connection with the

 

 

administration
of this plan have been delegated in accordance with the provisions of this
plan.

 

1.7 – Amendment, Modification, Suspension or
Termination

 

The Company reserves the right, by and through the
Compensation Committee, to amend, modify, suspend, reinstate or terminate all
or any part of this plan.  The Chief
Executive Officer will give prompt written notice to each Plan Participant of
any amendment, suspension or termination or any material modification of this
plan.  The Compensation Committee also
reserves the right to adjust or eliminate award payments that resulted from
fraudulent activity.

 

1.8 – Effective Date of the Plan

 

The effective date of this plan is June 9,
2005.

 

1.9 – Employer Relation with Participants

 

Neither the establishment nor the maintenance of
this plan shall be construed as conferring any legal rights upon any
participant or any person for a continuation of employment, nor shall it
interfere with the right of an employer to discharge any participant or
otherwise deal with him/her without regard to the existence of this plan.

 

1.10 – Governing Law

 

Except to the extent pre-empted under federal law, the provisions of
this plan shall be construed, administered and enforced in accordance with the
laws of the Commonwealth of Pennsylvania.Exhibit 10.1

 

2005 Incentive Stock Plan

 

 

INTRUSION
INC.

2005
STOCK INCENTIVE PLAN

 

ARTICLE ONE

 

GENERAL PROVISIONS

 

I.              PURPOSE
OF THE PLAN

 

This Plan is intended to
promote the interests of the Corporation by providing eligible persons, who are
employed by or serving the Corporation or any Parent or Subsidiary, with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
such service and to continue contributing to the on-going success of the
Corporation.

 

Capitalized terms shall
have the meanings assigned to such terms in the attached Appendix.

 

II.            STRUCTURE
OF  THE  PLAN

 

A.            The Plan
shall be divided into three separate equity incentive programs:

 

1.   the Discretionary Option Grant
Program under which eligible persons may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock;

 

2.   the Stock Issuance Program under
which eligible persons may, at the discretion of the Plan Administrator, be
issued shares of Common Stock directly, either through the immediate purchase
of such shares or as a bonus for services rendered the Corporation (or any
Parent or Subsidiary); and

 

3.   the Automatic Option Grant Program
under which eligible non-Employee Board members shall automatically receive
option grants at designated intervals over their period of continued Board
service.

 

B.            The
provisions of Articles One and Five shall apply to all equity programs under
the Plan and shall govern the interests of all persons under the Plan.

 

III.           ADMINISTRATION OF THE PLAN

 

A.            The
Primary Committee and the Board shall have concurrent authority to administer
the Discretionary Option Grant and Stock Issuance Programs with respect to
Section 16 Insiders.  Grants made by the
entire Board will be not be exempt from the million dollar compensation
deduction limitation of Code Section 162(m).  Administration of the Discretionary Option
Grant and Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board’s discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain the power
to administer those programs with

 

 

respect to all such persons. 
However, any discretionary option grants or stock issuances for members
of the Primary Committee should be authorized by a disinterested majority of
the Board.

 

B.            Members
of the Primary Committee or any Secondary Committee shall serve for such period
of time as the Board may determine and may be removed by the Board at any
time.  The Board may also at any time
terminate the functions of any Secondary Committee and reassume all powers and
authority previously delegated to such committee.

 

C.            Each Plan
Administrator shall, within the scope of its administrative functions under the
Plan, have full power and authority (subject to the provisions of the Plan) to
establish such rules and procedures as it may deem appropriate for proper
administration of the Discretionary Option Grant and Stock Issuance Programs
and to make such determinations under, and issue such interpretations of, the
provisions of those programs and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable.  Decisions of the Plan Administrator within
the scope of its administrative functions under the Plan shall be final on all
parties who have an interest in the Discretionary Option Grant and Stock
Issuance Programs under its jurisdiction or any option or stock issuance thereunder.

 

D.            Service
on the Primary Committee or the Secondary Committee shall constitute service as
a Board member, and members of each such committee shall accordingly be
entitled to full indemnification and reimbursement as Board members for their
service on such committee.  No member of
the Primary Committee or the Secondary Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any option grants or
stock issuances under the Plan.

 

E.             Administration
of the Automatic Option Grant Program shall be self-executing in accordance
with the terms of that program, and no Plan Administrator shall exercise any
discretionary functions with respect to any option grants or stock issuances
made under that program.

 

IV.           ELIGIBILITY

 

A.            The
persons eligible to participate in the Discretionary Option Grant and Stock
Issuance Programs are as follows:

 

1.             Employees,

 

2.             non-Employee
members of the Board or the board of directors of any Parent or Subsidiary, and

 

3.             independent
contractors who provide services to the Corporation (or any Parent or
Subsidiary).

 

B.            Each Plan
Administrator shall, within the scope of its administrative jurisdiction under
the Plan, have full authority to determine, (1) with respect to the option
grants made pursuant to the Discretionary Option Grant Program, which eligible
persons are to receive such grants, the time or times when those grants are to
be made, the number of shares to be

 

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covered by each such grant, the status of the granted option as either
an Incentive Option or a Non-Statutory Option, the time or times when each
option is to become exercisable, the exercise price, the vesting schedule (if
any) applicable to the option shares and the maximum term for which the option
is to remain outstanding and (2) with respect to stock issuances pursuant to
the Stock Issuance Program, which eligible persons are to receive such
issuances, the time or times when the issuances are to be made, the number of
shares to be issued to each Participant, the vesting schedule (if any)
applicable to the issued shares and the consideration for such shares.

 

C.            The Plan
Administrator shall have the absolute discretion either to grant options in
accordance with the Discretionary Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.

 

D.            The individuals who
shall be eligible to participate in the Automatic Option Grant Program shall be
limited to (1) those individuals who first become non-Employee Board members on
or after the Plan Effective Date, whether through appointment by the Board or
election by the Corporation’s stockholders, and (2) those individuals who
continue to serve as non-Employee Board members at one or more Annual
Stockholders’ Meetings held on or after the Plan Effective Date, provided that
individual has been a non-Employee Board member for at least six months.

 

V.            STOCK  SUBJECT  TO  THE  PLAN

 

A.            The stock
issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Corporation on the
open market.  The number of shares of
Common Stock reserved for issuance over the term of the Plan shall not exceed
750,000 shares.

 

B.            No one
person participating in the Plan may receive options and direct stock issuances
pursuant to the Plan for more than 100,000 shares of Common Stock in the
aggregate per calendar year.

 

C.            Shares of
Common Stock subject to outstanding options granted under the Plan shall be
available for subsequent issuance under the Plan to the extent (1) those
options expire or terminate for any reason prior to exercise in full or (2) the
options are cancelled in accordance with the cancellation-regrant provisions of
the Discretionary Option Grant Program. 
Unvested shares issued under the Plan and subsequently cancelled or
repurchased by the Corporation pursuant to the Corporation’s repurchase rights
under the Plan shall be added back to the number of shares of Common Stock
reserved for issuance under the Plan and shall accordingly be available for
reissuance through one or more subsequent option grants or direct stock
issuances under the Plan.  However,
should the exercise price of an option granted pursuant to the Plan be paid
with shares of Common Stock or should shares of Common Stock otherwise issuable
pursuant to the Plan be withheld by the Corporation in satisfaction of the
withholding taxes incurred in connection with the exercise of an option or the
vesting of a stock issuance made pursuant to the Plan, then the number of
shares of Common Stock available for issuance pursuant to the Plan shall be
reduced by the gross number of shares for which the option is exercised or
which vest under the stock issuance, and not by the net number of shares of
Common Stock issued to the holder of such option or stock issuance.

 

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D.            If any
change is made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made
by the Plan Administrator to (1) the maximum number and/or class of securities
issuable pursuant to the Plan, (2) the maximum number and/or class of
securities for which any one person may be granted options and direct stock
issuances pursuant to the Plan per calendar year, (3) the number and/or class
of securities for which grants are subsequently to be made pursuant to the
Automatic Option Grant Program to new and continuing non-Employee Board
members, and (4) the number and/or class of securities and the exercise price
per share in effect under each outstanding option granted pursuant to the
Plan.  Such adjustments to the
outstanding options are to be effected in a manner that shall preclude the
enlargement or dilution of rights and benefits under such options.  The adjustments determined by the Plan
Administrator shall be final.

 

E.             Outstanding
awards granted pursuant to the Plan shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

 

ARTICLE TWO

 

DISCRETIONARY OPTION GRANT PROGRAM

 

I.              OPTION TERMS

 

Each option shall be evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. 
Each document evidencing an Incentive Option shall, in addition, be
subject to the provisions of the Plan applicable to such options.

 

A.   Exercise Price.

 

1.             The
exercise price per share shall be fixed by the Plan Administrator but shall not
be less than 100% of the Fair Market Value per share of Common Stock on the
date of grant.

 

2.             The
exercise price shall become immediately due upon exercise of the option and
shall, subject to the provisions of Section I of Article Five and the documents
evidencing the option, be payable in one or more of the forms specified below:

 

(i)            cash
or check made payable to the Corporation,

 

(ii)           shares
of Common Stock held for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date, or

 

(iii)          to
the extent the option is exercised for vested shares, through a special sale
and remittance procedure pursuant to which the Optionee shall

 

4

 

concurrently provide irrevocable instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable income and
employment taxes required to be withheld by the Corporation by reason of such
exercise and (b) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale.

 

Except to the extent such sale and remittance
procedure is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

 

B.            Exercise and Term of Options. Each
option shall be exercisable at such time or times, during such period and for
such number of shares as shall be determined by the Plan Administrator and set
forth in the documents evidencing the option. 
However, no option shall have a term in excess of ten years measured
from the date the option is granted.

 

C.            Effect of Termination of Service.

 

1.             The
following provisions shall govern the exercise of any options granted pursuant
to the Discretionary Option Grant Program that are outstanding at the time of
the Optionee’s cessation of Service:

 

(i)            Immediately
upon the Optionee’s cessation of Service, the option shall terminate with
respect to the unvested shares subject to the option.

 

(ii)           Should
the Optionee’s Service be terminated for Misconduct or should the Optionee
otherwise engage in Misconduct, then the option shall terminate immediately
with respect to all shares subject to the option.

 

(iii)          Should
the Optionee’s Service terminate for reasons other than Misconduct, then the
option shall remain exercisable during such period of time after the Optionee’s
Service ceases as shall be determined by the Plan Administrator and set forth
in the documents evidencing the option, but no option shall be exercisable
after its Expiration Date.  During the
applicable post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of vested shares for which the option is
exercisable on the date of the Optionee’s Service ceased.  Upon the expiration of the applicable
exercise period or (if earlier) upon the Expiration Date, the option shall
terminate with respect to any vested shares subject to the options.

 

2.             Among
its discretionary powers, the Plan Administrator shall have complete
discretion, exercisable either at the time an option is granted or at any time
while the option remains outstanding, to:

 

(i)            extend
the period of time for which the option is to remain exercisable following the
Optionee’s cessation of Service, but in no event beyond the Expiration Date,
and/or

 

5

 

(ii)           permit
the option to be exercised, during the applicable post-Service exercise period,
not only with respect to the number of vested shares of Common Stock for which
such option is exercisable at the time of the Optionee’s cessation of Service
but also with respect to one or more additional installments in which the
Optionee would have vested had the Optionee continued in Service.

 

D.            Stockholder Rights. The holder of an
option shall have no stockholder rights with respect to the shares subject to
the option until such person shall have exercised the option, paid the exercise
price and become a holder of record of the purchased shares.

 

E.             Repurchase Rights. The Plan
Administrator shall have the discretion to grant options that are exercisable
for unvested shares of Common Stock. 
Should the Optionee cease Service while such shares are unvested, the
Corporation shall have the right to repurchase any or all of those unvested
shares at the exercise price paid per share. 
The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.

 

F.             Limited Transferability of Options.  During the lifetime of the Optionee, options
shall be exercisable only by the Optionee and shall not be assignable or
transferable other than by will or by the laws of inheritance following the
Optionee’s death.  However, a
Non-Statutory Option may be assigned in whole or in part during the Optionee’s
lifetime to one or more members of the Optionee’s family or to a trust
established exclusively for one or more such family members or to the Optionee’s
former spouse, to the extent such assignment is in connection with the Optionee’s
estate plan or pursuant to a domestic relations order.  The assigned portion may only be exercised by
the person or persons who acquire a proprietary interest in the option pursuant
to the assignment.  The terms applicable
to the assigned portion shall be the same as those in effect for the option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem appropriate.  Notwithstanding the foregoing, the Optionee
may also designate one or more persons as the beneficiary or beneficiaries of
his or her outstanding options granted pursuant to the Plan, and those options
shall, in accordance with such designation, automatically be transferred to
such beneficiary or beneficiaries upon the Optionee’s death prior to the
Expiration Date of those options.  Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee’s death.

 

II.            INCENTIVE OPTIONS

 

The terms specified below shall be applicable to all
Incentive Options.  Except as modified by
the provisions of this Section II, all the provisions of Articles One, Two and
Five shall be applicable to Incentive Options. 
Options that are specifically designated as Non-Statutory Options when
issued pursuant to the Plan shall not
be subject to the terms of this Section II.

 

A.            Eligibility.  Incentive Options may only be granted to
Employees.

 

6

 

B.            Dollar Limitation.  The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee pursuant to the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed $100,000.  To the extent
that an Optionee’s options exceed that limit, they will be treated as
Non-Statutory Options (but all of the other provisions of the option shall
remain applicable), with the first options that were awarded to the Optionee to
be treated as Incentive Options.

 

C.            10% Stockholder.  If any Employee to whom an Incentive Option
is granted is a 10% Stockholder, then the exercise price per share shall not be
less than 110% of the Fair Market Value per share of Common Stock on the date
the option is granted, and the Expiration Date shall not be more than five
years from the date the option was granted.

 

III.           CORPORATE TRANSACTIONS

 

A.            In the
event a Change in Control occurs, the shares of Common Stock at the time
subject to each outstanding option granted pursuant to this Discretionary
Option Grant Program shall automatically vest in full so that each such option
shall, immediately prior to the effective date of the Change in Control, become
exercisable for all the shares of Common Stock at the time subject to such
option and may be exercised for any or all of those shares as fully vested
shares of Common Stock.  However, an
outstanding option shall not become vested on such an accelerated basis if and
to the extent: (1) such option is to be assumed by the successor corporation
(or parent thereof) or is otherwise to continue in full force pursuant to the
terms of transaction or (2) such option is to be replaced with a cash incentive
program of the successor corporation which preserves the spread existing at the
time of the Change in Control on any shares for which the option is not
otherwise at that time exercisable and provides for subsequent payout of that
spread no later than the time the Optionee would vest in those option shares or
(3) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant.

 

B.            All
outstanding repurchase rights under the Discretionary Option Grant Program
shall automatically terminate, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, immediately prior to the
occurrence of a Change in Control, except to the extent: (1) those repurchase
rights are to be assigned to the successor corporation (or parent thereof) or
are otherwise to continue in full force pursuant to the terms of the
transaction or (2) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.

 

C.            Immediately
following the consummation of the transactions contemplated by the Change in
Control documentation, all outstanding options granted pursuant to the
Discretionary Option Grant Program shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation (or parent thereof)
or otherwise continued in full force and effect pursuant to the terms of the
transaction.

 

D.            Each
option granted pursuant to the Discretionary Option Grant Program which is
assumed or otherwise continued in effect in connection with a Change in Control
shall

 

7

 

be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Change in Control had the option been
exercised immediately prior to such Change in Control.  Appropriate adjustments to reflect such
Change in Control shall also be made to (1) the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same, (2) the maximum number
and/or class of securities available for issuance over the remaining term of
the Plan and (3) the maximum number and/or class of securities for which any
one person may be granted options and direct stock issuances pursuant to the
Plan per calendar year.  To the extent
the holders of Common Stock receive cash consideration for their Common Stock
in consummation of the Change in Control, the successor corporation may, in
connection with the assumption of the outstanding options granted pursuant to
the Discretionary Option Grant Program, substitute one or more shares of its
own common stock with a fair market value equivalent to the cash consideration
paid per share of Common Stock in such transaction.

 

E.             Among
its discretionary powers, the Plan Administrator shall have the ability to
structure an option (either at the time the option is granted or at any time
while the option remains outstanding) so that the option shall become
immediately exercisable and some or all of the shares subject to that option
shall automatically become vested (and some or all of the repurchase rights of
the Corporation with respect to the unvested shares subject to that option
shall immediately terminate) upon the occurrence of a Change in Control, the
consummation of a Proxy Contest or any other specified event or the Optionee’s
Involuntary Termination within a designated period of time following any of
these events.  In addition, the Plan
Administrator may provide that one or more of the Corporation’s repurchase
rights with respect to some or all of the shares held by the Optionee at the
time of such a Change in Control, Proxy Contest, or any other specified event
or the Optionee’s Involuntary Termination within a designated period of time
following such an event shall immediately terminate and all of the shares shall
become vested.

 

F.             The
portion of any Incentive Option accelerated in connection with a Change in
Control or Proxy Contest shall remain exercisable as an Incentive Option only
to the extent the $100,000 limitation described in Section II.B. above is not
exceeded.  To the extent such dollar
limitation is exceeded, the accelerated portion of such option shall be exercisable
as a Non-Statutory Option under the federal tax laws.

 

ARTICLE THREE

 

STOCK ISSUANCE PROGRAM

 

I.              STOCK ISSUANCE TERMS

 

Shares of Common Stock may be issued pursuant to the
Stock Issuance Program through direct and immediate issuances without any
intervening option grants.  Each such stock
issuance shall be evidenced by a Stock Issuance Agreement that complies with
the terms specified below.  Shares of
Common Stock may also be issued pursuant to the Stock Issuance Program pursuant
to awards that entitle the recipients to receive those shares upon the
attainment of designated performance goals or the satisfaction of specified
Service requirements.

 

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A.            Purchase Price.

 

1.             The
purchase price per share shall be fixed by the Plan Administrator, but shall
not be less than 100% of the Fair Market Value per share of Common Stock on the
date of grant.

 

2.             Subject
to the provisions of Section I of Article Five, shares of Common Stock may be
issued pursuant to the Stock Issuance Program for any of the following items of
consideration which the Plan Administrator may deem appropriate in each
individual instance:

 

(i)            cash or
check made payable to the Corporation, or

 

(ii)           past
services rendered to the Corporation (or any Parent or Subsidiary).

 

B.            Vesting Provisions.

 

1.             Shares
of Common Stock issued pursuant to the Stock Issuance Program may, in the
discretion of the Plan Administrator, be fully and immediately vested upon
issuance or may vest in one or more installments over the Participant’s period
of Service or upon attainment of specified performance objectives.  The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued pursuant to the Stock
Issuance Program shall be determined by the Plan Administrator and incorporated
into the Stock Issuance Agreement. 
Shares of Common Stock may also be issued pursuant to the Stock Issuance
Program pursuant to awards that entitle the recipients to receive those shares
upon the attainment of designated performance goals or the satisfaction of
specified Service requirements.

 

2.             Any new,
substituted or additional securities or other property (including money paid
other than as a regular cash dividend) which the Participant may have the right
to receive with respect to the Participant’s unvested shares of Common Stock by
reason of any stock dividend, stock split, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to such escrow arrangements as the Plan Administrator shall deem
appropriate and shall be vested to the same extent the Participant’s shares of
Common Stock are vested.

 

3.             The
Participant shall have full stockholder rights with respect to any shares of
Common Stock issued to the Participant pursuant to the Stock Issuance Program,
whether or not the Participant’s interest in those shares is vested.  Accordingly, the Participant shall have the
right to vote such shares and to receive any regular cash dividends paid on
such shares.  Cash dividends constitute
taxable compensation to the Participant are deductible by the Corporation
(unless the Participant has made an election under Section 83(b) of the Code).

 

4.             Should
the Participant cease to remain in Service while one or more shares of Common
Stock issued pursuant to the Stock Issuance Program are unvested or should the
performance objectives not be attained with respect to one or more such
unvested shares of Common Stock, then those shares shall be immediately
surrendered to the Corporation

 

9

 

for cancellation, and the Participant shall have no further stockholder
rights with respect to those shares.  To
the extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant’s
purchase-money indebtedness), the Corporation shall repay to the Participant
the cash consideration paid for the surrendered shares without interest and/or
shall cancel the unpaid principal balance of any outstanding purchase-money
note of the Participant attributable to the surrendered shares.

 

5.             The Plan
Administrator may in its discretion waive the surrender and cancellation of one
or more unvested shares of Common Stock that would otherwise occur upon the
cessation of the Participant’s Service or the non-attainment of the performance
objectives applicable to those shares. 
Such waiver shall result in the immediate vesting of the Participant’s
interest in the shares of Common Stock as to which the waiver applies.  Such waiver may be effected at any time,
whether before or after the Participant’s cessation of Service or attainment of
the applicable performance objectives.

 

6.             Outstanding
share right awards granted pursuant to the Stock Issuance Program shall
automatically terminate, and no shares of Common Stock shall actually be issued
in satisfaction of those awards, if the performance goals or Service
requirements established for such awards are not attained or satisfied.  The Plan Administrator, however, shall have
the discretionary authority to issue shares of Common Stock under one or more
outstanding share right awards as to which the designated performance goals or
Service requirements have not been attained or satisfied.

 

II.            CORPORATE TRANSACTIONS

 

A.            All of
the Corporation’s outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, immediately
prior to the occurrence of a Change in Control, except to the extent (1) those
repurchase rights are to be assigned to the successor corporation (or parent
thereof) or are otherwise to continue in full force and effect pursuant to the
terms of the transaction or (2) such accelerated vesting is precluded by other
limitations imposed in the Stock Issuance Agreement.

 

B.            The Plan
Administrator shall have the discretionary authority to structure one or more
of the Corporation’s repurchase rights under the Stock Issuance Program so that
those rights shall automatically terminate in whole or in part, and some or all
of the shares of Common Stock subject to those terminated rights shall
immediately vest, upon the occurrence of a Change in Control, the consummation
of a Proxy Contest or any other event, or the Participant’s Involuntary
Termination within a designated period of time following any of these events.

 

10

 

ARTICLE Four

 

AUTOMATIC OPTION GRANT PROGRAM

 

I.              OPTION TERMS

 

A.            Grant Dates.  Option grants shall be made on the dates
specified below:

 

1.             Each
individual who is first elected or appointed as a non-Employee Board member at
any time on or after the Plan Effective Date shall automatically be granted, on
the date of such initial election or appointment, a Non-Statutory Option to
purchase 10,000 shares of Common Stock; provided,
however, such individual has not been employed by the Corporation in
the preceding six months.

 

2.             On the
date of each annual stockholders’ meeting (beginning with the first annual
stockholders’ meeting occurring on or after the Plan Effective Date), each
individual who is to continue to serve as a non-Employee Board member shall automatically
be granted a Non-Statutory Option to purchase 5,000 shares of Common Stock,
provided such individual has served as a non-Employee Board member for at least
six months.  There shall be no limit on
the number of such annual option grants any one non-Employee Board member may
receive over his or her period of Board service, and non-Employee Board members
who have previously been in the employ of the Corporation (or any Parent or
Subsidiary) or who have otherwise received one or more option grants from the
Corporation prior to the Plan Effective Date shall be eligible to receive one
or more such annual option grants over their period of continued Board service.

 

B.            Exercise Price.  The exercise price per share shall be equal
to 100% of the Fair Market Value per share of Common Stock on the date the
option is granted.

 

C.            Option Term.  Each option shall have a term of ten years
measured from the date the option is granted.

 

D.            Exercisability.  Each option shall become exercisable in a
series of three successive equal annual installments upon the Optionee’s
completion of each year of Service as a Board member over the three-year period
measured from the date the option is granted.

 

E.             Termination of Board Service.  The following provisions shall govern the
exercise of any options granted to the Optionee pursuant to the Automatic
Option Grant Program that are outstanding at the time the Optionee ceases to
serve as a Board member:

 

1.             The
option shall be exercisable until the earlier to occur of (a) the Expiration
Date or (b) the one-year anniversary of the date the Optionee’s Board service
terminated.

 

2.             During
the post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of vested shares of Common Stock for which
the option is exercisable at the time of the Optionee’s cessation of Board
service.

 

11

 

3.             Should
the Optionee’s Board service cease due to death or Permanent Disability, then
all shares at the time subject to the option shall immediately vest so that
such option may be exercised for any or all of those shares as fully vested
shares of Common Stock.

 

4.             Upon the
expiration of the one year exercise period or (if earlier) upon the Expiration
Date, the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised.  However, the option shall, immediately upon
the Optionee’s cessation of Board service for any reason other than death or
Permanent Disability, terminate and cease to be outstanding to the extent the
option is not otherwise at that time exercisable for vested shares.

 

II.            CORPORATE TRANSACTION

 

A.            In the
event a Change in Control occurs while the Optionee remains a Board member, the
shares of Common Stock at the time subject to each outstanding option that was
granted pursuant to this Automatic Option Grant Program shall automatically
vest in full so that each such option shall, immediately prior to the effective
date of the Change in Control, become exercisable for all the shares subject to
the option at that time as fully vested shares of Common Stock and may be
exercised for any or all of those vested shares.  Immediately following the consummation of the
transactions contemplated by the Change in Control documentation, each
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof) or
otherwise continued in effect pursuant to the terms of the Change in Control
transaction.

 

B.            In the
event a Proxy Contest occurs while the Optionee remains a Board member, the
shares of Common Stock at the time subject to each outstanding option granted
pursuant to this Automatic Option Grant Program shall automatically vest in full
so that each such option shall, upon the consummation of the Proxy Contest,
become exercisable for all the option shares as fully vested shares of Common
Stock and may be exercised for any or all of those vested shares.  Such option shall remain exercisable until
the earliest to occur of (1) the
Expiration Date, (2) the expiration of the one-year period measured from the
date of the Optionee’s cessation of Board service, or (3) the termination of
the option in connection with a Change in Control transaction.

 

C.            Each
option which is assumed or otherwise continued in effect in connection with a
Change in Control shall be appropriately adjusted, immediately after such
Change in Control, to apply to the number and class of securities which would
have been issuable to the Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control.  Appropriate adjustments shall also be made to
the exercise price payable per share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same.  To the extent the holders of Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control, the successor corporation may, in connection with the assumption of
the outstanding options granted pursuant to the Automatic Option Grant Program,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
transaction.

 

12

 

III.           REMAINING TERMS

 

The remaining terms of each option granted pursuant to
the Automatic Option Grant Program shall be the same as the terms in effect for
option grants made pursuant to the Discretionary Option Grant Program.

 

ARTICLE FIVE

 

MISCELLANEOUS

 

I.              FINANCING

 

To the extent permissible under applicable law and
regulations (including any prohibitions on the Corporation’s ability to make
personal loans to Section 16 Insiders), the Plan Administrator may permit any
Optionee or Participant to pay the option exercise price under the
Discretionary Option Grant Program or the purchase price of shares issued
pursuant to the Stock Issuance Program by delivering a full-recourse, interest
bearing promissory note payable in one or more installments.  The terms of any such promissory note
(including the interest rate and the terms of repayment) shall be established
by the Plan Administrator in its sole discretion.  In no event may the maximum credit available
to the Optionee or Participant exceed the sum of (A) the aggregate option
exercise price or purchase price payable for the purchased shares (less the par
value of such shares) plus (B) any applicable income and employment tax liability
incurred by the Optionee or the Participant in connection with the option
exercise or share purchase.  Prior to
permitting the use of promissory notes as payment, the Plan Administrator may
wish to consider the restrictions on doing so imposed by Regulation U.

 

II.            TAX WITHHOLDING

 

A.            The
Corporation’s obligation to deliver shares of Common Stock upon the exercise of
options or the issuance or vesting of such shares granted pursuant to the Plan
shall be subject to the satisfaction of all applicable income and employment
tax withholding requirements.

 

B.            The Plan
Administrator may, in its discretion, provide any or all holders of
Non-Statutory Options or unvested shares of Common Stock issued pursuant to the
Plan (other than the options granted to non-Employee Board members or
independent contractors) with the right to use shares of Common Stock in
satisfaction of all or part of the Withholding Taxes to which such holders may
become subject in connection with the exercise of their options or the vesting
of their shares.  Such right may be
provided to any such holder in either or both of the following formats:

 

1.             Stock
Withholding:  The election to have
the Corporation withhold, from the shares of Common Stock otherwise issuable
upon the exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares.  So as to avoid
adverse accounting treatment, the number of shares that may be withheld for
this purpose shall not exceed the minimum number needed to satisfy the
applicable income and employment tax withholding rules.

 

13

 

2.             Stock
Delivery:  The election to deliver to
the Corporation, at the time the Non-Statutory Option is exercised or the
shares vest, one or more shares of Common Stock previously acquired by such
holder (other than in connection with the option exercise or share vesting
triggering the Withholding Taxes).  So as
to avoid adverse accounting treatment, the number of shares that may be
withheld for this purpose shall not exceed the minimum number needed to satisfy
the applicable income and employment tax withholding rules.

 

III.           SHARE ESCROW/LEGENDS

 

Unvested shares may, in the Plan Administrator’s
discretion, be held in escrow by the Corporation until the Participant’s or the
Optionee’s interest in such shares vests or may be issued directly to the
Participant or the Optionee with restrictive legends on the certificates
evidencing those unvested shares.

 

IV.           CANCELLATION AND REGRANT OF OPTIONS

 

The Plan Administrator shall have the authority to
effect, at any time and from time to time, with the consent of the affected
option holders, the cancellation of any or all outstanding options granted
pursuant to the Plan and to grant in substitution new options covering the same
or a different number of shares of Common Stock with an exercise price equal to
the Fair Market Value at the time of grant.

 

V.            EFFECTIVE DATE AND TERM OF THE PLAN

 

A.            The Plan
shall become effective immediately on the Plan Effective Date.  Options may be granted pursuant to the
Discretionary Option Grant at any time on or after the Plan Effective Date, and
the initial option grants made pursuant to the Automatic Option Grant Program
shall also be made on the Plan Effective Date to any non-Employee Board members
eligible for such grants at that time.

 

B.            Unless
terminated by the Board prior to such time, the Plan shall terminate upon the
tenth anniversary of the Plan’s adoption by the Board.  Should the Plan terminate when options and/or
unvested shares are outstanding, such awards shall continue in effect in
accordance with the provisions of the documents evidencing such grants or
issuances.

 

VI.           AMENDMENTS

 

The Board shall have complete and exclusive power and
authority to amend or modify the Plan or any awards made hereunder.  However, no such amendment or modification of
the Plan shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents in writing to such amendment or
modification.  In addition, certain
amendments to the Plan, including amendments increasing the maximum aggregate
number of shares of Common Stock that may be issued under the Plan or changing
the class of persons eligible to receive Incentive Options, shall required
approval of the Corporation’s stockholders.

 

14

 

VII.         USE OF PROCEEDS

 

Any cash proceeds received by the Corporation from the
sale of shares of Common Stock pursuant to the Plan shall be used for any
corporate purpose.

 

VIII.        REGULATORY APPROVALS

 

A.            The
implementation of the Plan, the granting of any option pursuant to the Plan and
the issuance of any shares of Common Stock (1) upon the exercise of any granted
option or (2) pursuant to the Stock Issuance Program shall be subject to the
Corporation’s procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted pursuant to
it and the shares of Common Stock issued pursuant to it.

 

B.            No shares
of Common Stock or other assets shall be issued or delivered pursuant to the
Plan unless and until there shall have been compliance with all applicable
requirements of applicable securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the shares of Common
Stock issuable pursuant to the Plan, and all applicable listing requirements of
any stock exchange or trading system, including the Nasdaq Stock Market, on
which Common Stock is then traded.

 

IX.           NO EMPLOYMENT/SERVICE RIGHTS

 

Nothing in the Plan shall confer upon the Optionee or
the Participant any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining such person) or
of the Optionee or the Participant, which rights are hereby expressly reserved
by each, to terminate such person’s Service at any time for any reason, with or
without cause.

 

15

 

APPENDIX

 

The following definitions shall be in effect under the
Plan:

 

A.            Automatic Option Grant Program shall
mean the automatic option grant program in effect under Article Four of the
Plan.

 

B.            Board shall mean the Corporation’s
Board of Directors.

 

C.            Change in Control shall mean a change
in ownership or control of the Corporation effected through any of the
following transactions:

 

1.  a merger, consolidation or other reorganization
approved by the Corporation’s stockholders, unless
securities possessing more than 50% of the total combined voting power of the
voting securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly, by the persons who beneficially
owned the Corporation’s outstanding voting securities immediately prior to such
transaction;

 

2.  the sale, transfer or other disposition
of all or substantially all of the Corporation’s assets; or

 

3.  the acquisition, directly or indirectly
by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than
50% of the total combined voting power of the Corporation’s outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation’s stockholders.

 

D.            Code shall mean the Internal Revenue
Code of 1986, as amended.

 

E.             Common Stock shall mean the Corporation’s
common stock, par value $0.01 per share.

 

F.             Corporation shall mean Intrusion Inc.,
a Delaware corporation, and any corporate successor to all or substantially all
of the assets or voting stock of Intrusion Inc. which has by appropriate action
assumed the Plan.

 

G.            Discretionary Option Grant Program
shall mean the discretionary option grant program in effect under Article Two
of the Plan.

 

H.            Employee shall mean an individual who
is in the employ of the Corporation (or any Parent or Subsidiary), subject to
the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.

 

I.              Exchange Act shall mean the Securities
Exchange Act of 1934, as amended.

 

A-1

 

J.             Exercise Date shall mean the date on
which the option shall have been exercised in accordance with the appropriate
option documentation.

 

K.            Expiration Date shall mean the 5:00
p.m. Central Time on the date the option expires as set forth in the Optionee’s
Notice of Stock Option Grant.

 

L.             Fair Market Value per share of Common
Stock on any relevant date shall be determined in accordance with the following
provisions:

 

1.  If the Common Stock is at the time
traded on the Nasdaq Stock Market, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities Dealers on the
Nasdaq Stock Market and published in The
Wall Street Journal.  If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

 

2.  If the Common Stock is at the time
listed on any stock exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the stock
exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange and published in The
Wall Street Journal.  If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

 

3.  If the Common Stock is at the time
neither listed on any stock exchange or the Nasdaq Stock Market, then the Fair
Market Value shall be determined by the Plan Administrator after taking into
account such factors as the Plan Administrator shall deem appropriate.

 

M.           Incentive Option shall mean an option
that satisfies the requirements of Code Section 422.

 

N.            Involuntary Termination shall mean the
termination of the Service of any individual which occurs by reason of:

 

1.  such individual’s involuntary dismissal
or discharge by the Corporation (or any Parent or Subsidiary) for reasons other
than Misconduct, or

 

2.  such individual’s voluntary resignation
following (a) a change in his or her position with the Corporation (or any
Parent or Subsidiary) which materially reduces his or her duties and
responsibilities, (b) a reduction in his or her base salary by more than 15%,
unless the base salaries of all similarly situated individuals are reduced by
the Corporation (or any Parent or Subsidiary) employing the individual or (c) a
relocation of such individual’s place of employment by more than fifty miles,
provided and only if such change, reduction or relocation is effected by the
Corporation (or any Parent or Subsidiary) without the individual’s consent.

 

O.            Misconduct shall mean the commission of
any act of fraud, embezzlement or dishonesty by the Optionee or Participant,
any unauthorized use or disclosure

 

A-2

 

by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner.  The foregoing definition shall not in any way
preclude or restrict the right of the Corporation (or any Parent or Subsidiary)
to discharge or dismiss any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary) for any other acts or
omissions but such other acts or omissions shall not be deemed, for purposes of
the Plan, to constitute grounds for termination for Misconduct.

 

P.             Non-Statutory Option shall mean an
option not intended to satisfy the requirements of Code Section 422.

 

Q.            Optionee shall mean any person to whom
an option is granted pursuant to the Discretionary Option Grant or Automatic
Option Grant Program.

 

R.            Parent shall mean any corporation
(other than the Corporation) in an unbroken chain of corporations ending with
the Corporation, provided each corporation in the unbroken chain (other than
the Corporation) owns, at the time of the determination, stock possessing 50%
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.

 

S.             Participant shall mean any person who
is issued shares of Common Stock under the Stock Issuance Program.

 

T.            Permanent Disability or Permanently Disabled
shall mean the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or has lasted or
can be expected to last for a continuous period of twelve months or more.  However, solely for purposes of the Automatic
Option Grant Program, Permanent Disability or Permanently Disabled shall mean
the inability of the non-Employee Board member to perform his or her usual
duties as a Board member by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration
of twelve months or more.

 

U.            Plan shall mean the Intrusion Inc. 2005
Stock Incentive Plan, as set forth in this document.

 

V.            Plan Administrator shall mean the
particular entity, whether the Primary Committee, the Board or the Secondary
Committee, which is authorized to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible
persons, to the extent such entity is carrying out its administrative functions
under those programs with respect to the persons under its jurisdiction.

 

W.           Plan Effective Date shall mean the date
the Corporation’s stockholders approve the Plan.

 

X.            Primary Committee shall mean the
committee comprised of one or more directors designated by the Board.  To obtain the benefits of Rule 16b-3,
there must be at least

 

A-3

 

two members on the Primary Committee and all of the members must be “non-employee” directors as that
term is defined in the Rule or
the entire Board must approve the grant(s). 
Similarly, to be exempt from the million dollar compensation deduction
limitation of Code Section 162(m), there must be at least two members on
the Primary Committee and all of the members must be “outside directors” as
that term is defined in Code Section 162(m). 
The Primary Committee may be the Corporation’s Compensation Committee so
long as it meets the requirements of this paragraph (Y).

 

Y.            Proxy Contest shall mean a change in
ownership or control of the Corporation effected through a change in the
composition of the Board over a period of thirty-six consecutive months or less
such that a majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who
either (a) have been Board members continuously since the beginning of such
period or (b) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (a) who were still in office at the time the Board approved such
election or nomination.

 

Z.            Secondary Committee shall mean a
committee of one or more Board members appointed by the Board (including the
Corporation’s Compensation Committee) to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.

 

AA.        Section 16 Insider shall mean an
officer or director of the Corporation subject to the short-swing profit
liabilities of Section 16 of the Exchange Act.

 

BB.          Service shall mean the performance of
services for the Corporation (or any Parent or Subsidiary) by a person in the
capacity of an Employee, a non-Employee member of the board of directors or an
independent contractor, except to the extent otherwise specifically provided in
the documents evidencing the option grant or stock issuance.

 

CC.          Stock Issuance Agreement shall mean the
agreement entered into by the Corporation and the Participant at the time of
issuance of shares of Common Stock under the Stock Issuance Program.

 

DD.         Stock Issuance Program shall mean the
stock issuance program in effect under Article Three of the Plan.

 

EE.          Subsidiary shall mean any corporation
(other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination,
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

 

FF.          10% Stockholder shall mean the owner of
stock (as determined under Code Section 424(d)) possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation (or any
Parent or Subsidiary).

 

A-4

 

GG.          Withholding Taxes shall mean the
applicable income and employment withholding taxes to which the holder of
Non-Statutory Options or unvested shares of Common Stock may become subject in
connection with the exercise of those options or the vesting of those shares.

 

A-5

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