EXHIBIT 10.15

 

KINTERA, INC.

2004 EQUITY INCENTIVE PLAN (FUNDWARE)

 

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1 Establishment. Kintera, Inc., a Delaware corporation, hereby establishes the
Kintera, Inc. 2004 Equity Incentive Plan (Fundware) (the “Plan”) effective as of
the date the Plan is adopted by the Board (the “Effective Date”).

 

1.2 Purpose. The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward Employees of the Participating Company Group and by
motivating such persons to contribute to the growth and profitability of the
Participating Company Group. The Plan seeks to achieve this purpose by providing
for Awards in the form of Options, Stock Appreciation Rights, Stock Purchase
Rights, Stock Bonuses, Stock Units, Performance Shares and Performance Units.

 

1.3 Term of Plan. The Plan shall continue in effect for a term of ten (10) years
after the Effective Date or until the earlier of its termination by the Board or
the date on which all of the shares of Stock available for issuance under the
Plan have been issued and all restrictions on such shares under the terms of the
Plan and the agreements evidencing Awards granted under the Plan have lapsed.

 

2. DEFINITIONS AND CONSTRUCTION.

 

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

 

(a) “Affiliate” means (i) an entity, other than a Parent Corporation, that
directly, or indirectly through one or more intermediary entities, controls the
Company or (ii) an entity, other than a Subsidiary Corporation, that is
controlled by the Company directly, or indirectly through one or more
intermediary entities. For this purpose, the term “control” (including the term
“controlled by”) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the relevant
entity, whether through the ownership of voting securities, by contract or
otherwise; or shall have such other meaning assigned such term for the purposes
of registration on Form S-8 under the Securities Act.

 

(b) “Award” means any Option, SAR, Stock Purchase Right, Stock Bonus, Stock
Unit, Performance Share or Performance Unit granted under the Plan.

 

(c) “Award Agreement” means a written agreement between the Company and a
Participant setting forth the terms, conditions and restrictions of the Award
granted to the Participant. An Award Agreement may be an “Option Agreement,” an
“SAR Agreement,” a “Stock Purchase Agreement,” a “Stock Bonus Agreement,” a
“Stock Unit Agreement,” a “Performance Share Agreement” or a “Performance Unit
Agreement.”

 

(d) “Board” means the Board of Directors of the Company.

 

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(e) “Code” means the Internal Revenue Code of 1986, as amended, and any
applicable regulations promulgated thereunder.

 

(f) “Committee” means the Compensation Committee or other committee of the Board
duly appointed to administer the Plan and having such powers as shall be
specified by the Board. If no committee of the Board has been appointed to
administer the Plan, the Board shall exercise all of the powers of the Committee
granted herein, and, in any event, the Board may in its discretion exercise any
or all of such powers.

 

(g) “Company” means Kintera, Inc., a Delaware corporation, or any successor
corporation thereto.

 

(h) “Consultant” means a person engaged to provide consulting or advisory
services (other than as an Employee or a member of the Board) to a Participating
Company, provided that the identity of such person, the nature of such services
or the entity to which such services are provided would not preclude the Company
from offering or selling securities to such person pursuant to the Plan in
reliance on registration on a Form S-8 Registration Statement under the
Securities Act.

 

(i) “Director” means a member of the Board or of the board of directors of any
other Participating Company.

 

(j) “Disability” means the permanent and total disability of the Participant,
within the meaning of Section 22(e)(3) of the Code.

 

(k) “Dividend Equivalent” means a credit, made at the discretion of the
Committee or as otherwise provided by the Plan, to the account of a Participant
in an amount equal to the cash dividends paid on one share of Stock for each
share of Stock represented by an Award held by such Participant.

 

(l) “Employee” means any person treated as an employee (including an Officer or
a member of the Board who is also treated as an employee) in the records of a
Participating Company; provided, however, that neither service as a member of
the Board nor payment of a director’s fee shall be sufficient to constitute
employment for purposes of the Plan.

 

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(n) “Fair Market Value” means, as of any date, the value of a share of Stock or
other property as determined by the Committee, in its discretion, or by the
Company, in its discretion, if such determination is expressly allocated to the
Company herein, subject to the following:

 

(i) If, on such date, the Stock is listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be
the closing price of a share of Stock (or the mean of the closing bid and asked
prices of a share of Stock if the Stock is so quoted instead) as quoted on the
Nasdaq National Market, The Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, as reported in The Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which
the Stock has traded on such securities exchange or market system, the date on
which the Fair Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other appropriate
day as shall be determined by the Committee, in its discretion.

 

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(ii) If, on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be as determined by the Committee in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse.

 

(o) “Insider” means an Officer, a Director or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

 

(p) “Nonstatutory Stock Option” means an Option not intended to be (as set forth
in the Award Agreement) an incentive stock option within the meaning of Section
422(b) of the Code.

 

(q) “Officer” means any person designated by the Board as an officer of the
Company.

 

(r) “Option” means the right to purchase Stock at a stated price for a specified
period of time granted to a participant pursuant to Section 6 of the Plan.
Options granted under the Plan shall be Nonstatutory Stock Options.

 

(s) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code.

 

(t) “Participant” means any eligible person who has been granted one or more
Awards.

 

(u) “Participating Company” means the Company or any Parent Corporation,
Subsidiary Corporation or Affiliate.

 

(v) “Participating Company Group” means, at any point in time, all corporations
collectively which are then Participating Companies.

 

(w) “Performance Award” means an Award of Performance Shares or Performance
Units.

 

(x) “Performance Award Formula” means, for any Performance Award, a formula or
table established by the Committee pursuant to Section 10.3 of the Plan which
provides the basis for computing the value of a Performance Award at one or more
threshold levels of attainment of the applicable Performance Goal(s) measured as
of the end of the applicable Performance Period.

 

(y) “Performance Goal” means a performance goal established by the Committee
pursuant to Section 10.3 of the Plan.

 

(z) “Performance Period” means a period established by the Committee pursuant to
Section 10.3 of the Plan at the end of which one or more Performance Goals are
to be measured.

 

(aa) “Performance Share” means a bookkeeping entry representing a right granted
to a Participant pursuant to Section 10 of the Plan to receive a payment equal
to the value of a Performance Share, as determined by the Committee, based on
performance.

 

(bb) “Performance Unit” means a bookkeeping entry representing a right granted
to a Participant pursuant to Section 10 of the Plan to receive a payment equal
to the value of a Performance Unit, as determined by the Committee, based upon
performance.

 

(cc) “Restriction Period” means the period established in accordance with
Section 9.5 of the Plan during which shares subject to a Stock Award are subject
to Vesting Conditions.

 

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(dd) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

 

(ee) “SAR” or “Stock Appreciation Right” means a bookkeeping entry representing,
for each share of Stock subject to such SAR, a right granted to a Participant
pursuant to Section 8 of the Plan to receive payment of an amount equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of
exercise of the SAR over the exercise price.

 

(ff) “Securities Act” means the Securities Act of 1933, as amended.

 

(gg) “Service” means a Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. A Participant’s Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating
Company for which the Participant renders such Service, provided that there is
no interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service with the Participating Company Group shall not be deemed
to have terminated if the Participant takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided, however,
that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day
of such leave the Participant’s Service shall be deemed to have terminated
unless the Participant’s right to return to Service with the Participating
Company Group is guaranteed by statute or contract. Notwithstanding the
foregoing, unless otherwise designated by the Company or required by law, a
leave of absence shall not be treated as Service for purposes of determining
vesting under the Participant’s Option Agreement. The Participant’s Service
shall be deemed to have terminated either upon an actual termination of Service
or upon the corporation for which the Participant performs Service ceasing to be
a Participating Company. Subject to the foregoing, the Company, in its
discretion, shall determine whether the Participant’s Service has terminated and
the effective date of such termination.

 

(hh) “Stock” means the common stock of the Company, as adjusted from time to
time in accordance with Section 4.2 of the Plan.

 

(ii) “Stock Award” means an Award of a Stock Bonus, a Stock Purchase Right or a
Stock Unit.

 

(jj) “Stock Bonus” means Stock granted to a Participant pursuant to Section 9 of
the Plan.

 

(kk) “Stock Purchase Right” means a right to purchase Stock granted to a
Participant pursuant to Section 9 of the Plan.

 

(ll) “Stock Unit” means the right to receive in cash or Stock the Fair Market
Value of a share of Stock granted pursuant to Section 9 of the Plan.

 

(mm) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

 

(nn) “Vesting Conditions” mean those conditions established in accordance with
Section 9.5 of the Plan prior to the satisfaction of which shares subject to a
Stock Award remain subject to forfeiture or a repurchase option in favor of the
Company.

 

2.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular shall include the
plural and the plural shall include the singular. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise.

 

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3. ADMINISTRATION.

 

3.1 Administration by the Committee. The Plan shall be administered by the
Committee. All questions of interpretation of the Plan or of any Award shall be
determined by the Committee, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Award.

 

3.2 Authority of Officers. Any Officer shall have the authority to act on behalf
of the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the Officer has apparent authority with respect to such matter,
right, obligation, determination or election. The Board may, in its discretion,
delegate to a committee comprised of one or more Officers the authority to grant
one or more Options, without further approval of the Board or the Committee, to
any Employee, other than a person who, at the time of such grant, is an Insider;
provided, however, that (i) such Awards shall not be granted for shares in
excess of the maximum aggregate number of shares of Stock authorized for
issuance pursuant to Section 4.1, (ii) the exercise price per share of each
Option shall be not less than the Fair Market Value per share of the Stock on
the effective date of grant (or, if the Stock has not traded on such date, on
the last day preceding the effective date of grant on which the Stock was
traded), and (iii) each such Award shall be subject to the terms and conditions
of the appropriate standard form of Award Agreement approved by the Board or the
Committee and shall conform to the provisions of the Plan and such other
guidelines as shall be established from time to time by the Board or the
Committee.

 

3.3 Administration with Respect to Insiders. With respect to participation by
Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered in compliance with the requirements, if any, of Rule 16b-3.

 

3.5 Powers of the Committee. In addition to any other powers set forth in the
Plan and subject to the provisions of the Plan, the Committee shall have the
full and final power and authority, in its discretion:

 

(a) subject to Section 5.1, to determine the persons to whom, and the time or
times at which, Awards shall be granted and the number of shares of Stock or
units to be subject to each Award;

 

(b) to determine the type of Award granted;

 

(c) to determine the Fair Market Value of shares of Stock or other property;

 

(d) to determine the terms, conditions and restrictions applicable to each Award
(which need not be identical) and any shares acquired pursuant thereto,
including, without limitation, (i) the exercise or purchase price of shares
purchased pursuant to any Award, (ii) the method of payment for shares purchased
pursuant to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with Award, including by the withholding or
delivery of shares of Stock, (iv) the timing, terms and conditions of the
exercisability or vesting of any Award or any shares acquired pursuant thereto,
(v) the Performance Award Formula and Performance Goals applicable to any Award
and the extent to which such Performance Goals have been attained, (vi) the time
of the expiration of any Award, (vii) the effect of the Participant’s
termination of Service on any of the foregoing, and (viii) all other terms,
conditions and restrictions applicable to any Award or shares acquired pursuant
thereto not inconsistent with the terms of the Plan;

 

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(e) to determine whether an Award of SARs, Stock Units, Performance Shares or
Performance Units will be settled in shares of Stock, cash, or in any
combination thereof;

 

(f) to approve one or more forms of Award Agreement;

 

(g) to amend, modify, extend, cancel or renew any Award or to waive any
restrictions or conditions applicable to any Award or any shares acquired
pursuant thereto;

 

(h) to accelerate, continue, extend or defer the exercisability or vesting of
any Award or any shares acquired pursuant thereto, including with respect to the
period following a Participant’s termination of Service;

 

(i) to prescribe, amend or rescind rules, guidelines and policies relating to
the plan, or to adopt sub-plans or supplements to, or alternative versions of,
the Plan, including, without limitation, as the Committee deems necessary or
desirable to comply with the laws of or to accommodate the laws, regulations,
tax or accounting effectiveness, accounting principles or custom of, foreign
jurisdictions whose citizens may be granted Awards; and

 

(j) to correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award Agreement and to make all other determinations and take
such other actions with respect to the Plan or any Award as the Committee may
deem advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.

 

3.6 No Repricing. Without the affirmative vote of holders of a majority of the
shares of Stock cast in person or by proxy at a meeting of the stockholders of
the Company at which a quorum representing a majority of all outstanding shares
of Stock is present or represented by proxy, the Board shall not approve a
program providing for either (a) the cancellation of outstanding Options and/or
SARs and the grant in substitution therefore of new Options and/or SARs having a
lower exercise price or (b) the amendment of outstanding Options and/or SARs to
reduce the exercise price thereof. This paragraph shall not be construed to
apply to “issuing or assuming a stock option in a transaction to which section
424(a) applies,” within the meaning of Section 424 of the Code.

 

3.7 Indemnification. In addition to such other rights of indemnification as they
may have as members of the Board or the Committee or as officers or employees of
the Participating Company Group, members of the Board or the Committee and any
officers or employees of the Participating Company Group to whom authority to
act for the Board, the Committee or the Company is delegated shall be
indemnified by the Company against all reasonable expenses, including attorneys’
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

 

4. SHARES SUBJECT TO PLAN.

 

4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock that may be issued
under the Plan shall be Five Hundred

 

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Thousand (500,000). Such shares shall consist of authorized but unissued or
reacquired shares of Stock or any combination thereof. If any outstanding Award
for any reason expires or is terminated or canceled without having been
exercised or settled in full, or if shares of Stock acquired pursuant to an
Award subject to forfeiture or repurchase are forfeited or repurchased by the
Company, the shares of Stock allocable to the terminated portion of such Award,
or such forfeited or repurchased shares of Stock shall again be available for
issuance under the Plan. Shares of Stock shall not be deemed to have been issued
pursuant to the Plan (i) with respect to any portion of an Award that is settled
in cash or (ii) to the extent such shares are withheld in satisfaction of tax
withholding obligations pursuant to Section 14.2. Upon payment in shares of
Stock pursuant to the exercise of an SAR, the number of shares available for
issuance under the Plan shall be reduced only by the number of shares actually
issued in such payment. If the exercise price of an Option is paid by tender to
the Company, or attestation to the ownership, of shares of Stock owned by the
Participant, the number of shares available for issuance under the Plan shall be
reduced by the gross number of shares for which the Option is exercised.

 

4.2 Adjustments for Changes in Capital Structure. In the event of any change in
the Stock through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares
or similar change in the capital structure of the Company, or in the event of
payment of a dividend or distribution to the stockholders of the Company in a
form other than Stock (excepting normal cash dividends) that has a material
effect on the Fair Market Value of shares of Stock, appropriate adjustments
shall be made in the number and class of shares subject to the Plan and subject
to any outstanding Awards, and to the exercise or purchase price per share under
any outstanding Award. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded down
to the nearest whole number, and in no event may the exercise or purchase price
under any Award be decreased to an amount less than the par value, if any, of
the stock subject to such Award. The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final, binding and conclusive.

 

5. ELIGIBILITY AND AWARD LIMITATIONS.

 

5.1 Persons Eligible for Awards. As an inducement material to the Participant’s
entering into service with a Participating Company, Awards may only be granted
to Employees (a) who have not previously been an Employee or Director of a
Participating Company or (b) following a bonafide period of non-employment or
non-service to a Participating Company; provided, however, that no Stock subject
to any such Award shall vest, become exercisable or be issued prior to the date
on which such person commences Service as an Employee.

 

5.2 Participation. Awards are granted solely at the discretion of the Committee.
Eligible persons may be granted more than one (1) Award. However, eligibility in
accordance with this Section shall not entitle any person to be granted an
Award, or, having been granted an Award, to be granted an additional Award.

 

6. TERMS AND CONDITIONS OF OPTIONS.

 

Options shall be evidenced by Award Agreements specifying the number of shares
of Stock covered thereby, in such form as the Committee shall from time to time
establish. No Option or purported Option shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing Options may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

 

6.1 Exercise Price. The exercise price for each Option shall be established in
the discretion of the Committee; provided, however, that the exercise price per
share shall be not less than the Fair Market

 

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Value of a share of Stock on the effective date of grant of the Option.
Notwithstanding the foregoing, an Option may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a manner
qualifying under the provisions of Section 424(a) of the Code.

 

6.2 Exercisability and Term of Options. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such Option; provided,
however, that (a) no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, and (b) no Option
granted to a prospective Employee may become exercisable prior to the date on
which such person commences Service. Subject to the foregoing, unless otherwise
specified by the Committee in the grant of an Option, any Option granted
hereunder shall terminate ten (10) years after the effective date of grant of
the Option, unless earlier terminated in accordance with its provisions.

 

6.3 Payment of Exercise Price.

 

(a) Forms of Consideration Authorized. Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock being purchased
pursuant to any Option shall be made (i) in cash, by check or cash equivalent,
(ii) by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant having a Fair Market Value not less than the
exercise price, (iii) by delivery of a properly executed notice of exercise
together with irrevocable instructions to a broker providing for the assignment
to the Company of the proceeds of a sale with respect to some or all of the
shares being acquired upon the exercise of the Option (a “Cashless Exercise”),
(iv) by such other consideration as may be approved by the Committee from time
to time to the extent permitted by applicable law, or (v) by any combination
thereof. The Committee may at any time or from time to time grant Options which
do not permit all of the foregoing forms of consideration to be used in payment
of the exercise price or which otherwise restrict one or more forms of
consideration.

 

(b) Limitations on Forms of Consideration.

 

(i) Tender of Stock. Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock. Unless otherwise provided by the Committee, an Option
may not be exercised by tender to the Company, or attestation to the ownership,
of shares of Stock unless such shares either have been owned by the Participant
for more than six (6) months (and not used for another Option exercise by
attestation during such period) or were not acquired, directly or indirectly,
from the Company.

 

(ii) Cashless Exercise. The Company reserves, at any and all times, the right,
in the Company’s sole and absolute discretion, to establish, decline to approve
or terminate any program or procedures for the exercise of Options by means of a
Cashless Exercise.

 

6.4 Effect of Termination of Service. An Option shall be exercisable after a
Participant’s termination of Service to such extent and during such period as
determined by the Committee, in its discretion, and set forth in the Award
Agreement evidencing such Option.

 

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6.5 Transferability of Options. During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or the Participant’s
guardian or legal representative. No Option shall be assignable or transferable
by the Participant, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Option, an
Option shall be assignable or transferable subject to the applicable
limitations, if any, described in the General Instructions to Form S-8
Registration Statement under the Securities Act.

 

7. [Reserved]

 

8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

 

SARs shall be evidenced by Award Agreements specifying the number of shares of
Stock subject to the Award, in such form as the Committee shall from time to
time establish. No SAR or purported SAR shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Award
Agreements evidencing SARs may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:

 

8.1 Types of SARs Authorized. SARs may be granted in tandem with all or any
portion of a related Option (a “Tandem SAR”) or may be granted independently of
any Option (a “Freestanding SAR”). A Tandem SAR may be granted either
concurrently with the grant of the related Option or at any time thereafter
prior to the complete exercise, termination, expiration or cancellation of such
related Option.

 

8.2 Exercise Price. The exercise price for each SAR shall be established in the
discretion of the Committee; provided, however, that (a) the exercise price per
share subject to a Tandem SAR shall be the exercise price per share under the
related Option and (b) the exercise price per share subject to a Freestanding
SAR shall be not less than the Fair Market Value of a share of Stock on the
effective date of grant of the SAR.

 

8.3 Exercisability and Term of SARs.

 

(a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the
extent that the related Option is exercisable, subject to such provisions as the
Committee may specify where the Tandem SAR is granted with respect to less than
the full number of shares of Stock subject to the related Option. The Committee
may, in its discretion, provide in any Award Agreement evidencing a Tandem SAR
that such SAR may not be exercised without the advance approval of the Company
and, if such approval is not given, then the Option shall nevertheless remain
exercisable in accordance with its terms. A Tandem SAR shall terminate and cease
to be exercisable no later than the date on which the related Option expires or
is terminated or canceled. Upon the exercise of a Tandem SAR with respect to
some or all of the shares subject to such SAR, the related Option shall be
canceled automatically as to the number of shares with respect to which the
Tandem SAR was exercised. Upon the exercise of an Option related to a Tandem SAR
as to some or all of the shares subject to such Option, the related Tandem SAR
shall be canceled automatically as to the number of shares with respect to which
the related Option was exercised.

 

(b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria and restrictions as shall be determined by the Committee
and set forth in the Award Agreement evidencing such SAR; provided, however,
that no Freestanding SAR shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such SAR.

 

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8.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section
8.5) of a SAR, the Participant (or the Participant’s legal representative or
other person who acquired the right to exercise the SAR by reason of the
Participant’s death) shall be entitled to receive payment of an amount for each
share with respect to which the SAR is exercised equal to the excess, if any, of
the Fair Market Value of a share of Stock on the date of exercise of the SAR
over the exercise price. Payment of such amount shall be made in cash, shares of
Stock, or any combination thereof as determined by the Committee. Unless
otherwise provided in the Award Agreement evidencing such SAR, payment shall be
made in a lump sum as soon as practicable following the date of exercise of the
SAR. The Award Agreement evidencing any SAR may provide for deferred payment in
a lump sum or in installments. When payment is to be made in shares of Stock,
the number of shares to be issued shall be determined on the basis of the Fair
Market Value of a share of Stock on the date of exercise of the SAR. For
purposes of Section 8, an SAR shall be deemed exercised on the date on which the
Company receives notice of exercise from the Participant.

 

8.5 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise
terminate or expire, the SAR by its terms remains exercisable immediately prior
to such termination or expiration and, if so exercised, would result in a
payment to the holder of such SAR, then any portion of such SAR which has not
previously been exercised shall automatically be deemed to be exercised as of
such date with respect to such portion.

 

8.6 Effect of Termination of Service. An SAR shall be exercisable after a
Participant’s termination of Service to such extent and during such period as
determined by the Committee, in its discretion, and set forth in the Award
Agreement evidencing such SAR.

 

8.7 Nontransferability of SARs. SARs may not be assigned or transferred in any
manner except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, shall be exercisable only by the Participant or the
Participant’s guardian or legal representative.

 

9. TERMS AND CONDITIONS OF STOCK AWARDS.

 

Stock Awards shall be evidenced by Award Agreements specifying whether the Award
is a Stock Bonus, a Stock Purchase Right or a Stock Unit and the number of
shares of Stock subject to the Award, in such form as the Committee shall from
time to time establish. No Stock Award or purported Stock Award shall be a valid
and binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Award Agreements evidencing Stock Awards may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to
the following terms and conditions:

 

9.1 Types of Stock Awards Authorized. Stock Awards may be in the form of either
a Stock Bonus, a Stock Purchase Right or a Stock Unit. Stock Awards may be
granted upon such conditions as the Committee shall determine, including,
without limitation, upon the attainment of one or more Performance Goals
described in Section 10.4. If either the grant of a Stock Award or the lapsing
of the Restriction Period is to be contingent upon the attainment of one or more
Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 10.3 through 10.5(a).

 

9.2 Purchase Price. The purchase price for shares of Stock issuable under each
Stock Purchase Right shall be established by the Committee in its discretion. No
monetary payment (other than applicable tax withholding) shall be required as a
condition of receiving shares of Stock pursuant to a Stock

 

10

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Bonus or a Stock Unit, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit. Notwithstanding the
foregoing, the Participant shall furnish consideration in the form of cash or
past services rendered to a Participating Company or for its benefit having a
value not less than the par value of the shares of Stock subject to such Stock
Award.

 

9.3 Purchase Period. A Stock Purchase Right shall be exercisable within a period
established by the Committee, which shall in no event exceed thirty (30) days
from the effective date of the grant of the Stock Purchase Right; provided,
however, that no Stock Purchase Right granted to a prospective Employee may
become exercisable prior to the date on which such person commences Service.

 

9.4 Payment of Purchase Price. Except as otherwise provided below, payment of
the purchase price for the number of shares of Stock being purchased pursuant to
any Stock Purchase Right shall be made (i) in cash, by check, or cash
equivalent, (ii) by such other consideration as may be approved by the Committee
from time to time to the extent permitted by applicable law, or (iii) by any
combination thereof. The Committee may at any time or from time to time grant
Stock Purchase Rights which do not permit all of the foregoing forms of
consideration to be used in payment of the purchase price or which otherwise
restrict one or more forms of consideration. Stock Bonuses and Stock Units shall
be issued in consideration for past services actually rendered to a
Participating Company or for its benefit.

 

9.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any Stock
Award may or may not be made subject to vesting conditioned upon the
satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 10.4 (the “Vesting Conditions”), as shall be established by
the Committee and set forth in the Award Agreement evidencing such Award. During
any period (the “Restriction Period”) in which shares acquired pursuant to a
Stock Award remain subject to Vesting Conditions, such shares may not be sold,
exchanged, transferred, pledged, assigned or otherwise disposed of other than
pursuant to an Ownership Change Event, as defined in Section 12.1, or as
provided in Section 9.8. Upon request by the Company, each Participant shall
execute any agreement evidencing such transfer restrictions prior to the receipt
of shares of Stock hereunder and shall promptly present to the Company any and
all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.

 

9.6 Voting Rights; Dividends and Distributions. Except as provided in this
Section, Section 9.5 and any Award Agreement, during the Restriction Period
applicable to shares subject to a Stock Purchase Right and Stock Bonuses, the
Participant shall have all of the rights of a stockholder of the Company holding
shares of Stock, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such shares. Participants
who have been granted Stock Units shall possess no incidents of ownership with
respect to shares of Stock underlying such Stock Units; provided, however, that
a Stock Unit Agreement may provide for payments in lieu of dividends in a manner
identical to that specified in Section 10.6 of the Plan. However, in the event
of a dividend or distribution paid in shares of Stock or any other adjustment
made upon a change in the capital structure of the Company as described in
Section 4.2, then any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant is entitled
by reason of the Participant’s Stock Award shall be immediately subject to the
same Vesting Conditions as the shares subject to the Stock Award with respect to
which such dividends or distributions were paid or adjustments were made.

 

9.7 Effect of Termination of Service. Unless otherwise provided by the Committee
in the grant of a Stock Award and set forth in the Award Agreement, if a
Participant’s Service terminates for any

 

11

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reason, whether voluntary or involuntary (including the Participant’s death or
Disability), then (i) the Company shall have the option to repurchase for the
purchase price paid by the Participant any shares acquired by the Participant
pursuant to a Stock Purchase Right which remain subject to Vesting Conditions as
of the date of the Participant’s termination of Service and (ii) the Participant
shall forfeit to the Company any shares acquired by the Participant pursuant to
a Stock Bonus or a Stock Unit which remain subject to Vesting Conditions as of
the date of the Participant’s termination of Service. The Company shall have the
right to assign at any time any repurchase right it may have, whether or not
such right is then exercisable, to one or more persons as may be selected by the
Company.

 

9.8 Nontransferability of Stock Award Rights. Rights to acquire shares of Stock
pursuant to a Stock Award may not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except by will or the laws of descent and distribution, and, during the lifetime
of the Participant, shall be exercisable only by the Participant or the
Participant’s guardian or legal representative.

 

10. TERMS AND CONDITIONS OF PERFORMANCE AWARDS.

 

Performance Awards shall be evidenced by Award Agreements in such form as the
Committee shall from time to time establish. No Performance Award or purported
Performance Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement. Award Agreements evidencing
Performance Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

 

10.1 Types of Performance Awards Authorized. Performance Awards may be in the
form of either Performance Shares or Performance Units. Each Award Agreement
evidencing a Performance Award shall specify the number of Performance Shares or
Performance Units subject thereto, the Performance Award Formula, the
Performance Goal(s) and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award.

 

10.2 Initial Value of Performance Shares and Performance Units. Unless otherwise
provided by the Committee in granting a Performance Award, each Performance
Share shall have an initial value equal to the Fair Market Value of one (1)
share of Stock, subject to adjustment as provided in Section 4.2, on the
effective date of grant of the Performance Share, and each Performance Unit
shall have an initial value of one hundred dollars ($100). The final value
payable to the Participant in settlement of a Performance Award determined on
the basis of the applicable Performance Award Formula will depend on the extent
to which Performance Goals established by the Committee are attained within the
applicable Performance Period established by the Committee.

 

10.3 Establishment of Performance Period, Performance Goals and Performance
Award Formula. In granting each Performance Award, the Committee shall establish
in writing the applicable Performance Period, Performance Award Formula and one
or more Performance Goals which, when measured at the end of the Performance
Period, shall determine on the basis of the Performance Award Formula the final
value of the Performance Award to be paid to the Participant. Once established,
the Performance Goals and Performance Award Formula shall not be changed during
the Performance Period. The Company shall notify each Participant granted a
Performance Award of the terms of such Award, including the Performance Period,
Performance Goal(s) and Performance Award Formula.

 

12

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10.4 Measurement of Performance Goals. Performance Goals shall be established by
the Committee on the basis of targets to be attained (“Performance Targets”)
with respect to one or more measures of business or financial performance (each,
a “Performance Measure”), subject to the following:

 

(a) Performance Measures. Performance Measures shall have the same meanings as
used in the Company’s financial statements, or, if such terms are not used in
the Company’s financial statements, they shall have the meaning applied pursuant
to generally accepted accounting principles, or as used generally in the
Company’s industry. Performance Measures shall be calculated with respect to the
Company and each Subsidiary Corporation consolidated therewith for financial
reporting purposes or such division or other business unit as may be selected by
the Committee. For purposes of the Plan, the Performance Measures applicable to
a Performance Award shall be calculated in accordance with generally accepted
accounting principles, but prior to the accrual or payment of any Performance
Award for the same Performance Period and excluding the effect (whether positive
or negative) of any change in accounting standards or any extraordinary, unusual
or nonrecurring item, as determined by the Committee, occurring after the
establishment of the Performance Goals applicable to the Performance Award.
Performance Measures may be one or more of the following, as determined by the
Committee:

 

(i) growth in revenue;

 

(ii) growth in the market price of the Stock;

 

(iii) operating margin;

 

(iv) gross margin;

 

(v) operating income;

 

(vi) pre-tax profit;

 

(vii) earnings before interest, taxes and depreciation;

 

(viii) net income;

 

(ix) total return on shares of Stock relative to the increase in an appropriate
index as may be selected by the Committee;

 

(x) earnings per share;

 

(xi) return on stockholder equity;

 

(xii) return on net assets;

 

(xiii) expenses;

 

(xiv) return on capital;

 

(xv) economic value added;

 

(xvi) market share; and

 

13

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(xvii) cash flow, as indicated by book earnings before interest, taxes,
depreciation and amortization.

 

(b) Performance Targets. Performance Targets may include a minimum, maximum,
target level and intermediate levels of performance, with the final value of a
Performance Award determined under the applicable Performance Award Formula by
the level attained during the applicable Performance Period. A Performance
Target may be stated as an absolute value or as a value determined relative to a
standard selected by the Committee.

 

10.5 Settlement of Performance Awards.

 

(a) Determination of Final Value. As soon as practicable following the
completion of the Performance Period applicable to a Performance Award, the
Committee shall certify in writing the extent to which the applicable
Performance Goals have been attained and the resulting final value of the Award
earned by the Participant and to be paid upon its settlement in accordance with
the applicable Performance Award Formula.

 

(b) Discretionary Adjustment of Award Formula. In its discretion, the Committee
may, either at the time it grants a Performance Award or at any time thereafter,
provide for the positive or negative adjustment of the Performance Award Formula
applicable to a Performance Award granted to any Participant to reflect such
Participant’s individual performance in his or her position with the Company or
such other factors as the Committee may determine.

 

(c) Effect of Leaves of Absence. Unless otherwise required by law, payment of
the final value, if any, of a Performance Award held by a Participant who has
taken in excess of thirty (30) days of leaves of absence during a Performance
Period shall be prorated on the basis of the number of days of the Participant’s
Service during the Performance Period during which the Participant was not on a
leave of absence.

 

(d) Notice to Participants. As soon as practicable following the Committee’s
determination and certification in accordance with Sections 10.5(a) and (b), the
Company shall notify each Participant of the determination of the Committee.

 

(e) Payment in Settlement of Performance Awards. As soon as practicable
following the Committee’s determination and certification in accordance with
Sections 10.5(a) and (b), payment shall be made to each eligible Participant (or
such Participant’s legal representative or other person who acquired the right
to receive such payment by reason of the Participant’s death) of the final value
of the Participant’s Performance Award. Payment of such amount shall be made in
cash, shares of Stock, or a combination thereof as determined by the Committee.
Unless otherwise provided in the Award Agreement evidencing a Performance Award,
payment shall be made in a lump sum. An Award Agreement may provide for deferred
payment in a lump sum or in installments. If any payment is to be made on a
deferred basis, the Committee may, but shall not be obligated to, provide for
the payment during the deferral period of Dividend Equivalents or interest.

 

(f) Provisions Applicable to Payment in Shares. If payment is to be made in
shares of Stock, the number of such shares shall be determined by dividing the
final value of the Performance Award by the value of a share of Stock determined
by the method specified in the Award Agreement. Such methods may include,
without limitation, the closing market price on a

 

14

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specified date (such as the settlement date) or an average of market prices over
a series of trading days. Shares of Stock issued in payment of any Performance
Award may be fully vested and freely transferable shares or may be shares of
Stock subject to Vesting Conditions as provided in Section 9.5. Any shares
subject to Vesting Conditions shall be evidenced by an appropriate Award
Agreement and shall be subject to the provisions of Sections 9.5 through 9.8
above.

 

10.6 Dividend Equivalents. In its discretion, the Committee may provide in the
Award Agreement evidencing any Performance Share Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment of
cash dividends on Stock having a record date prior to the date on which the
Performance Shares are settled or forfeited. Dividend Equivalents may be paid
currently or may be accumulated and paid to the extent that Performance Shares
become nonforfeitable, as determined by the Committee. Settlement of Dividend
Equivalents may be made in cash, shares of Stock, or a combination thereof as
determined by the Committee, and may be paid on the same basis as settlement of
the related Performance Share as provided in Section 10.5. Dividend Equivalents
shall not be paid with respect to Performance Units.

 

10.7 Effect of Termination of Service. The effect of a Participant’s termination
of Service on the Participant’s Performance Award shall be as determined by the
Committee, in its discretion, and set forth in the Award Agreement evidencing
such Performance Award.

 

10.8 Nontransferability of Performance Awards. Prior to settlement in accordance
with the provisions of the Plan, no Performance Award may be subject in any
manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except by will or by the laws of descent and
distribution. All rights with respect to a Performance Award granted to a
Participant hereunder shall be exercisable during his or her lifetime only by
such Participant or the Participant’s guardian or legal representative.

 

11. STANDARD FORMS OF AWARD AGREEMENT.

 

11.1 Award Agreements. Each Award shall comply with and be subject to the terms
and conditions set forth in the appropriate form of Award Agreement approved by
the Committee and as amended from time to time. Any Award Agreement may consist
of an appropriate form of Notice of Grant and a form of Agreement incorporated
therein by reference, or such other form or forms as the Committee may approve
from time to time.

 

11.2 Authority to Vary Terms. The Committee shall have the authority from time
to time to vary the terms of any standard form of Award Agreement either in
connection with the grant or amendment of an individual Award or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Award Agreement are not inconsistent with the terms of the Plan.

 

12. CHANGE IN CONTROL.

 

12.1 Definitions.

 

(a) An “Ownership Change Event” shall be deemed to have occurred if any of the
following occurs with respect to the Company: (i) the direct or indirect sale or
exchange by the stockholders of the Company of all or substantially all of the
voting stock of the Company; (ii) a merger or consolidation

 

15

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in which the Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange or
transfer to one or more subsidiaries of the Company); or (iv) a liquidation or
dissolution of the Company.

 

(b) A “Change in Control” shall mean an Ownership Change Event or series of
related Ownership Change Events (collectively, a “Transaction”) in which the
stockholders of the Company immediately before the Transaction do not retain
immediately after the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of an Ownership
Change Event described in Section 12.1(a)(iii), the entity to which the assets
of the Company were transferred.

 

12.2 Effect of Change in Control on Options. In the event of a Change in
Control, the Acquiring Corporation may, without the consent of any Participant,
either assume the Company’s rights and obligations under outstanding Options or
substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation’s stock. In the event that the Acquiring Corporation
elects to assume or substitute the outstanding Options, and the Change of
Control is consummated, then the vesting of the unvested shares underlying all
Options shall be accelerated by one year as set forth in the Option Agreement.
In the event the Acquiring Corporation elects not to assume or substitute for
outstanding Options in connection with a Change in Control, the vesting of each
such outstanding Option and any shares acquired upon the exercise thereof held
by a Participant whose Service has not terminated prior to such date shall be
fully accelerated, effective as of the date ten (10) days prior to the date of
the Change in Control, to such extent, if any, as shall have been determined by
the Board, in its discretion, and set forth in the Option Agreement evidencing
such Option. The vesting of any Option thereof that was permissible solely by
reason of this Section 12.2 and the provisions of such Option Agreement shall be
conditioned upon the consummation of the Change in Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Change in Control nor exercised as of the date of the Change
in Control shall terminate and cease to be outstanding effective as of the date
of the Change in Control. Notwithstanding the foregoing, shares acquired upon
exercise of an Option prior to the Change in Control and any consideration
received pursuant to the Change in Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement
evidencing such Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 12.1(a)(i) constituting a Change in Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
its discretion.

 

12.3 Effect of Change in Control on SARs. In the event of a Change in Control,
the Acquiring Corporation may, without the consent of any Participant, either
assume the Company’s rights and obligations under outstanding SARs or substitute
for outstanding SARs substantially equivalent SARs for the Acquiring
Corporation’s stock. In the event the Acquiring Corporation elects not to assume
or substitute for outstanding SARs in connection with a Change in Control, the
Committee shall provide that any unexercised and/or unvested portions of
outstanding SARs shall be immediately exercisable and vested in full as of the
date thirty (30) days prior to the date of the Change in Control. The exercise
and/or vesting of any SAR that was permissible solely by reason of this
paragraph 12.3 shall be conditioned upon the consummation of the Change in
Control. Any SARs which are not assumed by the Acquiring Corporation in
connection with the Change in Control nor exercised as of the time of
consummation of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in Control.

 

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12.4 Effect of Change in Control on Stock Awards. The Committee may, in its
discretion, provide in any Award Agreement evidencing a Stock Award that, in the
event of a Change in Control, the lapsing of the Restriction Period applicable
to the shares subject to the Stock Award held by a Participant whose Service has
not terminated prior to such date shall be accelerated effective as of the date
of the Change in Control to such extent as specified in such Award Agreement.
Any acceleration of the lapsing of the Restriction Period that was permissible
solely by reason of this Section 12.4 and the provisions of such Award Agreement
shall be conditioned upon the consummation of the Change in Control.

 

12.5 Effect of Change in Control on Performance Awards. The Committee may, in
its discretion, provide in any Award Agreement evidencing a Performance Award
that, in the event of a Change in Control, the Performance Award held by a
Participant whose Service has not terminated prior to such date shall become
payable effective as of the date of the Change in Control to such extent as
specified in such Award Agreement.

 

13. COMPLIANCE WITH SECURITIES LAW.

 

The grant of Awards and the issuance of shares of Stock pursuant to any Award
shall be subject to compliance with all applicable requirements of federal,
state and foreign law with respect to such securities and the requirements of
any stock exchange or market system upon which the Stock may then be listed. In
addition, no Award may be exercised or shares issued pursuant to an Award unless
(i) a registration statement under the Securities Act shall at the time of such
exercise or issuance be in effect with respect to the shares issuable pursuant
to the Award or (ii) in the opinion of legal counsel to the Company, the shares
issuable pursuant to the Award may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to issuance of any Stock, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

 

14. TAX WITHHOLDING.

 

14.1 Tax Withholding in General. The Company shall have the right to deduct from
any and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, including by means of a Cashless
Exercise of an Option, to make adequate provision for, the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Award or the shares acquired pursuant thereto.
The Company shall have no obligation to deliver shares of Stock, to release
shares of Stock from an escrow established pursuant to an Award Agreement, or to
make any payment in cash under the Plan until the Participating Company Group’s
tax withholding obligations have been satisfied by the Participant.

 

14.2 Withholding in Shares. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.

 

17

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15. TERMINATION OR AMENDMENT OF PLAN.

 

The Committee may terminate or amend the Plan at any time. No termination or
amendment of the Plan shall affect any then outstanding Award unless expressly
provided by the Committee. In any event, no termination or amendment of the Plan
may adversely affect any then outstanding Award without the consent of the
Participant, unless such termination or amendment is necessary to comply with
any applicable law, regulation or rule.

 

16. MISCELLANEOUS PROVISIONS.

 

16.1 Repurchase Rights. Shares issued under the Plan may be subject to one or
more repurchase options, or other conditions and restrictions as determined by
the Committee in its discretion at the time the Award is granted. The Company
shall have the right to assign at any time any repurchase right it may have,
whether or not such right is then exercisable, to one or more persons as may be
selected by the Company. Upon request by the Company, each Participant shall
execute any agreement evidencing such transfer restrictions prior to the receipt
of shares of Stock hereunder and shall promptly present to the Company any and
all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.

 

16.2 Provision of Information. Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders.

 

16.3 Rights as Employee, Consultant or Director. No person, even though eligible
pursuant to Section 5, shall have a right to be selected as a Participant, or,
having been so selected, to be selected again as a Participant. Nothing in the
Plan or any Award granted under the Plan shall confer on any Participant a right
to remain an Employee, Consultant or Director, or interfere with or limit in any
way any right of a Participating Company to terminate the Participant’s Service
at any time. To the extent that an Employee of a Participating Company other
than the Company receives an Award under the Plan, that Award can in no event be
understood or interpreted to mean that the Company is the Employee’s employer or
that the Employee has an employment relationship with the Company.

 

16.4 Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of such shares (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such shares are issued, except as provided
in Section 4.2 or another provision of the Plan.

 

16.5 Fractional Shares. The Company shall not be required to issue fractional
shares upon the exercise or settlement of any Award.

 

16.6 Beneficiary Designation. Subject to local laws and procedures, each
Participant may file with the Company a written designation of a beneficiary who
is to receive any benefit under the Plan to which the Participant is entitled in
the event of such Participant’s death before he or she receives any or all of
such benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective
only when filed by the Participant in writing with the Company during the
Participant’s lifetime. If a married Participant designates a beneficiary other
than the Participant’s spouse, the effectiveness of such designation may be
subject to the consent of the

 

18

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Participant’s spouse. If a Participant dies without an effective designation of
a beneficiary who is living at the time of the Participant’s death, the Company
will pay any remaining unpaid benefits to the Participant’s legal
representative.

 

16.7 Unfunded Obligation. Participants shall have the status of general
unsecured creditors of the Company. Any amounts payable to Participants pursuant
to the Plan shall be unfunded and unsecured obligations for all purposes,
including, without limitation, Title I of the Employee Retirement Income
Security Act of 1974. No Participating Company shall be required to segregate
any monies from its general funds, or to create any trusts, or establish any
special accounts with respect to such obligations. The Company shall retain at
all times beneficial ownership of any investments, including trust investments,
which the Company may make to fulfill its payment obligations hereunder. Any
investments or the creation or maintenance of any trust or any Participant
account shall not create or constitute a trust or fiduciary relationship between
the Committee or any Participating Company and a Participant, or otherwise
create any vested or beneficial interest in any Participant or the Participant’s
creditors in any assets of any Participating Company. The Participants shall
have no claim against any Participating Company for any changes in the value of
any assets which may be invested or reinvested by the Company with respect to
the Plan.

 

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KINTERA, INC.

 

2004 EQUITY INCENTIVE PLAN (FUNDWARE)

 

NOTICE OF GRANT OF STOCK OPTION

 

                             (the “Optionee”) has been granted an option (the
“Option”) to purchase certain shares of Stock of Kintera, Inc. pursuant to the
Kintera, Inc. 2004 Equity Incentive Plan (Fundware) (the “Plan”), as follows:

 

Date of Option Grant:    ________ Number of Option Shares:    ________ Exercise
Price:    $_______ per share Initial Vesting Date:    ________ Option Expiration
Date:    The date ten (10) years after the Date of Option Grant. Tax Status of
Option:    Nonstatutory Stock Option.

 

Vested Shares: Except as provided in the Plan and Stock Option Agreement, the
number of Vested Shares (disregarding any resulting fractional share) as of any
date is determined by multiplying the Number of Option Shares by the “Vested
Ratio” determined as of such date as follows:

 

         Vested Ratio

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a.   Initially, all shares of stock shall be Unvested Shares    0 b.   On
Initial Vesting Date, provided Optionee’s Service has not terminated prior to
such date    1/4 Plus:      c.   For each full day of the Optionee’s continuous
Service from Initial Vesting Date until the Vested Ratio equals 1/1, an
additional    1/1,460

 

By their signatures below, the Company and the Optionee agree that the Option is
governed by this Notice and by the provisions of the Plan and the Stock Option
Agreement, both of which are attached to and made a part of this document. The
Optionee acknowledges receipt of copies of the Plan and the Stock Option
Agreement, represents that the Optionee has read and is familiar with their
provisions, and hereby accepts the Option subject to all of their terms and
conditions.

 

KINTERA, INC.   OPTIONEE By:  

 

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        Signature Its:  

 

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            Date Address:  

9605 Scranton Rd., Suite 240

San Diego, CA 92121

 

 

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          Address            

 

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ATTACHMENTS:   2004 Equity Incentive Plan (Fundware), as amended to the Date of
Option Grant; Stock Option Agreement and Exercise Notice

 

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KINTERA, INC.

 

2004 EQUITY INCENTIVE PLAN (FUNDWARE)

STOCK OPTION AGREEMENT

 

Kintera, Inc. has granted to the individual (the “Optionee”) named in the Notice
of Grant of Stock Option (the “Notice”) to which this Stock Option Agreement
(the “Option Agreement”) is attached an option (the “Option”) to purchase
certain shares of Stock upon the terms and conditions set forth in the Notice
and this Option Agreement. The Option has been granted pursuant to and shall in
all respects be subject to the terms and conditions of the Kintera, Inc. 2004
Equity Incentive Plan (Fundware) (the “Plan”), as amended to the Date of Option
Grant, the provisions of which are incorporated herein by reference. By signing
the Notice, the Optionee: (a) represents that the Optionee has read and is
familiar with the terms and conditions of the Notice, the Plan and this Option
Agreement, including the Effect of Termination of Service set forth in Section
7, (b) accepts the Option subject to all of the terms and conditions of the
Notice, the Plan and this Option Agreement, (c) agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Notice, the Plan or this Option Agreement, and (d)
acknowledges receipt of a copy of the Notice, the Plan and this Option
Agreement.

 

1. DEFINITIONS AND CONSTRUCTION.

 

1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have
the meanings assigned to such terms in the Notice or the Plan.

 

1.2 Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of this
Option Agreement. Except when otherwise indicated by the context, the singular
shall include the plural and the plural shall include the singular. Use of the
term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

 

2. TAX STATUS OF OPTION.

 

This Option is intended to be a Nonstatutory Stock Option and shall not be
treated as an Incentive Stock Option within the meaning of Section 422(b) of the
Code.

 

3. ADMINISTRATION.

 

All questions of interpretation concerning this Option Agreement shall be
determined by the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.

 

4. EXERCISE OF THE OPTION.

 

4.1 Right to Exercise. Except as otherwise provided herein, the Option shall be
exercisable on and after the Date of Option Grant (or if later, the Optionee’s
Service commencement date) and prior to the termination of the Option (as
provided in Section 6) in an amount not to exceed the number of Vested Shares
less the number of shares previously acquired upon exercise of the Option.

 

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4.2 Method of Exercise. Exercise of the Option shall be by written notice to the
Company which must state the election to exercise the Option, the number of
whole shares of Stock for which the Option is being exercised and such other
representations and agreements as to the Optionee’s investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in Section 6, accompanied by full payment of the
aggregate Exercise Price for the number of shares of Stock being purchased. The
Option shall be deemed to be exercised upon receipt by the Company of such
written notice and the aggregate Exercise Price.

 

4.3 Payment of Exercise Price.

 

(a) Forms of Consideration Authorized. Except as otherwise provided below,
payment of the aggregate Exercise Price for the number of shares of Stock for
which the Option is being exercised shall be made (i) in cash, by check, or cash
equivalent, (ii) by tender to the Company, or attestation to the ownership, of
whole shares of Stock owned by the Optionee having a Fair Market Value (as
determined by the Company without regard to any restrictions on transferability
applicable to such stock by reason of federal or state securities laws or
agreements with an underwriter for the Company) not less than the aggregate
Exercise Price, (iii) by means of a Cashless Exercise, as defined in Section
4.3(b), or (iv) by any combination of the foregoing.

 

(b) Limitations on Forms of Consideration.

 

(i) Tender of Stock. Notwithstanding the foregoing, the Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock. The Option may not be exercised by tender to the
Company, or attestation to the ownership, of shares of Stock unless such shares
either have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.

 

(ii) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly
executed notice together with irrevocable instructions to a broker in a form
acceptable to the Company providing for the assignment to the Company of the
proceeds of a sale with respect to some or all of the shares of Stock acquired
upon the exercise of the Option pursuant to a program or procedure approved by
the Company. The Company reserves, at any and all times, the right, in the
Company’s sole and absolute discretion, to decline to approve or terminate any
such program or procedure.

 

4.4 Tax Withholding. At the time the Option is exercised, in whole or in part,
or at any time thereafter as requested by the Company, the Optionee hereby
authorizes withholding from payroll and any other amounts payable to the
Optionee, and otherwise agrees to make adequate provision for (including by
means of a Cashless Exercise to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Participating Company Group, if any, which arise in
connection with the Option, including,

 

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without limitation, obligations arising upon (i) the exercise, in whole or in
part, of the Option, (ii) the transfer, in whole or in part, of any shares
acquired upon exercise of the Option, (iii) the operation of any law or
regulation providing for the imputation of interest, or (iv) the lapsing of any
restriction with respect to any shares acquired upon exercise of the Option. The
Company shall have no obligation to deliver shares of Stock until the tax
withholding obligations of the Participating Company Group have been satisfied
by the Optionee.

 

4.5 Certificate Registration. Except in the event the Exercise Price is paid by
means of a Cashless Exercise, the certificate for the shares as to which the
Option is exercised shall be registered in the name of the Optionee, or, if
applicable, in the names of the heirs of the Optionee.

 

4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the
Option and the issuance of shares of Stock upon exercise of the Option shall be
subject to compliance with all applicable requirements of federal, state or
foreign law with respect to such securities. The Option may not be exercised if
the issuance of shares of Stock upon exercise would constitute a violation of
any applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon
which the Stock may then be listed. In addition, the Option may not be exercised
unless (i) a registration statement under the Securities Act shall at the time
of exercise of the Option be in effect with respect to the shares issuable upon
exercise of the Option or (ii) in the opinion of legal counsel to the Company,
the shares issuable upon exercise of the Option may be issued in accordance with
the terms of an applicable exemption from the registration requirements of the
Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED
UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT
BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares subject to the Option
shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been
obtained. As a condition to the exercise of the Option, the Company may require
the Optionee to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.

 

4.7 Fractional Shares. The Company shall not be required to issue fractional
shares upon the exercise of the Option.

 

5. NONTRANSFERABILITY OF THE OPTION.

 

The Option may be exercised during the lifetime of the Optionee only by the
Optionee or the Optionee’s guardian or legal representative and may not be
assigned or transferred in any manner except by will or by the laws of descent
and distribution. Following the death of the Optionee, the Option, to the extent
provided in Section 7, may be exercised by the Optionee’s legal representative
or by any person empowered to do so under the deceased Optionee’s will or under
the then applicable laws of descent and distribution.

 

6. TERMINATION OF THE OPTION.

 

The Option shall terminate and may no longer be exercised on the first to occur
of (a) the Option Expiration Date, (b) the last date for exercising the Option
following termination of the Optionee’s Service as described in Section 7, or
(c) a Change in Control to the extent provided in Section 8.

 

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7. EFFECT OF TERMINATION OF SERVICE.

 

7.1 Option Exercisability.

 

(a) Disability. If the Optionee’s Service with the Participating Company Group
terminates because of the Disability of the Optionee, the Option, to the extent
unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee (or the Optionee’s guardian or
legal representative) at any time prior to the expiration of twelve (12) months
after the date on which the Optionee’s Service terminated, but in any event no
later than the Option Expiration Date.

 

(b) Death. If the Optionee’s Service with the Participating Company Group
terminates because of the death of the Optionee, the Option, to the extent
unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee’s legal representative or other
person who acquired the right to exercise the Option by reason of the Optionee’s
death at any time prior to the expiration of twelve (12) months after the date
on which the Optionee’s Service terminated, but in any event no later than the
Option Expiration Date. The Optionee’s Service shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months
after the Optionee’s termination of Service.

 

(c) Termination After Change in Control. If the Optionee’s Service ceases as a
result of Termination After Change in Control (as defined in 7.4(a) below), (i)
the Option, to the extent unexercised and exercisable on the date on which the
Optionee’s Service terminated, may be exercised by the Optionee (or the
Optionee’s guardian or legal representative) at any time prior to the expiration
of six (6) months after the date on which the Optionee’s Service terminated, but
in any event no later than the Option Expiration Date, and (ii) the Option shall
become immediately vested and exercisable in full and the Vested Ratio shall be
deemed to be 1/1 as of the date on which the Optionee’s Service terminated.

 

(d) Other Termination of Service. If the Optionee’s Service with the
Participating Company Group terminates for any reason, except Disability, death
or Termination After Change in Control, the Option, to the extent unexercised
and exercisable by the Optionee on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee at any time prior to the expiration
of three (3) months (or such other longer period of time as determined by the
Board, in its discretion) after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration Date.

 

7.2 Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if
the exercise of the Option within the applicable time periods set forth in
Section 7.1 is prevented by the provisions of Section 4.6, the Option shall
remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

 

7.3 Extension if Optionee Subject to Section 16(b). Notwithstanding the
foregoing, if a sale within the applicable time periods set forth in Section 7.1
of shares acquired upon the exercise of the Option would subject the Optionee to
suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day following
the date on which a sale of such shares by the Optionee would no longer be
subject to such suit, (ii) the one hundred and ninetieth (190th) day after the
Optionee’s termination of Service, or (iii) the Option Expiration Date.

 

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7.4 Certain Definitions.

 

(a) “Termination After Change in Control” shall mean either of the following
events occurring within twenty-four (24) months after a Change in Control:

 

(i) termination by the Participating Company Group of the Optionee’s Service
with the Participating Company Group for any reason other than for Cause (as
defined in 7.4(b) below); or

 

(ii) the Optionee’s resignation for Good Reason (as defined in 7.4(c) below)
from all capacities in which the Optionee is then rendering Service to the
Participating Company Group within a reasonable period of time following the
event constituting Good Reason.

 

Notwithstanding any provision herein to the contrary, Termination After Change
in Control shall not include any termination of the Optionee’s Service with the
Participating Company Group which (1) is for Cause (as defined below); (2) is a
result of the Optionee’s death or disability; (3) is a result of the Optionee’s
voluntary termination of Service other than for Good Reason; or (4) occurs prior
to the effectiveness of a Change in Control.

 

(b) “Cause” shall mean any of the following: (i) the Optionee’s theft,
dishonesty, or falsification of any Participating Company documents or records;
(ii) the Optionee’s improper use or disclosure of a Participating Company’s
confidential or proprietary information; (iii) any action by the Optionee which
has a detrimental effect on a Participating Company’s reputation or business;
(iv) the Optionee’s failure or inability to perform adequately any reasonable
assigned duties as determined by a Participating Company; (v) any violation by
the Optionee of any material agreement between the Optionee and a Participating
Company, which breach is not cured pursuant to the terms of such agreement or
any breach of any material statutory duty to a Participating Company; or (vi)
the Optionee’s conviction (including any plea of guilty or nolo contendere) of
any felony or crime involving moral turpitude or dishonesty.

 

(c) “Good Reason” shall mean any one or more of the following:

 

(i) without the Optionee’s express written consent, the relocation of the
principal place of the Optionee’s Service to a location that is more than fifty
(50) miles from the Optionee’s principal place of Service immediately prior to
the date of the Change in Control;

 

(ii) any failure by the Participating Company Group to pay, or any reduction by
the Participating Company Group of the Optionee’s base salary in effect
immediately prior to the date of the Change in Control; or

 

(iii) any failure by the Participating Company Group to (1) continue to provide
to the Optionee a package of welfare benefit plans, including, but not limited
to, the Participating Company Group’s life, disability, health, dental, medical,
savings, profit sharing and retirement plans, that, taken as a whole, provide
substantially similar benefits to those to which the Optionee was entitled
immediately prior to the Change in Control (except that the Optionee’s
contributions may be increased to the extent of any cost increases imposed by
third parties) or (2) provide the Optionee with all other fringe benefits (or
their equivalent) from time to time in effect for the benefit of any employee of
the Participating Company Group.

 

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8. CHANGE IN CONTROL.

 

(a) In the event of a Change in Control, the surviving, continuing, successor,
or purchasing corporation or other business entity or parent thereof, as the
case may be (the “Acquiring Corporation”), may, without the consent of the
Optionee, either assume the Company’s rights and obligations under the Option or
substitute for the Option a substantially equivalent option for the Acquiring
Corporation’s stock. In the event of such assumption or substitution, the
vesting schedule set forth in the Notice shall accelerate by one full year. The
vesting schedule shall be adjusted as follows:

 

(i) if the Change of Control occurs prior to the Initial Vesting Date, the
Initial Vesting Date shall remain unchanged; however, thereafter the daily
vesting shall be adjusted so that the remaining 75% of the Stock shall vest
daily in 730 equal increments for the two-year period immediately following the
Initial Vesting Date, provided that the Optionee provides continuous Service to
the Acquiring Corporation or any Participating Company, and the Vested Ratio
shall be calculated accordingly;

 

(ii) if the Change of Control occurs on or after the Initial Vesting Date, all
Option Shares vested as of the date of the Change of Control shall remain Vested
Shares and, in lieu of the daily vesting schedule that would otherwise be
applicable, all shares that were not vested at the time of the Change of Control
will vest daily in equal increments from the date of the Change of Control
through the date two years after the Initial Vesting Date, provided that the
Optionee provides continuous Service to the Acquiring Corporation or any
Participating Company, and the Vested Ratio shall be calculated accordingly.
Notwithstanding the foregoing, if the Change of Control occurs after the third
anniversary of the Initial Vesting Date, then all remaining Option Shares that
had not yet vested shall vest at the time of the Change of Control.

 

(b) In the event the Acquiring Corporation elects not to assume the Company’s
rights and obligations under the Option or substitute for the Option in
connection with the Change in Control, and provided that the Optionee’s Service
has not terminated prior to such date, the Vested Ratio shall be deemed to be
1/1 and all shares acquired upon exercise of the Option shall be Vested Shares
as of the date ten (10) days prior to the date of the Change in Control. Any
vesting of the Option that was permissible solely by reason of this Section 8
shall be conditioned upon the consummation of the Change in Control. The Option
shall terminate and cease to be outstanding effective as of the date of the
Change in Control to the extent that the Option is neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control. Notwithstanding
the foregoing, shares acquired upon exercise of the Option prior to the Change
in Control and any consideration received pursuant to the Change in Control with
respect to such shares shall continue to be subject to all applicable provisions
of this Option Agreement except as otherwise provided herein. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject
to the Option immediately prior to an Ownership Change Event described in
Section 12.1(a)(i) of the Plan constituting a Change in Control is the surviving
or continuing corporation and immediately after such Ownership Change Event less
than fifty percent (50%) of the total combined voting power of its voting stock
is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without
regard to the provisions of Section 1504(b) of the Code, the Option shall not
terminate unless the Board otherwise provides in its discretion.

 

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9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

 

In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or similar change in the
capital structure of the Company, appropriate adjustments shall be made in the
number, Exercise Price and class of shares of stock subject to the Option. If a
majority of the shares which are of the same class as the shares that are
subject to the Option are exchanged for, converted into, or otherwise become
(whether or not pursuant to an Ownership Change Event) shares of another
corporation (the “New Shares”), the Board may unilaterally amend the Option to
provide that the Option is exercisable for New Shares. In the event of any such
amendment, the Number of Option Shares and the Exercise Price shall be adjusted
in a fair and equitable manner, as determined by the Board, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 9 shall be rounded down to the nearest whole number,
and in no event may the Exercise Price be decreased to an amount less than the
par value, if any, of the stock subject to the Option. The adjustments
determined by the Board pursuant to this Section 9 shall be final, binding and
conclusive.

 

10. RIGHTS AS A STOCKHOLDER, EMPLOYEE OR CONSULTANT.

 

The Optionee shall have no rights as a stockholder with respect to any shares
covered by the Option until the date of the issuance of a certificate for the
shares for which the Option has been exercised (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date such certificate is
issued, except as provided in Section 9. If the Optionee is an Employee, the
Optionee understands and acknowledges that, except as otherwise provided in a
separate, written employment agreement between a Participating Company and the
Optionee, the Optionee’s employment is “at will” and is for no specified term.
Nothing in this Option Agreement shall confer upon the Optionee any right to
continue in the Service of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee’s Service
as an Employee or Consultant, as the case may be, at any time.

 

11. NOTICE OF SALES UPON DISQUALIFYING DISPOSITION.

 

The Optionee shall dispose of the shares acquired pursuant to the Option only in
accordance with the provisions of this Option Agreement.

 

12. LEGENDS.

 

The Company may at any time place legends referencing any applicable federal,
state or foreign securities law restrictions on all certificates representing
shares of stock subject to the provisions of this Option Agreement. The Optionee
shall, at the request of the Company, promptly present to the Company any and
all certificates representing shares acquired pursuant to the Option in the
possession of the Optionee in order to carry out the provisions of this Section.

 

13. LOCK-UP AGREEMENT.

 

The Optionee hereby agrees that in the event of any underwritten public offering
of stock, including an initial public offering of stock, made by the Company
pursuant to an effective registration statement filed under the Securities Act,
the Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant
any option to purchase or make any short sale of, or otherwise dispose of any
shares of stock of the Company or any rights to acquire stock of the Company for
such period of time from and after the effective date of such registration
statement as may be established by the underwriter for such public offering;
provided, however, that such period of time shall not exceed one hundred eighty
(180) days from the effective date of the registration statement to be filed in
connection with such public offering. The foregoing limitation shall not apply
to shares registered in the public offering under the Securities Act.

 

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14. RESTRICTIONS ON TRANSFER OF SHARES.

 

No shares acquired upon exercise of the Option may be sold, exchanged,
transferred (including, without limitation, any transfer to a nominee or agent
of the Optionee), assigned, pledged, hypothecated or otherwise disposed of,
including by operation of law, in any manner which violates any of the
provisions of this Option Agreement, and any such attempted disposition shall be
void. The Company shall not be required (a) to transfer on its books any shares
which will have been transferred in violation of any of the provisions set forth
in this Option Agreement or (b) to treat as owner of such shares or to accord
the right to vote as such owner or to pay dividends to any transferee to whom
such shares will have been so transferred.

 

15. MISCELLANEOUS PROVISIONS.

 

15.1 Binding Effect. Subject to the restrictions on transfer set forth herein,
this Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.

 

15.2 Termination or Amendment. The Board may terminate or amend the Plan or the
Option at any time; provided, however, that except as provided in Section 8 in
connection with a Change in Control, no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Option Agreement shall be effective unless in writing.

 

15.3 Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given (except to the extent that this
Option Agreement provides for effectiveness only upon actual receipt of such
notice) upon personal delivery or upon deposit in the United States Post Office,
by registered or certified mail, with postage and fees prepaid, addressed to the
other party at the address shown below that party’s signature on the Notice or
at such other address as such party may designate in writing from time to time
to the other party.

 

15.4 Integrated Agreement. The Notice, this Option Agreement and the Plan
constitute the entire understanding and agreement of the Optionee and the
Participating Company Group with respect to the subject matter contained herein
or therein and supersedes any prior agreements, understandings, restrictions,
representations, or warranties among the Optionee and the Participating Company
Group with respect to such subject matter other than those as set forth or
provided for herein or therein. To the extent contemplated herein or therein,
the provisions of the Notice and the Option Agreement shall survive any exercise
of the Option and shall remain in full force and effect.

 

15.5 Applicable Law. This Option Agreement shall be governed by the laws of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within the State of
California.

 

15.6 Counterparts. The Notice may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

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