Exhibit
4.1


 


Internet Brands, Inc.


2007 Equity Plan


(as amended and restated December 21, 2007)


 


1. Purpose. The purpose of the Internet
Brands, Inc. 2007 Equity Plan is to provide a means through which the
Company and its Affiliates may attract and retain key personnel and to provide
a means whereby directors, officers, employees, consultants and advisors (and
prospective directors, officers, employees, consultants and advisors) of the
Company and its Affiliates can acquire and maintain an equity interest in the
Company, or be paid incentive compensation measured by reference to the value
of Common Stock, thereby strengthening their commitment to the welfare of the
Company and its Affiliates and aligning their interests with those of the
Company’s shareholders.


 


2. Definitions. The following definitions
shall be applicable throughout the Plan.


 


        (a)   “Affiliate”
means (i) any person or entity that directly or indirectly controls, is
controlled by or is under common control with the Company and/or (ii) to
the extent provided by the Committee, any person or entity in which the Company
has a significant interest. For purposes of this definition, the term “control”
(including, with correlative meaning, the terms “controlled by” and “under
common control with”), as applied to any person or entity, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting or other securities, by contract or otherwise.


 


        (b)   “Award”
means, individually or collectively, any Incentive Stock Option, Nonstatutory
Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Stock Bonus Award, or Performance Compensation Award granted under the
Plan.


 


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


 


        (d)   “Change
of Control” shall, unless in the case of a particular Award the applicable
Award agreement states otherwise or contains a different definition of “Change
of Control,” mean the occurrence of any one of the following events: (i) the
acquisition by any “ Person “ (as such term is defined in Section 3(a)(9) of
the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of
the Exchange Act) of more than 50% of the combined voting power of the then
outstanding securities entitled to vote generally in the election of directors
of the Company; or (ii) any merger, consolidation, reorganization,
recapitalization, tender, or exchange offer or any other transaction with or
affecting the Company as a result of which a Person owns after such transaction
more than 50% of the combined voting power of the then outstanding securities
entitled to vote generally in the election of the directors of the Company, or (iii) the
sale, lease, exchange, transfer, or other disposition to any Person of all or
substantially all, of the assets of the Company and its consolidated
subsidiaries, or (iv) the adoption by the Company of any plan of
liquidation providing for the distribution of all or substantially all of its
assets, or (v) a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who
are continuing directors.


 


        Notwithstanding
the foregoing, in no event shall the initial public offering of shares of
Common Stock (the “IPO”) or any corporate transactions effected in
connection with the reorganization of the Company and its Affiliates (and their
predecessors) associated with the IPO and described in the Registration
Statement on Form S-1 under the Securities Act (including all amendments
thereto) filed with the Securities and Exchange Commission in connection with
the IPO, individually or in the aggregate, constitute a Change of Control.


 


        (e)   “Code”
means the Internal Revenue Code of 1986, as amended, and any successor thereto.
Reference in the Plan to any section of the Code shall be deemed to
include any Treasury Regulations or other interpretative guidance under such
section, and any amendments or successor provisions to such section,
regulations or guidance.


 


        (f)    “Committee”
means a committee of at least two people as the Board may appoint to administer
the Plan pursuant to Section 4 of the Plan or, if no such committee has
been appointed by the Board, the Board.


 


        (g)   “Common
Stock” means the Class A common stock, par value $0.001 per share, of
the Company (and any stock or other securities into which such Class A
common stock may be converted or into which it may be exchanged).


 


        (h)   “Company”
means Internet Brands, Inc., a Delaware corporation, and any successor
thereto.


 


        (i)    “Date
of Grant” means the date on which the granting of an Award is authorized,
or such other date as may be specified in such authorization.


 


        (j)    “Disability”
means the inability of an individual, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of that individual’s
position with the Company because of the sickness or injury of that individual.


 


        (k)   “Effective
Date” means October 23, 2007.


 


        (l)    “Eligible
Director” means a person who is (i) a “non-employee director” within
the meaning of Rule 16b-3 under the Exchange Act, (ii) an “outside
director” within the meaning of Section 162(m) of the Code, and (iii) an
“independent director” under the rules of any established stock exchange
or national market system on which the Common Stock is listed or quoted, or a
person meeting any similar requirement under any successor rule or
regulation.


 


        (m)  “Eligible
Person” means (i) any individual who is employed by the Company or an
Affiliate such that the Company is an “eligible issuer of service recipient
stock” with respect to such Affiliate’s employees, within the meaning of Section 409A
of the Code and Treasury Regulation Section 1.409A-1(b)(5)(iii)(E), and
who satisfies all of the requirements of Section 6 of the Plan; provided,
however,  that no such employee
covered by a collective bargaining agreement shall be an Eligible Person unless
and to the extent that such eligibility is set forth in such collective
bargaining agreement or in an agreement or instrument relating thereto; (ii) any
director or officer of the Company or an Affiliate described in clause (i) above;
(iii) any consultant or advisor to the Company or an Affiliate described
in clause (i) above who may be offered securities registrable on Form S-8
under the Securities Act; or (iv) with respect to Awards granted on or
after the Registration Date, any prospective employee, director, officer,
consultant, or advisor who has accepted an offer of employment or consultancy
from the Company or an Affiliate described in clause (i) above (and
would satisfy the provisions of clauses (i) through (iii) above once
he or she begins employment with or providing services to the Company or such
Affiliate).


 


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        (n)   “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and any
successor thereto. Reference in the Plan to any section of (or rule promulgated
under) the Exchange Act shall be deemed to include any rules, regulations or
other interpretative guidance under such section or rule, and any
amendments or successor provisions to such section, rules, regulations or
guidance.


 


        (o)   “Exercise
Price” has the meaning given such term in Section 7(b) of the
Plan.


 


        (p)   “Fair
Market Value” means, on a given date: (i) if the Common Stock is
listed on any established stock exchange or a national market system, the
closing sales price of the Common Stock on such date (or the closing bid, if no
sales were reported) as quoted on the primary exchange or system on which the
Common Stock is listed and traded on the day of determination, as reported in The Wall Street Journal  or such other source as the Committee deems
reliable; (ii) if the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the mean between the
closing bid price and ask price for the Common Stock on the day of
determination, as reported in The Wall
Street Journal  or such other
source as the Committee deems reliable; (iii) for purposes of any Awards
granted on the Registration Date, the initial price to the public as set forth
in the final prospectus included within the registration statement in Form S-1
filed with the Securities and Exchange Commission for the IPO; or (iv) in
the absence of an established market for the Common Stock, the amount
determined by the Committee in good faith to be the fair market value of the
Common Stock.


 


        (q)   “Immediate
Family Members” has the meaning given such term in Section 16(b) of
the Plan.


 


        (r)   “Incentive
Stock Option” means an Option which is designated by the Committee as an
incentive stock option as described in Section 422 of the Code and
otherwise meets the requirements set forth in the Plan.


 


        (s)   “Indemnifiable
Person” has the meaning given such term in Section 4(d) of the
Plan.


 


        (t)    “Investor”
has the meaning given such term in the definition of “Change of Control”.


 


        (u)   “IPO”
has the meaning given such term in the definition of “Change of Control”.


 


        (v)   “Mature
Shares” means shares of Common Stock either (i) previously acquired on
the open market, (ii) not acquired from the Company in the form of
compensation, or (iii) acquired from the Company in the form of
compensation that have been owned by a Participant for at least six (6) months.


 


        (w)  “Negative
Discretion” shall mean the discretion authorized by the Plan to be applied
by the Committee to eliminate or reduce the size of a Performance Compensation
Award consistent with Section 162(m) of the Code.


 


        (x)   “Nonstatutory
Stock Option” means an Option which is not designated by the Committee as
an Incentive Stock Option.


 


        (y)   “Option”
means an Award granted under Section 7 of the Plan.


 


        (z)   “Option
Period” has the meaning given such term in Section 7(c) of the
Plan.


 


        (aa) “Participant”
means an Eligible Person who has been selected by the Committee to participate
in the Plan and to receive an Award pursuant to Section 6 of the Plan.


 


        (bb) “Performance
Compensation Award” shall mean any Award designated by the Committee as a
Performance Compensation Award pursuant to Section 11 of the Plan.


 


        (cc) “Performance
Criteria” shall mean the criterion or criteria that the Committee shall
select for purposes of establishing the Performance Goal(s) for a
Performance Period with respect to any Performance Compensation Award under Section 11
of the Plan.


 


        (dd) “Performance
Formula” shall mean, for a Performance Period, the one or more objective
formulae applied against the relevant Performance Goal to determine, with
regard to the Performance Compensation Award of a particular Participant,
whether all, some portion but less than all, or none of the Performance
Compensation Award has been earned for the Performance Period.


 


        (ee) “Performance
Goals” shall mean, for a Performance Period, the one or more goals
established by the Committee for the Performance Period based upon the
Performance Criteria.


 


        (ff)  “Performance
Period” shall mean the one or more periods of time, as the Committee may
select, over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant’s right to, and the
payment of, a Performance Compensation Award.


 


        (gg) “Permitted
Transferee” has the meaning given such term in Section 15(b) of
the Plan.


 


        (hh) “Person”
has the meaning given such term in the definition of “Change of Control”.


 


        (ii)   “Plan”
means this Internet Brands, Inc. 2007 Equity Plan.


 


        (jj)   “Predecessor
Plans” means the Internet Brands, Inc. 1998 Stock Plan and the
Internet Brands, Inc. 2000 Stock Plan, including any and all amendments
thereto.


 


        (kk) “Registration
Date” means the effective date of the first registration statement that is
filed by the Company and declared effective pursuant to Section 12(g) of
the Exchange Act, with respect to any class of the Company’s securities.


 


        (ll)   “Restricted
Period” means the period of time determined by the Committee during which
an Award is subject to restrictions or, as applicable, the period of time
within which performance is measured for purposes of determining whether an
Award has been earned.


 


        (mm) “Restricted
Stock” means Common Stock, subject to certain specified restrictions
(including, without limitation, a requirement that the Participant remain
continuously employed or provide continuous services for a specified period of
time), granted under Section 9 of the Plan.


 


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        (nn) “Restricted
Stock Unit” means an unfunded and unsecured promise to deliver shares of
Common Stock, cash, other securities or other property, subject to certain
restrictions (including, without limitation, a requirement that the Participant
remain continuously employed or provide continuous services for a specified
period of time), granted under Section 9 of the Plan.


 


        (oo) “SAR
Period” has the meaning given such term in Section 8(c) of the
Plan.


 


        (pp) “Section 162(m) Effective
Date” means the first date on which Awards granted under the Plan do not
qualify for an exemption from the deduction limitations of Section 162(m) of
the Code on account of an exemption, or a transition or grandfather rule.


 


        (qq) “Section 409A
Award” has the meaning given such term in Section 15(a) of the
Plan.


 


        (rr)  “Securities
Act” means the Securities Act of 1933, as amended, and any successor
thereto. Reference in the Plan to any section of the Securities Act shall
be deemed to include any rules, regulations or other interpretative guidance
under such section, and any amendments or successor provisions to such section,
rules, regulations or guidance.


 


        (ss)  “Service
Provider” means (i) any individual who is employed by the Company or
an Affiliate, (ii) any director or officer of the Company or an Affiliate;
and (iii) any consultant or advisor to the Company or an Affiliate,
subject to Section 16(h) of the Plan.


 


        (tt)  “Share
Limit” has the meaning given such term in Section 5(b) of the
Plan.


 


        (uu) “Stock
Appreciation Right” or “SAR”
means an Award granted under Section 8 of the Plan.


 


        (vv) “Stock
Bonus Award” means an Award granted under Section 10 of the Plan.


 


        (ww) “Strike
Price” means, (i) in the case of a SAR granted in tandem with an
Option, the Exercise Price of the related Option, or (ii) in the case of a
SAR granted independent of an Option, the Fair Market Value on the Date of
Grant.


 


        (xx) “Substitute
Award” has the meaning given such term in Section 5(e) of the
Plan.


 


        (yy) “Vesting
Commencement Date” has the meaning given such term in an applicable Award
agreement under the Plan.


 


3. Effective Date; Duration. The Plan shall be effective
as of the Effective Date. The expiration date of the Plan, on and after which
date no Awards may be granted hereunder, shall be the tenth anniversary of the
Effective Date; provided, however, 
that such expiration shall not affect Awards then outstanding, and the
terms and conditions of the Plan shall continue to apply to such Awards.


 


4. Administration. (a) The Committee shall
administer the Plan. To the extent required to comply with the provisions of Rule 16b-3
promulgated under the Exchange Act (if the Board is not acting as the Committee
under the Plan) or necessary to obtain the exception for performance-based
compensation under Section 162(m) of the Code, as applicable, it is
intended that each member of the Committee shall, at the time he takes any
action with respect to an Award under the Plan, be an Eligible Director.
However, the fact that a Committee member shall fail to qualify as an Eligible
Director shall not invalidate any Award granted by the Committee that is
otherwise validly granted under the Plan. The majority of the members of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.


 


        (b)   Subject
to the provisions of the Plan and applicable law, the Committee shall have the
sole and plenary authority, in addition to other express powers and
authorizations conferred on the Committee by the Plan, to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to
a Participant; (iii) determine the number of shares of Common Stock to be
covered by, or with respect to which payments, rights, or other matters are to
be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under
what circumstances Awards may be settled or exercised in cash, shares of Common
Stock, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances the delivery of cash,
Common Stock, other securities, other Awards or other property and other
amounts payable with respect to an Award shall be deferred either automatically
or at the election of the Participant or of the Committee, subject to the
requirements of Section 409A of the Code; (vii) interpret,
administer, reconcile any inconsistency in, correct any defect in and/or supply
any omission in the Plan and any instrument or agreement relating to, or Award
granted under, the Plan; (viii) establish, amend, suspend, or waive any rules and
regulations and appoint such agents as the Committee shall deem appropriate for
the proper administration of the Plan; (ix) accelerate the vesting or
exercisability of, payment for or lapse of restrictions on, Awards, subject to
the requirements of Section 409A of the Code; (x) extend the period
during which Awards may be exercised, subject to the requirements of Section 409A
of the Code; and (xi) make any other determination and take any other
action that the Committee deems necessary or desirable for the administration
of the Plan.


 


        (c)   Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Award or any documents evidencing Awards granted pursuant to the Plan shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all persons or entities, including,
without limitation, the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, and any shareholder of the Company.


 


        (d)   No
member of the Board, the Committee or any employee or agent of the Company
(each such person, an “Indemnifiable Person”) shall be liable for any
action taken or omitted to be taken or any determination made in good faith
with respect to the Plan or any Award hereunder. Each Indemnifiable Person
shall be indemnified and held harmless by the Company against and from any
loss, cost, liability, or expense (including attorneys’ fees) that may be
imposed upon or incurred by such Indemnifiable Person in connection with or
resulting from any action, suit or proceeding to which such Indemnifiable
Person may be a party or in which such Indemnifiable Person may be involved by
reason of any action taken or omitted to be taken under the Plan or any Award
agreement and against and from any and all amounts paid by such Indemnifiable
Person with the Company’s approval, in settlement thereof, or paid by such
Indemnifiable Person in satisfaction of any judgment in any such action, suit
or proceeding against such Indemnifiable Person,  provided that the Company shall have
the right, at its own expense, to assume and defend any such action, suit or
proceeding and once the Company gives notice of its intent to assume the
defense, the Company shall have sole control over such defense with counsel of
the Company’s choice. The foregoing right of indemnification shall not be available
to an Indemnifiable Person to the extent that a final judgment or other final
adjudication (in either case not subject to further appeal) binding upon such
Indemnifiable Person determines that the acts or omissions of such
Indemnifiable Person giving rise to the indemnification claim resulted from
such Indemnifiable Person’s bad faith, fraud or willful criminal act or
omission or that such right of indemnification is otherwise prohibited by law
or by the Company’s Certificate of Incorporation or Bylaws. The foregoing right
of indemnification shall not be exclusive of any other rights of
indemnification to which such Indemnifiable Persons may be entitled under the
Company’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any other power that the Company may have to indemnify such
Indemnifiable Persons or hold them harmless.


 


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        (e)   Notwithstanding
anything to the contrary contained in the Plan, the Board may, in its sole
discretion, at any time and from time to time, grant Awards and administer the
Plan with respect to such Awards. In any such case, the Board shall have all
the authority granted to the Committee under the Plan.


 


5. Grant of Awards; Shares Subject to the Plan; Limitations. (a) The
Committee may, from time to time, grant Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Stock Bonus Awards and/or Performance
Compensation Awards to one or more Eligible Persons.


 


        (b)   Awards
granted under the Plan shall be subject to the following limitations:


 


        (i)    Subject
to this Section 5 and Section 12 of the Plan, the maximum number of
shares of Common Stock that may be delivered in the aggregate pursuant to
Awards granted under the Plan is 1,868,251 (following the 1-for-2 reverse stock
split of the Company’s Class A and Class B common stock effected on November 21,
2007); provided that on each of January 1, 2009, January 1,
2010, January 1, 2011, January 1, 2012, and January 1, 2013, the
maximum number of shares deliverable under this clause (i) as in
effect on the immediately preceding December 31 shall be increased by the
lesser of (A) a number of shares of Common Stock equal to two and one half
percent (2.5%) of the total number of outstanding shares of Common Stock (on a
fully-diluted basis) on such date, (B) 1,500,000 shares of Common Stock,
or (C) such other amount as the Committee may determine on or before the
immediately preceding December 31;  provided,
further, that the maximum number of shares deliverable pursuant to this Section 5
(including paragraph (c) herein) (such maximum number of shares, as
in effect at any time hereunder, the “Share Limit”) shall not exceed 12,282,006.


 


        (ii)   Subject
to Section 12 of the Plan, no more than the lesser of (A) the Share
Limit or (B) 12,282,006 shares of Common Stock may be delivered in the
aggregate pursuant to the exercise of Incentive Stock Options granted under the
Plan.


 


        (iii)  Subject
to Section 12 of the Plan, no more than 1,500,000 shares of Common Stock
may be subject to grants of Options or SARs under the Plan to any single
Participant during any calendar year.


 


        (iv)  Subject
to Section 12 of the Plan, no more than 1,500,000 shares of Common Stock
may be delivered in respect of Performance Compensation Awards granted in a
calendar year to any single Participant pursuant to Section 11 of the
Plan, or in the event such Performance Compensation Award is paid in cash,
other securities, other Awards or other property, no more than the Fair Market
Value of 1,500,000 shares of Common Stock on the last day of the calendar year
in which the Award is made.


 


        (v)   The
maximum amount that can be paid to any single Participant in a calendar year
pursuant to a cash bonus Award described in Section 11(a) of the Plan
shall be $3,000,000.


 


        (c)   Shares
of Common Stock shall be deemed to have been used in settlement of Awards
whether or not they are actually delivered or the Fair Market Value equivalent
of such shares is paid in cash; provided, however,  that if shares of Common Stock issued upon
exercise, vesting or settlement of an Award or a stock option or stock purchase
right granted under the Predecessor Plans, or shares of Common Stock owned by a
Participant, are surrendered or tendered to the Company (either directly or by
means of attestation) on or after the Effective Date in payment of the Exercise
Price of an Award or the exercise price of a stock option or stock purchase
right granted under the Predecessor Plans, or of any taxes required to be
withheld in respect of an Award or a stock option or stock purchase right
granted under the Predecessor Plans, in each case, in accordance with the terms
and conditions of the Plan or Predecessor Plans and any applicable Award, or
stock option, or stock purchase right agreement, such surrendered or tendered
shares shall again become available for other Awards under the Plan; provided,
further,  that in no event shall such
shares increase the number of shares of Common Stock that may be delivered
pursuant to Incentive Stock Options granted under the Plan. In accordance with
(and without limitation upon) the preceding sentence, if and to the extent an
Award under the Plan or a stock option or stock purchase right granted under
the Predecessor Plans expires, terminates or is canceled or forfeited for any
reason whatsoever on or after the Effective Date without the Participant having
received any benefit therefrom, the shares covered by such Award, stock option,
or stock purchase right shall become available for other Awards under the Plan;
provided, however, that in the case of an award designated as a
Performance Compensation Award or any Option or SAR, cancellation of such Award
shall not increase the number of shares of Common Stock available for
Performance Compensation Awards to the Participant granted such Award in a
calendar year under the Plan. For purposes of the foregoing sentence, a
Participant shall not be deemed to have received any “benefit” (i) in the
case of forfeited Restricted Stock by reason of having enjoyed voting rights
and dividend rights prior to the date of forfeiture or (ii) in the case of
an Award, stock option, or stock purchase right canceled by reason of a new
Award, stock option, or stock purchase right being granted under the Plan or
the Predecessor Plans in substitution therefor.


 


        (d)   Shares
of Common Stock delivered by the Company in settlement of Awards may be
authorized and unissued shares, shares held in the treasury of the Company,
shares purchased on the open market or by private purchase, or a combination of
the foregoing.


 


        (e)   Awards
may, in the sole discretion of the Committee, be granted under the Plan to
Eligible Persons in assumption of, or in substitution for, outstanding awards
previously granted by the Company or any Affiliate or an entity acquired by the
Company or with which the Company combines (“Substitute Awards”). The
number of shares of Common Stock underlying any Substitute Awards shall be
counted against the aggregate number of shares of Common Stock available for
Awards under Section 5(b) of the Plan; provided, however,  that Substitute Awards issued in connection
with the assumption of, or the substitution for, outstanding awards previously
granted by an entity that is acquired by the Company or any Affiliate through a
merger or acquisition shall not be counted against the aggregate number of
shares of Common Stock available for Awards under Section 5(b) of the
Plan; provided, further, that Substitute Awards issued in connection
with the assumption of, or in substitution for, outstanding options intended to
qualify as “incentive stock options” within the meaning of Section 422 of
the Code that were previously granted by an entity that is acquired by the
Company or any Affiliate through a merger or acquisition shall be counted
against the aggregate number of shares of Common Stock available for Incentive
Stock Options under Section 5(b) the Plan.


 


6. Eligibility. Participation shall be
limited to Eligible Persons who have entered into an Award agreement or who
have received written notification from the Committee, or from a person
designated by the Committee, that they have been selected to participate in the
Plan.


 


7. Options. (a) Generally.
Each Option granted under the Plan shall be evidenced by an Award agreement.
Each Option so granted shall be subject to the conditions set forth in this Section 7,
and to such other conditions not inconsistent with the Plan as may be reflected
in the applicable Award agreement. All Options granted under the Plan shall be
Nonstatutory Stock Options unless the applicable Award agreement expressly
states that the Option is intended to be an Incentive Stock Option. Incentive
Stock Options shall be granted only to Eligible Persons who are employees of
the Company or Affiliates that are parents or subsidiaries of the Company
within the meaning of Section 424(e) and (f) of the Code, and no
Incentive Stock Option shall be granted to any Eligible Person who is
ineligible to receive an Incentive Stock Option under the Code. No Option shall
be treated as an Incentive Stock Option unless the Plan has been approved by
the shareholders of the Company in a manner intended to comply with the
shareholder approval requirements of Section 422(b)(1) of the Code, provided
that any Option intended to be an Incentive Stock Option shall not fail to be
effective solely on account of a failure to obtain such approval, but rather
such Option shall be treated as a Nonstatutory Stock Option unless and until
such approval is obtained. In the case of an Incentive Stock Option, the terms
and conditions of such grant shall be subject to and comply with such rules as
may be prescribed by Section 422 of the Code. If for any reason an Option
intended to be an Incentive Stock Option (or any portion thereof) shall not
qualify as an Incentive


 


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Stock
Option, then, to the extent of such nonqualification, such Option or portion
thereof shall be regarded as a Nonstatutory Stock Option appropriately granted
under the Plan. Notwithstanding any designation of Options as Incentive Stock
Options, to the extent that the aggregate Fair Market Value of the Shares with
respect to which such Options are exercisable for the first time during any
calendar year (under all plans of the Company and any Affiliate) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of the preceding sentence, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.


 


        (b)   Exercise
Price. Except as otherwise provided by the Committee in the case of
Substitute Awards, the exercise price (“Exercise Price”) per share of
Common Stock for each Option shall not be less than 100% of the Fair Market
Value of such share (determined as of the Date of Grant); provided, however,  that in the case of an Incentive Stock Option
granted to an employee who, at the time of the grant of such Option, owns stock
representing more than 10% of the voting power of all classes of stock of the
Company or any Affiliate, the Exercise Price per share shall be no less than 110%
of the Fair Market Value per share on the Date of Grant.


 


        (c)   Vesting
and Expiration. (i) Options shall vest and become exercisable in such
manner and on such date or dates determined by the Committee and shall expire
after such period, not to exceed ten (10) years, as may be determined by
the Committee (the “Option Period”); provided, however, that in
the case of an Incentive Stock Option granted to a Participant who on the Date
of Grant owns stock representing more than 10% of the voting power of all
classes of stock of the Company or any Affiliate, the Option Period shall not
exceed five (5) years from the Date of Grant. Notwithstanding any vesting
dates, exercisability period, or Option Period set by the Committee, the
Committee may, in its sole discretion, (A) accelerate the exercisability
of any Option, which acceleration shall not affect the terms and conditions of
such Option other than with respect to exercisability; and (B) extend the
period during which the vested portion of an Option shall be exercisable after
the Participant granted the Option ceases to be a Service Provider, provided,
however, that such period shall not be extended beyond the earlier of the
latest date upon which the Option could have expired by its original terms or ten
(10) years following the date on which the Option was granted.


 


        (ii)   Unless
otherwise provided by the Committee in an Award agreement, the unvested portion
of an Option shall expire on the date the Participant granted the Option ceases
to be a Service Provider, and the vested portion of such Option shall remain
exercisable for (A) one year following termination of the Participant’s
relationship as a Service Provider by reason of such Participant’s death or
Disability, but not later than the expiration of the Option Period or (B) three
(3) months following termination of the Participant’s relationship as a
Service Provider for any reason other than such Participant’s death or
Disability, but not later than the expiration of the Option Period. In the case
of any Option granted before the Registration Date, the following additional
requirements shall apply: the vested portion of such Option shall remain
exercisable until (A) at least six (6) months from the date of
Participant’s termination of employment by reason of such Participant’s death
or Disability (or, if earlier, the Registration Date) and (B) at least
thirty (30) days from the date of Participant’s termination of employment
for any reason other than such Participant’s death or Disability, and other
than termination of employment for cause as defined in the applicable Award
agreement (or, if earlier, the Registration Date), provided, however,
that such Option shall not be exercisable after the expiration of the Option
Period. For purposes of the foregoing sentence only, “termination of employment”
shall have the meaning ascribed thereto under section 260.140.41 of title
10 of the California Code of Regulations.


 


        (d)   Method
of Exercise and Form of Payment. No shares of Common Stock shall be
delivered pursuant to any exercise of an Option until payment in full of the
Exercise Price therefor is received by the Company and the Participant has paid
to the Company an amount equal to any Federal, state, local and non-U.S. income
and employment taxes required to be withheld. Options which have become
exercisable may be exercised by delivery of written or electronic notice of
exercise to the Company in accordance with the terms of the Option accompanied
by payment of the Exercise Price. The Exercise Price shall be payable (i) in
cash, check, cash equivalent, and/or shares of Common Stock valued at the Fair
Market Value at the time the Option is exercised (including, pursuant to
procedures approved by the Committee, by means of attestation of ownership of a
sufficient number of shares of Common Stock in lieu of actual delivery of such
shares to the Company); provided that such shares of Common Stock are
not subject to any pledge or other security interest and are Mature Shares; or (ii) by
such other method as the Committee may permit in its sole discretion, including
without limitation: (A) in other property having a fair market value on
the date of exercise equal to the Exercise Price or (B) if there is a
public market for the shares of Common Stock at such time, by means of a
broker-assisted “cashless exercise” pursuant to which the Company is delivered
a copy of irrevocable instructions to a stockbroker to sell the shares of
Common Stock otherwise deliverable upon the exercise of the Option and to
deliver promptly to the Company an amount equal to the Exercise Price or (C) by
means of a “net exercise” procedure approved by the Committee.


 


        (e)   Notification
upon Disqualifying Disposition of an Incentive Stock Option. Each
Participant awarded an Incentive Stock Option under the Plan shall notify the
Company in writing immediately after the date he makes a disqualifying
disposition of any Common Stock acquired pursuant to the exercise of such
Incentive Stock Option. A disqualifying disposition is any disposition
(including, without limitation, any sale) of such Common Stock before the later
of (A) two (2) years after the Date of Grant of the Incentive Stock
Option or (B) one (1) year after the date of exercise of the
Incentive Stock Option. The Company may, if determined by the Committee and in
accordance with procedures established by the Committee, retain possession of
any Common Stock acquired pursuant to the exercise of an Incentive Stock Option
as agent for the applicable Participant until the end of the period described
in the preceding sentence.


 


        (f)    Buyout.
The Committee may, in its sole discretion, at any time before the Registration
Date, buy out for a payment in cash or the delivery of shares of Common Stock
or other property (including, without limitation, another Award) an Option
previously granted, based on such terms and conditions as the Committee shall
establish and communicate to the Participant at the time such offer is made. If
the Committee so determines, the consent of the affected Participant shall not
be required to effect such buyout.


 


        (g)   Compliance
with Laws, etc. Notwithstanding the foregoing, in no event shall a
Participant be permitted to exercise an Option in a manner which the Committee
determines would violate the Sarbanes-Oxley Act of 2002, or any other
applicable law or the applicable rules and regulations of the Securities
and Exchange Commission or the applicable rules and regulations of any
securities exchange or inter-dealer quotation system on which the securities of
the Company are listed or traded.


 


8. Stock Appreciation Rights. (a) Generally.
Each SAR granted under the Plan shall be evidenced by an Award agreement. Each
SAR so granted shall be subject to the conditions set forth in this Section 8,
and to such other conditions not inconsistent with the Plan as may be reflected
in the applicable Award agreement. Any Option granted under the Plan may
include tandem SARs. The Committee also may award SARs to Eligible Persons
independent of any Option.


 


        (b)   Strike
Price. Except as otherwise provided by the Committee in the case of
Substitute Awards, the strike price (“Strike Price”) per share of Common
Stock for each SAR shall not be less than 100% of the Fair Market Value of such
share (determined as of the Date of Grant).


 


        (c)   Vesting
and Expiration. (i) A SAR granted in connection with an Option shall
become exercisable and shall expire according to the same vesting schedule and
expiration provisions as the corresponding Option. A SAR granted independent of
an Option shall vest and become exercisable and shall expire in such manner and
on such date or dates determined by the Committee and shall expire after such
period, not to exceed ten (10) years, as may be determined by the
Committee (the “SAR Period”); provided, however, that
notwithstanding any vesting dates set by the Committee, the Committee may, in
its sole discretion, accelerate the exercisability of any SAR, which
acceleration shall not affect the terms and conditions of such SAR other than
with respect to exercisability.


 


        (ii)   Unless
otherwise provided by the Committee in an Award agreement, the unvested portion
of a SAR shall expire on the date the Participant granted the SAR ceases to be
a Service Provider, and the vested portion of such SAR shall remain exercisable
for (i) one year following termination of the Participant’s relationship
as a


 


5

















 


Service
Provider by reason of such Participant’s death or Disability, but not later
than the expiration of the SAR Period or (ii) three (3) months
following termination of the Participant’s relationship as a Service Provider
for any reason other than such Participant’s death or Disability, but not later
than the expiration of the SAR Period. In the case of any SAR granted before
the Registration Date, the following additional requirements shall apply: the
vested portion of such SAR shall remain exercisable until (A) at least six
(6) months from the date of Participant’s termination of employment by
reason of such Participant’s death or Disability (or, if earlier, the
Registration Date) and (B) at least thirty (30) days from the date of
Participant’s termination of employment for any reason other than such
Participant’s death or Disability, and other than termination of employment for
cause as defined in the applicable Award agreement (or, if earlier, the
Registration Date), provided, however, that such SAR shall not be
exercisable after the expiration of the SAR Period. For purposes of the
foregoing sentence only, “termination of employment” shall have the meaning
ascribed thereto under section 260.140.41 of title 10 of the California
Code of Regulations.


 


        (d)   Method
of Exercise. SARs which have become exercisable may be exercised by
delivery of written or electronic notice of exercise to the Company in
accordance with the terms of the Award, specifying the number of SARs to be
exercised and the date on which such SARs were awarded.


 


        (e)   Payment.
Upon the exercise of a SAR, the Company shall pay to the Participant an amount
equal to the number of shares subject to the SAR that are being exercised
multiplied by the excess, if any, of the Fair Market Value of one share of
Common Stock on the exercise date over the Strike Price, less an amount equal
to any Federal, state, local and non-U.S. income and employment taxes required
to be withheld. The Company shall pay such amount in cash, in shares of Common
Stock valued at Fair Market Value, or any combination thereof, as determined by
the Committee. Any fractional shares of Common Stock shall be settled in cash.


 


        (f)    Substitution
of SARs for Nonstatutory Stock Options. The Committee shall have the
authority in its sole discretion to substitute, without the consent of the
affected Participant or any holder or beneficiary of SARs, SARs settled in
shares of Common Stock (or settled in shares or cash in the sole discretion of
the Committee) for outstanding Nonstatutory Stock Options, provided that
(i) the substitution shall not otherwise result in a modification of the
terms of any such Nonstatutory Stock Option, (ii) the number of shares of
Common Stock underlying the substituted SARs shall be the same as the number of
shares of Common Stock underlying such Nonstatutory Stock Options, and (iii) the
Strike Price of the substituted SARs shall be equal to the Exercise Price of
such Nonstatutory Stock Options; provided, however, that if, in the
opinion of the Company’s independent public auditors, the foregoing provision
creates adverse accounting consequences for the Company, such provision shall
be considered null and void.


 


9. Restricted Stock and Restricted Stock Units. (a) Generally.
Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by
an Award agreement. Each such grant shall be subject to the conditions set
forth in this Section 9, and to such other conditions not inconsistent
with the Plan as may be reflected in the applicable Award agreement.


 


        (b)   Stock
Certificates; Escrow or Similar Arrangement. Upon the grant of Restricted
Stock, the Committee shall cause a stock certificate registered in the name of
the Participant to be issued, or shall cause uncertificated shares to be issued
pursuant to a direct registration system adopted by the Company; and, if the
Committee determines that the Restricted Stock shall be held by the Company or
in escrow rather than delivered to the Participant pending the release of the
applicable restrictions, the Committee may require the Participant to
additionally execute and deliver to the Company (i) an escrow agreement
satisfactory to the Committee, if applicable, and (ii) the appropriate
stock power (endorsed in blank) with respect to the Restricted Stock covered by
such agreement. If a Participant shall fail to execute an agreement evidencing
an Award of Restricted Stock and, if applicable, an escrow agreement and blank
stock power within the amount of time specified by the Committee, the Award
shall be null and void. Subject to the restrictions set forth in this Section 9
and the applicable Award agreement, the Participant generally shall have the
rights and privileges of a shareholder as to such Restricted Stock, including
without limitation the right to vote such Restricted Stock. To the extent
shares of Restricted Stock are forfeited, such shares shall be returned to the
Company, and all rights of the Participant to such shares and as a shareholder
with respect thereto shall terminate without further obligation on the part of
the Company.


 


        (c)   Vesting;
Acceleration of Lapse of Restrictions. Unless otherwise provided by the
Committee in an Award agreement, the unvested portion of Restricted Stock and
Restricted Stock Units shall terminate and be forfeited on the date the Participant
granted the applicable Award ceases to be a Service Provider. The Committee may
in its sole discretion accelerate the lapse of any or all of the restrictions
on the Restricted Stock and Restricted Stock Units which acceleration shall not
affect any other terms and conditions of such Awards.


 


        (d)   Delivery
of Restricted Stock and Settlement of Restricted Stock Units. (i) Upon
the expiration of the Restricted Period with respect to any shares of
Restricted Stock, the restrictions set forth in the applicable Award agreement
shall be of no further force or effect with respect to such shares, except as
set forth in the applicable Award agreement. If an escrow arrangement is used,
upon such expiration, the Company shall deliver to the Participant, or his
beneficiary, without charge, any shares of Restricted Stock which have not then
been forfeited and with respect to which the Restricted Period has expired
(rounded down to the nearest full share). Dividends, if any, that may have been
withheld by the Committee and attributable to any particular share of
Restricted Stock shall be distributed to the Participant in cash or, at the
sole discretion of the Committee, in shares of Common Stock having a Fair
Market Value equal to the amount of such dividends, upon the release of
restrictions on such share and, if such share is forfeited, the Participant
shall have no right to such dividends.


 


        (ii)   Unless
otherwise provided by the Committee in an Award agreement that complies with
the requirements of Section 409A of the Code and Section 15 of the
Plan, upon the expiration of the Restricted Period with respect to any
outstanding Restricted Stock Units, the Company shall deliver to the
Participant, or his beneficiary, without charge, one share of Common Stock for
each such outstanding Restricted Stock Unit; provided, however, that the
Committee may, in its sole discretion, elect to pay cash or part cash and part
Common Stock in lieu of delivering only shares of Common Stock in respect of
such Restricted Stock Units. If a cash payment is made in lieu of delivering
shares of Common Stock, the amount of such payment shall be equal to the Fair
Market Value of the Common Stock as of the date on which the Restricted Period
lapsed with respect to such Restricted Stock Units, less an amount equal to any
Federal, state, local and non-U.S. income and employment taxes required to be
withheld.


 


        (e)   Legends
on Restricted Stock. Any certificate representing Restricted Stock awarded
under the Plan shall bear a legend substantially in the form of the following
in addition to any other information the Company deems appropriate until the
lapse of all restrictions with respect to such Common Stock:


 


TRANSFER
OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED PURSUANT TO
THE TERMS OF THE INTERNET BRANDS, INC. 2007 EQUITY PLAN AND A RESTRICTED
STOCK AWARD AGREEMENT, DATED AS
OF                        ,
BETWEEN INTERNET BRANDS, INC.
AND                        .
A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF INTERNET BRANDS, INC.


 


In
the case of any uncertificated shares of Restricted Stock issued pursuant to a
direct registration system adopted by the Company, the Company shall issue
appropriate stop transfer instructions to its transfer agent, if any, and, if
the Company transfers its own securities, it shall make appropriate notations
to the same effect in its own records.


 


10. Stock Bonus Awards. The Committee may issue
unrestricted Common Stock, or other Awards denominated in Common Stock, under
the Plan to Eligible Persons, alone or in tandem with other Awards, in such
amounts as the Committee shall from time to time in its sole discretion
determine. Each Stock Bonus Award granted


 


6

















 


under
the Plan shall be evidenced by an Award agreement. Each Stock Bonus Award so
granted shall be subject to such conditions not inconsistent with the Plan as
may be reflected in the applicable Award agreement.


 


11. Performance Compensation Awards. (a) Generally.
The Committee shall have the authority, at the time of grant of any Award
described in Sections 7 through 10 of the Plan, to designate such Award as
a Performance Compensation Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code. The Committee shall
have the authority to grant cash bonuses under the Plan with the intent that
such bonuses shall qualify for the exemption from Section 162(m) of
the Code provided pursuant to Treasury Regulation Section 1.162-27(f)(1),
for the reliance period described in Treasury Regulation Section 1.162-27(f)(2).
In addition, the Committee shall have the authority to make an award of a cash
bonus to any Participant and designate such Award as a Performance Compensation
Award intended to qualify as “performance-based compensation” under Section 162(m) of
the Code.


 


        (b)   Discretion
of Committee with Respect to Performance Compensation Awards. With regard
to a particular Performance Period, the Committee shall have sole discretion to
select the length of such Performance Period, the type(s) of Performance
Compensation Awards to be issued, the Performance Criteria that will be used to
establish the Performance Goal(s), the kind(s) and/or level(s) of the
Performance Goal(s) that is (are) to apply, and the Performance Formula.
Within the first 90 days of a Performance Period (or, if longer or
shorter, within the maximum period allowed under Section 162(m) of
the Code), the Committee shall, with regard to the Performance Compensation
Awards to be issued for such Performance Period, exercise its discretion with
respect to each of the matters enumerated in the immediately preceding sentence
and record the same in writing.


 


        (c)   Performance
Criteria. The Performance Criteria that will be used to establish the
Performance Goal(s) shall be based on the attainment of specific levels of
performance of the Company (and/or one or more Affiliates, divisions or
operational units, or any combination of the foregoing) and shall be limited to
the following: (i) net earnings or net income (before or after taxes); (ii) basic
or diluted earnings per share (before or after taxes); (iii) net revenue
or net revenue growth; (iv) gross profit or gross profit growth; (v) net
operating profit (before or after taxes); (vi) return measures (including,
but not limited to, return on assets, capital, invested capital, equity, or
sales); (vii) cash flow (including, but not limited to, operating cash
flow, free cash flow, and cash flow return on capital); (viii) earnings
before or after taxes, interest, depreciation and/or amortization; (ix) gross
or operating margins; (x) productivity ratios; (xi) share price
(including, but not limited to, growth measures and total shareholder return);
(xii) expense targets; (xiii) margins; (xiv) operating
efficiency; (xv) objective measures of customer satisfaction;
(xvi) working capital targets; (xvii) measures of economic value
added; and (xviii) enterprise value. Any one or more of the Performance
Criteria may be used on an absolute or relative basis to measure the
performance of the Company and/or one or more Affiliates as a whole or any
business

unit(s) of the Company and/or one or more Affiliates or any combination
thereof, as the Committee may deem appropriate, or any of the above Performance
Criteria may be compared to the performance of a group of comparator companies,
or a published or special index that the Committee, in its sole discretion,
deems appropriate, or as compared to various stock market indices. The
Committee also has the authority to provide for accelerated vesting of any
Award based on the achievement of Performance Goals pursuant to the Performance
Criteria specified in this paragraph. To the extent required under Section 162(m) of
the Code, the Committee shall, within the first 90 days of a Performance
Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of
the Code), define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period.


 


        (d)   Modification
of Performance Goal(s). In the event that applicable tax and/or securities
laws change to permit Committee discretion to alter the governing Performance
Criteria without obtaining shareholder approval of such alterations, the
Committee shall have sole discretion to make such alterations without obtaining
shareholder approval. The Committee is authorized at any time during the first
90 days of a Performance Period (or, if longer or shorter, within the
maximum period allowed under Section 162(m) of the Code), or at any
time thereafter to the extent the exercise of such authority at such time would
not cause the Performance Compensation Awards granted to any Participant for such
Performance Period to fail to qualify as “performance-based compensation” under
Section 162(m) of the Code, in its sole discretion, to adjust or
modify the calculation of a Performance Goal for such Performance Period, based
on and in order to appropriately reflect the following events: (i) asset
write-downs; (ii) litigation or claim judgments or settlements; (iii) the
effect of changes in tax laws, accounting principles, or other laws or
regulatory rules affecting reported results; (iv) any reorganization
and restructuring programs; (v) extraordinary nonrecurring items as
described in Accounting Principles Board Opinion No. 30 (or any successor
pronouncement thereto) and/or in management’s discussion and analysis of
financial condition and results of operations appearing in the Company’s annual
report to shareholders for the applicable year; (vi) acquisitions or
divestitures; (vii) any other specific unusual or nonrecurring events, or
objectively determinable category thereof; (viii) foreign exchange gains
and losses; and (ix) a change in the Company’s fiscal year.


 


        (e)   Payment
of Performance Compensation Awards. (i) Condition to Receipt of
Payment. Unless otherwise provided in the applicable Award agreement, a
Participant must be employed by the Company on the last day of a Performance
Period to be eligible for payment in respect of a Performance Compensation
Award for such Performance Period.


 


        (ii)   Limitation.
A Participant shall be eligible to receive payment in respect of a Performance
Compensation Award only to the extent that: (A) the Performance Goals for
such period are achieved; and (B) all or some of the portion of such
Participant’s Performance Compensation Award has been earned for the
Performance Period based on the application of the Performance Formula to such
achieved Performance Goals.


 


        (iii)  Certification.
Following the completion of a Performance Period, the Committee shall review
and certify in writing whether, and to what extent, the Performance Goals for
the Performance Period have been achieved and, if so, calculate and certify in
writing that amount of the Performance Compensation Awards earned for the
period based upon the Performance Formula. The Committee shall then determine
the amount of each Participant’s Performance Compensation Award actually
payable for the Performance Period and, in so doing, may apply Negative
Discretion.


 


        (iv)  Use
of Negative Discretion. In determining the actual amount of an individual
Participant’s Performance Compensation Award for a Performance Period, the
Committee may reduce or eliminate the amount of the Performance Compensation
Award earned under the Performance Formula in the Performance Period through
the use of Negative Discretion if, in its sole judgment, such reduction or
elimination is appropriate. The Committee shall not have the discretion to (A) grant
or provide payment in respect of Performance Compensation Awards for a
Performance Period if the Performance Goals for such Performance Period have
not been attained; or (B) increase a Performance Compensation Award above
the applicable limitations set forth in Section 5 of the Plan.


 


        (f)    Timing
of Award Payments. Performance Compensation Awards granted for a
Performance Period shall be paid to Participants as soon as administratively
practicable following completion of the certifications required by this Section 11.
Any Performance Compensation Award that has been deferred shall not (between
the date as of which the Award is deferred and the payment date) increase (i) with
respect to a Performance Compensation Award that is payable in cash, by a
measuring factor for each fiscal year greater than a reasonable rate of
interest set by the Committee or (ii) with respect to a Performance
Compensation Award that is payable in shares of Common Stock, by an amount
greater than the appreciation of a share of Common Stock from the date such
Award is deferred to the payment date.


 


12. Changes in Capital Structure and Similar Events. (a) Subject
to this Section 12, (i) Awards granted under the Plan and any
agreements evidencing such Awards, (ii) any or all of the number of shares
of Common Stock or other securities of the Company (or number and kind of other
securities or other property) which may be delivered in respect of Awards or
with respect to which Awards may be granted under the Plan (including, without
limitation, any or all of the limitations under Section 5 of the Plan) and
(iii) the terms of any outstanding Award, including, without limitation, (A) the
number of shares of Common Stock or other securities of the Company (or number
and kind of other securities or other property) subject to outstanding Awards
or to which outstanding Awards relate, (B) the Exercise Price or


 


7

















 


Strike
Price with respect to any Award, or (C) any applicable performance
measures (including, without limitation, Performance Criteria and Performance
Goals) shall be adjusted or substituted, in such manner as the Committee may
determine, as to the number, price, or kind of share of Common Stock or other
consideration subject to such Awards or as otherwise determined by the
Committee to be equitable, to preserve the economic value of such Awards (i.e.,
such that such value shall be neither increased nor decreased on account of
such transaction or event) (1) in the event of changes in the outstanding
Common Stock or in the capital structure of the Company by reason of stock or
extraordinary cash dividends, stock splits, reverse stock splits,
recapitalization, reclassification, reorganizations, mergers, consolidations,
separations, combinations, exchanges, spin-offs, liquidations, other
substantial distributions of the assets of the Company, or other relevant
corporate transactions or changes in capitalization occurring after the Date of
Grant of any such Award or (2) in the event of any change in applicable
laws or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for,
Participants, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan. In the event that a stock
split, reverse stock split, stock dividend, recapitalization, combination,
reclassification, or other distribution of securities of the Company of or on
Common Stock without receipt of consideration of the Company occurs prior to
the Registration Date, a proportionate adjustment shall be made to (1) the
number of shares of Common Stock purchasable under any Option or SAR, and the
Exercise Price or Strike Price thereof, or (2) the number of shares of
Common Stock allocated to a Participant under any other Award.


 


        (b)   Any
adjustment in Incentive Stock Options under this Section 12 shall be made
only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of
the Code, and any adjustments under this Section 12 shall be made in a
manner which does not adversely affect the exemption provided pursuant to Rule 16b-3
under the Exchange Act. Further, (i) with respect to any Award granted
during the reliance period described in Treasury Regulation Section 1.162-27(f)(2) which
is intended to qualify for the exemption from Section 162(m) of the
Code provided pursuant to Treasury Regulation Section 1.162-27(f)(1) or
any Award granted on or after the Section 162(m) Effective Date which
is intended to qualify as “performance-based compensation” under Section 162(m) of
the Code, such adjustments or substitutions shall be made only to the extent
that the Committee determines that such adjustments or substitutions may be
made without causing the Company to be denied a tax deduction on account of Section 162(m) of
the Code; and (ii) with respect to any Section 409A Award as defined
in Section 15(a) of the Plan, such adjustments or modifications shall
be made only to the extent that the Committee determines that such adjustments
or substitutions may be made without causing such Section 409A Award to
violate the requirements of Section 409A of the Code and Section 15
of the Plan. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for
all purposes.


 


        (c)   Notwithstanding
paragraphs (a) and (b) above, in the event of any of the following:


 


        A.
The Company is merged or consolidated with another corporation or entity and,
in connection therewith, consideration is received by shareholders of the
Company in a form other than stock or other equity interests of the surviving
entity;


 


        B.
All or substantially all of the stock or assets of the Company are acquired by
another person;


 


        C.
The reorganization or liquidation of the Company; or


 


        D.
The Company shall enter into a written agreement to undergo an event described
in clauses A, B or C above,


 


then
the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Awards and cause to be
paid to the holders thereof, in cash or stock, or any combination thereof, the
value of such Awards (whether or not vested or exercisable) based upon the
price per share of Common Stock received or to be received by other
shareholders of the Company in the event. The terms of this Section 12 may
be varied by the Committee in any particular Award agreement.


 


13. Effect of Change of Control. Except to the
extent otherwise provided in an Award agreement, in the event of a Change of
Control, notwithstanding any provision of the Plan to the contrary, the Committee
may in its sole discretion provide that, with respect to any particular
outstanding Award or Awards:


 


        (a)   all
then-outstanding Options and SARs shall become immediately exercisable as of
immediately prior to the Change of Control with respect to up to
100 percent of the shares subject to such Option or SAR;


 


        (b)   the
Restricted Period shall expire as of immediately prior to the Change of Control
with respect to up to 100 percent of then-outstanding shares of Restricted
Stock or Restricted Stock Units (including without limitation a waiver of any
applicable Performance Goals); and


 


        (c)   all
incomplete Performance Periods in effect on the date the Change of Control
occurs shall end on such date, and the Committee may (i) determine the
extent to which Performance Goals with respect to each such Performance Period
have been met based upon such audited or unaudited financial information or
other information then available as it deems relevant and (ii) cause the
Participant to receive partial or full payment of Awards for each such
Performance Period based upon the Committee’s determination of the degree of
attainment of Performance Goals, or assuming that the applicable “target”
levels of performance have been attained, or on such other basis determined by
the Committee.


 


        To
the extent practicable, any actions taken by the Committee under the
immediately preceding clauses (a) through (c) shall occur in a manner
and at a time which allows affected Participants the ability to participate in
the Change of Control transaction with respect to the Common Stock subject to
their Awards.


 


14. Amendments and Termination. (a) Amendment
and Termination of the Plan. The Board may amend, alter, suspend, discontinue,
or terminate the Plan or any portion thereof at any time; provided that
no such amendment, alteration, suspension, discontinuation or termination shall
be made without shareholder approval if such approval is necessary to comply
with any tax or regulatory requirement applicable to the Plan (including,
without limitation, as necessary to comply with any rules or requirements
of any securities exchange or inter-dealer quotation system on which the shares
of Common Stock may be listed or quoted or to prevent the Company from being
denied a tax deduction under Section 162(m) of the Code); provided,
further, that any such amendment, alteration, suspension, discontinuance or
termination that would materially and adversely affect the rights of any Participant
or any holder or beneficiary of any Award theretofore granted shall not to that
extent be effective without the consent of the affected Participant, holder or
beneficiary.


 


        (b)   Amendment
of Award Agreements. The Committee may, to the extent consistent with the
terms of any applicable Award agreement, waive any conditions or rights under,
amend any terms of, or alter, suspend, discontinue, cancel or terminate, any
Award theretofore granted or the associated Award agreement, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would materially and adversely
affect the rights of any Participant with respect to any Award theretofore
granted shall not to that extent be effective without the consent of the
affected Participant; provided, further, that without shareholder
approval, except as otherwise permitted under Section 12 of the Plan, (i) no
amendment or modification may reduce the Exercise Price of any Option or the
Strike Price of any SAR, (ii) the Committee may not cancel any outstanding
Option or SAR and replace it with a new Option or SAR (with a lower Exercise
Price or Strike Price, as the case may be) in a manner which would either (A) be
reportable on the Company’s proxy statement as Options which have been “repriced”
(as such term is used in Item 402 of Regulation S-K promulgated under the
Exchange Act) or (B) result in any “repricing” for financial statement
reporting purposes (or otherwise cause the Award to fail to qualify for equity
accounting treatment), and (iii) the Committee may not take any other
action


 


8

















 


which
is considered a “repricing” for purposes of the shareholder approval rules of
the applicable securities exchange or inter-dealer quotation system on which
the Common Stock is listed or quoted.


 


15. Compliance with Section 409A of the Code. (a) Awards
Subject to Code Section 409A. Any Award that constitutes, or provides
for, a deferral of compensation subject to Section 409A of the Code (a “Section 409A
Award”) shall satisfy the requirements of Section 409A of the Code,
the Treasury Regulations thereunder, and this Section 15, to the extent
applicable. The Award agreement with respect to a Section 409A Award shall
incorporate the terms and conditions required by Section 409A of the Code,
the Treasury Regulations thereunder, and this Section 15.


 


        (b)   Distributions
Under a Section 409A Award. (i) Subject to paragraph (ii) below,
any shares of Common Stock, cash, or other property or amounts to be paid or
distributed upon the grant, issuance, vesting, exercise, or payment of a Section 409A
Award shall be distributed in accordance with the requirements of Section 409A(a)(2) of
the Code, and shall not be distributed earlier than: (A) the Participant’s
separation from service, as determined by the Secretary of the Treasury, (B) the
date the Participant becomes disabled within the meaning of Section 409A(a)(2)(C) of
the Code, (C) the Participant’s death, (D) a specified time (or
pursuant to a fixed schedule) specified under the Award agreement at the date
of the deferral of such compensation, (E) a change in the ownership or
effective control of the Company or an Affiliate, or in the ownership of a
substantial portion of the assets of the Company or an Affiliate, to the extent
permitted under Section 409A of the Code and Treasury Regulation Section 1.409A-3(i)(5),
or (F) the occurrence of an unforeseeable emergency with respect to the Participant.


 


        (ii)   In
the case of a Participant who is a “Specified Employee,” the requirement of
clause (A) of paragraph (i) above shall be met only if the
distributions with respect to the Section 409A Award may not be made
before the date which is six months after the Participant’s separation
from service (or, if earlier, the date of the Participant’s death). For
purposes of this paragraph (ii), a Holder shall be a Specified Employee if
such holder is a key employee (as defined in Section 416(i) of the
Code without regard to paragraph (5) thereof) of a corporation any
stock in which is publicly traded on an established securities market or
otherwise, as determined under Section 409A(a)(2)(B)(i) of the Code.


 


        (iii)  The
requirement of paragraph (i)(F) above shall be met only if, as
determined under Section 409A(a)(2)(B)(ii) of the Code, the amounts
distributed with respect to the unforeseeable emergency do not exceed the
amounts necessary to satisfy such unforeseeable emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such unforeseeable emergency is
or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship).


 


        (iv)  For
purposes of this Section 15, the terms specified herein shall have the
respective meanings ascribed thereto under Section 409A of the Code and
the Treasury Regulations thereunder.


 


        (c)   Prohibition
on Acceleration of Benefits. The time or schedule of any distribution or
payment of any shares of Common Stock, cash, or other property or amounts under
a Section 409A Award shall not be accelerated, except as otherwise
permitted under Section 409A(a)(3) of the Code.


 


        (d)   Elections
Under Section 409A Awards. (i) Any deferral election provided
under or with respect to an Award to any Eligible Person or Participant shall
satisfy the requirements of Section 409A(a)(4)(B) of the Code, to the
extent applicable, and, except as otherwise permitted under sub-paragraph (A) or
(B) below, any such deferral election with respect to compensation for
services performed during a taxable year shall be made not later than the close
of the preceding taxable year, or at such other time as provided in Treasury
Regulations.


 


        (A)  In
the case of the first year in which an Eligible Person or Participant becomes
eligible to participate in the Plan, any such deferral election may be made
with respect to services to be performed subsequent to the election within
thirty (30) days after the date the Eligible Person or Participant becomes
eligible to participate in the Plan, as provided under Section 409A(a)(4)(B)(ii) of
the Code.


 


        (B)  In
the case of any performance-based compensation based on services performed by
an Eligible Person or Participant over a period of at least twelve
(12) months, any such deferral election may be made no later than six (6) months
before the end of the period, as provided under Section 409A(a)(4)(B)(iii) of
the Code.


 


        (ii)   In
the event that a Section 409A Award permits, under a subsequent election
by the Participant, a delay in a distribution or payment of any shares of
Common Stock, cash, or other property or amounts under such Section 409A
Award, or a change in the form of distribution or payment, such subsequent
election shall satisfy the requirements of Section 409A(a)(4)(C) of
the Code, and:


 


        (A)  such
subsequent election may not take effect until at least twelve (12) months
after the date on which the election is made,


 


        (B)  in
the case such subsequent election relates to a distribution or payment not
described in clauses (B), (C), or (F) of paragraph (b)(i) above,
the first payment with respect to such election may be deferred for a period of
not less than five (5) years from the date such distribution or payment
otherwise would have been made, and


 


        (C)  in
the case such subsequent election relates to a distribution or payment
described in clause (D) of paragraph (b)(i) above, such
election may not be made less than twelve (12) months prior to the date of
the first scheduled distribution or payment under clause (D) of
paragraph (b)(i).


 


        (e)   Compliance
in Form and Operation. A Section 409A Award, and any election
under or with respect to such Section 409A Award, shall comply in form and
operation with the requirements of Section 409A of the Code and the
Treasury Regulations thereunder.


 


16. General. (a) Award
Agreements. Each Award under the Plan shall be evidenced by an Award
agreement, which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto,
including without limitation, the effect on such Award of a Participant’s
death, Disability, or termination of relationship as Service Provider, or of
such other events as may be determined by the Committee.


 


        (b)   Nontransferability.
(i) Each Award shall be exercisable only by a Participant during the
Participant’s lifetime, or, if permissible under applicable law, by the
Participant’s legal guardian or representative. No Award may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant other than by will or by the laws of descent and distribution and
any such purported assignment, alienation, pledge, attachment, sale, transfer
or encumbrance shall be void and unenforceable against the Company or an
Affiliate; provided that the designation of a beneficiary shall not
constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.


 


        (ii)   Notwithstanding
the foregoing, the Committee may, in its sole discretion, permit Awards (other
than Incentive Stock Options) to be transferred by a Participant, without
consideration or pursuant to a domestic relations order, subject to such rules as
the Committee may adopt consistent with any applicable Award


 


9

















 


agreement
to preserve the purposes of the Plan, to: (A) any person who is a “family
member” of the Participant, as such term is used in the instructions to Form S-8
under the Securities Act (collectively, the “Immediate Family Members”);
(B) a trust solely for the benefit of the Participant and his or her
Immediate Family Members; (C) a partnership or limited liability company
whose only partners or shareholders are the Participant and his or her
Immediate Family Members; or (D) on or after the Registration Date, any
other transferee as may be approved either (I) by the Board or the
Committee in its sole discretion, or (II) as provided in the applicable
Award agreement; (each transferee described in clauses (A), (B), (C) or (D) above
is hereinafter referred to as a “ Permitted Transferee”); provided
that the Participant gives the Committee advance written notice describing
the terms and conditions of the proposed transfer and the Committee notifies
the Participant in writing that such a transfer would comply with the
requirements of the Plan.


 


        (iii)  The
terms of any Award transferred in accordance with the immediately preceding
sentence shall apply to the Permitted Transferee and any reference in the Plan,
or in any applicable Award agreement, to a Participant shall be deemed to refer
to the Permitted Transferee, except that (A) Permitted Transferees shall
not be entitled to transfer any Award, other than by will or the laws of
descent and distribution; (B) Permitted Transferees shall not be entitled
to exercise any transferred Option unless there shall be in effect a
registration statement on an appropriate form covering the shares of Common
Stock to be acquired pursuant to the exercise of such Option if the Committee
determines, consistent with any applicable Award agreement, that such a
registration statement is necessary or appropriate; (C) the Committee or
the Company shall not be required to provide any notice to a Permitted
Transferee, whether or not such notice is or would otherwise have been required
to be given to the Participant under the Plan or otherwise; and (D) the
consequences of the termination of the Participant’s relationship as a Service
Provider under the terms of the Plan and the applicable Award agreement shall
continue to be applied with respect to the Participant, including, without
limitation, that an Option shall be exercisable by the Permitted Transferee
only to the extent, and for the periods, specified in the Plan and the applicable
Award agreement.


 


        (c)   Dividends
and Dividend Equivalents. In the sole discretion of the Committee, an Award
may provide a Participant with dividends or dividend equivalents, payable in
cash, shares of Common Stock, other securities, other Awards or other property,
on a current or deferred basis, on such terms and conditions as may be
determined by the Committee in its sole discretion, including without
limitation, payment directly to the Participant, withholding of such amounts by
the Company subject to vesting of the Award or reinvestment in additional
shares of Common Stock, Restricted Stock or other Awards.


 


        (d)   Tax
Withholding. (i) A Participant shall be required to pay to the Company
or any Affiliate, and the Company or any Affiliate shall have the right and is
hereby authorized to withhold, from any cash, shares of Common Stock, other
securities or other property deliverable under any Award or from any
compensation or other amounts owing to a Participant, the amount (in cash, Common
Stock, other securities or other property) of any required withholding taxes in
respect of an Award, its exercise, or any payment or transfer under an Award or
under the Plan and to take such other action as may be necessary in the opinion
of the Committee or the Company to satisfy all obligations for the payment of
such withholding and taxes.


 


        (ii)   Without
limiting the generality of clause (i) above, the Committee may, in
its sole discretion, permit a Participant to satisfy, in whole or in part, the
foregoing withholding liability by (A) the delivery of shares of Common
Stock (which are not subject to any pledge or other security interest and are
Mature Shares) owned by the Participant having a Fair Market Value equal to
such withholding liability or (B) having the Company withhold from the
number of shares of Common Stock otherwise issuable or deliverable pursuant to
the exercise or settlement of the Award a number of shares with a Fair Market
Value equal to such withholding liability (but no more than the minimum
required statutory withholding liability).


 


        (e)   No
Claim to Awards; No Rights to Continued Employment; Waiver. No employee of
the Company or an Affiliate, or other person, shall have any claim or right to
be granted an Award under the Plan or, having been selected for the grant of an
Award, to be selected for a grant of any other Award. There is no obligation
for uniformity of treatment of Participants or holders or beneficiaries of
Awards. The terms and conditions of Awards and the Committee’s determinations
and interpretations with respect thereto need not be the same with respect to
each Participant and may be made selectively among Participants, whether or not
such Participants are similarly situated. Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be retained
in the employ or service of the Company or an Affiliate, nor shall it be
construed as giving any Participant any rights to continued service on the
Board. The Company or any of its Affiliates may at any time dismiss a
Participant from employment or discontinue any consulting relationship, free
from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or any Award agreement. By accepting an Award under the
Plan, a Participant shall thereby be deemed to have waived any claim to
continued exercise or vesting of an Award or to damages or severance
entitlement related to non-continuation of the Award beyond the period provided
under the Plan or any Award agreement, notwithstanding any provision to the
contrary in any written employment contract or other agreement between the
Company and its Affiliates and the Participant, whether any such agreement is
executed before, on or after the Date of Grant.


 


        (f)    International
Participants. With respect to Participants who reside or work outside of
the United States of America and who are not (and who are not expect to be) “covered
employees” within the meaning of Section 162(m) of the Code, the
Committee may in its sole discretion amend the terms of the Plan or outstanding
Awards with respect to such Participants in order to conform such terms with
the requirements of local law or to obtain more favorable tax or other
treatment for a Participant, the Company or its Affiliates.


 


        (g)   Designation
and Change of Beneficiary. Each Participant may file with the Committee a
written designation of one or more persons as the beneficiary(ies) who shall be
entitled to receive the amounts payable with respect to an Award, if any, due
under the Plan upon his death. A Participant may, from time to time, revoke or
change his beneficiary designation without the consent of any prior beneficiary
by filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that
no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant’s death, and in no event
shall it be effective as of a date prior to such receipt. If no beneficiary
designation is filed by a Participant, the beneficiary shall be deemed to be
his or her spouse or, if the Participant is unmarried at the time of death, his
or her estate.


 


        (h)   Termination
of Employment. Unless determined otherwise by the Committee, (i) a
temporary absence from employment or service approved by the Company due to
illness, vacation, or leave of absence; a transfer between locations of the
Company or an Affiliate; a transfer from employment or service with the Company
to employment or service with an Affiliate (or vice-versa); or a transfer from
employment or service with an Affiliate to employment or service with another
Affiliate shall not be considered a termination of the Participant’s
relationship as a Service Provider; and (ii) if a Participant’s employment
with the Company and its Affiliates terminates, but such Participant continues
to provide services to the Company and its Affiliates in a non-employee capacity
as a Service Provider (or vice-versa), such change in status shall not be
considered a termination of the Participant’s relationship as a Service
Provider. Notwithstanding the foregoing, with respect to any Section 409A
Award, a termination of the relationship as a Service Provider shall be
considered to occur if and only if there has been a separation from service
within the meaning of Section 409A of the Code.


 


        (i)    No
Rights as a Shareholder. Except as otherwise specifically provided in the
Plan or any Award agreement, no person shall be entitled to the privileges of
ownership in respect of shares of Common Stock which are subject to Awards
hereunder until such shares have been issued or delivered to that person.


 


        (j)    Government
and Other Regulations. (i) The obligation of the Company to settle
Awards in Common Stock or other consideration shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any
Award to the contrary, the Company shall be under no obligation to offer to
sell or to sell, and shall be prohibited from offering to sell or selling, any
shares of Common Stock pursuant to an Award unless such shares have been
properly registered for sale pursuant to the Securities Act with the Securities
and Exchange Commission or unless


 


10

















 


the
Company has received an opinion of counsel, satisfactory to the Company, that
such shares may be offered or sold without such registration pursuant to an
available exemption therefrom and the terms and conditions of such exemption
have been fully complied with. The Company shall be under no obligation to
register for sale under the Securities Act any of the shares of Common Stock to
be offered or sold under the Plan. The Committee shall have the authority to
provide that all shares of Common Stock or other securities of the Company or
any Affiliate delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
Plan, the applicable Award agreement, the Federal securities laws, or the
rules, regulations and other requirements of the Securities and Exchange Commission,
any securities exchange or inter-dealer quotation system upon which such shares
or other securities are then listed or quoted and any other applicable Federal,
state, local or non-U.S. laws, and, without limiting the generality of Section 9
of the Plan, the Committee may cause a legend or legends to be put on any
certificates evidencing such shares to make appropriate reference to such
restrictions. Notwithstanding any provision in the Plan to the contrary, the
Committee reserves the right to add any additional terms or provisions to any
Award granted under the Plan that it in its sole discretion deems necessary or
advisable in order that such Award complies with the legal requirements of any
governmental entity to whose jurisdiction the Award is subject.


 


        (ii)   The
Committee may cancel an Award or any portion thereof if it determines, in its
sole discretion, that legal or contractual restrictions and/or blockage and/or
other market considerations would make the Company’s acquisition of shares of
Common Stock from the public markets, the Company’s issuance of Common Stock to
the Participant, the Participant’s acquisition of Common Stock from the Company
and/or the Participant’s sale of Common Stock to the public markets, illegal,
impracticable or inadvisable. If the Committee determines to cancel all or any
portion of an Award in accordance with the foregoing, the Company shall pay to
the Participant an amount equal to the excess of (A) the aggregate Fair
Market Value of the shares of Common Stock subject to such Award or portion
thereof canceled (determined as of the applicable exercise date, or the date
that the shares would have been vested or delivered, as applicable), over (B) the
aggregate Exercise Price or Strike Price (in the case of an Option or SAR,
respectively) or any amount payable as a condition of delivery of shares of
Common Stock (in the case of any other Award). Such amount shall be delivered
to the Participant as soon as practicable following the cancellation of such
Award or portion thereof, except that in the case of a Section 409A Award,
the timing of such payment shall be subject to the requirements of Section 409A
of the Code.


 


        (k)   No
Code Section 83(b) Elections Without Consent of Company. No
election under Section 83(b) of the Code or under a similar provision
of law may be made unless expressly permitted by the terms of the applicable
Award agreement or by action of the Committee in writing prior to the making of
such election. If a Participant, in connection with the acquisition of shares
of Common Stock under the Plan or otherwise, is expressly permitted to make
such election and the Participant makes the election, the Participant shall
notify the Company of such election within ten (10) days of filing notice of
the election with the Internal Revenue Service or other governmental authority,
in addition to any filing and notification required pursuant to Section 83(b) of
the Code or other applicable provision.


 


        (l)    Payments
to Persons Other Than Participants. If the Committee shall find that any
person to whom any amount is payable under the Plan is unable to care for his
affairs because of illness or accident, or is a minor, or has died, then any
payment due to such person or his estate (unless a prior claim therefor has
been made by a duly appointed legal representative) may, if the Committee so
directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Company therefor.


 


        (m)  Nonexclusivity
of the Plan. Neither the adoption of this Plan by the Board nor the
submission of this Plan to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under this Plan
(subject to Section 17 of the Plan), and such arrangements may be either
applicable generally or only in specific cases.


 


        (n)   No
Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate, on the one hand, and a
Participant or other person or entity, on the other hand. No provision of the
Plan or any Award shall require the Company, for the purpose of satisfying any
obligations under the Plan, to purchase assets or place any assets in a trust
or other entity to which contributions are made or otherwise to segregate any
assets, nor shall the Company maintain separate bank accounts, books, records
or other evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Participants shall have no rights under
the Plan other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional compensation
by performance of services, they shall have the same rights as other employees
under general law.


 


        (o)   Reliance
on Reports. Each member of the Committee and each member of the Board shall
be fully justified in acting or failing to act, as the case may be, and shall
not be liable for having so acted or failed to act in good faith, in reliance
upon any report made by the independent public accountant of the Company and
its Affiliates and/or any other information furnished in connection with the
Plan by any agent of the Company or the Committee or the Board, other than
himself.


 


        (p)   Relationship
to Other Benefits. No payment under the Plan shall be taken into account in
determining any benefits under any pension, retirement, profit sharing, group
insurance or other benefit plan of the Company except as otherwise specifically
provided in such other plan.


 


        (q)   Governing
Law. The Plan shall be governed by and construed in accordance with the
internal laws of the State of California applicable to contracts made and
performed wholly within the State of California, without giving effect to the
conflict of laws provisions thereof.


 


        (r)   Severability.
If any provision of the Plan or any Award or Award agreement is or becomes or
is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to
any person or entity or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall be construed
or deemed amended to conform to the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be construed
or deemed stricken as to such jurisdiction, person or entity or Award and the
remainder of the Plan and any such Award shall remain in full force and effect.


 


        (s)   Obligations
Binding on Successors. The obligations of the Company under the Plan shall
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company.


 


        (t)    Code
Section 162(m) Re-approval. If so determined by the Committee, (i) the
Plan shall be submitted for re-approval by the shareholders of the Company no
later than the first meeting of shareholders at which directors are to be
elected that occurs after the close of the third calendar year following the
calendar year in which the IPO is consummated, and (ii) the provisions of
the Plan regarding Performance Compensation Awards shall be submitted for
re-approval by the shareholders of the Company no later than the first
shareholder meeting that occurs in the fifth year following the year that
shareholders previously approved such provisions following the IPO, in each
case for purposes of exempting certain Awards granted after such time from the
deduction limitations of Section 162(m) of the Code. Nothing in this
paragraph, however, shall affect the validity of Awards granted after such time
if such shareholder approval has not been obtained.


 


        (u)   Expenses;
Gender; Titles and Headings. The expenses of administering the Plan shall
be borne by the Company and its Affiliates. Masculine pronouns and other words
of masculine gender shall refer to both men and women. The titles and headings
of the sections in the Plan are for convenience of reference only, and in
the


 


11

















 


event
of any conflict, the text of the Plan, rather than such titles or headings
shall control.


 


17. Predecessor Plans. No new stock options or
stock purchase rights will be granted under the Predecessor Plans on or after
the Effective Date.


 


* * *


 


 


12
















 


INTERNET BRANDS, INC.


 


2007 EQUITY PLAN


 


RESTRICTED STOCK AGREEMENT


 


Unless otherwise defined
herein, the terms defined in the Internet Brands, Inc. 2007 Equity Plan
(the “Plan”) shall have the same defined meanings in this Restricted Stock
Agreement (the “Agreement”).


 


I.              NOTICE
OF RESTRICTED STOCK GRANT


 


	
  Participant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


The above named
Participant has been granted an Award of Restricted Stock of the Company,
subject to the terms and conditions of the Plan and this Agreement, as follows:


 


	
  Grant Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Grant

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting Commencement Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of Shares

  	
   

  	
   

  
	
   

  
	
  Vesting Schedule:

  	
   

  	
   

  
					



 


Subject
to accelerated vesting as set forth in this Agreement or in the Plan, the
Restricted Stock shall vest according to the following vesting schedule,
subject also to Participant having been continuously a Service Provider from
the Date of Grant through the date such vesting is scheduled to occur:


 


20% of the shares granted shall vest immediately upon
grant, 20% of the shares granted shall vest upon the one year anniversary of
the Vesting Commencement Date, and five percent (5%) of the remaining shares
granted shall vest on the last day of each three (3) month period
following thereafter.


 


Accelerated Vesting:


 


Upon the occurrence of a Change of Control, 50% of the
unvested shares shall immediately vest. 
In the event of a (i) material diminution of Participant’s duties
as a Service Provider, (ii) a material change in the geographic location
at which the Service Provider must perform services, or (iii) termination
of Participant’s relationship as a Service Provider without


 


1

















 


cause  within six (6) months
prior to or twelve (12) months after such Change of Control, the remaining
unvested shares shall immediately vest.


 


II.            TERMS
AND CONDITIONS OF RESTRICTED STOCK GRANT


 


1.             Grant of Restricted Stock.  The Committee hereby grants to the Participant
named in Section I herein, for past services and as a separate incentive
in connection with his or her services and not in lieu of any salary or other
compensation for his or her services, the Number of Shares of Restricted Stock
(the “Shares”) as set forth in Section I herein, subject to the terms and
conditions of this Agreement and the Plan, which is incorporated herein by
reference.


 


2.             Escrow of Shares.


 


a.             All Shares awarded by this Agreement shall, upon
execution of this Agreement, be delivered to and deposited with an escrow
holder designated by the Company (the “Escrow Holder”).  The Shares shall be held by the Escrow Holder
until such time as the Shares vest or the date Participant ceases to be a
Service Provider.


 


b.             The Escrow Holder shall not be liable for any act it may
do or omit to do with respect to holding the Shares in escrow while acting in
good faith and in the exercise of its judgment.


 


c.             Upon the termination of Participant’s relationship as a
Service Provider for any reason, the Escrow Holder, upon receipt of written
notice of such termination, shall take all steps necessary to accomplish the
transfer of the unvested Shares to the Company. 
Participant hereby appoints the Escrow Holder with full power of
substitution, as Participant’s true and lawful attorney-in-fact with
irrevocable power and authority in the name and on behalf of Participant, to
take any action and execute all documents and instruments, including without
limitation stock powers which may be necessary to transfer such unvested Shares
to the Company upon such termination.


 


d.             The Escrow Holder shall take all steps necessary to
accomplish the transfer of Shares to Participant after they vest following
Participant’s request that the Escrow Holder do so.


 


e.             Except as otherwise provided in this Agreement or the
Plan, Participant shall have all the rights of a stockholder with respect to the
Shares while they are held in escrow, including without limitation the right to
vote such Shares.


 


3.             Vesting Schedule. 
Except as provided in Section II.4 and subject to Section II.5
of this Agreement, the Shares awarded by this Agreement shall vest in
accordance with the Vesting Schedule set forth in Section I herein.  Shares scheduled to vest on a certain date or
upon the occurrence of a certain condition shall not vest in Participant in
accordance with any of the provisions of this Agreement unless Participant will
have been continuously a Service Provider from the Date of Grant through the
date such vesting is scheduled to occur.


 


2

















 


4.             Acceleration of Vesting.  The Committee, in its discretion, may
accelerate the vesting of the balance, or some lesser portion of the balance,
of the unvested Shares at any time, subject to the terms of the Plan.  If so accelerated, such Shares shall be
considered as having vested as of the date or upon the occurrence of the
condition specified by the Committee.


 


5.             Forfeiture upon Termination of Status as a Service
Provider.  Notwithstanding any
contrary provision of this Agreement, the balance of the Shares that have not
vested at the time of the termination of Participant’s relationship as a
Service Provider for any reason shall be forfeited and automatically
transferred to and reacquired by the Company at no cost to the Company upon the
date of such termination, and Participant shall have no further rights
thereunder.


 


6.             Dividends. 
Any cash dividends, additional shares of Common Stock, other securities
of the Company, or other property distributed with respect to the Shares prior
to the date the Shares vest shall be subject to the same restrictions, terms,
and conditions as the Shares under this Agreement and the Plan, including
without limitation the provisions of this Agreement relating to vesting,
forfeiture, escrow, and, with respect to shares or other securities of the
Company, transferability.


 


7.             Withholding of Taxes.  Notwithstanding any contrary provision of
this Agreement, no Shares shall be released from the escrow established
pursuant to Section II.2 of this Agreement unless and until satisfactory
arrangements (as determined by the Committee) will have been made by Participant
with respect to the payment of income, employment, and other taxes which the
Company determines must be withheld with respect to such Shares.  To the extent determined appropriate by the
Company in its discretion, it shall have the right (but not the obligation) to
satisfy any tax withholding obligations by reducing the number of Shares
otherwise deliverable to Participant.  If
Participant fails to make satisfactory arrangements for the payment of any
required tax withholding obligations hereunder at the time any applicable Shares
otherwise are scheduled to vest pursuant to Sections II.3 and II.4 of this Agreement,
Participant acknowledges and agrees that Participant shall permanently forfeit
such Shares and such Shares shall be returned to the Company at no cost to the
Company.


 


8.             Additional Conditions to Issuance and Release from
Escrow.  The Company shall not be
required to issue any Shares hereunder or to release such Shares from the
escrow established pursuant to Section II.2 of this Agreement unless such
issuance or release complies with all applicable U.S. federal and state laws,
the requirements of any stock exchange or quotation system on which the Common
Stock is listed or quoted, and the applicable laws of any other jurisdiction
where Shares are granted under the Plan.  The Committee may, in its sole discretion and
in connection with the issuance or delivery of Shares in compliance with
applicable laws, rules, and regulations, postpone the issuance or delivery of
Shares as the Committee may consider appropriate, require Participant to make
such representations and furnish such information as it may consider
appropriate, and cause such legends to be put on any certificates evidencing
the Shares or subject the Shares to such stop transfer orders or other
restrictions as it may consider appropriate.


 


9.             Changes in Capital Structure.  In the event of any stock dividend, stock
split, reverse stock split, recapitalization, reclassification, reorganization,
merger, consolidation,


 


3

















 


separation, combination, exchange, spin-off,
liquidation, other substantial distribution of the assets of the Company, or
other relevant corporate transaction or change in capitalization occurring
after the Date of Grant and affecting the Shares of Restricted Stock, the
Shares shall be increased, reduced, or otherwise changed as to the number or
kind of share in the same manner as other shares of Common Stock outstanding.  If by virtue of any such change Participant
shall in his or her capacity as owner of unvested Shares be entitled to new or
additional or different shares of stock, cash, or securities (other than rights
or warrants to purchase securities), such new or additional or different
shares, cash, or securities shall thereupon be considered to be unvested Shares
of Restricted Stock and shall be subject to all of the conditions and
restrictions which were applicable to the unvested Shares pursuant to this
Agreement.  If Participant receives
rights or warrants with respect to any unvested Shares, such rights or warrants
may be held or exercised by Participant, provided that until such exercise any
such rights or warrants and after such exercise any shares or other securities
acquired by the exercise of such rights or warrants shall be considered to be
unvested Shares of Restricted Stock and shall be subject to all of the
conditions and restrictions which were applicable to the unvested Shares of
Restricted Stock pursuant to this Agreement. 
Subject to the terms of the Plan, the Committee in its absolute
discretion at any time may accelerate the vesting of all or any portion of such
new or additional shares of stock, cash, securities, rights or warrants to
purchase securities or shares, or other securities acquired by the exercise of
such rights or warrants.


 


10.           Non-Transferability of Unvested
Restricted Stock.  The unvested
Shares subject to this Agreement may not be transferred in any manner otherwise
than by will or by the laws of descent or distribution.  If Participant is deceased, any distribution
or delivery to be made to Participant under this Agreement shall be made to
Participant’s designated beneficiary, or if no beneficiary survives
Participant, the administrator or executor of Participant’s estate.  Any such transferee must furnish the Company
with (a) written notice of his or her status as transferee and (b) evidence
satisfactory to the Company to establish the validity of the transfer and
compliance with any laws or regulations pertaining to said transfer.  The terms of the Plan and this Agreement
shall be binding upon the executors, administrators, heirs, successors, and
assigns of Participant.  Upon any attempt
to transfer, assign, pledge, hypothecate, or otherwise dispose of any unvested
Shares subject to this Agreement, or any right or privilege conferred hereby,
or upon any attempted sale under any execution, attachment, or similar process,
this Agreement and the rights and privileges conferred hereby immediately shall
become null and void.


 


11.           Rights as Stockholder.  Neither Participant nor any person claiming
under or through Participant shall have any of the rights or privileges of a
stockholder of the Company in respect of any Shares granted under this Agreement
unless and until such Shares will have been issued and recorded on the records
of the Company or its transfer agents or registrars.  Except as otherwise provided in this Agreement
or the Plan, after such issuance and recordation, Participant shall have all
the rights of a stockholder with respect to the Shares, including without
limitation the right to vote such Shares.


 


12.           No Guarantee of Continued Service.  PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES OF RESTRICTED STOCK PURSUANT TO THE VESTING SCHEDULE HEREOF
IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY
OR AN AFFILIATE, AND NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED SHARES
HEREUNDER.


 


4

















 


PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER, AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S
(OR AN AFFILIATE’S) RIGHT TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.


 


13.           Successors and Assigns.  The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer
herein set forth, this Agreement shall be binding upon Participant and his or
her heirs, executors, administrators, successors, and assigns.


 


14.           Address for Notices.  Any notice to be given to the Company under
the terms of this Agreement shall be addressed to the Company at Internet Brands, Inc.,
909 N. Sepulveda Blvd., 11th Floor, El Segundo, CA 90245, or at such
other address as the Company may hereafter designate in writing.


 


15.           Electronic Delivery.  The Company may, in its sole discretion,
decide to deliver any documents related to the Shares or future Awards of
Restricted Stock under the Plan by electronic means or request Participant’s
consent to participate in the Plan by electronic means.  Participant hereby consents to receive such
documents by electronic delivery and agrees to participate in the Plan through
any on-line or electronic system established and maintained by the Company or a
third party designated by the Company.


 


16.           Plan Governs.  This Agreement is subject to all terms and
provisions of the Plan.  In the event of
a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan shall govern.  Capitalized terms used but not defined in
this Agreement shall have the meaning set forth in the Plan.


 


17.           Amendment, Suspension, or
Termination of the Plan.  Participant
understands that the Plan is discretionary in nature and may be amended,
suspended, or terminated by the Company at any time.


 


18.           Committee Authority.  Subject to the limitations of the Plan, the
Committee shall have the power to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation, and application
of the Plan as are consistent therewith and to interpret or revoke any such rules (including,
but not limited to, the determination of whether or to what degree the Shares
have vested).  All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon Participant, the Company, and all other interested
persons.  No member of the Committee
shall be personally liable for any action, determination, or interpretation
made in good faith with respect to the Plan or this Agreement.


 


5

















 


19.           Interpretation.  Any dispute regarding the interpretation of
this Agreement shall be submitted by Participant or by the Company forthwith to
the Committee which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the
Committee made in good faith shall be final and binding on all parties.


 


20.           Captions.  Captions provided herein are for convenience
only and are not to serve as a basis for interpretation or construction of this
Agreement.


 


21.           Severability.  In the event that any provision in this Agreement
will be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.


 


22.           Entire Agreement.  This Agreement and the Plan as incorporated
by reference constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Participant with respect to the subject
matter hereof, and may not be modified adversely to Participant’s interest
except by means of a writing signed by the Company and Participant.  Participant expressly warrants that he or she
is not accepting this Agreement in reliance on any promises, representations,
or inducements other than those contained herein.


 


23.           Governing Law.  This Agreement is governed by the internal
substantive laws, but not the choice of law rules, of the State of California.  For purposes of litigating any dispute that
arises under this Award or this Agreement, the parties hereby submit to and
consent to the jurisdiction of the State of California, and agree that such
litigation shall be conducted in the courts of Los Angeles County, California,
or the federal courts of the United States for the Central District of
California, and no other courts.


 


[Signatures appear on next page.]


 


6

















 


Participant acknowledges
receipt of a copy of the Plan and represents that he or she is familiar with
the terms and provisions thereof, and hereby accepts this Award subject to all
of the terms and provisions thereof.  Participant
has reviewed the Plan and this Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement,
and fully understands all provisions of the Agreement.  Participant hereby agrees to accept as
binding, conclusive, and final all decisions or interpretations of the Committee
upon any questions arising under the Plan or this Agreement.  Participant further agrees to notify the
Company upon any change in the residence address indicated below.


 


	
  PARTICIPANT

  	
   

  	
  INTERNET BRANDS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Internet
  Brands, Inc.

  
	
   

  	
   

  	
  909 N. Sepulveda
  Blvd., 11th Floor

  
	
   

  	
   

  	
  El Segundo, CA
  90245

  



 


7
















 


INTERNET BRANDS, INC.


 


2007 EQUITY PLAN


 


STOCK OPTION AGREEMENT


 


Unless otherwise defined
herein, the terms defined in the Internet Brands, Inc. 2007 Equity Plan
(the “Plan”) shall have the same defined meanings in this Stock Option
Agreement (the “Agreement”).


 


I.              NOTICE
OF STOCK OPTION GRANT


 


	
  Participant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


The above named Participant
has been granted an option (the “Option”) to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Agreement, as
follows:


 


	
  Grant Number

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date of Grant

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Vesting
  Commencement Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Number of Shares

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exercise Price
  per Share

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Exercise
  Price

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Type of Option

  	
   

  	
   

  	
  Incentive Stock
  Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Nonstatutory
  Stock Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Term/Expiration
  Date

  	
   

  	
   

  	
   

  



 


Vesting Schedule:


 


Subject
to accelerated vesting as set forth in this Agreement or in the Plan, this
Option shall be exercisable in whole or in part, and shall vest according to
the following vesting


 


1

















 


schedule, subject also to Participant having been
continuously a Service Provider from the Date of Grant through the date such
vesting is scheduled to occur:


 


20% of the shares subject to this Option shall vest immediately
upon grant, 20% of the shares subject to this Option shall vest upon the one
year anniversary of the Vesting Commencement Date, and five percent (5%) of the
remaining shares subject to this Option shall vest on the last day of each
three (3) month period following thereafter.


 


Post-Termination
Exercisability Period:


 


If Participant ceases to
be a Service Provider without cause, this Option shall be exercisable for the
earlier to occur of (i) twelve (12) months after the date Participant
ceases to be a Service Provider or (ii) 190 days after the Registration
Date; provided, however, that if the termination of Participant’s
relationship as a Service Provider occurs subsequent to the 100 day anniversary
of the Registration Date, this Option shall be exercisable for three (3) months
following the termination of Participant’s relationship as a Service
Provider.  If Participant ceases to be a
Service Provider by reason of Participant’s death or Disability, this Option
may be exercised for twelve (12) months after the termination of Participant’s
relationship as a Service Provider.  In
no event may Participant exercise this Option after the Term/Expiration Date as
provided above.


 


Accelerated Vesting:


 


Upon the occurrence of a
Change of Control, 50% of the unvested portion of this Option shall immediately
vest and become exercisable in full.  In
the event of (i) a material diminution of Participant’s duties as a
Service Provider, (ii) a material change in the geographic location at
which the Service Provider must perform services, or (iii) termination of
Participant’s relationship as a Service Provider without cause within six (6) months
prior to or twelve (12) months after such Change of Control, the remaining
unvested portion of this Option shall immediately vest.


 


II.            TERMS
AND CONDITIONS OF STOCK OPTION GRANT


 


1.             Grant of Option. 
The Committee hereby grants to the Participant named in Section I
herein this Option to purchase the Number of Shares of Common Stock as set
forth in Section I herein, at the Exercise Price per Share set forth in Section I
herein, and subject to the terms and conditions of this Agreement and the Plan,
which is incorporated herein by reference.


 


If designated in Section I
herein as an Incentive Stock Option (“ISO”), this Option is intended to qualify
as an Incentive Stock Option as defined in Section 422 of the Code.  Nevertheless, to the extent that it exceeds
the $100,000 rule of Section 422(d) of the Code, this Option
shall be treated as a Nonstatutory Stock Option (“NSO”).


 


2

















 


2.             Vesting Schedule. 
Except as provided in Section II.3 of this Agreement, the Option
shall vest in accordance with the Vesting Schedule set forth in Section I
of this Agreement.  Any portion of the
Option scheduled to vest on a certain date or upon the occurrence of a certain
condition shall not vest in Participant in accordance with any of the
provisions of this Agreement unless Participant will have been continuously a Service
Provider from the Date of Grant through the date such vesting is scheduled to
occur.


 


3.             Acceleration of Vesting.  The Committee, in its discretion, may
accelerate the vesting of the balance, or some lesser portion of the balance,
of the unvested Option at any time, subject to the terms of the Plan.  If so accelerated, such balance or such
portion of the balance of the Option shall be considered as having vested as of
the date or upon the occurrence of the condition specified by the Committee.


 


4.             Exercise of Option.


 


a.             Right to Exercise.  This Option shall be exercisable only within
its term as set out in Section I of this Agreement, and may be exercised
during such term only in accordance with the Vesting Schedule and with the
applicable provisions of the Plan and this Agreement.


 


b.             Method of Exercise.  This Option shall be exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the “Exercise
Notice”) which shall state the election to exercise the Option, the number of
shares of Common Stock with respect to which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be
required by the Company.  The Exercise
Notice shall be completed by Participant and delivered to the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares together with any applicable tax withholding
pursuant to Section II.6 of this Agreement.  This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by the aggregate Exercise Price.


 


c.             Additional Conditions to Issuance of Stock.  No shares shall be issued pursuant to the
exercise of an Option unless such issuance and such exercise complies with all
applicable U.S. federal and state laws, the requirements of any stock exchange
or quotation system on which the Common Stock is listed or quoted, and the
applicable laws of any other jurisdiction where Options are granted under the
Plan.  The Committee may, in its sole
discretion and in connection with the issuance or delivery of Shares in
compliance with applicable laws, rules, and regulations, postpone the issuance
or delivery of Shares as the Committee may consider appropriate, require
Participant to make such representations and furnish such information as it may
consider appropriate, and cause such legends to be put on any certificates
evidencing the Shares or subject the Shares to such stop transfer orders or
other restrictions as it may consider appropriate.  Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to Participant on
the date on which the Option is exercised with respect to such shares.


 


3

















 


5.             Method of Payment.  Payment of the aggregate Exercise Price shall
be by any of the following, or a combination thereof, at the election of Participant:


 


a.             cash or check;


 


b.             surrender of other shares of Common Stock which (i) have
a Fair Market Value on the date of surrender equal to the aggregate Exercise
Price of the Exercised Shares, and (ii) are Mature Shares not subject to
any pledge or other security interest;


 


c.             with the consent of the Committee, consideration
received by the Company under a formal cashless exercise program adopted by the
Company in connection with the Plan; or


 


d.             with the consent of the Committee, by means of a net
exercise procedure approved by the Committee in connection with the Plan.


 


6.             Non-Transferability of Option.  This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Participant only by Participant.  If Participant is deceased, this Option may
be exercised by Participant’s designated beneficiary, or if no beneficiary
survives Participant, the administrator or executor of Participant’s estate,
and any distribution or delivery to be made to Participant under this Agreement
shall be made to such transferee, provided that such transferee must furnish
the Company with (a) written notice of his or her status as transferee and
(b) evidence satisfactory to the Company to establish the validity of the
transfer and compliance with any laws or regulations pertaining to said
transfer.  The terms of the Plan and this
Agreement shall be binding upon the executors, administrators, heirs,
successors, and assigns of Participant.


 


7.             Withholding of Taxes.  Notwithstanding any contrary provision of
this Agreement, no shares shall be issued to Participant pursuant to the
exercise of this Option unless and until satisfactory arrangements (as
determined by the Committee) will have been made by Participant with respect to
the payment of income, employment, and other taxes which the Company determines
must be withheld with respect to such shares. 
To the extent determined appropriate by the Company in its discretion,
it shall have the right (but not the obligation) to satisfy any tax withholding
obligations by reducing the number of shares otherwise deliverable to Participant.  If Participant fails to make satisfactory
arrangements for the payment of any required tax withholding obligations
hereunder at the time of the Option exercise, Participant acknowledges and
agrees that the Company may refuse to honor the exercise and refuse to deliver
shares if such withholding amounts are not delivered at the time of exercise.


 


8.             Notice of Disqualifying Disposition of ISO Shares.  If the Option granted to Participant herein
is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (i) the date two
years after the Date of Grant, or (ii) the date one year after the date of
exercise, Participant shall immediately notify the


 


4

















 


Company in writing of such disposition.  Participant agrees that Participant may be
subject to income tax withholding by the Company on the compensation income
recognized by Participant.


 


9.             Code Section 409A.  Under Code Section 409A, an option that
was granted with a per share exercise price that is determined by the Internal
Revenue Service (the “IRS”) to be less than the Fair Market Value of a share on
the date of grant (a “Discount Option”) may be considered “deferred
compensation.”  A Discount Option may
result in adverse tax consequences, including (i) income recognition by
the option grantee prior to the exercise of the option, (ii) an additional
twenty percent (20%) federal income tax, and (iii) potential penalty and
interest charges.  The Discount Option
may also result in additional state income, penalty, and interest charges to
the grantee.  Participant acknowledges
that the Company cannot and has not guaranteed that the IRS will agree that the
Exercise Price per Share of this Option equals or exceeds the fair market value
of a share on the Date of Grant in a later examination.  Participant agrees that if the IRS determines
that the Option was granted with an Exercise Price per Share that was less than
the fair market value of a share on the Date of Grant, Participant shall be
solely responsible for Participant’s costs related to such a determination.


 


10.           Rights as Stockholder.  Neither Participant nor any person claiming
under or through Participant shall have any of the rights or privileges of a
stockholder of the Company in respect of any shares deliverable under this
Option unless and until such shares will have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to Participant.  After such issuance, recordation, and
delivery, Participant shall have all the rights of a stockholder of the Company
with respect to voting such shares and receipt of dividends and distributions
on such shares.


 


11.           No Guarantee of Continued Service.  PARTICIPANT ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY OR AN AFFILIATE,
AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION, OR ACQUIRING
SHARES HEREUNDER.  PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER, AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR
THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY
WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S (OR AN AFFILIATE’S) RIGHT TO
TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.


 


12.           Address for Notices.  Any notice to be given to the Company under
the terms of this Agreement shall be addressed to the Company at Internet
Brands, Inc., 909 N. Sepulveda Blvd., 11th Floor, El Segundo,
CA 90245, or at such other address as the Company may hereafter designate in
writing.


 


5

















 


13.           Electronic Delivery.  The Company may, in its sole discretion,
decide to deliver any documents related to Options awarded under the Plan or
future Options that may be awarded under the Plan by electronic means or
request Participant’s consent to participate in the Plan by electronic
means.  Participant hereby consents to
receive such documents by electronic delivery and agrees to participate in the
Plan through any on-line or electronic system established and maintained by the
Company or a third party designated by the Company.


 


14.           Plan Governs.  This Agreement is subject to all terms and
provisions of the Plan.  In the event of
a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan shall govern.  Capitalized terms used but not defined in
this Agreement shall have the meaning set forth in the Plan.


 


15.           Amendment, Suspension, or
Termination of the Plan.  Participant
understands that the Plan is discretionary in nature and may be amended,
suspended, or terminated by the Company at any time.


 


16.           Committee Authority.  Subject to the limitations of the Plan, the
Committee shall have the power to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation, and application
of the Plan as are consistent therewith and to interpret or revoke any such rules (including,
but not limited to, the determination of whether or to what degree the Option
has vested).  All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon Participant, the Company, and all other interested
persons.  No member of the Committee
shall be personally liable for any action, determination, or interpretation
made in good faith with respect to the Plan or this Agreement.


 


17.           Captions.  Captions provided herein are for convenience
only and are not to serve as a basis for interpretation or construction of this
Agreement.


 


18.           Severability.  In the event that any provision in this Agreement
will be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.


 


19.           Entire Agreement.  This Agreement, the Plan as incorporated by
reference, and the Stock Option Exercise Notice constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Participant
with respect to the subject matter hereof, and may not be modified adversely to
Participant’s interest except by means of a writing signed by the Company and Participant.  Participant expressly warrants that he or she
is not accepting this Agreement in reliance on any promises, representations,
or inducements other than those contained herein.


 


20.           Governing Law. This Agreement
is governed by the internal substantive laws, but not the choice of law rules,
of the State of California.  For purposes
of litigating any dispute that


 


6

















 


arises under this Option or this Agreement, the
parties hereby submit to and consent to the jurisdiction of the State of
California, and agree that such litigation shall be conducted in the courts of
Los Angeles County, California, or the federal courts of the United States for
the Central District of California, and no other courts.


 


[Signatures appear on next page.]


 


7

















 


Participant acknowledges
receipt of a copy of the Plan and represents that he or she is familiar with
the terms and provisions thereof, and hereby accepts this Option subject to all
of the terms and provisions thereof.  Participant
has reviewed the Plan and this Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement,
and fully understands all provisions of the Agreement.  Participant hereby agrees to accept as
binding, conclusive, and final all decisions or interpretations of the Committee
upon any questions arising under the Plan or this Agreement.  Participant further agrees to notify the
Company upon any change in the residence address indicated below.


 


	
  PARTICIPANT

  	
   

  	
  INTERNET BRANDS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Internet
  Brands, Inc.

  
	
   

  	
   

  	
  909 N. Sepulveda
  Blvd., 11th Floor

  
	
   

  	
   

  	
  El Segundo, CA
  90245

  



 


8

















 


EXHIBIT A


 


2007 EQUITY PLAN


STOCK OPTION EXERCISE NOTICE


 


Internet Brands, Inc.


909 N. Sepulveda Blvd., 11th Floor


El Segundo, CA
90245


 


1.             Exercise of Option.  Effective as of today, ___________, the
undersigned Participant hereby elects to exercise Participant’s option to
purchase ___________ shares (the “Shares”) of the Common Stock of Internet
Brands, Inc. (the “Company”) under and pursuant to the 2007 Equity Plan
(the “Plan”) and the Stock Option Agreement between Participant and the Company
dated ___________ (the “Agreement”).


 


2.             Delivery of Payment.  Purchaser herewith delivers to the Company
the full purchase price of the Shares and any required tax withholding to be
paid in connection with the exercise of the Option, as set forth in the Agreement.


 


3.             Representations of Participant.  Participant acknowledges that Participant has
received, read, and understood the Plan and the Agreement and agrees to abide
by and be bound by their terms and conditions.


 


4.             Rights as Shareholder.  Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
optioned stock, notwithstanding the exercise of the Option.  The Shares shall be issued to Participant as
soon as practicable after the Option is exercised.  No adjustment shall be made for a dividend or
other right for which the record date is prior to the date of issuance, except
as provided in Section 12 of the Plan.


 


5.             Tax Consultation. 
Participant understands that Participant may suffer adverse tax consequences
as a result of Participant’s purchase or disposition of the Shares.  Participant represents that Participant has
consulted with any tax consultants Participant deems advisable in connection
with the purchase or disposition of the Shares and that Participant is not
relying on the Company for any tax advice.


 


6.             Successors and Assigns.  The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer
herein set forth, this Agreement shall be binding upon Participant and his or
her heirs, executors, administrators, successors, and assigns.


 


7.             Interpretation. 
Any dispute regarding the interpretation of this Agreement shall be
submitted by Participant or by the Company forthwith to the Committee which
shall review


 


1

















 


such dispute at its next regular meeting.  The resolution of such a dispute by the
Committee made in good faith shall be final and binding on all parties.


 


8.             Governing Law. 
This Agreement is governed by the internal substantive laws, but not the
choice of law rules, of the State of California.  For purposes of litigating any dispute that
arises under this Option or this Agreement, the parties hereby submit to and
consent to the jurisdiction of the State of California, and agree that such
litigation shall be conducted in the courts of Los Angeles County, California,
or the federal courts of the United States for the Central District of
California, and no other courts.


 


9.             Entire Agreement. 
The Plan and Agreement are incorporated herein by reference.  This Stock Option Exercise Notice, the Plan, and
the Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with respect to the
subject matter hereof, and may not be modified adversely to Participant’s
interest except by means of a writing signed by the Company and Participant.


 


[Signatures appear on next page.]


 


2

















 


	
  Submitted by:

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  PARTICIPANT:

  	
   

  	
  INTERNET BRANDS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 

  
	
   

  	
   

  	
  909 N. Sepulveda
  Blvd.,

  
	
   

  	
   

  	
  11th Floor El Segundo,
  CA 90245

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date Received

  



 


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