Exhibit
4.2


 


INTERNET BRANDS, INC.


 


2000 STOCK PLAN


 


(as amended and restated December 21, 2007)


 


1.        Purposes
of the Plan.    The purposes of this Stock
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants and to promote the success of the Company’s business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan.


 


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


 


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


 


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


 


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


 


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


 


(e)   “Committee” means a committee of Directors
appointed by the Board in accordance with Section 4 hereof.


 


(f)    “Common Stock” means the Class A Common
Stock of the Company.


 


(g)   “Company” means Internet Brands, Inc., a
Delaware corporation.


 


(h)   “Consultant” means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
to such entity.


 


(i)    “Director” means a member of the Board of
Directors of the Company.


 


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


 


(k)   “Employee” means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
A Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. For purposes of Incentive Stock Options, no such leave may
exceed ninety days, unless reemployment upon expiration of such leave is guaranteed
by statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, then three (3) months
following the 91st day of such leave any Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.


 


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


 


(m)  “Fair Market Value” means, as of any date, the value of
Common Stock determined as follows:


 


(i)    If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;


 


(ii)    If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for
the Common Stock on the last market trading day prior to the day of
determination; or


 


(iii)    In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.


 


(n)    “Incentive Stock Option” means an Option
intended to qualify as an incentive stock option within the meaning of Section 422
of the Code.


 


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


 


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


 


(q)    “Option” means a stock option granted
pursuant to the Plan.


 


(r)    “Option Agreement” means a written or
electronic agreement between the Company and an Optionee evidencing the terms
and conditions of an individual Option grant. The Option Agreement is subject
to the terms and conditions of the Plan.


 


(s)    “Option Exchange Program” means a program
whereby outstanding Options are exchanged for Options with a lower exercise
price.


 


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(t)    “Optioned Stock” means the Common Stock
subject to an Option or a Stock Purchase Right.


 


(u)    “Optionee” means the holder of an outstanding
Option or Stock Purchase Right granted under the Plan.


 


(v)    “Parent” means a “parent corporation,”
whether now or hereafter existing, as defined in Section 424(e) of
the Code.


 


(w)    “Plan” means this 2000 Stock Plan.


 


(x)    “Restricted Stock” means shares of Common
Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11
below.


 


(y)    “Section 16(b)” means Section 16(b) of
the Securities Exchange Act of 1934, as amended.


 


(z)    “Service Provider” means an Employee,
Director or Consultant.


 


(aa)  “Share” means a share of the Common Stock, as adjusted
in accordance with Section 12 below.


 


(bb) “Stock Purchase Right” means a right to purchase Common Stock
pursuant to Section 11 below.


 


(cc) “Subsidiary” means a “subsidiary corporation,” whether now or
hereafter existing, as defined in Section 424(f) of the Code.


 


3.    Stock
Subject to the Plan.    Subject to the
provisions of Section 12 of the Plan, the maximum aggregate number of
Shares which may be subject to option and sold under the Plan is 215,650
Shares. The Shares may be authorized but unissued or reacquired Common Stock.


 


If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated or the availability of such Shares arises on or after October 23,
2007); provided, however, that
Shares that have actually been issued under the Plan, whether upon exercise of
either an Option or Stock Purchase Right, shall not be returned to the Plan and
shall not become available for future distribution under the Plan, except that
if Shares of Restricted Stock are repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the Plan.


 


4.    Administration
of the Plan.


 


(a)  Administrator.    The
Plan shall be administered by the Board or a Committee appointed by the Board,
which Committee shall be constituted to comply with Applicable Laws.


 


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


 


(i)       to determine the Fair
Market Value;


 


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


 


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


 


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


 


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


 


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


 


(vii)    to prescribe, amend and
rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of satisfying
applicable foreign laws;


 


(viii)   to modify or amend each
Option or Stock Purchase Right (subject to Section 14(c) of the
Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;


 


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


 


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


 


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


 


(c)      Effect of Administrator’s Decision.    All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all Optionees.


 


5.        Eligibility.


 


(a)      Nonstatutory Stock Options
and Stock Purchase Rights may be granted to Service Providers. Incentive Stock
Options may be granted only to Employees.


 


(b)      Each Option shall be
designated in the Option Agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such


 


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designation,
to the extent that the aggregate Fair Market Value of the Shares with respect
to which Incentive Stock Options are exercisable for the first time by the
Optionee during any calendar year (under all plans of the Company and any
Parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive
Stock Options shall be taken into account in the order in which they were
granted. The Fair Market Value of the Shares shall be determined as of the time
the Option with respect to such Shares is granted.


 


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


 


6.    Term of
Plan.    The Plan shall become effective upon
its adoption by the Board. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 14 of the Plan.


 


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


 


8.    Option
Exercise Price and Consideration.


 


(a)   The per share exercise price for the Shares to be
issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:


 


(i)  In the case of an Incentive Stock Option


 


(A)  granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.


 


(B)  granted to any Employee other than an Employee described
in paragraph (A) immediately above, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.


 


(ii)  In the case of a Nonstatutory Stock Option


 


(A)  granted to a Service Provider who, at the time of grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.


 


(B)  granted to any other Service Provider, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.


 


(iii)  Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.


 


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


 


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


 


(i)  cash;


 


(ii)  check;


 


(iii)  promissory note;


 


(iv)  other Shares, provided Shares acquired from the Company,
(A) have been owned by Optionee for more than six (6) months on the
date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate price of the Shares as to which said Option
shall be exercised;


 


(v)  consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;


 


(vi)  a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee’s
participation in any Company-sponsored deferred compensation program or
arrangement;


 


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


 


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


 


9.    Exercise of
Option.


 


(a)    Procedure
for Exercise; Rights as a Stockholder.    Any
Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Except in the case of Options granted to
Officers, Directors and Consultants, Options shall become exercisable at a rate
of no less than 20% per year over five (5) years from the date the Options
are granted. Unless the Administrator provides otherwise, vesting of Options
granted hereunder shall be tolled during any unpaid leave of absence. An Option
may not be exercised for a fraction of a Share.


 


An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised. Full payment may consist
of any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued


 


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in
the name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the Shares are issued, except as provided in Section 12 of the
Plan.


 


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


 


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


 


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


 


(d)    Death of
Optionee.    If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement to the extent that the Option is vested on
the date of death (but in no event later than the expiration of the term of
such Option as set forth in the Option Agreement) by the Optionee’s estate or
by a person who acquires the right to exercise the Option by bequest or inheritance.
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for twelve (12) months following the Optionee’s
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.


 


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


 


10.    Non-Transferability
of Options and Stock Purchase Rights.    The
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.


 


11.    Stock
Purchase Rights.


 


(a)    Rights to
Purchase.    Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid, and the time within
which such person must accept such offer. The terms of the offer shall comply
in all respects with Section 260.140.42 of Title 10 of the California Code
of Regulations. The offer shall be accepted by execution of a Restricted Stock
Purchase Agreement in the form determined by the Administrator.


 


(b)    Repurchase
Option.    Unless the Administrator determines otherwise,
the Restricted Stock purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser’s service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. Except with respect to Shares purchased by
Officers, Directors and Consultants, the repurchase option shall in no case
lapse at a rate of less than 20% per year over five (5) years from the
date of purchase.


 


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


 


(d)    Rights as
a Stockholder.    Once the Stock Purchase Right
is exercised, the purchaser shall have rights equivalent to those of a
stockholder and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the Stock Purchase Right is exercised, except as provided in Section 12
of the Plan.


 


12.    Adjustments
Upon Changes in Capitalization, Merger or Asset Sale.


 


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


 


(b)    Dissolution
or Liquidation.    In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be


 


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exercisable.
In addition, the Administrator may provide that any Company repurchase option
applicable to any Shares purchased upon exercise of an Option or Stock Purchase
Right shall lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Option or Stock Purchase Right
will terminate immediately prior to the consummation of such proposed action.


 


(c)    Merger or
Asset Sale.    In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Administrator shall notify the Optionee in
writing or electronically that the Option or Stock Purchase Right shall be
exercisable, to the extent vested, for a period of fifteen (15) days from
the date of such notice, and the Option or Stock Purchase Right shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon
the exercise of the Option or Stock Purchase Right, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right, to be solely common stock
of the successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Common Stock in the merger or
sale of assets.


 


13.    Time of
Granting Options and Stock Purchase Rights.    The
date of grant of an Option or Stock Purchase Right shall, for all purposes, be
the date on which the Administrator makes the determination granting such
Option or Stock Purchase Right, or such other date as is determined by the
Administrator. Notice of the determination shall be given to each Service
Provider to whom an Option or Stock Purchase Right is so granted within a reasonable
time after the date of such grant.


 


14.    Amendment
and Termination of the Plan.


 


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


 


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


 


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


 


15.    Conditions
Upon Issuance of Shares.


 


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


 


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


 


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


 


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


 


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


 


19.    Information
to Optionees and Purchasers.    The Company
shall provide to each Optionee and to each individual who acquires Shares
pursuant to the Plan, not less frequently than annually during the period such
Optionee or purchaser has one or more Options or Stock Purchase Rights
outstanding, and, in the case of an individual who acquires Shares pursuant to
the Plan, during the period such individual owns such Shares, copies of annual
financial statements. The Company shall not be required to provide such statements
to key employees whose duties in connection with the Company assure their
access to equivalent information.


 


20.    Cessation of Grants. 
No new stock options or stock purchase rights will be granted under the
Plan on or after October 23, 2007.


 


* * *


 


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INTERNET BRANDS, INC.


2000 STOCK PLAN


STOCK OPTION AGREEMENT


 


Unless
otherwise defined herein, the terms defined in the 2000 Stock Plan shall have
the same defined meanings in this Stock Option Agreement.


 


I.  NOTICE OF
STOCK OPTION GRANT


 


	
  Name:

  	
  «First» «Last»

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


The
undersigned Optionee has been granted an Option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:


 


	
   

  	
  Grant Number

  	
  «Number»

  
	
   

  	
  Date of Grant

  	
  «Option_Date»

  
	
   

  	
  Vesting Commencement Date

  	
  «Vest_Base Date»

  
	
   

  	
  Exercise Price per Share

  	
  «Price»

  
	
   

  	
  Total Number of Shares Granted

  	
  «Shares_Granted_»

  
	
   

  	
  Total Exercise Price

  	
  «Total_Price_»

  
	
   

  	
  Type of Option

  	
  «Option_Type»

  
	
   

  	
  Term/Expiration Date

  	
  «Exp_Date»

  



 


Vesting Schedule:


 


This
Option shall be exercisable in whole or in part, and shall vest according to
the following vesting schedule:


 


«Vest_Template»


 


Termination Period:


 


This
Option shall be exercisable for three (3) months after Optionee ceases to
be a Service Provider. Upon Optionee’s death or Disability, this Option may be
exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.


 


II.    AGREEMENT


 


1.     Grant of
Option.  The Plan
Administrator of the Company hereby grants to the Optionee named in the Notice
of Grant (the “Optionee”), an option (the “Option”) to purchase the number of
Shares set forth in the Notice of Grant, at the exercise price per Share set forth
in the Notice of Grant (the “Exercise Price”), and subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to Section 14(c) of
the Plan, in the event of a conflict between the terms and conditions of the Plan
and this Option Agreement, the terms and conditions of the Plan shall prevail.


 


If designated in the Notice of Grant 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


 


1

















 


extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as
a Nonstatutory Stock Option (“NSO”).


 


2.     Exercise of
Option.


 


a.     Right to Exercise.  This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option 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 with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to
all Exercised Shares. 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.


 


No Shares
shall be issued pursuant to the exercise of an Option unless such issuance and
such exercise complies with Applicable laws. Assuming such compliance, for
income tax purposes the Shares shall be considered transferred to the Optionee
on the date on which the Option is exercised with respect to such Shares.


 


3.     Optionee’s
Representations.  In the event
the Shares have not been registered under the Securities Act of 1933, as
amended, at the time this Option is exercised, the Optionee shall, if required
by the Company, concurrently with the exercise of all or any portion of this
Option, deliver to the Company his or her Investment Representation Statement
in the form attached hereto as Exhibit B.


 


4.     Lock-Up
Period.  Optionee hereby
agrees that, if so requested by the Company or any representative of the
underwriters (the “Managing Underwriter”) in connection with any registration
of the offering of any securities of the Company under the Securities Act,
Optionee shall not sell or otherwise transfer any Shares or other securities of
the Company during the 180-day period (or such other period as may be requested
in writing by the Managing Underwriter and agreed to in writing by the Company)
(the “Market Standoff Period”) following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.


 


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 the Optionee:


 


a.     cash
or check;


 


b.     consideration
received by the Company under a formal cashless exercise program adopted by the
Company in connection with the Plan; or


 


c.     surrender
of other Shares which, (i) in the case of Shares acquired upon exercise of
an option, have been owned by the Optionee for more than six (6) months on
the date of surrender, and (ii) have a Fair Market Value on the date of
surrender equal to the aggregate Exercise Price of the Exercised Shares.


 


6.     Restrictions
on Exercise.  This Option may
not be exercised until such time as the Plan has been approved by the
shareholders of the Company, or if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any Applicable Law.


 


2

















 


7.     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 Optionee only by Optionee. The terms of the
Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.


 


8.     Term of
Option.  This Option may be
exercised only within the term set out in the Notice of Grant, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.


 


9.     Tax
Consequences.  Set forth below
is a brief summary as of the date of this Option of some of the federal tax
consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.


 


a.     Exercise of ISO.  If this Option qualifies as an ISO, there will
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee
to the alternative minimum tax in the year of exercise.


 


b.     Exercise of Nonstatutory Stock Option.  There may be a regular federal income tax
liability upon the exercise of a Nonstatutory Stock Option. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price. If Optionee is an Employee or
a former Employee, the Company will be required to withhold from Optionee’s
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.


 


c.     Disposition of Shares.  In the case of an NSO, if Shares are held for
at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of
the Shares on the date of exercise, or (2) the sale price of the Shares.
Any additional gain will be taxed as capital gain, short-term or long-term
depending on the period that the ISO Shares were held.


 


d.     Notice of Disqualifying Disposition of ISO
Shares.  If the Option granted
to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of
any of the Shares acquired pursuant to the ISO on or before the later of (1) the
date two years after the Date of Grant, or (2) the date one year after the
date of exercise, the Optionee shall immediately notify the Company in writing
of such disposition. Optionee agrees that Optionee may be subject to income tax
withholding by the Company on the compensation income recognized by the
Optionee.


 


10.   Entire
Agreement; Governing Law.  The
Plan is incorporated herein by reference. The Plan and this Option 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 Optionee with respect to the subject matter
hereof, and may not be modified adversely to the


 


3

















 


Optionee’s interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws but not the choice of law rules of
California.


 


11.   No Guarantee
of Continued Service. 
OPTIONEE 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 (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE 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 OPTIONEE’S
RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.


 


[Signatures appear on next page.]


 


4

















 


Optionee
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. Optionee has reviewed the
Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.


 


	
  OPTIONEE

  	
   

  	
  INTERNET BRANDS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  «First» «Last»

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Internet Brands, Inc.

  909 N. Sepulveda Blvd., 11th Floor

  El Segundo, CA 90245

  	
   

  



 


5

















 


EXHIBIT A


 


2000 STOCK PLAN


EXERCISE NOTICE


 


Internet Brands, Inc.


909 N. Sepulveda Blvd., 11th
Floor


El Segundo, CA 90245


 


Attention: Corporate Secretary


 


1.     Exercise of
Option.  Effective as of
today,                         ,     , the undersigned (“Optionee”) hereby
elects to exercise Optionee’s option to purchase                          shares of the Common
Stock (the “Shares”) of Internet Brands, Inc. (the “Company”) under and
pursuant to the 2000 Stock Plan (the “Plan”) and the Stock Option Agreement
dated «Option            Date» (the “Option
Agreement”).


 


2.     Delivery of
Payment.  Purchaser herewith
delivers to the Company the full purchase price of the Shares, as set forth in
the Option Agreement.


 


3.     Representations
of Optionee.  Optionee
acknowledges that Optionee has received, read and understood the Plan and the
Option 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 the Optionee 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.     Company’s
Right of First Refusal. 
Before any Shares held by Optionee or any transferee (either being
sometimes referred to herein as the “Holder”) may be sold or otherwise
transferred (including transfer by gift or operation of law), the Company or
its assignee(s) shall have a right of first refusal to purchase the Shares
on the terms and conditions set forth in this Section (the “Right of First
Refusal”).


 


a.     Notice of Proposed Transfer.  The Holder of the Shares shall deliver to the
Company a written notice (the “Notice”) stating: (i) the Holder’s bona
fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the Shares (the “Offered Price”), and the Holder shall offer the
Shares at the Offered Price to the Company or its assignee(s).


 


b.     Exercise of Right of First Refusal.  At any time within thirty (30) days
after receipt of the Notice, the Company and /or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.


 


c.     Purchase Price.  The purchase price (“Purchase Price”) for the
Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.


 


1

















 


d.     Payment.  Payment of the Purchase Price shall be made,
at the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice
or in the manner and at the times set forth in the Notice.


 


e.     Holder’s Right to Transfer.  If all of the Shares proposed in the Notice
to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee
at the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the Notice, that
any such sale or other transfer is effected in accordance with any applicable
securities laws and that the Proposed Transferee agrees in writing that the
provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.


 


f.      Exception for Certain Family Transfers.  Anything to the contrary contained in this Section notwithstanding,
the transfer of any or all of the Shares during the Optionee’s lifetime or on
the Optionee’s death by will or intestacy to the Optionee’s immediate family or
a trust for the benefit of the Optionee’s immediate family shall be exempt from
the provisions of this Section. “Immediate Family” as used herein shall mean
spouse, lineal descendant or antecedent, father, mother, brother or sister. In
such case, the transferee or other recipient shall receive and hold the Shares
so transferred subject to the provisions of this Section, and there shall be no
further transfer of such Shares except in accordance with the terms of this
Section.


 


g.     Termination of Right of First Refusal.  The Right of First Refusal shall terminate as
to any Shares upon the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective
by the Securities and Exchange Commission under the Securities Act of 1933, as
amended.


 


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


 


7.     Restrictive
Legends and Stop-Transfer Orders.


 


a.     Legends.  Optionee understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing
ownership of the Shares together with any other legends that may be required by
the Company or by state or federal securities laws:


 


THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
IN COMPLIANCE THEREWITH.


 


THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH


 


2

















 


MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.


 


SECURITIES LEGISLATION IN THE PROVINCE OF ONTARIO IMPOSES CERTAIN
RESTRICTIONS ON THE ABILITY TO TRADE THE COMMON SHARES OBTAINABLE ON THE
EXERCISE OF THIS OPTION. IT IS THE RESPONSIBILITY OF THE HOLDER OF THIS
CERTIFICATE TO ENSURE THAT ALL SALES AND OTHER DISPOSTITIONS OF SUCH COMMON
SHARES ARE CONDUCTED IN ACCORDANCE WITH ALL APPLICABLE LAWS.


 


b.     Stop-Transfer Notices.  Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.


 


c.     Refusal to Transfer.  The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat
as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.


 


8.     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 Optionee and his or her heirs, executors, administrators, successors and
assigns.


 


9.     Interpretation.  Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such
dispute at its next regular meeting. The resolution of such a dispute by the
Administrator shall be final and binding on all parties.


 


10.   Governing Law; Severability.  This Agreement is governed by the internal
substantive laws but not the choice of law rules, of California.


 


11.   Entire Agreement. 
The Plan and Option Agreement are incorporated herein by reference. This
Agreement, the Plan, the Option Agreement and the Investment Representation
Statement 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 Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and Optionee.


 


[Signatures appear on next page.]


 


3

















 


	
  Submitted by:

  	
   

  	
  Accepted by:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  OPTIONEE:

  	
   

  	
  INTERNET BRANDS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  «First» «Last»

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  909 N. Sepulveda Blvd., 11th Floor

  El Segundo, CA 90245

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date Received

  	
   

  



 


4

















 


EXHIBIT B


 


INVESTMENT REPRESENTATION STATEMENT


 


	
  OPTIONEE:

  	
  «First» «Last»

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPANY:

  	
  INTERNET BRANDS, INC.

  
	
   

  	
   

  
	
  SECURITY:

  	
  COMMON STOCK

  	
   

  
	
   

  	
   

  	
   

  
	
  AMOUNT:

  	
                           shares

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  



 


In
connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:


 


a.     Optionee
is aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. Optionee is acquiring these
Securities for investment for Optionee’s own account only and not with a view
to, or for resale in connection with, any “distribution” thereof within the
meaning of the Securities Act of 1933, as amended (the “Securities Act”).


 


b.     Optionee
acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act and have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of Optionee’s investment
intent as expressed herein. In this connection, Optionee understands that, in
the view of the Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if Optionee’s representation was predicated
solely upon a present intention to hold these Securities for the minimum
capital gains period specified under tax statutes, for a deferred sale, for or
until an increase or decrease in the market price of the Securities, or for a
period of one year or any other fixed period in the future. Optionee further
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, a legend prohibiting their transfer without the
consent of the Commissioner of Corporations of the State of California and any
other legend required under applicable state securities laws.


 


c.     Optionee
is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited
public resale of “restricted securities” acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701
at the time of the grant of the Option to the Optionee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, ninety (90) days thereafter (or such
longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of
certain of the conditions specified by Rule 144, including: (1) the
resale being made through a broker in an unsolicited “broker’s transaction” or
in transactions directly with a market maker (as said term is defined under the


 


1

















 


Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
availability of certain public information about the Company, (3) the
amount of Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144,
if applicable.


 


d.     In
the event that the Company does not qualify under Rule 701 at the time of
grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case
of acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the
paragraph immediately above.


 


e.     Optionee
further understands that in the event all of the applicable requirements of Rule 701
or 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required;
and that, notwithstanding the fact that Rules 144 and 701 are not
exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rules 144 or
701 will have a substantial burden of proof in establishing that an exemption
from registration is available for such offers or sales, and that such persons
and their respective brokers who participate in such transactions do so at
their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.


 


	
   

  	
  Signature of Optionee:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  «First» «Last»

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
					



 


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