exv10w11






Exhibit 10.11




TRUSTWAVE HOLDINGS, INC.




 





2011 CASH AND EQUITY INCENTIVE PLAN



 





ARTICLE I

PURPOSE



     The purpose of this Trustwave Holdings, Inc. 2011 Cash and Equity Incentive Plan is to enhance
the profitability and value of the Company for the benefit of its stockholders by enabling the
Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain
and reward such individuals and strengthen the mutuality of interests between such individuals and
the Company’s stockholders. The Plan is effective as of the date set forth in Article XV.



ARTICLE II

DEFINITIONS



     For purposes of the Plan, the following terms shall have the following meanings:



     2.1 “Acquisition Event” has the meaning set forth in Section 4.2(d).



     2.2 “Affiliate” means each of the following: (a) any Subsidiary; (b) any Parent; (c)
any corporation, trade or business (including, without limitation, a partnership or limited
liability company) which is directly or indirectly controlled 50% or more (whether by ownership of
stock, assets or an equivalent ownership interest or voting interest) by the Company or one of its
Affiliates; (d) any trade or business (including, without limitation, a partnership or limited
liability company) which directly or indirectly controls 50% or more (whether by ownership of
stock, assets or an equivalent ownership interest or voting interest) of the Company; and (e) any
other entity in which the Company or any of its Affiliates has a material equity interest and which
is designated as an “Affiliate” by resolution of the Committee; provided that, unless otherwise
determined by the Committee, the Common Stock subject to any Award constitutes “service recipient
stock” for purposes of Section 409A of the Code or otherwise does not subject the Award to Section
409A of the Code.



     2.3 “Award” means any award under the Plan of any Stock Option, Stock Appreciation
Right, Restricted Stock Award, Performance Award, Other Stock-Based Award or Other Cash-Based
Award. All Awards shall be granted by, confirmed by, and subject to the terms of, a written
agreement executed by the Company and the Participant.



     2.4 “Award Agreement” means the written or electronic agreement setting forth the
terms and conditions applicable to an Award.



     2.5 “Board” means the Board of Directors of the Company.



 









 





     2.6 “Cause” means, unless otherwise provided by the Committee in the applicable Award
Agreement, with respect to a Participant’s Termination of Employment or Termination of Consultancy,
the following: (a) in the case where there is no employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award (or where there is such an agreement but it
does not define “cause” (or words of like import)), termination due to a (i) willful or serious
misconduct or gross negligence in the performance of the Participant’s duties to the Company; (ii)
willful or repeated failure to satisfactorily perform the Participant’s duties to the Company or to
follow the lawful directives of the Board or any executive or supervisor to which the Participant
reports (other than as a result of death or due to Disability); (iii) commission of, indictment
for, conviction of, or pleading of guilty or nolo contendere to, a felony or any crime involving
moral turpitude; (iv) performance of any act of theft, embezzlement, fraud, malfeasance, dishonesty
or misappropriation of the Company’s property; or (v) breach of, or failure to comply with, any
material agreement with the Company, or a violation of the Company’s code of conduct or other
written policy; or (b) in the case where there is an employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award that defines “cause” (or words of like
import), “cause” as defined under such agreement; provided, however, that with regard to any
agreement under which the definition of “cause” only applies on occurrence of a change in control,
such definition of “cause” shall not apply until a change in control actually takes place and then
only with regard to a termination thereafter. With respect to a Participant’s Termination of
Directorship, “cause” means an act or failure to act that constitutes cause for removal of a
director under applicable Delaware law.



     2.7 “Change in Control” has the meaning set forth in 11.2.



     2.8 “Change in Control Price” has the meaning set forth in Section 11.1.



     2.9 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to any
section of the Code shall also be a reference to any successor provision and any treasury
regulation promulgated thereunder.



     2.10 “Committee” means any committee of the Board duly authorized by the Board to
administer the Plan. If no committee is duly authorized by the Board to administer the Plan, the
term “Committee” shall be deemed to refer to the Board for all purposes under the Plan.



     2.11 “Common Stock” means the Class A Common Stock, $0.01 par value per share, of the
Company.



     2.12 “Company” means Trustwave Holdings, Inc., a Delaware corporation, and its
successors by operation of law.



     2.13 “Consultant” means any natural person who is an advisor or consultant to the
Company or its Affiliates.



     2.14 “Disability” means, unless otherwise provided by the Committee in the applicable
Award Agreement, with respect to a Participant’s Termination, a permanent and total disability as
defined in Section 22(e)(3) of the Code. Notwithstanding the foregoing, for Awards that are



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subject to Section 409A of the Code, Disability shall mean that a Participant is disabled
under Section 409A(a)(2)(C)(i) or (ii) of the Code.




     2.15 “Effective Date” means the effective date of the Plan as defined in Article XV.



     2.16 “Eligible Employees” means each employee of the Company or an Affiliate.



     2.17 “Eligible Individual” means any Eligible Employee, Non-Employee Director or
Consultant.



     2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended. Reference
to a specific section of the Exchange Act or regulation thereunder shall include such section or
regulation, any valid regulation or interpretation promulgated under such section, and any
comparable provision of any future legislation or regulation amending, supplementing or superseding
such section or regulation.



     2.19 “Fair Market Value” means, for purposes of the Plan, unless otherwise required by
any applicable provision of the Code or any regulations issued thereunder, as of any date and
except as provided below, the last sales price reported for the Common Stock on the applicable
date: (a) as reported on the principal national securities exchange in the United States on which
it is then traded or (b) if the Common Stock is not traded, listed or otherwise reported or quoted,
the Committee shall determine in good faith the Fair Market Value in whatever manner it considers
appropriate taking into account the requirements of Section 409A of the Code. For purposes of the
grant of any Award, the applicable date shall be the trading day immediately prior to the date on
which the Award is granted. For purposes of the exercise of any Award, the applicable date shall
be the date a notice of exercise is received by the Committee or, if not a day on which the
applicable market is open, the next day that it is open.



     2.20 “Family Member” means “family member” as defined in Section A.1.(a)(5) of the
general instructions of Form S-8.



     2.21 “Incentive Stock Option” means any Stock Option awarded to an Eligible Employee
of the Company, its Subsidiaries and its Parents (if any) under the Plan intended to be and
designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.



     2.22 “Non-Employee Director” means a director or a member of the Board of the Company
or any Affiliate who is not an active employee of the Company or any Affiliate.



     2.23 “Non-Qualified Stock Option” means any Stock Option awarded under the Plan that
is not an Incentive Stock Option.



     2.24 “Non-Tandem Stock Appreciation Right” shall mean the right to receive an amount
in cash and/or stock equal to the difference between (x) the Fair Market Value of a share of Common
Stock on the date such right is exercised, and (y) the aggregate exercise price of such right,
otherwise than on surrender of a Stock Option.



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     2.25 “Other Cash-Based Award” means an Award granted pursuant to Section 10.3 of the
Plan and payable in cash at such time or times and subject to such terms and conditions as provided
by the Committee in the applicable Award Agreement.



     2.26 “Other Stock-Based Award” means an Award under Article X of the Plan that is
valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock,
including, without limitation, an Award valued by reference to an Affiliate.



     2.27 “Parent” means any parent corporation of the Company within the meaning of
Section 424(e) of the Code.



     2.28 “Participant” means an Eligible Individual to whom an Award has been granted
pursuant to the Plan.



     2.29 “Performance Award” means an Award granted to a Participant pursuant to Article
IX hereof contingent upon achieving certain Performance Goals.



     2.30 “Performance Goals” means goals established by the Committee as contingencies for
Awards to vest and/or become exercisable or distributable based on one or more of the performance
goals set forth in Exhibit A hereto.



     2.31 “Performance Period” means the designated period during which the Performance
Goals must be satisfied with respect to the Award to which the Performance Goals relate.



     2.32 “Plan” means this Trustwave Holdings, Inc. 2011 Cash and Equity Incentive Plan,
as amended from time to time.



     2.33 “Reference Stock Option” has the meaning set forth in Section 7.1.



     2.34 “Registration Date” means the date on which the Company sells its Common Stock in
a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities
Act.



     2.35 “Restricted Stock” means an Award of shares of Common Stock under the Plan that
is subject to restrictions under Article VIII.



     2.36 “Restriction Period” has the meaning set forth in Section 8.3(a) with respect to
Restricted Stock.



     2.37 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in
effect or any successor provision.



     2.38 “Section 162(m) of the Code” means the exception for performance-based
compensation under Section 162(m) of the Code and any applicable treasury regulations thereunder.



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     2.39 “Section 409A of the Code” means the nonqualified deferred compensation rules
under Section 409A of the Code and any applicable treasury regulations and other official guidance
thereunder.



     2.40 “Securities Act” means the Securities Act of 1933, as amended and all rules and
regulations promulgated thereunder. Reference to a specific section of the Securities Act or
regulation thereunder shall include such section or regulation, any valid regulation or
interpretation promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or regulation.



     2.41 “Stock Appreciation Right” shall mean the right pursuant to an Award granted
under Article VII.



     2.42 “Stock Option” or “Option” means any option to purchase shares of Common
Stock granted to Eligible Individuals granted pursuant to Article VI.



     2.43 “Subsidiary” means any subsidiary corporation of the Company within the meaning
of Section 424(f) of the Code.



     2.44 “Tandem Stock Appreciation Right” shall mean the right to surrender to the
Company all (or a portion) of a Stock Option in exchange for an amount in cash and/or stock equal
to the difference between (i) the Fair Market Value on the date such Stock Option (or such portion
thereof) is surrendered, of the Common Stock covered by such Stock Option (or such portion
thereof), and (ii) the aggregate exercise price of such Stock Option (or such portion thereof).



     2.45 “Ten Percent Stockholder” means a person owning stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the Company, its
Subsidiaries or its Parent.



     2.46 “Termination” means a Termination of Consultancy, Termination of Directorship or
Termination of Employment, as applicable.



     2.47 “Termination of Consultancy” means: (a) that the Consultant is no longer acting
as a consultant to the Company or an Affiliate; or (b) when an entity which is retaining a
Participant as a Consultant ceases to be an Affiliate unless the Participant otherwise is, or
thereupon becomes, a Consultant to the Company or another Affiliate at the time the entity ceases
to be an Affiliate. In the event that a Consultant becomes an Eligible Employee or a Non-Employee
Director upon the termination of such Consultant’s consultancy, no Termination of Consultancy shall
be deemed to occur until such time as such Consultant is no longer a Consultant, an Eligible
Employee or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise
define Termination of Consultancy in the Award Agreement or, if no rights of a Participant are
reduced, may otherwise define Termination of Consultancy thereafter, provided that any such change
to the definition of the term “Termination of Consultancy” does not subject the applicable Award to
Section 409A of the Code.



     2.48 “Termination of Directorship” means that the Non-Employee Director has ceased to
be a director of the Company; except that if a Non-Employee Director becomes an



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Eligible Employee or a Consultant upon the termination of such Non-Employee Director’s
directorship, such Non-Employee Director’s ceasing to be a director of the Company shall not be
treated as a Termination of Directorship unless and until the Participant has a Termination of
Employment or Termination of Consultancy, as the case may be.




     2.49 “Termination of Employment” means: (a) a termination of employment (for reasons
other than a military or personal leave of absence granted by the Company) of a Participant from
the Company and its Affiliates; or (b) when an entity which is employing a Participant ceases to be
an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate at the time the entity ceases to be an Affiliate. In the event that an Eligible
Employee becomes a Consultant or a Non-Employee Director upon the termination of such Eligible
Employee’s employment, no Termination of Employment shall be deemed to occur until such time as
such Eligible Employee is no longer an Eligible Employee, a Consultant or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may otherwise define Termination of Employment in the
Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of
Employment thereafter, provided that any such change to the definition of the term “Termination of
Employment” does not subject the applicable Award to Section 409A of the Code.



     2.50 “Transfer” means: (a) when used as a noun, any direct or indirect transfer,
sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance
of equity in any entity), whether for value or no value and whether voluntary or involuntary
(including by operation of law), and (b) when used as a verb, to directly or indirectly transfer,
sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance
of equity in any entity) whether for value or for no value and whether voluntarily or involuntarily
(including by operation of law). “Transferred” and “Transferable” shall have a correlative
meaning.



     2.51 “Transition Period” means the period beginning with the Registration Date and
ending as of the earlier of: (i) the date of the first annual meeting of stockholders of the
Company at which directors are to be elected that occurs after the close of the third calendar year
following the calendar year in which the Registration Date occurs; and (ii) the expiration of the
“reliance period” under Treasury Regulation Section 1.162-27(f)(2).



ARTICLE III

ADMINISTRATION




     3.1 The Committee. The Plan shall be administered and interpreted by the Committee.
To the extent required by applicable law, rule or regulation, it is intended that each member of
the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, (b) an “outside
director” under Section 162(m) of the Code and (c) an “independent director” under the rules of any
national securities exchange or national securities association, as applicable. If it is later
determined that one or more members of the Committee do not so qualify, actions taken by the
Committee prior to such determination shall be valid despite such failure to qualify.



     3.2 Grants of Awards. The Committee shall have full authority to grant, pursuant to
the terms of the Plan, to Eligible Individuals: (i) Stock Options, (ii) Stock Appreciation Rights,



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(iii) Restricted Stock Awards, (iv) Performance Awards; (v) Other Stock-Based Awards; and (vi)
Other Cash-Based Awards. In particular, the Committee shall have the authority:




          (a) to select the Eligible Individuals to whom Awards may from time to time be granted
hereunder;




          (b) to determine whether and to what extent Awards, or any combination thereof, are to be
granted hereunder to one or more Eligible Individuals;




          (c) to determine the number of shares of Common Stock to be covered by each Award granted
hereunder;




          (d) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder (including, but not limited to, the exercise or purchase price (if any),
any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Award and the shares of Common Stock relating
thereto, based on such factors, if any, as the Committee shall determine);




          (e) to determine the amount of cash to be covered by each Award granted hereunder;




          (f) to determine whether, to what extent and under what circumstances grants of Options and
other Awards under the Plan are to operate on a tandem basis and/or in conjunction with or apart
from other awards made by the Company outside of the Plan;




          (g) to determine whether and under what circumstances a Stock Option may be settled in cash,
Common Stock and/or Restricted Stock under Section 6.4(d);




          (h) to determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock
Option;




          (i) to determine whether to require a Participant, as a condition of the granting of any
Award, to not sell or otherwise dispose of shares acquired pursuant to the exercise of an Award for
a period of time as determined by the Committee following the date of the acquisition of such
Award;




          (j) to modify, extend or renew an Award, subject to Article XII and Section 6.4(l), provided,
however, that such action does not subject the Award to Section 409A of the Code without the
consent of the Participant; and




          (k) solely to the extent permitted by applicable law, to determine whether, to what extent and
under what circumstances to provide loans (which may be on a recourse basis and shall bear interest
at the rate the Committee shall provide) to Participants in order to exercise Options under the
Plan.




     3.3 Guidelines. Subject to Article XII hereof, the Committee shall have the authority
to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan
and perform all acts, including the delegation of its responsibilities (to the extent permitted by



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applicable law and applicable stock exchange rules), as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any agreements relating thereto); and to otherwise supervise the administration
of the Plan. The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt
special guidelines and provisions for persons who are residing in or employed in, or subject to,
the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities
laws of such domestic or foreign jurisdictions. Notwithstanding the foregoing, no action of the
Committee under this Section 3.3 shall impair the rights of any Participant without the
Participant’s consent. To the extent applicable, the Plan is intended to comply with the
applicable requirements of Rule 16b-3, and with respect to Awards intended to be
“performance-based,” the applicable provisions of Section 162(m) of the Code, and the Plan shall be
limited, construed and interpreted in a manner so as to comply therewith.




     3.4 Decisions Final. Any decision, interpretation or other action made or taken in
good faith by or at the direction of the Company, the Board or the Committee (or any of its
members) arising out of or in connection with the Plan shall be within the absolute discretion of
all and each of them, as the case may be, and shall be final, binding and conclusive on the Company
and all employees and Participants and their respective heirs, executors, administrators,
successors and assigns.



     3.5 Procedures. If the Committee is appointed, the Board shall designate one of the
members of the Committee as chairman and the Committee shall hold meetings, subject to the By-Laws
of the Company, at such times and places as it shall deem advisable, including, without limitation,
by telephone conference or by written consent to the extent permitted by applicable law. A
majority of the Committee members shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or determination reduced to writing and
signed by all of the Committee members in accordance with the By-Laws of the Company, shall be
fully effective as if it had been made by a vote at a meeting duly called and held. The Committee
shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.



     3.6 Designation of Consultants/Liability.



          (a) The Committee may designate employees of the Company and professional advisors to assist
the Committee in the administration of the Plan and (to the extent permitted by applicable law and
applicable exchange rules) may grant authority to officers to grant Awards and/or execute
agreements or other documents on behalf of the Committee. In the event of any designation of
authority hereunder, subject to applicable law, applicable stock exchange rules and any limitations
imposed by the Committee in connection with such designation, such designee or designees shall have
the power and authority to take such actions, exercise such powers and make such determinations
that are otherwise specifically designated to the Committee hereunder.




          (b) The Committee may employ such legal counsel, consultants and agents as it may deem
desirable for the administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computation received from any such consultant or






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agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel,
consultant or agent shall be paid by the Company. The Committee, its members and any person
designated pursuant to sub-section (a) above shall not be liable for any action or determination
made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, no
officer of the Company or member or former member of the Committee or of the Board shall be liable
for any action or determination made in good faith with respect to the Plan or any Award granted
under it.




     3.7 Indemnification. To the maximum extent permitted by applicable law and the
Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance
directly insuring such person, each officer or employee of the Company or any Affiliate and member
or former member of the Committee or the Board shall be indemnified and held harmless by the
Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to
the Committee) or liability (including any sum paid in settlement of a claim with the approval of
the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the
fullest extent permitted, arising out of any act or omission to act in connection with the
administration of the Plan, except to the extent arising out of such officer’s, employee’s,
member’s or former member’s own fraud or bad faith. Such indemnification shall be in addition to
any right of indemnification the employees, officers, directors or members or former officers,
directors or members may have under applicable law or under the Certificate of Incorporation or
By-Laws of the Company or any Affiliate. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an individual with regard
to Awards granted to such individual under the Plan.



ARTICLE IV

SHARE LIMITATION




     4.1 Shares. (a) The aggregate number of shares of Common Stock that may be issued or
used for reference purposes or with respect to which Awards may be granted under the Plan shall not
exceed 12,000,000 shares (subject to any increase or decrease pursuant to Section 4.2), which may
be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury
of the Company or both. The maximum number of shares of Common Stock with respect to which
Incentive Stock Options may be granted under the Plan shall be 12,000,000 shares. These totals
shall be automatically increased on January 1 of each year the Plan is in effect by the least of
(i) 3.0% of the total number of shares of Common Stock outstanding on the last day of the
immediately preceding December, or (ii) 6,000,000 shares, or (iii) a lesser amount determined by
the Board. With respect to Stock Appreciation Rights settled in Common Stock, upon settlement, only
the number of shares of Common Stock delivered to a Participant (based on the difference between
the Fair Market Value of the shares of Common Stock subject to such Stock Appreciation Right on the
date such Stock Appreciation Right is exercised and the exercise price of each Stock Appreciation
Right on the date such Stock Appreciation Right was awarded) shall count against the aggregate and
individual share limitations set forth under Sections 4.1(a) and 4.1(b). If any Option, Stock
Appreciation Right or Other Stock-Based Awards granted under the Plan expires, terminates or is
canceled for any reason without having been exercised in full, the number of shares of Common Stock
underlying any unexercised Award shall again be available for the purpose of Awards under the Plan.
If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in



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shares of Common Stock awarded under the Plan to a Participant are forfeited for any reason,
the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards
denominated in shares of Common Stock shall again be available for purposes of Awards under the
Plan. If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is granted in
tandem with an Option, such grant shall only apply once against the maximum number of shares of
Common Stock which may be issued under the Plan. Any Award under the Plan settled in cash shall
not be counted against the foregoing maximum share limitations.




          (a) Individual Participant Limitations. To the extent required by Section 162(m) of
the Code for Awards under the Plan to qualify as “performance-based compensation,” the following
individual Participant limitations shall only apply after the expiration of the Transition Period:




               (i) The maximum number of shares of Common Stock subject to any Award of Stock Options, or
Stock Appreciation Rights, or shares of Restricted Stock, or Other Stock-Based Awards for which the
grant of such Award or the lapse of the relevant Restriction Period is subject to the attainment of
Performance Goals in accordance with Section 8.3(a)(ii) which may be granted under the Plan during
any fiscal year of the Company to any Participant shall be 2,500,000 shares per type of Award
(which shall be subject to any further increase or decrease pursuant to Section 4.2), provided that
the maximum number of shares of Common Stock for all types of Awards does not exceed 6,000,000
shares (which shall be subject to any further increase or decrease pursuant to Section 4.2) during
any fiscal year of the Company. If a Tandem Stock Appreciation Right is granted or a Limited Stock
Appreciation Right is granted in tandem with a Stock Option, it shall apply against the
Participant’s individual share limitations for both Stock Appreciation Rights and Stock Options.



               (ii) There are no annual individual share limitations applicable to Participants on Restricted
Stock or Other Stock-Based Awards for which the grant, vesting or payment (as applicable) of any
such Award is not subject to the attainment of Performance Goals.



               (iii) The maximum number of shares of Common Stock subject to any Performance Award which may
be granted under the Plan during any fiscal year of the Company to any Participant shall be
2,500,000 shares (which shall be subject to any further increase or decrease pursuant to Section
4.2) with respect to any fiscal year of the Company.



               (iv) The maximum value of a cash payment made under a Performance Award which may be granted
under the Plan with respect to any fiscal year of the Company to any Participant shall be
$5,000,000.



               (v) The individual Participant limitations set forth in this Section 4.1(b) (other than
Section 4.1(b)(iii)) shall be cumulative; that is, to the extent that shares of Common Stock for
which Awards are permitted to be granted to a Participant during a fiscal year are not covered by
an Award to such Participant in a fiscal year, the number of shares of Common Stock available for
Awards to such Participant shall automatically increase in the subsequent fiscal years during the
term of the Plan until used.



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     4.2 Changes.



          (a) The existence of the Plan and the Awards granted hereunder shall not affect in any way the
right or power of the Board or the stockholders of the Company to make or authorize (i) any
adjustment, recapitalization, reorganization or other change in the Company’s capital structure or
its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance
of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock,
(iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of
all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate
act or proceeding.




          (b) Subject to the provisions of Section 4.2(d), if there shall occur any such change in the
capital structure of the Company by reason of any stock split, reverse stock split, stock dividend,
subdivision, combination or reclassification of shares that may be issued under the Plan, any
recapitalization, any merger, any consolidation, any spin off, any reorganization or any partial or
complete liquidation, or any other corporate transaction or event having an effect similar to any
of the foregoing (a “Section 4.2 Event”), then (i) the aggregate number and/or kind of
shares that thereafter may be issued under the Plan, (ii) the number and/or kind of shares or other
property (including cash) to be issued upon exercise of an outstanding Award granted under the
Plan, and/or (iii) the purchase price thereof, shall be appropriately adjusted. In addition,
subject to Section 4.2(d), if there shall occur any change in the capital structure or the business
of the Company that is not a Section 4.2 Event (an “Other Extraordinary Event”), including
by reason of any extraordinary dividend (whether cash or stock), any conversion, any adjustment,
any issuance of any class of securities convertible or exercisable into, or exercisable for, any
class of stock, or any sale or transfer of all or substantially all of the Company’s assets or
business, then the Committee, in its sole discretion, may adjust any Award and make such other
adjustments to the Plan. Any adjustment pursuant to this Section 4.2 shall be consistent with the
applicable Section 4.2 Event or the applicable Other Extraordinary Event, as the case may be, and
in such manner as the Committee may, in its sole discretion, deem appropriate and equitable to
prevent substantial dilution or enlargement of the rights granted to, or available for,
Participants under the Plan. Any such adjustment determined by the Committee shall be final,
binding and conclusive on the Company and all Participants and their respective heirs, executors,
administrators, successors and permitted assigns. Except as expressly provided in this Section 4.2
or in the applicable Award Agreement, a Participant shall have no rights by reason of any Section
4.2 Event or any Other Extraordinary Event.




          (c) Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to
Section 4.2(a) or 4.2(b) shall be aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater
than one-half. No cash settlements shall be made with respect to fractional shares eliminated by
rounding. Notice of any adjustment shall be given by the Committee to each Participant whose Award
has been adjusted and such adjustment (whether or not such notice is given) shall be effective and
binding for all purposes of the Plan.




          (d) In the event of a merger or consolidation in which the Company is not the surviving entity
or in the event of any transaction that results in the acquisition of substantially all of the
Company’s outstanding Common Stock by a single person or entity or by a group of






11









 







persons and/or entities acting in concert, or in the event of the sale or transfer of all or
substantially all of the Company’s assets (all of the foregoing being referred to as an
“Acquisition Event”), then the Committee may, in its sole discretion, terminate all
outstanding and unexercised Stock Options, Stock Appreciation Rights, or any Other Stock-Based
Award that provides for a Participant elected exercise, effective as of the date of the Acquisition
Event, by (i) cashing-out such Awards upon the date of consummation of the Acquisition Event, or
(ii) delivering notice of termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event, in which case during the period from the date on which such
notice of termination is delivered to the consummation of the Acquisition Event, each such
Participant shall have the right to exercise in full all of such Participant’s Awards that are then
outstanding (without regard to any limitations on exercisability otherwise contained in the Award
Agreements), but any such exercise shall be contingent on the occurrence of the Acquisition Event,
and, provided that, if the Acquisition Event does not take place within a specified period after
giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be
null and void.




     If an Acquisition Event occurs but the Committee does not terminate the outstanding Awards
pursuant to this Section 4.2(d), then the provisions of Section 4.2(b) and Article XI shall apply.



     4.3 Minimum Purchase Price. Notwithstanding any provision of the Plan to the
contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan,
such shares shall not be issued for a consideration that is less than as permitted under applicable
law.



ARTICLE V

ELIGIBILITY




     5.1 General Eligibility. All current and prospective Eligible Individuals are
eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the
Plan shall be determined by the Committee.



     5.2 Incentive Stock Options. Notwithstanding the foregoing, only Eligible Employees
of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock
Options under the Plan. Eligibility for the grant of an Incentive Stock Option and actual
participation in the Plan shall be determined by the Committee.



     5.3 General Requirement. The vesting and exercise of Awards granted to a prospective
Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee,
Consultant or Non-Employee Director, respectively.



ARTICLE VI

STOCK OPTIONS




     6.1 Options. Stock Options may be granted alone or in addition to other Awards
granted under the Plan. Each Stock Option granted under the Plan shall be of one of two types: (a)
an Incentive Stock Option or (b) a Non-Qualified Stock Option.



12









 





     6.2 Grants. The Committee shall have the authority to grant to any Eligible Employee
one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options.
The Committee shall have the authority to grant any Consultant or Non-Employee Director one or more
Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive
Stock Option (whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not so qualify shall constitute a
separate Non-Qualified Stock Option.



     6.3 Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, no
term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the Participants affected, to
disqualify any Incentive Stock Option under such Section 422.



     6.4 Terms of Options. Options granted under the Plan shall be subject to the
following terms and conditions and shall be in such form and contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:



          (a) Exercise Price. The exercise price per share of Common Stock subject to a Stock
Option shall be provided by the Committee in the applicable Award Agreement at the time of grant,
provided that the per share exercise price of a Stock Option shall not be less than 100% (or, in
the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair
Market Value of the Common Stock at the time of grant.




          (b) Stock Option Term. The term of each Stock Option shall be fixed by the Committee,
provided that no Stock Option shall be exercisable more than 10 years after the date the Option is
granted; and provided further that the term of an Incentive Stock Option granted to a Ten Percent
Stockholder shall not exceed five years.




          (c) Exercisability. Unless otherwise provided by the Committee in accordance with the
provisions of this Section 6.4, Stock Options granted under the Plan shall be exercisable at such
time or times and subject to such terms and conditions as shall be provided by the Committee in the
applicable Award Agreement at the time of grant. If the Committee provides, in its discretion,
that any Stock Option is exercisable subject to certain limitations (including, without limitation,
that such Stock Option is exercisable only in installments or within certain time periods), the
Committee may waive such limitations on the exercisability at any time at or after the time of
grant in whole or in part (including, without limitation, waiver of the installment exercise
provisions or acceleration of the time at which such Stock Option may be exercised), based on such
factors, if any, as the Committee shall determine.




          (d) Method of Exercise. Subject to whatever installment exercise and waiting period
provisions apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in
whole or in part at any time during the Option term, by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank
draft or money order payable to the order of the Company; (ii) solely to the extent permitted by
applicable law, if the Common Stock is traded on a national securities exchange, and the






13









 







Committee authorizes, through a procedure whereby the Participant delivers irrevocable
instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company
an amount equal to the purchase price; or (iii) on such other terms and conditions as may be
acceptable to the Committee (including, without limitation, having the Company withhold shares of
Common Stock issuable upon exercise of the Stock Option, or by payment in full or in part in the
form of Common Stock owned by the Participant, based on the Fair Market Value of the Common Stock
on the payment date as determined by the Committee). No shares of Common Stock shall be issued
until payment therefor, as provided herein, has been made or provided for.




          (e) Non-Transferability of Options. No Stock Option shall be Transferable by the
Participant other than by will or by the laws of descent and distribution, and all Stock Options
shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding
the foregoing, the Committee may provide in the applicable Award Agreement at the time of grant or
thereafter that a Non-Qualified Stock Option that is otherwise not Transferable pursuant to this
Section is Transferable to a Family Member in whole or in part and in such circumstances, and under
such conditions, as specified by the Committee. A Non-Qualified Stock Option that is Transferred
to a Family Member pursuant to the preceding sentence (i) may not be subsequently Transferred other
than by will or by the laws of descent and distribution and (ii) remains subject to the terms of
the Plan and the applicable Award Agreement. Any shares of Common Stock acquired upon the exercise
of a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified Stock Option or a
permissible transferee pursuant to a Transfer after the exercise of the Non-Qualified Stock Option
shall be subject to the terms of the Plan and the applicable Award Agreement.




          (f) Termination by Death and Disability. Unless otherwise provided by the Committee
in the applicable Award Agreement at the time of grant, or if no rights of the Participant are
reduced, thereafter, if a Participant’s Termination is by reason of death or Disability, all Stock
Options that are held by such Participant that are vested and exercisable at the time of the
Participant’s Termination may be exercised by the Participant at any time within a period of one
year from the date of such Termination, but in no event beyond the expiration of the stated term of
such Stock Options; provided, however, that, following a termination by reason of Disability, if
the Participant dies within such exercise period, all unexercised Stock Options held by such
Participant shall thereafter be exercisable, to the extent to which they were exercisable at the
time of death, for a period of one year from the date of such death, but in no event beyond the
expiration of the stated term of such Stock Options.




          (g) Involuntary Termination Without Cause. Unless otherwise provided by the Committee
in the applicable Award Agreement at the time of grant, or if no rights of the Participant are
reduced, thereafter, if a Participant’s Termination is by involuntary termination by the Company
without Cause, all Stock Options that are held by such Participant that are vested and exercisable
at the time of the Participant’s Termination may be exercised by the Participant at any time within
a period of 90 days from the date of such Termination, but in no event beyond the expiration of the
stated term of such Stock Options.




          (h) Voluntary Termination. Unless otherwise provided by the Committee in the
applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced,
thereafter, if a Participant’s Termination is voluntary (other than a voluntary termination
described






14









 







in Section 6.4(i)(y) hereof), all Stock Options that are held by such Participant that are
vested and exercisable at the time of the Participant’s Termination may be exercised by the
Participant at any time within a period of 30 days from the date of such Termination, but in no
event beyond the expiration of the stated term of such Stock Options.




          (i) Termination for Cause. Unless otherwise provided by the Committee in the
applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced,
thereafter, if a Participant’s Termination (x) is for Cause or (y) is a voluntary Termination (as
provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a
Termination for Cause, all Stock Options, whether vested or not vested, that are held by such
Participant shall thereupon terminate and expire as of the date of such Termination.




          (j) Unvested Stock Options. Unless otherwise provided by the Committee in the
applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced,
thereafter, Stock Options that are not vested as of the date of a Participant’s Termination for any
reason shall terminate and expire as of the date of such Termination.




          (k) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market
Value (determined as of the time of grant) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an Eligible Employee during any calendar year
under the Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent
exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. Should any
provision of the Plan not be necessary in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the Committee may amend the Plan
accordingly, without the necessity of obtaining the approval of the stockholders of the Company.




          (l) Form, Modification, Extension and Renewal of Stock Options. Subject to the terms
and conditions and within the limitations of the Plan, Stock Options shall be evidenced by such
form of agreement or grant as is approved by the Committee, and the Committee may (i) modify,
extend or renew outstanding Stock Options granted under the Plan (provided that the rights of a
Participant are not reduced without such Participant’s consent and provided further that such
action does not subject the Stock Options to Section 409A of the Code without the consent of the
Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not
theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to
the extent not theretofore exercised). Notwithstanding the foregoing, an outstanding Option may
not be modified to reduce the exercise price thereof nor may a new Option at a lower price be
substituted for a surrendered Option (other than adjustments or substitutions in accordance with
Section 4.2), unless such action is approved by the stockholders of the Company.




          (m) Deferred Delivery of Common Shares. The Committee may in its discretion permit
Participants to defer delivery of Common Stock acquired pursuant to a Participant’s exercise of an
Option in accordance with the terms and conditions established by the Committee in the applicable
Award Agreement, which shall be intended to comply with the requirements of Section 409A of the
Code.







15









 








          (n) Early Exercise. The Committee may provide that a Stock Option include a provision
whereby the Participant may elect at any time before the Participant’s Termination to exercise the
Stock Option as to any part or all of the shares of Common Stock subject to the Stock Option prior
to the full vesting of the Stock Option and such shares shall be subject to the provisions of
Article VIII and be treated as Restricted Stock. Unvested shares of Common Stock so purchased may
be subject to a repurchase option in favor of the Company or to any other restriction the Committee
determines to be appropriate.




          (o) Other Terms and Conditions. The Committee may include a provision in an Award
Agreement providing for the automatic exercise of a Non-Qualified Stock Option on a cashless basis
on the last day of the term of such Option if the Participant has failed to exercise the
Non-Qualified Stock Option as of such date, with respect to which the Fair Market Value of the
shares of Common Stock underlying the Non-Qualified Stock Option exceeds the exercise price of such
Non-Qualified Stock Option on the date of expiration of such Option, subject to Section 14.4.
Stock Options may contain such other provisions, which shall not be inconsistent with any of the
terms of the Plan, as the Committee shall deem appropriate.




ARTICLE VII

STOCK APPRECIATION RIGHTS




     7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option (a “Reference Stock Option”) granted under
the Plan (“Tandem Stock Appreciation Rights”). In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of the grant of such Reference Stock
Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of
the grant of such Reference Stock Option.



     7.2 Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock
Appreciation Rights granted hereunder shall be subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as shall be provided by the Committee in the
applicable Award Agreement at the time of grant, and the following:



          (a) Exercise Price. The exercise price per share of Common Stock subject to a Tandem
Stock Appreciation Right shall be provided by the Committee in the applicable Award Agreement at
the time of grant, provided that the per share exercise price of a Tandem Stock Appreciation Right
shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.




          (b) Term. A Tandem Stock Appreciation Right or applicable portion thereof granted
with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the Reference Stock Option, except that, unless otherwise provided by
the Committee in the applicable Award Agreement at the time of grant, a Tandem Stock Appreciation
Right granted with respect to less than the full number of shares covered by the Reference Stock
Option shall not be reduced until, and then only to the extent that the exercise or termination of
the Reference Stock Option causes, the number of shares covered by the Tandem Stock Appreciation
Right to exceed the number of shares remaining available and unexercised under the Reference Stock
Option.







16









 








          (c) Exercisability. Tandem Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Reference Stock Options to which they relate shall be
exercisable in accordance with the provisions of Article VI, and shall be subject to the provisions
of Section 6.4(c).




          (d) Method of Exercise. A Tandem Stock Appreciation Right may be exercised by the
Participant by surrendering the applicable portion of the Reference Stock Option. Upon such
exercise and surrender, the Participant shall be entitled to receive an amount determined in the
manner prescribed in this Section 7.2. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent that the related Tandem Stock Appreciation
Rights have been exercised.




          (e) Payment. Upon the exercise of a Tandem Stock Appreciation Right, a Participant
shall be entitled to receive up to, but no more than, an amount in cash and/or Common Stock (as
chosen by the Committee) equal in value to the excess of the Fair Market Value of one share of
Common Stock over the Option exercise price per share specified in the Reference Stock Option
agreement multiplied by the number of shares of Common Stock in respect of which the Tandem Stock
Appreciation Right shall have been exercised, with the Committee having the right to determine the
form of payment.




          (f) Deemed Exercise of Reference Stock Option. Upon the exercise of a Tandem Stock
Appreciation Right, the Reference Stock Option or part thereof to which such Stock Appreciation
Right is related shall be deemed to have been exercised for the purpose of the limitation set forth
in Article IV of the Plan on the number of shares of Common Stock to be issued under the Plan.




          (g) Non-Transferability. Tandem Stock Appreciation Rights shall be Transferable only
when and to the extent that the underlying Stock Option would be Transferable under Section 6.4(e)
of the Plan.




     7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights may
also be granted without reference to any Stock Options granted under the Plan.



     7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights granted hereunder shall be subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as shall be provided by the Committee in the
applicable Award Agreement at the time of grant, and the following:



          (a) Exercise Price. The exercise price per share of Common Stock subject to a
Non-Tandem Stock Appreciation Right shall be provided by the Committee in the applicable Award
Agreement at the time of grant, provided that the per share exercise price of a Non-Tandem Stock
Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the
time of grant.




          (b) Term. The term of each Non-Tandem Stock Appreciation Right shall be fixed by the
Committee, but shall not be greater than 10 years after the date the right is granted.







17









 








          (c) Exercisability. In accordance with the provisions of this Section 7.4, Non-Tandem
Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and
subject to such terms and conditions as shall be provided by the Committee in the applicable Award
Agreement at the time of grant. If the Committee provides, in its discretion, that any such right
is exercisable subject to certain limitations (including, without limitation, that it is
exercisable only in installments or within certain time periods), the Committee may waive such
limitations on the exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of the installment exercise provisions or acceleration of the time at
which such right may be exercised), based on such factors, if any, as the Committee shall
determine.




          (d) Method of Exercise. Subject to whatever installment exercise and waiting period
provisions apply under Section 7.4(c), Non-Tandem Stock Appreciation Rights may be exercised in
whole or in part at any time in accordance with the applicable Award Agreement, by giving written
notice of exercise to the Company specifying the number of Non-Tandem Stock Appreciation Rights to
be exercised.




          (e) Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant
shall be entitled to receive, for each right exercised, up to, but no more than, an amount in cash
and/or Common Stock (as chosen by the Committee) equal in value to the excess of the Fair Market
Value of one share of Common Stock on the date that the right is exercised over the Fair Market
Value of one share of Common Stock on the date that the right was awarded to the Participant.




          (f) Termination. Unless otherwise provided by the Committee in the applicable Award
Agreement at the time of grant or, if no rights of the Participant are reduced, thereafter, subject
to the provisions of the applicable Award Agreement and the Plan, upon a Participant’s Termination
for any reason, Non-Tandem Stock Appreciation Rights will remain exercisable following a
Participant’s Termination on the same basis as Stock Options would be exercisable following a
Participant’s Termination in accordance with the provisions of Sections 6.4(f) through 6.4(j).




          (g) Non-Transferability. No Non-Tandem Stock Appreciation Rights shall be
Transferable by the Participant other than by will or by the laws of descent and distribution, and
all such rights shall be exercisable, during the Participant’s lifetime, only by the Participant.




     7.5 Limited Stock Appreciation Rights. The Committee may grant Tandem and Non-Tandem
Stock Appreciation Rights either as a general Stock Appreciation Right or as a Limited Stock
Appreciation Right. Limited Stock Appreciation Rights may be exercised only upon the occurrence of
a Change in Control or such other event as the Committee may designate at the time of grant or
thereafter. Upon the exercise of Limited Stock Appreciation Rights, except as otherwise provided
in an Award Agreement, the Participant shall receive in cash and/or Common Stock, an amount equal
to the amount (i) set forth in Section 7.2(e) with respect to Tandem Stock Appreciation Rights, or
(ii) set forth in Section 7.4(e) with respect to Non-Tandem Stock Appreciation Rights.



18









 





     7.6 Other Terms and Conditions. The Committee may include a provision in an Award
Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on
the last day of the term of such Stock Appreciation Right if the Participant has failed to exercise
the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the
shares of Common Stock underlying the Stock Appreciation Right exceeds the exercise price of such
Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to
Section 14.4. Stock Appreciation Rights may contain such other provisions, which shall not be
inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate.



ARTICLE VIII

RESTRICTED STOCK




     8.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued either alone
or in addition to other Awards granted under the Plan. The Committee shall determine the Eligible
Individuals, to whom, and the time or times at which, grants of Restricted Stock shall be made, the
number of shares to be awarded, the price (if any) to be paid by the Participant (subject to
Section 8.2), the time or times within which such Awards may be subject to forfeiture, the vesting
schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.



     The Committee may condition the grant or vesting of Restricted Stock upon the attainment of
specified performance targets (including, the Performance Goals) or such other factor as the
Committee may determine, including to comply with the requirements of Section 162(m) of the Code.



     8.2 Awards and Certificates. Eligible Individuals selected to receive Restricted
Stock shall not have any right with respect to such Award, unless and until such Participant has
delivered a fully executed copy of the agreement evidencing the Award to the Company, to the extent
required by the Committee, and has otherwise complied with the applicable terms and conditions of
such Award. Further, such Award shall be subject to the following conditions:



          (a) Purchase Price. The purchase price of Restricted Stock shall be fixed by the
Committee. Subject to Section 4.3, the purchase price for shares of Restricted Stock may be zero
to the extent permitted by applicable law, and, to the extent not so permitted, such purchase price
may not be less than par value.




          (b) Acceptance. Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter period as the Committee may specify at grant) after the grant date, by
executing a Restricted Stock agreement and by paying whatever price (if any) the Committee has
designated thereunder.




          (c) Legend. Each Participant receiving Restricted Stock shall be issued a stock
certificate in respect of such shares of Restricted Stock, unless the Committee elects to use
another system, such as book entries by the transfer agent, as evidencing ownership of shares of
Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall,
in addition to






19









 







such legends required by applicable securities laws, bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Award, substantially in the following
form:





	 	 	 	“The anticipation, alienation, attachment, sale, transfer, assignment,
pledge, encumbrance or charge of the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) of the
Trustwave Holdings, Inc. (the “Company”) 2011 Cash and Equity Incentive
Plan (the “Plan”) and an Agreement entered into between the registered
owner and the Company dated _________. Copies of such Plan and
Agreement are on file at the principal office of the Company.”





          (d) Custody. If stock certificates are issued in respect of shares of Restricted
Stock, the Committee may require that any stock certificates evidencing such shares be held in
custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition
of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power or
other instruments of assignment (including a power of attorney), each endorsed in blank with a
guarantee of signature if deemed necessary or appropriate by the Company, which would permit
transfer to the Company of all or a portion of the shares subject to the Restricted Stock Award in
the event that such Award is forfeited in whole or part.




     8.3 Restrictions and Conditions. The shares of Restricted Stock awarded pursuant to
the Plan shall be subject to the following restrictions and conditions:



          (a) Restriction Period. (i) The Participant shall not be permitted to Transfer shares
of Restricted Stock awarded under the Plan during the period or periods set by the Committee (the
“Restriction Period”) commencing on the date of such Award, as set forth in the Restricted
Stock Award Agreement and such agreement shall set forth a vesting schedule and any event that
would accelerate vesting of the shares of Restricted Stock. Within these limits, based on service,
attainment of Performance Goals pursuant to Section 8.3(a)(ii) and/or such other factors or
criteria as the Committee may determine, the Committee may condition the grant or provide for the
lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of
all or any part of any Restricted Stock Award and/or waive the deferral limitations for all or any
part of any Restricted Stock Award.




               (ii) If the grant of shares of Restricted Stock or the lapse of restrictions is based on the
attainment of Performance Goals, the Committee shall establish the objective Performance Goals and
the applicable vesting percentage of the Restricted Stock applicable to each Participant or class
of Participants in writing prior to the beginning of the applicable fiscal year or at such later
date as otherwise determined by the Committee and while the outcome of the Performance Goals are
substantially uncertain. Such Performance Goals may incorporate provisions for disregarding (or
adjusting for) changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type events or circumstances. With
regard to a Restricted Stock Award that is intended to comply with Section 162(m) of the Code, to
the extent that any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or
effect.



20









 





          (b) Rights as a Stockholder. Except as provided in Section 8.3(a) and this Section
8.3(b) or as otherwise provided by the Committee in the applicable Award Agreement at the time of
grant, the Participant shall have, with respect to the shares of Restricted Stock, all of the
rights of a holder of shares of Common Stock of the Company, including, without limitation, the
right to receive dividends, the right to vote such shares and, subject to and conditioned upon the
full vesting of shares of Restricted Stock, the right to tender such shares. The Committee may
provide in the applicable Award Agreement at the time of grant that the payment of dividends shall
be deferred until, and conditioned upon, the expiration of the applicable Restriction Period.




          (c) Termination. Unless otherwise provided by the Committee in the applicable Award
Agreement at grant or, if no rights of the Participant are reduced, thereafter, subject to the
applicable provisions of the Award Agreement and the Plan, upon a Participant’s Termination for any
reason during the relevant Restriction Period, all Restricted Stock still subject to restriction
will be forfeited in accordance with the terms and conditions established by the Committee at grant
or thereafter.




          (d) Lapse of Restrictions. If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the
Participant. All legends shall be removed from said certificates at the time of delivery to the
Participant, except as otherwise required by applicable law or other limitations imposed by the
Committee.




ARTICLE IX

PERFORMANCE AWARDS




     9.1 Performance Awards. The Committee may grant a Performance Award to a Participant
payable upon the attainment of specific Performance Goals. The Committee may grant Performance
Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the
Code, as well as Performance Awards that are not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code. If the Performance Award is payable in shares of
Restricted Stock, such shares shall be transferable to the Participant only upon attainment of the
relevant Performance Goal in accordance with Article VIII. If the Performance Award is payable in
cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in
shares of Restricted Stock (based on the then current Fair Market Value of such shares), as
provided by the Committee in the applicable Award Agreement at the time of grant. Each Performance
Award shall be evidenced by an Award Agreement in such form that is not inconsistent with the Plan
and that the Committee may from time to time approve.



     With respect to Performance Awards that are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall condition the right to payment
of any Performance Award upon the attainment of objective Performance Goals established pursuant to
Section 9.2(c).



     9.2 Terms and Conditions. Performance Awards awarded pursuant to this Article IX
shall be subject to the following terms and conditions:



21









 





          (a) Earning of Performance Award. At the expiration of the applicable Performance
Period, the Committee shall determine the extent to which the Performance Goals established
pursuant to Section 9.2(c) are achieved and the percentage of each Performance Award that has been
earned.




          (b) Non-Transferability. Subject to the applicable provisions of the Award Agreement
and the Plan, Performance Awards may not be Transferred during the Performance Period.




          (c) Objective Performance Goals, Formulae or Standards. With respect to Performance
Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the
Code, the Committee shall establish the objective Performance Goals for the earning of Performance
Awards based on a Performance Period applicable to each Participant or class of Participants in
writing prior to the beginning of the applicable Performance Period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are
substantially uncertain. Such Performance Goals may incorporate, if and only to the extent
permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes
in accounting methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent that any such
provision would create impermissible discretion under Section 162(m) of the Code or otherwise
violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to
Performance Awards that are intended to qualify as “performance-based compensation” under Section
162(m) of the Code.




          (d) Dividends. Unless otherwise provided by the Committee in the applicable Award
Agreement at the time of grant, amounts equal to dividends declared during the Performance Period
with respect to the number of shares of Common Stock covered by a Performance Award will not be
paid to the Participant.




          (e) Payment. Following the Committee’s determination in accordance with Section
9.2(a), the Company shall settle Performance Awards, in such form (including, without limitation,
in shares of Common Stock or in cash) as determined by the Committee, in an amount equal to such
Participant’s earned Performance Awards. With respect to any Award that is intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, the Committee shall be precluded
from having discretion to increase the amount of compensation payable under the terms of such
Award.




          (f) Termination. Subject to the applicable provisions of the Award Agreement and the
Plan, upon a Participant’s Termination for any reason during the Performance Period for a given
Performance Award, the Performance Award in question will vest or be forfeited in accordance with
the terms and conditions established by the Committee at grant.




          (g) Accelerated Vesting. Based on service, performance and/or such other factors or
criteria, if any, as the Committee may determine, the Committee may, at or after grant, accelerate
the vesting of all or any part of any Performance Award.







22









 








ARTICLE X

OTHER STOCK-BASED AND CASH-BASED AWARDS




     10.1 Other Stock-Based Awards. The Committee is authorized to grant to Eligible
Individuals Other Stock-Based Awards that are payable in, valued in whole or in part by reference
to, or otherwise based on or related to shares of Common Stock, including but not limited to,
shares of Common Stock awarded purely as a bonus and not subject to restrictions or conditions,
shares of Common Stock in payment of the amounts due under an incentive or performance plan
sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock
units, and Awards valued by reference to book value of shares of Common Stock. Other Stock-Based
Awards may be granted either alone or in addition to or in tandem with other Awards granted under
the Plan.



     Subject to the provisions of the Plan, the Committee shall have authority to determine the
Eligible Individuals, to whom, and the time or times at which, such Awards shall be made, the
number of shares of Common Stock to be awarded pursuant to such Awards, and all other conditions of
the Awards. The Committee may also provide for the grant of Common Stock under such Awards upon
the completion of a specified Performance Period.



     The Committee may condition the grant or vesting of Other Stock-Based Awards upon the
attainment of specified Performance Goals as the Committee may determine; provided that to the
extent that such Other Stock-Based Awards are intended to comply with Section 162(m) of the Code,
the Committee shall establish the objective Performance Goals for the grant or vesting of such
Other Stock-Based Awards based on a Performance Period applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable Performance Period or at such
later date as permitted under Section 162(m) of the Code and while the outcome of the Performance
Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the
extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without limitation, dispositions
and acquisitions) and other similar type events or circumstances. To the extent that any such
provision would create impermissible discretion under Section 162(m) of the Code or otherwise
violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to
Performance Awards that are intended to qualify as “performance-based compensation” under Section
162(m) of the Code.



     10.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this Article X
shall be subject to the following terms and conditions:



          (a) Non-Transferability. Subject to the applicable provisions of the Award Agreement
and the Plan, shares of Common Stock subject to Awards made under this Article X may not be
Transferred prior to the date on which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses.




          (b) Dividends. Unless otherwise provided by the Committee in the applicable Award
Agreement at the time of grant, subject to the provisions of the Award Agreement and the Plan, the
recipient of an Award under this Article X shall not be entitled to receive, currently or on






23









 







a deferred basis, dividends or dividend equivalents in respect of the number of shares of
Common Stock covered by the Award.




          (c) Vesting. Any Award under this Article X and any Common Stock covered by any such
Award shall vest or be forfeited to the extent so provided in the Award Agreement.




          (d) Price. Common Stock issued on a bonus basis under this Article X may be issued
for no cash consideration. Common Stock purchased pursuant to a purchase right awarded under this
Article X shall be priced, as determined by the Committee.




     10.3 Other Cash-Based Awards. The Committee may from time to time grant Other
Cash-Based Awards to Eligible Individuals in such amounts, on such terms and conditions, and for
such consideration, including no consideration or such minimum consideration as may be required by
applicable law. Other Cash-Based Awards may be granted subject to the satisfaction of vesting
conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and
if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any
time. The grant of an Other Cash-Based Award shall not require a segregation of any of the
Company’s assets for satisfaction of the Company’s payment obligation thereunder.



ARTICLE XI

CHANGE IN CONTROL PROVISIONS




     11.1 Benefits. In the event of a Change in Control of the Company (as defined below),
and except as otherwise provided by the Committee in an Award Agreement, a Participant’s unvested
Award shall not vest automatically and a Participant’s Award shall be treated in accordance with
one of the following methods as determined by the Committee:



          (a) Awards, whether or not then vested, shall be continued, assumed, have new rights
substituted therefor or be treated in accordance with Section 4.2(d) hereof, as determined by the
Committee, and restrictions to which shares of Restricted Stock or any other Award granted prior to
the Change in Control are subject shall not lapse upon a Change in Control and the Restricted Stock
or other Award shall, where appropriate in the sole discretion of the Committee, receive the same
distribution as other Common Stock on such terms as determined by the Committee; provided that the
Committee may decide to award additional Restricted Stock or other Awards in lieu of any cash
distribution. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock
Options, any assumed or substituted Stock Option shall comply with the requirements of Treasury
Regulation Section 1.424-1 (and any amendment thereto).




          (b) The Committee, in its sole discretion, may provide for the purchase of any Awards by the
Company or an Affiliate for an amount of cash equal to the excess of the Change in Control Price
(as defined below) of the shares of Common Stock covered by such Awards, over the aggregate
exercise price of such Awards. For purposes of this Section 11.1, “Change in Control
Price” shall mean the highest price per share of Common Stock paid in any transaction related
to a Change in Control of the Company.




          (c) Notwithstanding any other provision herein to the contrary, the Committee may, in its sole
discretion, provide for accelerated vesting or lapse of restrictions, of an Award at any time.







24









 








     11.2 Change in Control. Unless otherwise provided by the Committee in the applicable
Award Agreement at the time of grant or other written agreement approved by the Committee, a
“Change in Control” shall be deemed to occur if:



          (a) any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other
than the Company, any trustee or other fiduciary holding securities under any employee benefit plan
of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common Stock of the Company), becoming the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power of the Company’s
then outstanding securities;




          (b) during any period of two consecutive years, individuals who at the beginning of such
period constitute the Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction described in paragraph (a),
(c), or (d) of this Section 11.2 or a director whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such term is used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board) whose election by the Board
or nomination for election by the Company’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at the beginning of the
two-year period or whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority of the Board;




          (c) a merger or consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person (other than those
covered by the exceptions in Section 11.2(a)) acquires more than 50% of the combined voting power
of the Company’s then outstanding securities shall not constitute a Change in Control of the
Company; or




          (d) a complete liquidation or dissolution of the Company or the consummation of a sale or
disposition by the Company of all or substantially all of the Company’s assets other than the sale
or disposition of all or substantially all of the assets of the Company to a person or persons who
beneficially own, directly or indirectly, 50% or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale.



Notwithstanding the foregoing, with respect to any Award that is characterized as “nonqualified
deferred compensation” within the meaning of Section 409A of the Code, an event shall not be
considered to be a Change in Control under the Plan for purposes of payment of such Award unless
such event is also a “change in ownership,” a “change in effective control” or a “change in the
ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A
of the Code.







25









 








     11.3 Initial Public Offering not a Change in Control. Notwithstanding the foregoing,
for purposes of the Plan, the occurrence of the Registration Date or any change in the composition
of the Board within one year following the Registration Date shall not be considered a Change in
Control.



ARTICLE XII

TERMINATION OR AMENDMENT OF PLAN




     12.1 Termination or Amendment. Notwithstanding any other provision of the Plan, the
Board may at any time, and from time to time, amend, in whole or in part, any or all of the
provisions of the Plan (including any amendment deemed necessary to ensure that the Company may
comply with any regulatory requirement referred to in Article XIV or Section 409A of the Code), or
suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless
otherwise required by law or specifically provided herein, the rights of a Participant with respect
to Awards granted prior to such amendment, suspension or termination, may not be impaired without
the consent of such Participant and, provided further, that without the approval of the holders of
the Company’s Common Stock entitled to vote in accordance with applicable law, no amendment may be
made that would (i) increase the aggregate number of shares of Common Stock that may be issued
under the Plan (except by operation of Section 4.2); (ii) increase the maximum individual
Participant limitations for a fiscal year under Section 4.1(b) (except by operation of Section
4.2); (iii) change the classification of individuals eligible to receive Awards under the Plan;
(iv) decrease the minimum option price of any Stock Option or Stock Appreciation Right; (v) extend
the maximum option period under Section 6.4; (vi) alter the Performance Goals for Restricted Stock,
Performance Awards or Other Stock-Based Awards as set forth in Exhibit A hereto; (vii)
award any Stock Option or Stock Appreciation Right in replacement of a canceled Stock Option or
Stock Appreciation Right with a higher exercise price than the replacement award; or (viii) require
stockholder approval in order for the Plan to continue to comply with the applicable provisions of
Section 162(m) of the Code or, to the extent applicable to Incentive Stock Options, Section 422 of
the Code. In no event may the Plan be amended without the approval of the stockholders of the
Company in accordance with the applicable laws of the State of Delaware to increase the aggregate
number of shares of Common Stock that may be issued under the Plan, decrease the minimum exercise
price of any Award, or to make any other amendment that would require stockholder approval under
Financial Industry Regulatory Authority (FINRA) rules and regulations or the rules of any exchange
or system on which the Company’s securities are listed or traded at the request of the Company.
Notwithstanding anything herein to the contrary, the Board may amend the Plan or any Award
Agreement at any time without a Participant’s consent to comply with applicable law including
Section 409A of the Code.



     The Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively, but, subject to Article IV or as otherwise specifically provided herein, no such
amendment or other action by the Committee shall impair the rights of any holder without the
holder’s consent.



26









 





ARTICLE XIII

UNFUNDED STATUS OF PLAN




     The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.
With respect to any payment as to which a Participant has a fixed and vested interest but which
are not yet made to a Participant by the Company, nothing contained herein shall give any such
Participant any right that is greater than those of a general unsecured creditor of the Company.



ARTICLE XIV

GENERAL PROVISIONS




     14.1 Legend. The Committee may require each person receiving shares of Common Stock
pursuant to a Stock Option or other Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to distribution thereof. In
addition to any legend required by the Plan, the certificates for such shares may include any
legend that the Committee deems appropriate to reflect any restrictions on Transfer. All
certificates for shares of Common Stock delivered under the Plan shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed or any national securities exchange system upon whose
system the Common Stock is then quoted, any applicable federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.



     14.2 Other Plans. Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval if such approval is
required, and such arrangements may be either generally applicable or applicable only in specific
cases.



     14.3 No Right to Employment/Directorship/Consultancy. Neither the Plan nor the grant
of any Option or other Award hereunder shall give any Participant or other employee, Consultant or
Non-Employee Director any right with respect to continuance of employment, consultancy or
directorship by the Company or any Affiliate, nor shall there be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a Consultant or
Non-Employee Director is retained to terminate such employment, consultancy or directorship at any
time.



     14.4 Withholding of Taxes. The Company shall have the right to deduct from any
payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery
of shares of Common Stock or the payment of any cash hereunder, payment by the Participant of, any
federal, state or local taxes required by law to be withheld. Upon the vesting of Restricted Stock
(or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of
the Code, a Participant shall pay all required withholding to the Company. Any statutorily
required withholding obligation with regard to any Participant may be satisfied, subject to the
consent of the Committee, by reducing the number of shares of Common Stock otherwise deliverable or
by delivering shares of Common Stock already owned. Any fraction of a share of



27









 




Common Stock required to satisfy such tax obligations shall be disregarded and the amount due
shall be paid instead in cash by the Participant.




     14.5 No Assignment of Benefits. No Award or other benefit payable under the Plan
shall, except as otherwise specifically provided by law or permitted by the Committee, be
Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any
such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such benefit, nor shall it be subject
to attachment or legal process for or against such person.



     14.6 Listing and Other Conditions.



          (a) Unless otherwise determined by the Committee, as long as the Common Stock is listed on a
national securities exchange or system sponsored by a national securities association, the issuance
of shares of Common Stock pursuant to an Award shall be conditioned upon such shares being listed
on such exchange or system. The Company shall have no obligation to issue such shares unless and
until such shares are so listed, and the right to exercise any Option or other Award with respect
to such shares shall be suspended until such listing has been effected.




          (b) If at any time counsel to the Company shall be of the opinion that any sale or delivery of
shares of Common Stock pursuant to an Option or other Award is or may in the circumstances be
unlawful or result in the imposition of excise taxes on the Company under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no obligation to make such sale
or delivery, or to make any application or to effect or to maintain any qualification or
registration under the Securities Act or otherwise, with respect to shares of Common Stock or
Awards, and the right to exercise any Option or other Award shall be suspended until, in the
opinion of said counsel, such sale or delivery shall be lawful or will not result in the imposition
of excise taxes on the Company.




          (c) Upon termination of any period of suspension under this Section 14.6, any Award affected
by such suspension which shall not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension shall extend the term of any
Award.




          (d) A Participant shall be required to supply the Company with certificates, representations
and information that the Company requests and otherwise cooperate with the Company in obtaining any
listing, registration, qualification, exemption, consent or approval the Company deems necessary or
appropriate.




     14.7 Stockholders Agreement and Other Requirements. Notwithstanding anything herein
to the contrary, as a condition to the receipt of shares of Common Stock pursuant to an Award under
the Plan, to the extent required by the Committee, the Participant shall execute and deliver a
stockholder’s agreement or such other documentation that shall set forth certain restrictions on
transferability of the shares of Common Stock acquired upon exercise or purchase, and such other
terms as the Board or Committee shall from time to time establish. Such stockholder’s agreement or
other documentation shall apply to the Common Stock acquired under



28









 




the Plan and covered by such stockholder’s agreement or other documentation. The Company may
require, as a condition of exercise, the Participant to become a party to any other existing
stockholder agreement (or other agreement).




     14.8 Governing Law. The Plan and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Delaware (regardless of the law
that might otherwise govern under applicable Delaware principles of conflict of laws).



     14.9 Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding with respect
to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction
in respect of any thereof, shall be resolved only in the courts of the State of Delaware or the
United States District Court for the District of Delaware and the appellate courts having
jurisdiction of appeals in such courts. In that context, and without limiting the generality of
the foregoing, the Company and each Participant shall irrevocably and unconditionally (a) submit in
any proceeding relating to the Plan or any Award Agreement, or for the recognition and enforcement
of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the
courts of the State of Delaware, the court of the United States of America for the District of
Delaware, and appellate courts having jurisdiction of appeals from any of the foregoing, and agree
that all claims in respect of any such Proceeding shall be heard and determined in such Delaware
State court or, to the extent permitted by law, in such federal court, (b) consent that any such
Proceeding may and shall be brought in such courts and waives any objection that the Company and
each Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in
any such court or that such Proceeding was brought in an inconvenient court and agree not to plead
or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on
contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d)
agree that service of process in any such Proceeding may be effected by mailing a copy of such
process by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the
books and records of the Company or, in the case of the Company, at the Company’s principal
offices, attention General Counsel, and (e) agree that nothing in the Plan shall affect the right
to effect service of process in any other manner permitted by the laws of the State of Delaware.



     14.10 Construction. Wherever any words are used in the Plan in the masculine gender
they shall be construed as though they were also used in the feminine gender in all cases where
they would so apply, and wherever words are used herein in the singular form they shall be
construed as though they were also used in the plural form in all cases where they would so apply.



     14.11 Other Benefits. No Award granted or paid out under the Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the Company or its
Affiliates nor affect any benefit under any other benefit plan now or subsequently in effect under
which the availability or amount of benefits is related to the level of compensation.



     14.12 Costs. The Company shall bear all expenses associated with administering the
Plan, including expenses of issuing Common Stock pursuant to Awards hereunder.



29









 





     14.13 No Right to Same Benefits. The provisions of Awards need not be the same with
respect to each Participant, and such Awards to individual Participants need not be the same in
subsequent years.



     14.14 Death/Disability. The Committee may in its discretion require the transferee of
a Participant to supply it with written notice of the Participant’s death or Disability and to
supply it with a copy of the will (in the case of the Participant’s death) or such other evidence
as the Committee deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by all of the terms and
conditions of the Plan.



     14.15 Section 16(b) of the Exchange Act. All elections and transactions under the
Plan by persons subject to Section 16 of the Exchange Act involving shares of Common Stock are
intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may
establish and adopt written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and
operation of the Plan and the transaction of business thereunder.



     14.16 Section 409A of the Code. The Plan is intended to comply with the applicable
requirements of Section 409A of the Code and shall be limited, construed and interpreted in
accordance with such intent. To the extent that any Award is subject to Section 409A of the Code,
it shall be paid in a manner that will comply with Section 409A of the Code, including proposed,
temporary or final regulations or any other guidance issued by the Secretary of the Treasury and
the Internal Revenue Service with respect thereto. Notwithstanding anything herein to the
contrary, any provision in the Plan that is inconsistent with Section 409A of the Code shall be
deemed to be amended to comply with Section 409A of the Code and to the extent such provision
cannot be amended to comply therewith, such provision shall be null and void. The Company shall
have no liability to a Participant, or any other party, if an Award that is intended to be exempt
from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action
taken by the Committee or the Company and, in the event that any amount or benefit under the Plan
becomes subject to penalties under Section 409A of the Code, responsibility for payment of such
penalties shall rest solely with the affected Participants and not with the Company.
Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of
“nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are
otherwise required to be made under the Plan to a “specified employee” (as defined under Section
409A of the Code) as a result of such employee’s separation from service (other than a payment that
is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following
such separation from service (or, if earlier, the date of death of the specified employee) and
shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay
period.



     14.17 Successor and Assigns. The Plan shall be binding on all successors and
permitted assigns of a Participant, including, without limitation, the estate of such Participant
and the executor, administrator or trustee of such estate.



30









 





     14.18 Severability of Provisions. If any provision of the Plan shall be held invalid
or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof,
and the Plan shall be construed and enforced as if such provisions had not been included.



     14.19 Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor,
an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid
to such person’s guardian or to the party providing or reasonably appearing to provide for the care
of such person, and such payment shall fully discharge the Committee, the Board, the Company, its
Affiliates and their employees, agents and representatives with respect thereto.



     14.20 Agreement. As a condition to the grant of an Award, if requested by the Company
and the lead underwriter of any public offering of the Common Stock (the “Lead
Underwriter”), a Participant shall irrevocably agree not to sell, contract to sell, grant any
option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or
otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible
into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired on the public market
after such offering) during such period of time following the effective date of a registration
statement of the Company filed under the Securities Act that the Lead Underwriter shall specify
(the “Lock-Up Period”). The Participant shall further agree to sign such documents as may
be requested by the Lead Underwriter to effect the foregoing and agree that the Company may impose
stop-transfer instructions with respect to Common Stock acquired pursuant to an Award until the end
of such Lock-Up Period.



     14.21 Headings and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan, and shall not be employed
in the construction of the Plan.



     14.22 Section 162(m) of the Code. Notwithstanding any other provision of the Plan to
the contrary, (i) prior to the Registration Date and during the Transition Period, the provisions
of the Plan requiring compliance with Section 162(m) of the Code for Awards intended to qualify as
“performance-based compensation” shall only apply to the extent required by Section 162(m) of the
Code, and (ii) the provisions of the Plan requiring compliance with Section 162(m) of the Code
shall not apply to Awards granted under the Plan that are not intended to qualify as
“performance-based compensation” under Section 162(m) of the Code.



     14.23 Post-Transition Period. Following the Transition Period, any Award granted
under the Plan that is intended to be “performance-based compensation” under Section 162(m) of the
Code, shall be subject to the approval of the material terms of the Plan by a majority of the
stockholders of the Company in accordance with Section 162(m) of the Code and the treasury
regulations promulgated thereunder.



     14.24 Company Recoupment of Awards. A Participant’s rights with respect to any Award
hereunder shall in all events be subject to any right or obligation that the Company may have
regarding the clawback of “incentive-based compensation” under Section 10D of the Exchange Act and
any applicable rules and regulations promulgated thereunder from time to time by the U.S.
Securities and Exchange Commission.



31









 





ARTICLE XV

EFFECTIVE DATE OF PLAN




     The Plan shall become effective as of the date that the Company completes its initial public
offering pursuant to the Registration Statement on Form S-1 (File No. 333-173661) originally filed
with the Securities and Exchange Commission on April 21, 2011.



ARTICLE XVI

TERM OF PLAN



     No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the
earlier of the date that the Plan is adopted or the date of stockholder approval, but Awards
granted prior to such tenth anniversary may extend beyond that date; provided that no Award (other
than a Stock Option or Stock Appreciation Right) that is intended to be “performance-based
compensation” under Section 162(m) of the Code shall be granted on or after the fifth anniversary
of the stockholder approval of the Plan unless the Performance Goals are re-approved (or other
designated Performance Goals are approved) by the stockholders no later than the first stockholder
meeting that occurs in the fifth year following the year in which stockholders approve the
Performance Goals.



ARTICLE XVII

NAME OF PLAN



     The Plan shall be known as the “Trustwave Holdings, Inc. 2011 Cash and Equity Incentive Plan.”








32









 








EXHIBIT A




PERFORMANCE GOALS



     To the extent permitted under Section 162(m) of the Code, performance goals established for
purposes of Awards intended to be “performance-based compensation” under Section 162(m) of the
Code, shall be based on the attainment of certain target levels of, or a specified increase or
decrease (as applicable) in one or more of the following performance goals:




	 	•	 	gross revenues;
	 
	 	•	 	net revenues;
	 
	 	•	 	annual recurring net or gross revenues;
	 
	 	•	 	license revenues;
	 
	 	•	 	services revenues;
	 
	 	•	 	gross profit;
	 
	 	•	 	gross margin;
	 
	 	•	 	operating income;
	 
	 	•	 	operating margin;
	 
	 	•	 	net income (before or after taxes);
	 
	 	•	 	net income (before or after taxes) margin;
	 
	 	•	 	earnings before interest and taxes;
	 
	 	•	 	earnings before interest and taxes margin;
	 
	 	•	 	earnings before interest, tax, depreciation and amortization;
	 
	 	•	 	earnings before interest, tax, depreciation and amortization margin;
	 
	 	•	 	adjusted earnings before interest, tax, depreciation and amortization;
	 
	 	•	 	adjusted earnings before interest, tax, depreciation and amortization
margin;
	 
	 	•	 	earnings per share;
	 
	 	•	 	revenue growth, as to either gross or net revenues;
	 
	 	•	 	gross margin growth;
	 
	 	•	 	cash flow;
	 
	 	•	 	working capital;
	 
	 	•	 	gross profit return on investment;
	 
	 	•	 	gross margin return on investment;
	 
	 	•	 	return on equity;
	 
	 	•	 	return on assets;
	 
	 	•	 	return on capital;
	 
	 	•	 	return on invested capital;
	 
	 	•	 	total shareholder return;
	 
	 	•	 	economic value added;
	 
	 	•	 	sales or market share;
	 
	 	•	 	reduction in operating expenses;
	 
	 	•	 	specified objectives with regard to limiting the level of increase in all or
a portion of the Company’s bank debt or other long-term or short-term public or
private debt or other similar financial obligations of the Company, which may




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	 	 	 	be calculated net of cash balances and/or other offsets and adjustments as may be
established by the Committee;
	 
	 	•	 	the fair market value of a share of Common Stock;
	 
	 	•	 	the growth in the value of an investment in the Common Stock assuming the
reinvestment of dividends; or
	 
	 	•	 	other objective milestones.





     With respect to Awards that are intended to qualify as “performance-based compensation” under
Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, the Committee
may, in its sole discretion, also exclude, or adjust to reflect, the impact of an event or
occurrence that the Committee determines should be appropriately excluded or adjusted, including:



          (a) restructurings, discontinued operations, extraordinary items or events, and other unusual
or non-recurring charges as described in Accounting Standards Codification 225-20, “Extraordinary
and Unusual Items,” and/or management’s discussion and analysis of financial condition and results
of operations appearing or incorporated by reference in the Company’s Form 10-K for the applicable
year;




          (b) an event either not directly related to the operations of the Company or not within the
reasonable control of the Company’s management; or




          (c) a change in tax law or accounting standards required by generally accepted accounting
principles.




     Performance goals may also be based upon individual participant performance goals, as
determined by the Committee. In addition, Awards that are not intended to qualify as
“performance-based compensation” under Section 162(m) of the Code may be based on the performance
goals set forth herein or on such other performance goals as determined by the Committee in its
sole discretion.



     In addition, such performance goals may be based upon the attainment of specified levels of
Company (or subsidiary, division, other operational unit, administrative department or product
category of the Company) performance under one or more of the measures described above relative to
the performance of other corporations. With respect to Awards that are intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, to the extent permitted under
Section 162(m) of the Code, but only to the extent permitted under Section 162(m) of the Code
(including, without limitation, compliance with any requirements for stockholder approval), the
Committee may also:



          (a) designate additional business criteria on which the performance goals may be based; or




          (b) adjust, modify or amend the aforementioned business criteria.





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