Document:

Letter Agreement, dated as of September 29, 2005

 Exhibit 10.08 
 September 29, 2005 
  

			
	 NightWatch Capital Partners, LP and
 NightWatch Capital
Partners II, LP
 3311 North University Avenue, Suite 206
 Provo,
Utah 84604
 Attention: John Nemelka
	  	 RHP Master Fund, Ltd.
 c/o Rock Hill Investor Management,
L.P.
 3 Bala Plaza - East, Suite 585
 Bala Cynwyd, PA
19004
 Attention: Wayne Bloch

  

	 	Re:	Purchase of Additional Units 

 Dear John and Wayne: 
 In connection with the execution of the Common Stock and Warrant Purchase Agreement (the “Purchase
Agreement”), dated September 29, 2005, by and among Kana Software, Inc. (the “Company”) and the Buyers named therein (the “Buyers”), the undersigned parties have agreed to enter into this letter agreement to set out the
terms and conditions on which additional Units will be sold by the Company to the Buyers (the “Additional Issuance”). Capitalized terms used herein but not otherwise defined herein, shall have the respective meanings set forth in the
Purchase Agreement. 
 The Company hereby agrees to sell $1,000,000 of Units to the Buyers, and the Buyers agree to purchase (on a
pro rata basis based on the number of Units purchased under the Purchase Agreement), at a price per Unit of $1.52, within three (3) business days of satisfaction of the Purchase Conditions. If the Purchase Conditions are not satisfied, the
Buyers will not have any obligation to purchase Units, and the Company will not have any obligation to sell Units, pursuant to the Additional Issuance. “Purchase Conditions” shall mean (i) the Company shall have filed its quarterly
reports for the three-month periods ended March 31, 2005 and June 30, 2005 on or prior to October 7, 2005 and on or prior to October 19, 2005, respectively, and (ii) shall have filed its quarterly report for the three-month
period ended September 30, 2005 without the Common Stock being delisted from the Principal Exchange. The Company will provide prompt written notice to the Buyers of its satisfaction of the Purchase Conditions. 
 Upon satisfaction of the Purchase Conditions, the parties will promptly execute definitive agreements for the Additional Issuance in the same forms as
the Transaction Documents (other than Sections 4.12 and 4.15, which will be deleted). 
 All warrants issued pursuant to the Additional
Issuance will become exercisable beginning six months days following the date of issuance and will expire five years from the date of issuance. All securities issued pursuant to the Buyers under the terms of this letter agreement will have
registration rights identical to such registration rights included in the Registration Rights Agreement, dated the date hereof, by and among the parties. 

 NightWatch Capital Partners, LP, 
 NightWatch Capital Partners II, LP 
 RHP Master Fund, Ltd. 
 September 29, 2005 
 Page 2 
  

 Please indicate your agreement to the foregoing by executing a counterpart copy of this letter and
returning it to the undersigned. 
  

			
	KANA SOFTWARE, INC.
		
	By:	 	/s/ John Thompson
	 Name:
	 	John Thompson
	 Title:
	 	Chief Financial Officer

 [Signatures Continue on Following Page] 

 NightWatch Capital Partners, LP, 
 NightWatch Capital Partners II, LP 
 RHP Master Fund, Ltd. 
 September 29, 2005 
 Page 3 
  

 Agreed and Acknowledged: 
  

			
	NIGHTWATCH CAPITAL PARTNERS, LP
		
	By	 	NightWatch Capital Management, LLC, its general partner
		
	 By:
	 	/s/ John F. Nemelka
		 	 John F. Nemelka
 Managing Principal

  

			
	NIGHTWATCH CAPITAL PARTNERS II, LP
		
	By	 	NightWatch Capital Management, LLC, its general partner
		
	 By:
	 	/s/ John F. Nemelka
		 	 John F. Nemelka
 Managing Principal

  

			
	RHP MASTER FUND, LTD.
		
	By:	 	Rock Hill Investment Management, L.P., its investment manager
	By:	 	RHP General Partner, LLC
		
	 By:
	 	/s/ Keith S. Marlowe
		 	 Keith S. Marlowe
 DirectorKana Software, Inc. 1999 Stock Incentive Plan, as amended

 Exhibit 10.01 
 KANA SOFTWARE, INC. 
 (formerly known as Kana Communications, Inc.) 
 1999 STOCK INCENTIVE PLAN 
 AS AMENDED
ON APRIL 26, 2001 AND APRIL 9, 2005 
 ARTICLE ONE 
 GENERAL PROVISIONS 
 I. PURPOSE OF THE PLAN 
 This 1999 Stock Incentive Plan is intended to promote the interests of Kana Software, Inc. (formerly known as Kana Communications, Inc., a Delaware
corporation, by providing eligible persons in the Corporation’s service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in such
service. Capitalized terms shall have the meanings assigned to such terms in the attached Appendix. All share numbers in this document reflect the 2-for-1 split of the Common Stock which was effected on February 22, 2000 and, except where
noted, the 10-for-1 reverse split of the Common Stock which was effected on December 13, 2001. 
 II. STRUCTURE OF THE PLAN 
 A. The Plan shall be divided into five separate equity incentives programs: 
  

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

  

	 	•	 	the Salary Investment Option Grant Program under which eligible employees may elect to have a portion of their base salary invested each year in special option grants,

  

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

  

	 	•	 	the Automatic Option Grant Program under which eligible non-employee Board members shall automatically receive option grants at designated intervals over their period of continued
Board service, and 

  

	 	•	 	the Director Fee Option Grant Program under which non-employee Board members may elect to have all or any portion of their annual retainer fee otherwise payable in cash applied to a
special stock option grant. 

 B. The provisions of Articles One and Seven shall apply to all equity programs under the Plan
and shall govern the interests of all persons under the Plan. 
 III. ADMINISTRATION OF THE PLAN 
 A. The Primary Committee shall have sole and exclusive authority to administer the Discretionary Option Grant and Stock Issuance Programs with respect to
Section 16 Insiders. Administration of the Discretionary Option Grant and Stock Issuance Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to all such persons. However, any discretionary option grants or stock issuances for members of the Primary Committee must be authorized
by a disinterested majority of the Board. 
 B. Members of the Primary Committee or any Secondary Committee shall serve for such period of
time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee. 

C. Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem 

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

D. The Primary Committee shall have the sole and exclusive authority to determine which Section 16 Insiders and other highly compensated
Employees shall be eligible for participation in the Salary Investment Option Grant Program for one or more calendar years. However, all option grants under the Salary Investment Option Grant Program shall be made in accordance with the express
terms of that program, and the Primary Committee shall not exercise any discretionary functions with respect to the option grants made under that program. 
 E. Service on the Primary Committee or the Secondary Committee shall constitute service as a Board member, and members of each such committee shall accordingly be entitled to full indemnification and reimbursement as
Board members for their service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the
Plan. 
 F. Administration of the Automatic Option Grant and Director Fee Option Grant Programs shall be self-executing in accordance with
the terms of those programs, and no Plan Administrator shall exercise any discretionary functions with respect to any option grants or stock issuances made under those programs. 
 IV. ELIGIBILITY 
 A. The persons eligible to participate in the Discretionary Option Grant and Stock
Issuance Programs are as follows: 
 (i) Employees, 
 (ii) non-employee members of the Board or the board of directors of any Parent or Subsidiary, and 
 (iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary). 
 B. Only Employees who are Section 16 Insiders or other highly compensated individuals shall be eligible to participate in the Salary Investment
Option Grant Program. 
 C. Each Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full
authority to determine, (i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive such grants, the time or times when those grants are to be made, the number of shares to be
covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the
maximum term for which the option is to remain outstanding and (ii) with respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive such issuances, the time or times when the issuances are to be made, the
number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration for such shares. 
 D. The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Discretionary Option Grant Program or to effect stock issuances in accordance with the Stock Issuance
Program. 
 E. The individuals who shall be eligible to participate in the Automatic Option Grant Program shall be limited to (i) those
individuals who first become on-employee Board members on or after the Underwriting Date, whether through appointment by the Board or election by the Corporation’s stockholders, and (ii) those individuals who continue to serve as
non-employee Board members atone or more Annual Stockholders Meetings held after the Underwriting Date. A non-employee Board member who has previously been in the employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to
receive adoption grant under the Automatic Option Grant Program at the time he or she first becomes a non-employee Board member, but shall be eligible to receive periodic option grants under the Automatic Option Grant Program while he or she
continues to serve as a non-employee Board member. 
  

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 F. All non-employee Board members shall be eligible to participate in the Director Fee Option Grant
Program. 
 V. STOCK SUBJECT TO THE PLAN 
 A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The number of shares of Common Stock reserved for issuance over
the term of the Plan shall not exceed Forty Million Ninety-Eight Thousand Two Hundred Forty-Two (40,098,242) shares.1 
 B. The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first
trading day of January each calendar year during the term of the Plan, beginning with calendar year 2000, by an amount equal to four and one-fourth percent (4.25%) of the total number of shares of Common Stock outstanding on the last trading
day in December of the immediately preceding calendar year, but in no event shall any such annual increase exceed One Million (1,000,000) shares.2 
 C. No one person participating in the Plan may receive stock options, separately
exercisable stock appreciation rights and direct stock issuances for more than 1,000,000 shares of Common Stock in the aggregate per calendar year. 
 D. Shares of Common Stock subject to outstanding options (including options incorporated into this Plan from the Predecessor Plan) shall be available for subsequent issuance under the Plan to the extent (i) those options expire or
terminate for any reason prior to exercise in full or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently cancelled or repurchased by the
Corporation at the original issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be
available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan. However, should the exercise price of an option under the Plan be paid with shares of Common Stock or should shares of Common Stock
otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an option or the vesting of a stock issuance under the Plan, then the number of shares of Common
Stock available for issuance under 
  

	1	As of April 25, 2005, such reserve consists of (i) the number of shares which remained available for issuance, as of the Plan Effective Date, under the
Predecessor Plan as last approved by the Corporation’s stockholders, including the shares subject to outstanding options under that Predecessor Plan, (ii) plus an additional increase of approximately Seven Million One Hundred Thirty
Thousand (7,130,000) shares approved by the Corporation’s stockholders prior to the Underwriting Date, plus (iii) an additional increase of Two Million Five Hundred Eighty Three Thousand and One Hundred (2,583,100) shares on
January 3, 2000 pursuant to the automatic share increase provisions of Section V.B. of this Article One, plus (iv) an additional increase of Ten Million (10,000,000) shares approved by the Board in March 2000, and approved by the
Corporation’s stockholders at the 2000 Special Stockholders Meeting held on April 25, 2000, plus (v) an additional increase of Three Million Nine Hundred Ninety-Nine Thousand Three Hundred Twenty-Eight (3,999,328) shares on
January 2, 2001 pursuant to the automatic share increase provisions of Section V.B. of this Article One, plus (vi) an additional increase of Fifteen Million (15,000,000) shares authorized by the Board on April 26, 2001, subject
to stockholder approval at the 2001 Annual Meeting. 

	2	For the 1999 calendar year, the annual increase was limited to Four Million (4,000,000) shares. For the 2000 and 2001 calendar years, the annual increase was
limited to Six Million (6,000,000) shares. The increase to Ten Million (10,000,000) shares took effect with the 2002 calendar year due to the approval of the April 2001 Amendment by the stockholders, but was decreased to One Million
(1,000,000) shares due to the 10:1 reverse stock split of December 13, 2001. The increase to Ten Million (10,000,000) shares shall be effective for the 2006 calendar year and each subsequent calendar year, subject to stockholder
approval. 

  

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 the Plan shall be reduced by the gross number of shares for which the option is exercised or which vest under the stock
issuance, and not by the net number of shares of Common Stock issued to the holder of such option or stock issuance. Shares of Common Stock underlying one or more stock appreciation rights exercised under Section IV of Article Two, Section III of
Article Three, Section II of Article Five or Section III of Article Six of the Plan shall not be available for subsequent issuance under the Plan. 
 E. If any change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities
for which any one person may be granted stock options, separately exercisable stock appreciation rights and direct stock issuances under the Plan per calendar year, (iii) the number and/or class of securities for which grants are subsequently
to be made under the Automatic Option Grant Program to new and continuing non-employee Board members, (iv) the number and/or class of securities and the exercise price per share in effect under each outstanding option under the Plan,
(v) the number and/or class of securities and exercise price per share in effect under each outstanding option incorporated into this Plan from the Predecessor Plan and (vi) the maximum number and/or class of securities by which the share
reserve is to increase automatically each calendar year pursuant to the provisions of Section V.B of this Article One. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of
rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. 
 ARTICLE TWO 
 DISCRETIONARY OPTION GRANT PROGRAM 
 I. OPTION TERMS 
 Each option shall be evidenced by one or more documents in the form approved by the
Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

 A. Exercise Price. 
 1. The exercise price per share shall be fixed by the Plan Administrator and may be set at a price per share less than, equal to or greater than the Fair Market Value per share of Common Stock on the option grant date. 
 2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of
Article Seven and the documents evidencing the option, be payable in one or more of the forms specified below: 
 (i) cash or
check made payable to the Corporation, 
 (ii) shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or 
 (iii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optioned shall concurrently provide irrevocable instructions to (a) a Corporation-designated brokerage
firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm
in order to complete the sale. 
 Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the
purchased shares must be made on the Exercise Date. 
  

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 B. Exercise and Term of Options. Each option shall be exercisable at such time or times, during such
period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. However, no option shall have a term in excess of ten (10) years measured from the option grant date.

 C. Effect of Termination of Service. 
 1. The following provisions shall govern the exercise of any options held by the Optioned at the time of cessation of Service or death: 
 (i) Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period
of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term. 
 (ii) Any option held by the Optionee at the time of death and exercisable in whole or in part at that time may be subsequently exercised
by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or
beneficiaries of that option. 
 (iii) Should the Optionee’s Service be terminated for Misconduct or should the Optionee
otherwise engage in Misconduct while holding one or more outstanding options under this Article Two, then all those options shall terminate immediately and cease to be outstanding. 
 (iv) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and
cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares. 
 2. The Plan Administrator shall have complete discretion, exercisable
either at the time an option is granted or at any time while the option remains outstanding, to: 
 (i) extend the period of
time for which the option is to remain exercisable following the Optionee’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option term, and/or 
 (ii) permit the option to be exercised,
during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or
more additional installments in which the Optionee would have vested had the Optionee continued in Service. 
 D. Stockholder Rights. The
holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares. 
 E. Repurchase Rights. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. 
 F. Limited Transferability of Options. During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or the laws of inheritance following the Optionee’s death. However, a Non-Statutory Option may be assigned in whole or in part 
  

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 during the Optionee’s lifetime to one or more members of the Optionee’s family or to a trust established
exclusively for one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to domestic relations order. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her
outstanding options under this Article Two, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such beneficiary
or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be
exercised following the Optionee’s death. 
 II. INCENTIVE OPTIONS 
 The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Seven shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section II. 
 A. Eligibility. Incentive Options may only be granted to Employees. 
 B. Exercise Price. The exercise price
per share for each Incentive Option shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the grant date of that Incentive Option. 
 C. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum
of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as
Incentive Options shall be applied on the basis of the order in which such options are granted. 
 D. 10% Stockholder. If any Employee to
whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term
shall not exceed five (5) years measured from the option grant date. 
 III. CORPORATE TRANSACTION/CHANGE IN CONTROL 
 A. In the event of any Corporate Transaction, each outstanding option shall automatically accelerate so that each such option shall, immediately prior to
the effective date of the Corporate Transaction, become exercisable for all the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully vested shares of Common Stock. However, an
outstanding option shall not become exercisable on such an accelerated basis if and to the extent: (i) such option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or
(ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any shares for which the option is not otherwise at that time
exercisable and provides for subsequent payout in accordance with the same exercise/vesting schedule applicable to those option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. 
 B. All outstanding repurchase rights shall automatically terminate, and the shares of Common Stock subject
to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection with such
Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued. 
  

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 C. Immediately following the consummation of the Corporate Transaction, all outstanding options shall
terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof). 
 D. Each option which
is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of
such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments to reflect such Corporate Transaction shall also be made to (i) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan and (iii) the
maximum number and/or class of securities for which any one person may be granted stock options, separately exercisable stock appreciation rights and direct stock issuances under the Plan per calendar year and (iv) the maximum number and/or
class of securities by which the share reserve is to increase automatically each calendar year. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of
the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction. 
 E. The Plan Administrator shall have the discretionary
authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all the shares of Common
Stock at the time subject to those options and may be exercised for any or all of those shares as fully vested shares of Common Stock, whether or not those options are to be assumed in the Corporate Transaction. In addition, the Plan Administrator
shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Option Grant Program so that those rights shall not be assignable in connection with such Corporate Transaction and
shall accordingly terminate upon the consummation of such Corporate Transaction, and the shares subject to those terminated rights shall thereupon vest in full. 
 F. The Plan Administrator shall have full power and authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall become exercisable for all the shares
of Common Stock at the time subject to those options in the event the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within designated period (not to exceed eighteen (18) months) following the
effective date of any Corporate Transaction in which those options are assumed and do not otherwise accelerate. In addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights so that those rights shall
immediately terminate with respect to any shares held by the Optionee at the time of his or her Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time. 
 G. The Plan Administrator shall have the discretionary authority to structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effective date of a Change in Control, become exercisable for all the shares of Common Stock at the time subject to those options and may be exercised for any or all of those shares as
fully vested shares of Common Stock. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Option Grant Program so that those rights
shall terminate automatically upon the consummation of such Change in Control, and the shares subject to those terminated rights shall thereupon vest in full. Alternatively, the Plan Administrator may condition the automatic acceleration of one or
more outstanding options under the Discretionary Option Grant Program and the termination of one or more of the Corporation’s outstanding repurchase rights under such program upon the subsequent termination of the Optionee’s Service by
reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of such Change in Control. 
 H. The portion of any Incentive Option accelerated in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand
Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Nonstatutory Option under the Federal tax laws. 
  

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 I. The outstanding options shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
 IV. CANCELLATION AND REGRANT OF OPTIONS 
 The Plan Administrator shall have the authority to effect,
at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Discretionary Option Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or a different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new grant date. 
 V. STOCK APPRECIATION RIGHTS 
 A. The Plan
Administrator shall have full power and authority to grant to selected Optionees tandem stock appreciation rights and/or limited stock appreciation rights. 
 B. The following terms shall govern the grant and exercise of tandem stock appreciation rights: 
 (i) One or more Optioned may be granted the right, exercisable upon such terms as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the excess of (a) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (b) the aggregate exercise price payable for such shares. 
 (ii) No such option
surrender shall be effective unless it is approved by the Plan Administrator, either at the time of the actual option surrender or at any earlier time. If the surrender is so approved, then the distribution to which the Optionee shall be entitled
may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate. 
 (iii) If the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (a) five (5) business days after the receipt of the rejection notice or
(b) the last day on which the option is otherwise exercisable in accordance with the terms of the documents evidencing such option, but in no event may such rights be exercised more than ten (10) years after the option grant date.

 C. The following terms shall govern the grant and exercise of limited stock appreciation rights: 
 (i) One or more Section 16 Insiders may be granted limited stock appreciation rights with respect to their outstanding options.

 (ii) Upon the occurrence of a Hostile Take-Over, each individual holding one or more options with such a limited stock
appreciation right shall have the unconditional right (exercisable for a thirty (30)-day period following such Hostile Take-Over) to surrender each such option to the Corporation. In return for the surrendered option, the Optionee shall receive a
cash distribution from the Corporation in an amount equal to the excess of (A) the Take-Over Price of the shares of Common Stock at the time subject to such option (whether or not the Optionee is otherwise vested in those shares) over
(B) the aggregate exercise price payable for those shares. Such cash distribution shall be paid within five (5) days following the option surrender date. 
 (iii) At the time such limited stock appreciation right is granted, the Plan Administrator shall pre-approve any subsequent exercise of
that right in accordance with the terms of this Paragraph C. Accordingly, no further approval of the Plan Administrator or the Board shall be required at the time of the actual option surrender and cash distribution. 
  

 8 

 ARTICLE THREE 
 SALARY INVESTMENT OPTION GRANT PROGRAM 
 I. OPTION GRANTS 
 The Primary Committee shall have the sole and exclusive authority to determine the calendar year or years (if any) for which the Salary Investment Option
Grant Program is to be in effect and to select the Section 16 Insiders and other highly compensated Employees eligible to participate in the Salary Investment Option Grant Program for such calendar year or years. Each selected individual who
elects to participate in the Salary Investment Option Grant Program must, prior to the start of each calendar year of participation, file with the Plan Administrator (or its designate) an irrevocable authorization directing the Corporation to reduce
his or her base salary for that calendar year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than Fifty Thousand Dollars ($50,000.00). Each individual who files such a timely authorization shall automatically be granted an
option under the Salary Investment Grant Program on the first trading day in January of the calendar year for which the salary reduction is to be in effect. 
 II. OPTION TERMS 
 Each option shall be a Non-Statutory Option evidenced by one or more documents in the form approved by the
Plan Administrator; provided, however, that each such document shall comply with the terms specified below. 
 A. Exercise Price. 

1. The exercise price per share shall be thirty-three and one-third percent (33 1/3%) of the Fair Market Value per share of Common Stock on the option grant date. 
 2. The exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

 B. Number of Option Shares. The number of shares of Common Stock subject to the option shall be determined pursuant to the following
formula (rounded down to the nearest whole number): 
 X = A / (B x 66 2/3%), where 
 X is the number of option shares, 
 A is the dollar amount of the reduction in the Optionee’s base salary for the calendar year to be in effect pursuant to this program,
and 
 B is the Fair Market Value per share of Common Stock on the option grant date. 
 C. Exercise and Term of Options. The option shall become exercisable in a series of twelve (12) successive equal monthly installments upon the
Optionee’s completion of each calendar month of Service in the calendar year for which the salary reduction is in effect. Each option shall have a maximum term of ten (10) years measured from the option grant date. 
 D. Effect of Termination of Service. Should the Optionee cease Service for any reason while holding one or more options under this Article Three, then
each such option shall remain exercisable, for any or all of the shares for which the option is exercisable at the time of such cessation of Service, until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such cessation of Service. Should the Optionee die while holding one or more options under this Article Three, then each such option may be exercised, for any or all of the shares for
which the option is exercisable at the time of the Optionee’s cessation of Service (less any shares subsequently purchased by Optionee prior to death), by the personal representative of the Optionee’s estate or by the person or persons to
whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or by the designated beneficiary or beneficiaries of the option. Such right of exercise shall lapse, and the option shall terminate, upon the earlier of
(i) the expiration of the ten (10)-year option term or (ii) the three (3)-year period measured from the date of the Optionee’s cessation of Service. However, 
  

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 the option shall, immediately upon the Optionee’s cessation of Service for any reason, terminate and cease to remain
outstanding with respect to any and all shares of Common Stock for which the option is not otherwise at that time exercisable. 
 III. CORPORATE
TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER 
 A. In the event of any Corporate Transaction while the Optionee remains in Service,
each outstanding option held by such Optionee under this Salary Investment Option Grant Program shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable
for all the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. Each such outstanding option shall terminate immediately following the Corporate
Transaction, except to the extent assumed by the successor corporation (or parent thereof) in such Corporate Transaction. Any option so assumed shall remain exercisable for the fully-vested shares until the earlier of (i) the expiration of the
ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of the Optionee’s cessation of Service. 
 B. In the event of a Change in Control while the Optionee remains in Service, each outstanding option held by such Optionee under this Salary Investment Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares
of Common Stock. The option shall remain so exercisable until the earliest to occur of (i) the expiration of the ten (10)-year option term, (ii) the expiration of the three (3)-year period measured from the date of the Optionee’s
cessation of Service, (iii) the termination of the option in connection with a Corporate Transaction or (iv) the surrender of the option in connection with a Hostile Take-Over. 
 C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each outstanding
option granted him or her under the Salary Investment Option Grant Program. The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over Price of the shares of Common
Stock at the time subject to the surrendered option (whether or not the option is otherwise at the time exercisable for those shares) over (ii) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within
five (5) days following the surrender of the option to the Corporation. The Primary Committee shall, at the time the option with such limited stock appreciation right is granted under the Salary Investment Option Grant Program, pre-approve any
subsequent exercise of that right in accordance with the terms of this Paragraph C. Accordingly, no further approval of the Primary Committee or the Board shall be required at the time of the actual option surrender and cash distribution.

 D. Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the actual holders of the
Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding options under this Plan,
substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction. 
 E. The grant of options under the Salary Investment Option Grant Program shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
 IV. REMAINING TERMS 
 The remaining terms of each option granted under the Salary Investment Option
Grant Program shall be the same as the terms in effect for option grants made under the Discretionary Option Grant Program. 
  

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 ARTICLE FOUR 
 STOCK ISSUANCE PROGRAM 
 I. STOCK ISSUANCE TERMS 
 Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each
such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the
recipients to receive those shares upon the attainment of designated performance goals. 
 A. Purchase Price. 
 1. The purchase price per share shall be fixed by the Plan Administrator and may be less than, equal to or greater than the Fair Market
Value per share of Common Stock on the issuance date. 
 2. Subject to the provisions of Section I of Article Seven, shares of
Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance: 
 (i) cash or check made payable to the Corporation, or 
 (ii) past services rendered to the Corporation (or any Parent or Subsidiary). 
 B. Vesting Provisions. 
 1.
Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or
upon attainment of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into
the Stock Issuance Agreement. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive those shares upon the attainment of designated performance goals.

 2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock
and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. 
 3. The Participant shall have full
stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares. 
 4. Should the Participant cease to remain
in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal
balance of any outstanding purchase-money note of the Participant attributable to the surrendered shares. 
  

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 5. The Plan Administrator may in its discretion waive the surrender and cancellation of
one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those shares. Such waiver shall result in the immediate
vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment
of the applicable performance objectives. 
 6. Outstanding share right awards under the Stock Issuance Program shall
automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards, if the performance goals established for such awards are not attained. The Plan Administrator, however, shall have the discretionary
authority to issue shares of Common Stock under one or more outstanding share right awards as to which the designated performance goals have not been attained. 
 II. CORPORATE TRANSACTION/CHANGE IN CONTROL 
 A. All of the Corporation’s outstanding repurchase rights under the Stock
Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent (i) those repurchase rights
are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement. 
 B. The Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently
terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor
corporation (or parent thereof). 
 C. The Plan Administrator shall also have the discretionary authority to structure one or more of the
Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the
Participant’s Service should subsequently terminate by reason of an Involuntary Termination within designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control. 
 III. SHARE ESCROW/LEGENDS 
 Unvested shares may, in
the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those
unvested shares. 
 ARTICLE FIVE 
 AUTOMATIC OPTION GRANT PROGRAM 
 I. OPTION TERMS 
 A. Grant Dates. Option grants shall be made on the dates specified below: 
 1. Each
individual who is first elected or appointed as a non-employee Board member at any time on or after the Underwriting Date shall automatically be granted, on the date of such initial election or appointment, a Non-Statutory Option to purchase 40,000
shares of Common Stock, provided that individual has not previously been in the employ of the Corporation or any Parent or Subsidiary. 
 2. On the date of each Annual Stockholders Meeting held after the Underwriting Date, each individual who is to continue to serve as an Eligible Director, whether or not that individual is standing for re-election to
the Board at that particular Annual Meeting, shall automatically be granted a Non-Statutory Option to purchase 10,000 shares of Common Stock, provided such individual has served as a non-employee Board member for at least six (6) months. There
shall be no limit on the number of such 10,000-share option grants any one Eligible Director may receive over his or her period of Board service, and non-employee Board 
  

 12 

 members who have previously been in the employ of the Corporation (or any Parent or Subsidiary) or who
have otherwise received one or more stock option grants from the Corporation prior to the Underwriting Date shall be eligible to receive one or more such annual option grants over their period of continued Board service. 
 B. Exercise Price. 
 1. The
exercise price per share shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date. 
 2. The exercise price shall be payable in one or more of the alternative forms authorized under the Discretionary Option Grant Program. Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. 
 C. Option Term. Each option shall have
a term of ten (10) years measured from the option grant date. 
 D. Exercise and Vesting of Options. Each option shall be immediately
exercisable for any or all of the option shares. However, any unvested shares purchased under the option shall be subject to repurchase by the Corporation, at the exercise price paid per share, upon the Optionee’s cessation of Board service
prior to vesting in those shares. The shares subject to each initial 40,000-share grant shall vest, and the Corporation’s repurchase right shall lapse, in a series of eight (8) successive equal semi-annual installments upon the
Optionee’s completion of each six (6)-month period of service as a Board member over the forty eight (48)-month period measured from the option grant date. The shares subject to each annual 10,000-share option grant shall be fully vested as of
the grant date. 
 E. Limited Transferability of Options. Each option under this Article Five may be assigned in whole or in part during the
Optionee’s lifetime to one or more members of the Optionee’s family or to a trust established exclusively for one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with the
Optionee’s estate plan or pursuant to domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the
assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. The Optionee may also designate
one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Five, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon
the Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be exercised following the Optionee’s death. 
 F. Termination
of Board Service. The following provisions shall govern the exercise of any options held by the Optionee at the time the Optionee ceases to serve as a Board member: 
 (i) The Optionee (or, in the event of Optionee’s death, the personal representative of the Optionee’s estate or the person or
persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or the designated beneficiary or beneficiaries of such option) shall have a twelve (12)-month period following the date of such cessation of
Board service in which to exercise each such option. 
 (ii) During the twelve (12)-month exercise period, the option may not
be exercised in the aggregate for more than the number of vested shares of Common Stock for which the option is exercisable at the time of the Optionee’s cessation of Board service. 
 (iii) Should the Optionee cease to serve as a Board member by reason of death or Permanent Disability, then all shares at the time subject
to the option shall immediately vest so that such option may, during the twelve (12)-month exercise period following such cessation of Board service, be exercised for all or any portion of those shares as fully-vested shares of Common Stock.

 (iv) In no event shall the option remain exercisable after the expiration of the option term. Upon the expiration of the
twelve (12)-month exercise period or (if earlier) upon the expiration of the option term, the 
  

 13 

 option shall terminate and cease to be outstanding for any vested shares for which the option has not
been exercised. However, the option shall, immediately upon the Optionee’s cessation of Board service for any reason other than death or Permanent Disability, terminate and cease to be outstanding to the extent the option is not otherwise at
that time exercisable for vested shares. 
 II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER 
 A. In the event of a Corporate Transaction while the Optionee remains a Board member, the shares of Common Stock at the time subject to each outstanding
option held by such Optionee under this Automatic Option Grant Program but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable
for all the option shares as fully-vested shares of Common Stock and may be exercised for any or all of those vested shares. Immediately following the consummation of the Corporate Transaction, each automatic option grant shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation (or parent thereof). 
 B. In the event of a Change in Control
while the Optionee remains a Board member, the shares of Common Stock at the time subject to each outstanding option held by such Optionee under this Automatic Option Grant Program but not otherwise vested shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all the option shares as fully-vested shares of Common Stock and may be exercised for any or all of those vested shares. Each such
option shall remain exercisable for such fully-vested option shares until the expiration or sooner termination of the option term or the surrender of the option in connection with a Hostile Take-Over. 
 C. All outstanding repurchase rights shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately
vest in full, in the event of any Corporate Transaction or Change in Control. 
 D. Upon the occurrence of a Hostile Take-Over, the Optionee
shall have a thirty (30)-day period in which to surrender to the Corporation each of his or her outstanding automatic option grants. The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to each surrendered option (whether or not the Optionee is otherwise at the time vested in those shares) over (ii) the aggregate exercise price payable for
such shares. Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation. No approval or consent of the Board or any Plan Administrator shall be required at the time of the actual option
surrender and cash distribution. 
 E. Each option which is assumed in connection with a Corporate Transaction shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to
such Corporate Transaction. Appropriate adjustments shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the
actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding
options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction. 
 F. The grant of options under the Automatic Option Grant Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
 III. REMAINING TERMS 
 The remaining terms of each option granted under the Automatic Option Grant Program shall be the same
as the terms in effect for option grants made under the Discretionary Option Grant Program. 
  

 14 

 ARTICLE SIX 
 DIRECTOR FEE OPTION GRANT PROGRAM 
 I. OPTION GRANTS 
 The Primary Committee shall have the sole and exclusive authority to determine the calendar year or years for which the Director Fee Option Grant Program
is to be in effect. For each such calendar year the program is in effect, each non-employee Board member may irrevocably elect to apply all or any portion of the annual retainer fee otherwise payable in cash for his or her service on the Board for
that year to the acquisition of a special option grant under this Director Fee Option Grant Program. Such election must be filed with the Corporation’s Chief Financial Officer prior to the first day of the calendar year for which the annual
retainer fee which is the subject of that election is otherwise payable. Each non-employee Board member who files such a timely election shall automatically be granted an option under this Director Fee Option Grant Program on the first trading day
in January in the calendar year for which the annual retainer fee which is the subject of that election would otherwise be payable in cash. 
 II. OPTION
TERMS 
 Each option shall be a Non-Statutory Option governed by the terms and conditions specified below. 
 A. Exercise Price. 
 1. The
exercise price per share shall be thirty-three and one-third percent (33 1/3%) of the Fair Market Value per share of
Common Stock on the option grant date. 
 2. The exercise price shall become immediately due upon exercise of the option and
shall be payable in one or more of the alternative forms authorized under the Discretionary Option Grant Program. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the
purchased shares must be made on the Exercise Date. 
 B. Number of Option Shares. The number of shares of Common Stock subject to the option
shall be determined pursuant to the following formula (rounded down to the nearest whole number): 
 X = A / (B x 66- 2/3%), where 
 X is the number of option shares, 
 A is the portion of the annual retainer fee subject to
the non-employee Board member’s election, and 
 B is the Fair Market Value per share of Common Stock on the option grant
date. 
 C. Exercise and Term of Options. The option shall become exercisable in a series of twelve (12) equal monthly installments upon
the Optionee’s completion of each calendar month of Board service during the calendar year for which the retainer fee election is in effect. Each option shall have a maximum term often (10) years measured from the option grant date.

 D. Limited Transferability of Options. Each option under this Article Six may be assigned in whole or in part during the Optionee’s
lifetime to one or more members of the Optionee’s family or to a trust established exclusively for one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with Optionee’s estate
plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be
the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. The Optionee may also designate one or more persons as
the beneficiary or beneficiaries of his or her outstanding options under this Article Six, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death
while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited
time period during which the option may be exercised following the Optionee’s death. 
  

 15 

 E. Termination of Board Service. Should the Optionee cease Board service for any reason (other than death
or Permanent Disability) while holding one or more options under this Director Fee Option Grant Program, then each such option shall remain exercisable, for any or all of the shares for which the option is exercisable at the time of such cessation
of Board service, until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of such cessation of Board service. However, each option held by the
Optionee under this Director Fee Option Grant Program at the time of his or her cessation of Board service shall immediately terminate and cease to remain outstanding with respect to any and all shares of Common Stock for which the option is not
otherwise at that time exercisable. 
 F. Death or Permanent Disability. Should the Optionee’s service as a Board member cease by reason
of death or Permanent Disability, then each option held by such Optionee under this Director Fee Option Grant Program shall immediately become exercisable for all the shares of Common Stock at the time subject to that option, and the option may be
exercised for any or all of those shares as fully-vested shares until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of such cessation of Board
service. In the event of the Optionee’s death while holding such option, the option may be exercised by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the
Optionee’s will or the laws of inheritance or by the designated beneficiary or beneficiaries of such option. 
 Should the Optionee die
after cessation of Board service but while holding one or more options under this Director Fee Option Grant Program, then each such option may be exercised, for any or all of the shares for which the option is exercisable at the time of the
Optionee’s cessation of Board service (less any shares subsequently purchased by Optionee prior to death), by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to
the Optionee’s will or the laws of inheritance or by the designated beneficiary or beneficiaries of such option. Such right of exercise shall lapse, and the option shall terminate, upon the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the three (3)-year period measured from the date of the Optionee’s cessation of Board service. 
 III. CORPORATE
TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER 
 A. In the event of any Corporate Transaction while the Optionee remains a Board member,
each outstanding option held by such Optionee under this Director Fee Option Grant Program shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for
all the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. Each such outstanding option shall terminate immediately following the Corporate
Transaction, except to the extent assumed by the successor corporation (or parent thereof) in such Corporate Transaction. Any option so assumed and shall remain exercisable for the fully-vested shares until the earlier of (i) the expiration of
the ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of the Optionee’s cessation of Board service. 
 B. In the event of a Change in Control while the Optionee remains a Board member, each outstanding option held by such Optionee under this Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares
of Common Stock. The option shall remain so exercisable until the earliest to occur of (i) the expiration of the ten (10)-year option term, (ii) the expiration of the three (3)-year period measured from the date of the Optionee’s
cessation of Board service, (iii) the termination of the option in connection with a Corporate Transaction or (iv) the surrender of the option in connection with a Hostile Take-Over. 
 C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each outstanding
option granted him or her under the Director Fee Option Grant Program. The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over Price of the shares of Common
Stock at the time subject to each surrendered option (whether or not the option is otherwise at the time exercisable for those shares) over (ii) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within
five (5) days following the surrender of the option to the Corporation. No approval or consent of the Board or any Plan Administrator shall be required at the time of the actual option surrender and cash distribution. 
  

 16 

 D. Each option which is assumed in connection with a Corporate Transaction shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to
such Corporate Transaction. Appropriate adjustments shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the
actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding
options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction. 
 E. The grant of options under the Director Fee Option Grant Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
 IV. REMAINING TERMS 
 The remaining terms of each option granted under this Director Fee Option Grant Program shall be the
same as the terms in effect for option grants made under the Discretionary Option Grant Program. 
 ARTICLE SEVEN 
 MISCELLANEOUS 
 I. FINANCING 
 The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments. The terms of any such promissory note (including the interest rate and the terms of
repayment) shall be established by the Plan Administrator in its sole discretion. In no event may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable
for the purchased shares (less the par value of such shares) plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

 II. TAX WITHHOLDING 
 A. The
Corporation’s obligation to deliver shares of Common Stock upon the exercise of options or the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and
employment tax withholding requirements. 
 B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory
Options or unvested shares of Common Stock under the Plan (other than the options granted or the shares issued under the Automatic Option Grant or Director Fee Option Grant Program) with the right to use shares of Common Stock in satisfaction of all
or part of the Withholding Taxes to which such holders may become subject in connection with the exercise of their options or the vesting of their shares. Such right may be provided to any such holder in either or both of the following formats:

 Stock Withholding: The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of
such Non-Statutory Option or the vesting of such shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder.

 Stock Delivery: The election to deliver to the Corporation, at the time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such holder (other than in connection with the option exercise or share vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes
(not to exceed one hundred percent (100%)) designated by the holder. 
  

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 III. EFFECTIVE DATE AND TERM OF THE PLAN 
 A. The Plan shall become effective immediately on the Plan Effective Date. However, the Salary Investment Option Grant Program and the Director Fee Option
Grant Program shall not be implemented until such time as the Primary Committee may deem appropriate. Options may be granted under the Discretionary Option Grant at any time on or after the Plan Effective Date, and the initial option grants under
the Automatic Option Grant Program shall also be made on the Plan Effective Date to any non-employee Board members eligible for such grants at that time. However, no options granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months after the Plan Effective Date, then all options previously granted under this Plan shall
terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan. 
 B. The Plan
shall serve as the successor to the Predecessor Plan, and no further option grants or direct stock issuances shall be made under the Predecessor Plan after the Plan Effective Date. All options outstanding under the Predecessor Plan on the Plan
Effective Date shall be incorporated into the Plan at that time and shall be treated as outstanding options under the Plan. However, each outstanding option so incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of such incorporated options with respect to their acquisition of shares of Common Stock. 
 C. One or more provisions of the Plan, including (without limitation) the option/vesting acceleration provisions of Article Two relating to Corporate
Transactions and Changes in Control, may, in the Plan Administrator’s discretion, be extended to one or more options incorporated from the Predecessor Plan which do not otherwise contain such provisions. 
 D. The Plan shall terminate upon the earliest to occur of (i) June 30, 2009, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as fully-vested shares or (iii) the termination of all outstanding options in connection with a Corporate Transaction. Should the Plan terminate on June 30, 2009, then all option grants and unvested
stock issuances outstanding at that time shall continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances. 
 IV. AMENDMENT OF THE PLAN 
 A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to stock options or unvested stock issuances at the time outstanding under the Plan unless the
Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws or regulations. 
 B. The Plan was amended and restated in March 2000 (the “March 2000 Restatement”) to effect the following changes, which were approved by the
Corporation’s stockholders at the 2000 Special Stockholders Meeting held on April 25, 2000 (numbers are unadjusted for stock splits occurring after April 25, 2000): 
 (i) increase the maximum number of shares of Common Stock authorized for issuance under the Plan by an additional 10,000,000 shares so
that the authorized share reserve was thereby increased from 11,983,100 shares to 21,983,100 shares of Common Stock; 
 (ii)
provide the Plan Administrator with the authority to make option grants and direct stock issuances under the Discretionary Option Grant and Stock Issuance Programs with an exercise or issue price less than the Fair Market Value of the shares on the
date of the option grant or stock issuance; and 
 (iii) increase the limitation on the number of shares by which the share
reserve is to increase automatically each year pursuant to the provisions of Section V.B. of Article One from 4,000,000 shares to 6,000,000 shares. 
 C. The Plan was amended in April 2001 (the “April 2001 Amendment”) subject to stockholder approval at the 2001 Annual Meeting (numbers are unadjusted for stock splits occurring after April 2001) to: (i) effect an increase of
the maximum number of shares of Common Stock authorized for issuance under the Plan by an additional 
  

 18 

 15,000,000 shares so that the authorized share reserve was thereby increased from Forty Million Nine Hundred Eighty-Two
Thousand Four Hundred Twenty-Eight (40,982,428) shares to Forty Million Nine Hundred Eighty-Two Thousand Four Hundred Twenty-Eight (40,982,428) shares of Common Stock; and (ii) increase the limitation of the number of shares by which
the reserve is to increase automatically each year pursuant to the provisions of Section V.B of Article One from 6,000,000 shares to 10,000,000 shares effective for all calendar years after 2001. 
 The 2001 Amendment was approved at the 2001 Annual Meeting of Stockholders. 
 D. Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant and Salary Investment Option Grant Programs and shares
of Common Stock may be issued under the Stock Issuance Program that are in each instance in excess of the number of shares then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in
escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after
the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and
the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares
shall thereupon be automatically cancelled and cease to be outstanding. 
 V. USE OF PROCEEDS 
 Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

 VI. REGULATORY APPROVALS 
 A. The
implementation of the Plan, the granting of any stock option under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any granted option or (ii) under the Stock Issuance Program shall be subject to the
Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the stock options granted under it and the shares of Common Stock issued pursuant to it. 
 B. No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any stock
exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading. 
 VII. NO EMPLOYMENT/SERVICE RIGHTS

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

 19 

 APPENDIX 
 The following definitions shall be in effect under the Plan: 
 A. Automatic Option Grant Program shall mean
the automatic option grant program in effect under Article Five of the Plan. 
 B. Board shall mean the Corporation’s Board of
Directors. 
 C. Change in Control shall mean a change in ownership or control of the Corporation effected through either of the following
transactions: 
 (i) the acquisition, directly or indirectly by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the Corporation’s stockholders, or 
 (ii) a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination. 
 D. Code shall mean the Internal Revenue Code of 1986, as amended. 
 E. Common Stock shall mean the Corporation’s common stock. 
 F. Corporate Transaction shall mean either
of the following stockholder-approved transactions to which the Corporation is a party: 
 (i) a merger or consolidation in
which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately
prior to such transaction, or 
 (ii) the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation. 
 G. Corporation shall mean Kana Software, Inc.
(formerly known as Kana Communications, Inc.), a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Kana Software, Inc. which shall by appropriate action adopt the Plan. 
 H. Director Fee Option Grant Program shall mean the special stock option grant in effect for non-employee Board members under Article Six of the Plan.

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

 J. Eligible Director shall mean a non-employee Board member eligible to participate in the Automatic Option Grant Program or the Director
Fee Option Grant Program in accordance with the eligibility provisions of Articles One, Five and Six. 
 K. Employee shall mean an individual
who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. 
  

 i 

 L. Exercise Date shall mean the date on which the Corporation shall have received written notice of the
option exercise. 
 M. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following
provisions: 
 (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall
be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 
 (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by
the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 
 (iii)
For purposes of any option grants made on the Underwriting Date, the Fair Market Value shall be deemed to be equal to the price per share at which the Common Stock is to be sold in the initial public offering pursuant to the Underwriting Agreement.

 N. Hostile Take-Over shall mean the acquisition, directly or indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the Corporation’s stockholders which the Board does not recommend such stockholders
to accept. 
 O. Incentive Option shall mean an option which satisfies the requirements of Code Section 422. 
 P. Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of: 
 (i) such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or 
 (ii) such individual’s voluntary resignation following (A) a change in his or her position with the Corporation which materially
reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and percentage target bonus under any
corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction
or relocation is effected by the Corporation without the individual’s consent. 
 Q. Misconduct shall mean the commission of any act of
fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by
such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary). 
 R. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. 
 S. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. 
  

 ii 

 T. Optionee shall mean any person to whom an option is granted under the Discretionary Option Grant,
Salary Investment Option Grant, Automatic Option Grant or Director Fee Option Grant Program. 
 U. Parent shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
 V. Participant shall mean
any person who is issued shares of Common Stock under the Stock Issuance Program. 
 W. Permanent Disability or Permanently Disabled shall
mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant and Director Fee Option Grant Programs, Permanent Disability or Permanently Disabled shall mean the inability of the non-employee Board member to perform his or her
usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. 
 X. Plan shall mean the Corporation’s 1999 Stock Incentive Plan, as set forth in this document. 
 Y. Plan Administrator shall mean the particular entity, whether the Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons
under its jurisdiction. 
 Z. Plan Effective Date shall mean the date the Plan shall become effective and shall be coincident with the
Underwriting Date. 
 AA. Predecessor Plan shall mean the Corporation’s 1997 Stock Option/Stock Issuance Plan in effect immediately
prior to the Plan Effective Date hereunder. 
 BB. Primary Committee shall mean the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders and to administer the Salary Investment Option Grant Program solely with respect to the selection of the
eligible individuals who may participate in such program. 
 CC. Salary Investment Option Grant Program shall mean the salary investment
option grant program in effect under Article Three of the Plan. 
 DD. Secondary Committee shall mean a committee of one or more Board
members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect to eligible persons other than Section 16 Insiders. 
 EE. Section 16 Insider shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act. 
 FF. Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary) by a person in the capacity
of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. 
 GG. Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange. 
 HH. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program. 
 II. Stock Issuance Program shall mean the stock issuance program in effect under Article Four of
the Plan. 
  

 iii 

 JJ. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. 
 KK. Take-Over Price shall mean the greater of (i) the
Fair Market Value per share of Common Stock on the date the option is surrendered to the Corporation in connection with a Hostile Take-Over or (ii) the highest reported price per share of Common Stock paid by the tender offer or in effecting
such Hostile Take-Over. However, if the surrendered option is an Incentive Option, the Take-Over Price shall not exceed the clause (i) price per share. 
 LL. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the
Corporation (or any Parent or Subsidiary). 
 MM. Underwriting Agreement shall mean the agreement between the Corporation and the underwriter
or underwriters managing the initial public offering of the Common Stock. 
 NN. Underwriting Date shall mean the date on which the
Underwriting Agreement is executed and priced in connection with an initial public offering of the Common Stock. 
 OO. Withholding Taxes
shall mean the Federal, state and local income and employment withholding taxes to which the holder of Non-Statutory Options or unvested shares of Common Stock may become subject in connection with the exercise of those options or the vesting of
those shares. 
  

 iv

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