Document:

exv10w6

 

Exhibit 10.6

ARCSIGHT, INC.

2007 Equity Incentive Plan

     1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are important to the success of
the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an
opportunity to participate in the Company’s future performance through the grant of Awards.
Capitalized terms not defined elsewhere in the text are defined in Section 27.

     2. SHARES SUBJECT TO THE PLAN.

          2.1 Number of Shares Available. Subject to Sections 2.4, 2.6 and any other
applicable provisions hereof, the total number of Shares reserved and available for grant and
issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is 4,000,000
Shares plus (i) any reserved shares not issued or subject to outstanding grants under the Company’s
2000 Stock Incentive Plan and 2002 Stock Plan (the “Prior Plans”) on the Effective Date (as defined
below), (ii) shares that are subject to stock options granted under the Prior Plans that cease to
be subject to such stock options after the Effective Date and (iii) shares issued under the Prior
Plans before or after the Effective Date pursuant to the exercise of stock options that are, after
the Effective Date, forfeited or shares issued under the Prior Plans that are repurchased by the
Company at the original issue price.

          2.2 Lapsed, Returned Awards. Shares subject to Awards, and Shares issued upon
exercise of Awards, will again be available for grant and issuance in connection with subsequent
Awards under this Plan to the extent such Shares: (i) are subject to issuance upon exercise of an
Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any
reason other than exercise of the Option or SAR; (ii) are subject to Awards granted under this Plan
that are forfeited or are repurchased by the Company at the original issue price; (iii) are
surrendered pursuant to an Exchange Program; or (iv) are subject to Awards granted under this Plan
that otherwise terminate without such Shares being issued. With respect to SARs, only Shares
actually issued pursuant to a SAR will cease to be available under the Plan; all remaining Shares
under SARs will remain available for future grant or sale under the Plan. Shares used to pay the
exercise price of an Award or to satisfy the tax withholding obligations related to an Award will
become available for future grant or sale under the Plan. To the extent an Award under the Plan is
paid out in cash rather than Shares, such cash payment will not result in reducing the number of
Shares available for issuance under the Plan.

          2.3 Minimum Share Reserve. At all times the Company shall reserve and keep available
a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding
Awards granted under this Plan and all other outstanding but unvested Awards granted under this
Plan.

          2.4 Automatic Share Reserve Increase. The number of Shares available for grant and
issuance under the Plan shall be increased on January 1, of each of 2009 through 2012, by the
lesser of (i) four percent (4%) of the number of Shares issued and outstanding on each December 31
immediately prior to the date of increase (rounded down to the nearest whole share) or (ii) such
number of Shares determined by the Board.

          2.5 Limitations. No more than 80,000,000 Shares shall be issued pursuant to the
exercise of ISOs.

          2.6 Adjustment of Shares. If the number of outstanding Shares is changed by a stock
dividend, recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or

 

 

similar change in the capital structure of the Company, without consideration, then (a) the
number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1,
(b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the
number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be
issued as ISOs set forth in Section 2.5, (e) the maximum number of Shares that may be issued to an
individual or to a new Employee in any one calendar year set forth in Section 3 and (f) the number
of Shares that are granted as Awards to Outside Directors as set forth in Section 12, shall be
proportionately adjusted, subject to any required action by the Board or the stockholders of the
Company and in compliance with applicable securities laws; provided that fractions of a Share will
not be issued.

     3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be
granted to Employees, Consultants, Directors and Outside Directors of the Company or any Parent or
Subsidiary of the Company; provided such Consultants, Directors and Outside Directors
render bona fide services not in connection with the offer and sale of securities in a
capital-raising transaction. No Participant will be eligible to receive more than 1,000,000 Shares
in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of
the Company or of a Parent or Subsidiary of the Company (including new Employees who are also
officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to
receive up to a maximum of 2,000,000 Shares in the calendar year in which they commence their
employment.

     4. ADMINISTRATION.

          4.1 Committee Composition; Authority. This Plan will be administered by the Committee
or by the Board acting in place of the Committee. Subject to the general purposes, terms and
conditions of this Plan, and to the direction of the Board, the Committee will have full power to
implement and carry out this Plan, except, however, the Board shall establish the terms for the
grant of an Award to Outside Directors. The Committee will have the authority to:

               (a) construe and interpret this Plan, any Award Agreement and any other agreement or document
executed pursuant to this Plan;

               (b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

               (c) select persons to receive Awards;

               (d) determine the form and terms and conditions, not inconsistent with the terms of the Plan,
of any Award granted hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Award or the Shares relating thereto, based in each case on such factors
as the Committee will determine;

               (e) determine the number of Shares or other consideration subject to Awards;

               (f) determine the Fair Market Value in good faith, if necessary;

               (g) determine whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of the Company;

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               (h) grant waivers of Plan or Award conditions;

               (i) determine the vesting, exercisability and payment of Awards;

               (j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any
Award or any Award Agreement;

               (k) determine whether an Award has been earned;

               (l) determine the terms and conditions of any, and to institute any Exchange Program;

               (m) reduce or waive any criteria with respect to Performance Factors;

               (n) adjust Performance Factors to take into account changes in law and accounting or tax rules
as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships provided that such adjustments are
consistent with the regulations promulgated under Section 162(m) of the Code with respect to
persons whose compensation is subject to Section 162(m) of the Code; and

               (o) make all other determinations necessary or advisable for the administration of this Plan.

          4.2 Committee Interpretation and Discretion. Any determination made by the Committee
with respect to any Award shall be made in its sole discretion at the time of grant of the Award
or, unless in contravention of any express term of the Plan or Award, at any later time, and such
determination shall be final and binding on the Company and all persons having an interest in any
Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement
shall be submitted by the Participant or Company to the Committee for review. The resolution of
such a dispute by the Committee shall be final and binding on the Company and the Participant. The
Committee may delegate to one or more executive officers the authority to review and resolve
disputes with respect to Awards held by Participants who are not Insiders, and such resolution
shall be final and binding on the Company and the Participant.

          4.3 Section 162(m) of the Code and Section 16 of the Exchange Act. When necessary or
desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the
Code, the Committee shall include at least two persons who are “outside directors” (as defined
under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on
the Committee) such “outside directors” shall approve the grant of such Award and timely determine
(as applicable) the Performance Period and any Performance Factors upon which vesting or settlement
of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior
to settlement of any such Award at least two (or a majority if more than two then serve on the
Committee) such “outside directors” then serving on the Committee shall determine and certify in
writing the extent to which such Performance Factors have been timely achieved and the extent to
which the Shares subject to such Award have thereby been earned. Awards granted to Insiders must be
approved by two or more “non-employee directors” (as defined in the regulations promulgated under
Section 16 of the Exchange Act).

     5. OPTIONS. The Committee may grant Options to Participants and will determine
whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or
Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise
Price

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of the Option, the period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:

          5.1 Option Grant. Each Option granted under this Plan will identify the Option as an
ISO or an NQSO. An Option may be, but need not be, awarded upon satisfaction of such Performance
Factors during any Performance Period as are set out in advance in the Participant’s individual
Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then
the Committee will: (x) determine the nature, length and starting date of any Performance Period
for each Option; and (y) select from among the Performance Factors to be used to measure the
performance, if any. Performance Periods may overlap and Participants may participate
simultaneously with respect to Options that are subject to different performance goals and other
criteria.

          5.2 Date of Grant. The date of grant of an Option will be the date on which the
Committee makes the determination to grant such Option, or a specified future date. The Award
Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.

          5.3 Exercise Period. Options may be exercisable within the times or upon the
conditions as set forth in the Award Agreement governing such Option; provided,
however, that no Option will be exercisable after the expiration of ten (10) years from the
date the Option is granted; and provided further that no ISO granted to a person who, at
the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary
of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5)
years from the date the ISO is granted. The Committee also may provide for Options to become
exercisable at one time or from time to time, periodically or otherwise, in such number of Shares
or percentage of Shares as the Committee determines.

          5.4 Exercise Price. The Exercise Price of an Option will be determined by the
Committee when the Option is granted; provided that: (i) the Exercise Price of an ISO will be not
less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant
and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than
one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.
Payment for the Shares purchased may be made in accordance with Section 11. The Exercise Price of
a NQSO may be less than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant in the Committee’s discretion.

          5.5 Method of Exercise. Any Option granted hereunder will be exercisable according to
the terms of the Plan and at such times and under such conditions as determined by the Committee
and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An
Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as
the Committee may specify from time to time) from the person entitled to exercise the Option, and
(ii) full payment for the Shares with respect to which the Option is exercised (together with
applicable withholding taxes). Full payment may consist of any consideration and method of payment
authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon
exercise of an Option will be issued in the name of the Participant. Until the Shares are issued
(as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights as a stockholder
will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will
issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any
manner will decrease the number of Shares thereafter

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available, both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.

          5.6 Termination. The exercise of an Option will be subject to the following (except
as may be otherwise provided in an Award Agreement):

               (a) If the Participant is Terminated for any reason except for Cause or the Participant’s
death or Disability, then the Participant may exercise such Participant’s Options only to the
extent that such Options would have been exercisable by the Participant on the Termination Date no
later than three (3) months after the Termination Date (or such shorter time period or longer time
period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an NQSO), but in any event no later than
the expiration date of the Options.

               (b) If the Participant is Terminated because of the Participant’s death (or the Participant
dies within three (3) months after a Termination other than for Cause or because of the
Participant’s Disability), then the Participant’s Options may be exercised only to the extent that
such Options would have been exercisable by the Participant on the Termination Date and must be
exercised by the Participant’s legal representative, or authorized assignee, no later than twelve
(12) months after the Termination Date (or such shorter time period not less than six (6) months or
longer time period not exceeding five (5) years as may be determined by the Committee, with any
exercise beyond (a) three (3) months after the Termination Date when the Termination is for any
reason other than the Participant’s death, or (b) twelve (12) months after the Termination Date
when the Termination is for the Participant’s death, deemed to be an NQSO), but in any event no
later than the expiration date of the Options.

               (c) If the Participant is Terminated because of the Participant’s Disability, then the
Participant’s Options may be exercised only to the extent that such Options would have been
exercisable by the Participant on the Termination Date and must be exercised by the Participant (or
the Participant’s legal representative or authorized assignee) no later than twelve (12) months
after the Termination Date (with any exercise beyond (a) three (3) months after the Termination
Date when the Termination is for a Disability that is not a “permanent and total
disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the
Termination Date when the Termination is for a Disability that is a “permanent and total
disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NQSO), but in
any event no later than the expiration date of the Options.

               (d) If the Participant is terminated for Cause, then Participant’s Options shall expire on
such Participant’s Termination Date, or at such later time and on such conditions as are determined
by the Committee, but in any no event later than the expiration date of the Options.

          5.7 Limitations on Exercise. The Committee may specify a minimum number of Shares
that may be purchased on any exercise of an Option, provided that such minimum number will not
prevent any Participant from exercising the Option for the full number of Shares for which it is
then exercisable.

          5.8 Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that
the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for
the first time by the Participant during any calendar year (under all plans of the Company and any
Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated
as NQSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which
they were granted. The Fair Market Value of the Shares will be determined as of the time the Option
with respect to such Shares is granted. In the event that the Code or the regulations promulgated
thereunder are amended after

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the Effective Date to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit will be automatically incorporated herein and
will apply to any Options granted after the effective date of such amendment.

          5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution therefor, provided that
any such action may not, without the written consent of a Participant, impair any of such
Participant’s rights under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the
Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the
Committee may reduce the Exercise Price of outstanding Options without the consent of such
Participants; provided, however, that the Exercise Price may not be reduced below
the Fair Market Value on the date the action is taken to reduce the Exercise Price.

          5.10 No Disqualification. Notwithstanding any other provision in this Plan, no term
of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or
authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any ISO under Section
422 of the Code.

     6. RESTRICTED STOCK AWARDS.

          6.1 Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company
to sell to a Participant Shares that are subject to restrictions (“Restricted Stock”). The
Committee will determine to whom an offer will be made, the number of Shares the Participant may
purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other
terms and conditions of the Restricted Stock Award, subject to the Plan.

          6.2 Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award
will be evidenced by an Award Agreement. A Participant accepts a Restricted Stock Award by signing
and delivering to the Company an Award Agreement with full payment of the Purchase Price, within
thirty (30) days from the date the Award Agreement was delivered to the Participant. If the
Participant does not accept such Award within thirty (30) days, then the offer of such Restricted
Stock Award will terminate, unless the Committee determines otherwise.

          6.3 Purchase Price. The Purchase Price for a Restricted Stock Award will be
determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock
Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the
Plan, and the Award Agreement.

          6.4 Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such
restrictions as the Committee may impose or are required by law. These restrictions may be based
on completion of a specified number of years of service with the Company or upon completion of
Performance Factors, if any, during any Performance Period as set out in advance in the
Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee
shall: (a) determine the nature, length and starting date of any Performance Period for the
Restricted Stock Award; (b) select from among the Performance Factors to be used to measure
performance goals, if any; and (c) determine the number of Shares that may be awarded to the
Participant. Performance Periods may overlap and a Participant may participate simultaneously with
respect to Restricted Stock Awards that are subject to different Performance Periods and having
different performance goals and other criteria.

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          6.5 Termination of Participant. Except as may be set forth in the Participant’s Award
Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by
the Committee).

     7. STOCK BONUS AWARDS.

          7.1 Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person of
Shares (which may consist of Restricted Stock or Restricted Stock Units) for services to be
rendered or for past services already rendered to the Company or any Parent or Subsidiary. All
Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant
will be required for Shares awarded pursuant to a Stock Bonus Award.

          7.2 Terms of Stock Bonus Awards. The Committee will determine the number of Shares to
be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These
restrictions may be based upon completion of a specified number of years of service with the
Company or upon satisfaction of performance goals based on Performance Factors during any
Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the
grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting
date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance
Factors to be used to measure performance goals; and (c) determine the number of Shares that may be
awarded to the Participant. Performance Periods may overlap and a Participant may participate
simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods
and different performance goals and other criteria.

          7.3 Termination of Participation. Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise
by the Committee).

     8. STOCK APPRECIATION RIGHTS.

          8.1 Awards of SARs. A Stock Appreciation Right (“SAR”) is an award to a Participant
that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value
equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise
Price multiplied by (b) the number of Shares with respect to which the SAR is being settled
(subject to any maximum number of Shares that may be issuable as specified in an Award Agreement).
All SARs shall be made pursuant to an Award Agreement.

          8.2 Terms of SARs. The Committee will determine the terms of each SAR including,
without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the
time or times during which the SAR may be settled; (c) the consideration to be distributed on
settlement of the SAR; and (d) the effect of the Participant’s Termination on each SAR. The
Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may be
less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if
any, during any Performance Period as are set out in advance in the Participant’s individual Award
Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the
Committee will: (x) determine the nature, length and starting date of any Performance Period for
each SAR; and (y) select from among the Performance Factors to be used to measure the performance,
if any. Performance Periods may overlap and Participants may participate simultaneously with
respect to SARs that are subject to different Performance Factors and other criteria.

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          8.3 Exercise Period and Expiration Date. A SAR will be exercisable within the times
or upon the occurrence of events determined by the Committee and set forth in the Award Agreement
governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR
will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The
Committee may also provide for SARs to become exercisable at one time or from time to time,
periodically or otherwise (including, without limitation, upon the attainment during a Performance
Period of performance goals based on Performance Factors), in such number of Shares or percentage
of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the
Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6
also will apply to SARs.

          8.4 Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to
receive payment from the Company in an amount determined by multiplying (i) the difference between
the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the
number of Shares with respect to which the SAR is exercised. At the discretion of the Committee,
the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or
in some combination thereof.

     9. RESTRICTED STOCK UNITS.

          9.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to
a Participant covering a number of Shares that may be settled in cash, or by issuance of those
Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award
Agreement.

          9.2 Terms of RSUs. The Committee will determine the terms of an RSU including,
without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which
the RSU may be settled; and (c) the consideration to be distributed on settlement, and the effect
of the Participant’s Termination on each RSU. An RSU may be awarded upon satisfaction of such
Performance Factors (if any) during any Performance Period as are set out in advance in the
Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance
Factors, then the Committee will: (x) determine the nature, length and starting date of any
Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure
the performance, if any; and (z) determine the number of Shares deemed subject to the RSU.
Performance Periods may overlap and participants may participate simultaneously with respect to
RSUs that are subject to different Performance Periods and different performance goals and other
criteria.

          9.3 Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as
practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The
Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of
both.

          9.4 Termination of Participant. Except as may be set forth in the Participant’s Award
Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by
the Committee).

     10. PERFORMANCE SHARES.

          10.1 Awards of Performance Shares. A Performance Share Award is an award to a
Participant denominated in Shares that may be settled in cash, or by issuance of those Shares
(which may consist of Restricted Stock). Grants of Performance Shares shall be made pursuant to an
Award Agreement.

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          10.2 Terms of Performance Shares. The Committee will determine, and each Award
Agreement shall set forth, the terms of each award of Performance Shares including, without
limitation: (a) the number of Shares deemed subject to such Award; (b) the Performance Factors and
Performance Period that shall determine the time and extent to which each award of Performance
Shares shall be settled; (c) the consideration to be distributed on settlement, and the effect of
the Participant’s Termination on each award of Performance Shares. In establishing Performance
Factors and the Performance Period the Committee will: (x) determine the nature, length and
starting date of any Performance Period; (y) select from among the Performance Factors to be used;
and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to
settlement the Committee shall determine the extent to which Performance Shares have been earned.
Performance Periods may overlap and Participants may participate simultaneously with respect to
Performance Shares that are subject to different Performance Periods and different performance
goals and other criteria.

          10.3 Value, Earning and Timing of Performance Shares. Each Performance Share will
have an initial value equal to the Fair Market Value of a Share on the date of grant. After the
applicable Performance Period has ended, the holder of Performance Shares will be entitled to
receive a payout of the number of Performance Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding Performance Factors
or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay
earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value
equal to the value of the earned Performance Shares at the close of the applicable Performance
Period) or in a combination thereof.

          10.4 Termination of Participant. Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise
by the Committee).

     11. PAYMENT FOR SHARE PURCHASES.

          Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or
by check or, where expressly approved for the Participant by the Committee and where permitted by
law (and to the extent not otherwise set forth in the applicable Award Agreement):

               (a) by cancellation of indebtedness of the Company to the Participant;

               (b) by surrender of shares of the Company held by the Participant that have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said
Award will be exercised or settled;

               (c) by waiver of compensation due or accrued to the Participant for services rendered or to be
rendered to the Company or a Parent or Subsidiary of the Company;

               (d) by consideration received by the Company pursuant to a broker-assisted and/or same day
sale (or other) cashless exercise program implemented by the Company in connection with the Plan;

               (e) by any combination of the foregoing; or

               (f) by any other method of payment as is permitted by applicable law.

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     12. GRANTS TO OUTSIDE DIRECTORS.

          12.1 Types of Awards. Outside Directors are eligible to receive any type of Award
offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made
pursuant to a policy adopted by the Board, or made from time to time as determined in the
discretion of the Board.

          12.2 Eligibility. Awards pursuant to this Section 12 shall be granted only to Outside
Directors. An Outside Director who is elected or re-elected as a member of the Board will be
eligible to receive an Award under this Section 12.

          12.3 Vesting, Exercisability and Settlement. Except as set forth in Section 21,
Awards shall vest, become exercisable and be settled as determined by the Board. With respect to
Options and SARs, the exercise price granted to Outside Directors shall not be less than the Fair
Market Value of the Shares at the time that such Option or SAR is granted.

     13. WITHHOLDING TAXES.

          13.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of
Awards granted under this Plan, the Company may require the Participant to remit to the Company an
amount sufficient to satisfy applicable federal, state, local and international withholding tax
requirements prior to the delivery of Shares pursuant to exercise or settlement of any Award.
Whenever payment in satisfaction of Awards granted under this Plan are to be made in cash, such
payment will be net of an amount sufficient to satisfy applicable federal, state, local and
international withholding tax requirements.

          13.2 Stock Withholding. The Committee, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may require or permit a Participant to satisfy such
tax withholding obligation, in whole or in part by (without limitation) (i) paying cash,
(ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair
Market Value equal to the minimum statutory amount required to be withheld, or (iii) delivering to
the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount
required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be
determined as of the date that the taxes are required to be withheld.

     14. TRANSFERABILITY. Unless determined otherwise by the Committee, an Award may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. If the Committee makes an Award transferable, such
Award will contain such additional terms and conditions as the Committee deems appropriate. All
Awards shall be exercisable: (i) during the Participant’s lifetime only by (A) the Participant, or
(B) the Participant’s guardian or legal representative; and (ii) after the Participant’s death, by
the legal representative of the Participant’s heirs or legatees.

     15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

          15.1 Voting and Dividends. No Participant will have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the Participant. After
Shares are issued to the Participant, the Participant will be a stockholder and have all the rights
of a stockholder with respect to such Shares, including the right to vote and receive all dividends
or other distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new,

10

 

additional or different securities the Participant may become entitled to receive with respect
to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the Restricted Stock;
provided, further, that the Participant will have no right to retain such stock
dividends or stock distributions with respect to Shares that are repurchased at the Participant’s
Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.

          15.2 Restrictions on Shares. At the discretion of the Committee, the Company may
reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion
of any or all Unvested Shares held by a Participant following such Participant’s Termination at any
time within ninety (90) days after the later of the Participant’s Termination Date and the date the
Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.

     16. CERTIFICATES. All certificates for Shares or other securities delivered under
this Plan will be subject to such stock transfer orders, legends and other restrictions as the
Committee may deem necessary or advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations and other requirements of the SEC or any
stock exchange or automated quotation system upon which the Shares may be listed or quoted.

     17. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares,
the Committee may require the Participant to deposit all certificates representing Shares, together
with stock powers or other instruments of transfer approved by the Committee, appropriately
endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until
such restrictions have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any Participant who is permitted
to execute a promissory note as partial or full consideration for the purchase of Shares under this
Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased
as collateral to secure the payment of the Participant’s obligation to the Company under the
promissory note; provided, however, that the Committee may require or accept other
or additional forms of collateral to secure the payment of such obligation and, in any event, the
Company will have full recourse against the Participant under the promissory note notwithstanding
any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the
Shares, the Participant will be required to execute and deliver a written pledge agreement in such
form as the Committee will from time to time approve. The Shares purchased with the promissory
note may be released from the pledge on a pro rata basis as the promissory note is paid.

     18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS. The Committee may reprice Options or
SARS without prior stockholder approval. The Committee may, at any time or from time to time
authorize the Company, in the case of an Option or SAR exchange, and with the consent of the
respective Participants (unless not required pursuant to Section 5.9 of the Plan), to pay cash or
issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.
The Committee may reduce the Exercise Price of outstanding Options or SARs without the consent of
affected Participants by a written notice to them.

     19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective
unless such Award is in compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any
other provision in this Plan, the Company will have no obligation to issue or deliver certificates
for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that
the

11

 

Company determines are necessary or advisable; and/or (b) completion of any registration or
other qualification of such Shares under any state or federal law or ruling of any governmental
body that the Company determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock exchange or automated
quotation system, and the Company will have no liability for any inability or failure to do so.

     20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this
Plan will confer or be deemed to confer on any Participant any right to continue in the employ of,
or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company
or limit in any way the right of the Company or any Parent or Subsidiary of the Company to
terminate Participant’s employment or other relationship at any time.

     21. CORPORATE TRANSACTIONS.

          21.1 Assumption or Replacement of Awards by Successor. In the event of a Corporate
Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation,
which assumption or replacement shall be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially similar
consideration to Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Participant, substantially similar shares or other
property subject to repurchase restrictions no less favorable to the Participant. In the event
such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute
Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other
provision in this Plan to the contrary, such Awards will expire on such transaction at such time
and on such conditions as the Board will determine; the Board (or, the Committee, if so designated
by the Board) may, in its sole discretion, accelerate the vesting of such Awards in connection with
a Corporate Transaction. In addition, in the event such successor or acquiring corporation (if
any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a
Corporate Transaction, the Committee will notify the Participant in writing or electronically that
such Award will be exercisable for a period of time determined by the Committee in its sole
discretion, and such Award will terminate upon the expiration of such period. Awards need not be
treated similarly in a Corporate Transaction.

     Notwithstanding anything to the contrary in this Section 21.1, the Committee, in its sole
discretion, may grant Awards that provide for acceleration upon a Corporate Transaction or in other
events in the specific Award Agreements.

          21.2 Assumption of Awards by the Company. The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in connection with an
acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in
substitution of such other company’s award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award granted under this
Plan. Such substitution or assumption will be permissible if the holder of the substituted or
assumed award would have been eligible to be granted an Award under this Plan if the other company
had applied the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain unchanged
(except that the Purchase Price or the Exercise Price, as the case may be, and the number
and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted
appropriately pursuant to Section 424(a) of the Code).

12

 

          21.3 Outside Directors’ Awards. Notwithstanding any provision to the contrary herein,
in the event of a Corporate Transaction, the vesting of all Awards granted to Outside Directors
shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the
consummation of such event at such times and on such conditions as the Committee determines.

     22. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall be submitted for the approval
of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or
after the date this Plan is adopted by the Board.

     23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this
Plan will become effective on the Effective Date and will terminate ten (10) years from the date
this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by
and construed in accordance with the laws of the State of California.

     24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend
this Plan in any respect, including, without limitation, amendment of any form of Award Agreement
or instrument to be executed pursuant to this Plan; provided, however, that the
Board will not, without the approval of the stockholders of the Company, amend this Plan in any
manner that requires such stockholder approval; provided further, that a Participant’s
Award shall be governed by the version of this Plan then in effect at the time such Award was
granted.

     25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the
submission of this Plan to the stockholders of the Company for approval, nor any provision of this
Plan will be construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including, without limitation, the
granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.

     26. INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with
any policy adopted by the Company from time to time covering transactions in the Company’s
securities by Employees, officers and/or directors of the Company.

     27. DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the
following terms will have the following meanings:

     “Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus,
Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.

     “Award Agreement” means, with respect to each Award, the written or electronic agreement
between the Company and the Participant setting forth the terms and conditions of the Award, which
shall be in substantially a form (which need not be the same for each Participant) that the
Committee has from time to time approved, and will comply with and be subject to the terms and
conditions of this Plan.

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

     “Cause” means (except as may otherwise be defined in Participant’s employment or services
agreement or Award Agreement) that the Board determines reasonably and in good faith that the
Participant (i) committed an act of embezzlement, fraud, dishonesty or breach of fiduciary duty to
the Company, (ii) deliberately and repeatedly violated the rules of the Company or the valid
instructions of the Board or an authorized officer of the Company, (iii) made any unauthorized
disclosure of any of the secrets or confidential information of the Company, (iv) induced any
client or customer of the Company

13

 

to break any contract with the Company or (v) engaged in any conduct that could reasonably be
expected to result in loss, damage or injury to the Company.

     “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

     “Committee” means the Compensation Committee of the Board or those persons to whom
administration of the Plan, or part of the Plan, has been delegated as permitted by law.

     “Company” means ArcSight, Inc., or any successor corporation.

     “Consultant” means any person, including an advisor or independent contractor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.

     “Corporate Transaction” means the occurrence of any of the following events: (i) any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or “group” (two or more
persons acting as a partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding, or disposing of the applicable securities referred to herein) becomes the
“beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then-outstanding voting securities; (ii) the consummation of the sale
or other disposition by the Company of all or substantially all of the Company’s assets; (iii) the
consummation of a merger, reorganization, consolidation or similar transaction or series of related
transactions of the Company with any other corporation, other than a merger, reorganization,
consolidation or similar transaction (or series of related transactions) which would result in the
voting securities of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity or its parent) at least a majority of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding immediately after such
merger, reorganization, consolidation or similar transaction (or series of related transactions) or
(iv) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the
Code wherein the stockholders of the Company give up all of their equity interest in the Company
(except for the acquisition, sale or transfer of all or substantially all of the outstanding shares
of the Company).

     “Director” means a member of the Board.

     “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code,
provided, however, that except with respect to Awards granted as ISOs, the Committee in its
discretion may determine whether a total and permanent disability exists in accordance with
non-discriminatory and uniform standards adopted by the Committee from time to time, whether
temporary or permanent, partial or total, as determined by the Committee.

     “Effective Date” means the date of the underwritten initial public offering of the Company’s
Common Stock pursuant to a registration statement that is declared effective by the SEC.

     “Employee” means any person, including Officers and Directors, employed by the Company or any
Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee
by the Company will be sufficient to constitute “employment” by the Company.

     “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

     “Exercise Price” means the price at which a holder of an Option or SAR may purchase the

14

 

Shares issuable upon exercise of an Option or SAR.

     “Exchange Program” means a program pursuant to which outstanding Awards are surrendered,
cancelled or exchanged for cash, the same type of Award or a different Award (or combination
thereof).

     “Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock
determined as follows:

               (a) if such Common Stock is then quoted on the Nasdaq Global Select Market, the Nasdaq Global
Market or the Nasdaq Capital Market (collectively, the “Nasdaq Market”), its closing price on the
Nasdaq Market on the date of determination, or if there are no sales for such date, then the last
preceding business day on which there were sales, as reported in The Wall Street Journal or such
other source as the Board or the Committee deems reliable;

               (b) if such Common Stock is publicly traded and is then listed on a national securities
exchange, its closing price on the date of determination on the principal national securities
exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street
Journal or such other source as the Board or the Committee deems reliable;

               (c) if such Common Stock is publicly traded but is neither quoted on the Nasdaq Market nor
listed or admitted to trading on a national securities exchange, the average of the closing bid and
asked prices on the date of determination as reported in The Wall Street Journal or such other
source as the Board or the Committee deems reliable;

               (d) in the case of an Option or SAR grant made on the Effective Date, the price per share at
which shares of the Company’s Common Stock are initially offered for sale to the public by the
Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act; or

               (e) if none of the foregoing is applicable, by the Board or the Committee in good faith.

     “Insider” means an officer or director of the Company or any other person whose transactions
in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

     “Option” means an award of an option to purchase Shares pursuant to Section 5.

     “Outside Director” means a Director who is not an Employee of the Company or any Parent or
Subsidiary.

     “Parent” means any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if each of such corporations other than the Company owns 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.

     “Participant” means an Employee, Consultant or Director (including Outside Directors) who
receives an Award under this Plan.

     “Performance Factors” means the factors selected by the Committee, which may include, but are
not limited to the, the following measures (whether or not in comparison to other peer companies)
to

15

 

determine whether the performance goals established by the Committee and applicable to Awards
have been satisfied:

	 	•	 	net revenue and/or net revenue growth;
	 
	 	•	 	earnings per share and/or earnings per share growth;
	 
	 	•	 	earnings before income taxes and amortization and/or earnings before income
taxes and amortization growth;
	 
	 	•	 	operating income and/or operating income growth;
	 
	 	•	 	net income and/or net income growth;
	 
	 	•	 	total stockholder return and/or total stockholder return growth;
	 
	 	•	 	return on equity;
	 
	 	•	 	operating cash flow return on income;
	 
	 	•	 	adjusted operating cash flow return on income;
	 
	 	•	 	economic value added;
	 
	 	•	 	individual business objectives; and
	 
	 	•	 	company-specific operational metrics.

     “Performance Period” means the period of service determined by the Committee, not to exceed
five (5) years, during which years of service or performance is to be measured for the Award.

     “Performance Share” means an Award granted pursuant to Section 10 of the Plan.

     “Plan” means this ArcSight, Inc. 2007 Equity Incentive Plan.

     “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than
Shares acquired upon exercise of an Option or SAR.

     “Restricted Stock Award” means an award of Shares pursuant to Section 6 of the Plan, or issued
pursuant to the early exercise of an Option.

     “Restricted Stock Unit” means an Award granted pursuant to Section 9 of the Plan.

     “SEC” means the United States Securities and Exchange Commission.

     “Securities Act” means the United States Securities Act of 1933, as amended.

     “Shares” means shares of the Company’s Common Stock, as adjusted pursuant to Sections 2 and
other applicable provisions hereof, and any successor security.

     “Stock Appreciation Right” means an Award granted pursuant to Section 8 of the Plan.

16

 

     “Stock Bonus” means an Award granted pursuant to Section 7 of the Plan.

     “Subsidiary” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations other than the last corporation
in the unbroken chain owns 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.

     “Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant,
that the Participant has for any reason ceased to provide services as an employee, officer,
director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of
the Company. An employee will not be deemed to have ceased to provide services in the case of (i)
sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee;
provided, that such leave is for a period of not more than 90 days, unless reemployment
upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise
pursuant to formal policy adopted from time to time by the Company and issued and promulgated to
employees in writing. In the case of any employee on an approved leave of absence, the Committee
may make such provisions respecting suspension of vesting of the Award while on leave from the
employ of the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except
that in no event may an Award be exercised after the expiration of the term set forth in the
applicable Award Agreement. The Committee will have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which the Participant ceased
to provide services (the “Termination Date”).

     “Unvested Shares” means Shares that have not yet vested or are subject to a right of
repurchase in favor of the Company (or any successor thereto).

17exv10w7

 

Exhibit 10.7

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

Unless otherwise defined herein, the terms defined in the 2007 Equity Incentive Plan (the “Plan”)
shall have the same meanings in this Notice of Stock Option Grant (the “Notice”).

	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 

You (the “Participant”) have been granted an option to purchase shares of Common Stock of the
Company under the Plan subject to the terms and conditions of the Plan, this Notice and the Stock
Option Award Agreement (the “Option Agreement”).

	 	 	 	 	 
	 
	 	 	 	 
	Grant Number:
	 	 	 	 
	 

	 	 

	 	 
	Date of Grant:
	 	 	 	 
	 

	 	 

	 	 
	Vesting Commencement Date:
	 	 	 	 
	 

	 	 

	 	 
	Exercise Price per Share:
	 	 	 	 
	 

	 	 

	 	 
	Total Number of Shares:
	 	 	 	 
	 

	 	 

	 	 
	Type of Option:

	 	                     Non-Qualified Stock Option (                     shares)	 	 
	 

	 	                     Incentive Stock Option (                     shares)	 	 
	 
	 	 	 	 
	Expiration Date:
	 	 	 	 
	 

	 	 

	 	 
	Post-Termination Exercise Period:

	 	Termination for Cause = None

Voluntary Termination = 3 Months

Termination without Cause = 3 Months

Disability = 12 Months

Death = 12 Months	 	 
	 
	 	 	 	 
	Vesting Schedule:

	 	Subject to the limitations set forth in this Notice,
the Plan and the Option
Agreement, the Option will vest and may be exercised,
in whole or in part, in accordance with
the following schedule: [INSERT VESTING SCHEDULE]	 	 

You understand that your employment or consulting relationship or service with the Company is for
an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in
this Notice, the Option Agreement or the Plan changes the at-will nature of that relationship. You
acknowledge that the vesting of the Options pursuant to this Notice is earned only by continuing
service as an Employee, Director or Consultant of the Company. Participant also understands that
this Notice is subject to the terms and conditions of both the Option Agreement and the Plan, both
of which are incorporated herein by reference. Participant has read both the Option Agreement and
the Plan.

	 	 	 	 	 	 	 	 	 	 	 
	PARTICIPANT:	 	 	 	ARCSIGHT, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Print Name:

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

 

 

ARCSIGHT, INC.

STOCK OPTION AWARD AGREEMENT

2007 EQUITY INCENTIVE PLAN

Unless otherwise defined in this Stock Option Award Agreement (the “Agreement”), any capitalized
terms used herein shall have the meaning ascribed to them in the Company’s 2007 Equity Incentive
Plan (the “Plan”).

     Participant has been granted an option to purchase Shares (the “Option”), subject to the terms
and conditions of the Plan, the Notice of Stock Option Grant (the “Notice”) and this Agreement.

     1. Vesting Rights. Subject to the applicable provisions of the Plan and this
Agreement, this Option may be exercised, in whole or in part, in accordance with the schedule set
forth in the Notice.

     2. Termination Period.

          (a) General Rule. Except as provided below, and subject to the Plan, this Option may
be exercised for 3 months after termination of Participant’s employment with the Company. In no
event shall this Option be exercised later than the Expiration Date set forth in the Notice.

          (b) Death; Disability. Unless provided otherwise in the Notice, upon the termination
of Participant’s service to the Company by reason of his or her Disability or death, or if a
Participant dies within three months of the Termination Date, this Option may be exercised for
twelve months, provided that in no event shall this Option be exercised later than the Expiration
Date set forth in the Notice.

          (c) Cause. Upon the termination of Participant’s employment by the Company for Cause,
the Option shall expire on such date of Participant’s Termination Date.

     3. Grant of Option. The Participant named in the Notice has been granted an Option
for the number of Shares set forth in the Notice at the exercise price per Share set forth in the
Notice (the “Exercise Price”). In the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall
prevail. If designated in the Notice as an Incentive Stock Option (“ISO”), this Option is intended
to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is
intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it
shall be treated as a Nonqualified Stock Option (“NSO”).

     4. Exercise of Option.

          (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set forth in the Notice and the applicable provisions of the Plan and this
Agreement. In the event of Participant’s death, Disability, Termination for Cause or other
Termination, the exercisability of the Option is governed by the applicable provisions of the Plan,
the Notice and this Agreement.

          (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice
(the “Exercise Notice”), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other
representations and agreements as may be required by the Company pursuant to the provisions of the
Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile
or by other authorized method to the Secretary of the Company or other person designated by the
Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to
all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of
such fully executed Exercise Notice accompanied by such aggregate Exercise Price.

 

 

          (c) No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with all relevant provisions of law and the requirements of any stock exchange or
quotation service upon which the Shares are then listed. Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Participant on the date the
Option is exercised with respect to such Exercised Shares.

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

          (a) cash;

          (b) check;

          (c) a “broker-assisted” or “same-day sale” (as described in Section 11(d) of the Plan); or

          (d) other method authorized by the Company.

     6. Non-Transferability of Option. This Option may not be transferred in any manner
other than by will or by the laws of descent or distribution or court order and may be exercised
during the lifetime of Participant only by the Participant unless otherwise permitted by the
Committee on a case-by-case basis. The terms of the Plan and this Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Participant.

     7. Term of Option. This Option shall in any event expire on the expiration date set
forth in the Notice of Stock Option Grant, which date is 10 years after the Date of Grant (five
years after the Date of Grant if this option is designated as an ISO in the Notice of Stock Option
Grant and Section 5.3 of the Plan applies).

     8. U.S. Tax Consequences. For Participants subject to U.S. income tax, some of the
federal tax consequences relating to this Option, as of the date of this Option, are set forth
below. All other Participants should consult a tax advisor for tax consequences relating to this
Option in their respective jurisdiction. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS
AND REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

          (a) Exercising the Option.

               (i) Nonqualified Stock Option. The Participant may incur federal ordinary income tax
liability upon exercise of a NSO. The Participant will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the
Participant is an Employee or a former Employee, the Company will be required to withhold from his
or her compensation an amount equal to the minimum amount the Company is required to withhold for
income and employment taxes or collect from Participant and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding
amounts are not delivered at the time of exercise.

               (ii) Incentive Stock Option. If this Option qualifies as an ISO, the Participant will
have no regular federal income tax liability upon its exercise, although the excess, if any, of the
aggregate Fair Market Value of the Exercised Shares on the date of exercise over their aggregate

 

 

Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal
tax purposes and may subject the Participant to alternative minimum tax in the year of exercise.

          (b) Disposition of Shares.

               (i) NSO. If the Participant holds NSO Shares for at least one year, any gain realized
on disposition of the Shares will be treated as long-term capital gain for federal income tax
purposes.

               (ii) ISO. If the Participant holds ISO Shares for at least one year after exercise
and two years after the grant date, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes. If the Participant disposes of ISO
Shares within one year after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair Market Value of the
Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise Price.

          (c) Notice of Disqualifying Disposition of ISO Shares. If the Participant sells or
otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later of (i)
two years after the grant date, or (ii) one year after the exercise date, the Participant shall
immediately notify the Company in writing of such disposition. The Participant agrees that he or
she may be subject to income tax withholding by the Company on the compensation income recognized
from such early disposition of ISO Shares by payment in cash or out of the current earnings paid to
the Participant.

     9. Acknowledgement. The Company and Participant agree that the Option is granted
under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated
herein by reference). Participant: (i) acknowledges receipt of a copy of the Plan and the Plan
prospectus, (ii) represents that Participant has carefully read and is familiar with their
provisions, and (iii) hereby accepts the Option subject to all of the terms and conditions set
forth herein and those set forth in the Plan and the Notice.

     10. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice
constitute the entire agreement and understanding of the parties relating to the subject matter
herein and supersede all prior discussions between them. Any prior agreements, commitments or
negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in writing and signed by the parties to this Agreement. The failure by either party to
enforce any rights under this Agreement shall not be construed as a waiver of any rights of such
party.

     11. Compliance with Laws and Regulations. The issuance of Shares will be subject to
and conditioned upon compliance by the Company and Participant with all applicable state and
federal laws and regulations and with all applicable requirements of any stock exchange or
automated quotation system on which the Company’s Common Stock may be listed or quoted at the time
of such issuance or transfer.

     12. Governing Law; Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement
for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance
of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance
of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

 

 

     13. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall
affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the
Company, to terminate Participant’s service, for any reason, with or without cause.

     By your signature and the signature of the Company’s representative on the Notice, you and the
Company agree that this Option is granted under and governed by the terms and conditions of the
Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this
Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to
executing the Notice, and fully understands all provisions of the Plan, the Notice and this
Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions relating to the Plan, the Notice and the
Agreement. Participant further agrees to notify the Company upon any change in the residence
address indicated on the Notice.

 

 

No.                    

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

STOCK OPTION EXERCISE AGREEMENT

This Stock Option Exercise Agreement (the “Exercise Agreement”) is made and entered into as of
                    ,                      (the “Effective Date”) by and between ArcSight, Inc., a Delaware
corporation (the “Company”), and the purchaser named below (the “Purchaser”). The terms defined in
the Company’s 2007 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Stock
Option Exercise Agreement (the “Exercise Agreement”). To the extent any capitalized terms used
herein are not defined, they shall have the meaning ascribed to them in the Plan.

	 	 	 	 	 
	 
	 	 	 	 
	Purchaser:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	Social Security Number:
	 	 	 	 
	 

	 	 

	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	Total Number of Shares:
	 	 	 	 
	 

	 	 

	 	 
	Exercise Price Per Share:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Type of Stock Option
	 	 	 	 
	 
	(Check one):

	 	 o Incentive Stock Option	 	 
	 

	 	 o Nonqualified Stock Option	 	 

     1. EXERCISE OF OPTION.

          1.1 Exercise. Pursuant to exercise of that certain option (the “Option”) granted to
Purchaser under the Plan and subject to the terms and conditions of this Exercise Agreement,
Purchaser hereby purchases from the Company, and the Company hereby sells to Purchaser, the Total
Number of Shares set forth above (the “Shares”) of the Company’s Common Stock, at the Exercise
Price Per Share set forth above (the “Exercise Price”). As used in this Exercise Agreement, the
term “Shares” refers to the Shares purchased under this Exercise Agreement and includes all
securities received (i) in replacement of the Shares, (ii) as a result of stock dividends or stock
splits with respect to the Shares, and (iii) all securities received in replacement of the Shares
in a merger, recapitalization, reorganization or similar corporate transaction.

          1.2 Title to Shares. The exact spelling of the name(s) under which Purchaser will
take title to the Shares is:

	 	 	 	 
	 

	 	 
	 
	 	 
	 

	 	 

          Purchaser desires to take title to the Shares as follows:

	 	 	 	 ̈     Individual, as separate property

 

 

	 	 	 	 ̈        Husband and wife, as community property
	 
	 	 	 	 ̈        Joint Tenants
	 
	 	 	 	 ̈        Other; please specify:                                                            

          1.3 Payment. Purchaser hereby delivers payment of the Exercise Price in the manner
permitted in the Stock Option Agreement as follows (check and complete as appropriate):

	 	 ̈ 	 	 in cash (by check) in the amount of $_________, receipt of which
is acknowledged by the Company;
	 
	 	 ̈ 	 	by delivery of _________ fully-paid, nonassessable and vested shares
of the Common Stock of the Company owned by Purchaser which have been
paid for within the meaning of SEC Rule 144, (if purchased by use of a
promissory note, such note has been fully paid with respect to such
vested shares), or obtained by Purchaser in the open public market, and
owned free and clear of all liens, claims, encumbrances or security
interests, valued at the current fair market value of $__________ per
share;
	 
	 	 ̈ 	 	 through a “broker-assisted” or “same day sale” program, commitment
from the Purchaser or Authorized Transferee and an NASD Dealer meeting
the requirements set forth by the Company; or
	 
	 	 ̈ 	 	 through a “margin” commitment from Purchaser or Authorized
Transferee and an NASD Dealer meeting the requirements of the Company’s
“margin” procedures and in accordance with law.

     2. DELIVERY.

          2.1 Deliveries by Purchaser. Purchaser hereby delivers to the Company (i) this
Exercise Agreement and (ii) the Exercise Price and payment or other provision for any applicable
tax obligations.

          2.2 Deliveries by the Company. Upon its receipt of the Exercise Price, payment or
other provision for any applicable tax obligations and all the documents to be executed and
delivered by Purchaser to the Company under Section 2.1, the Company will issue a duly executed
stock certificate evidencing the Shares in the name of Purchaser.

     3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to
the Company that:

          3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the Plan and the
Stock Option Agreement, has read and understands the terms of the Plan, the Stock Option Agreement
and this Exercise Agreement, and agrees to be bound by their terms and conditions. Purchaser
acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition
of the Shares, and that Purchaser should consult a tax adviser prior to such exercise or
disposition.

          3.2 Access to Information. Purchaser has had access to all information regarding the
Company and its present and prospective business, assets, liabilities and financial condition that
Purchaser reasonably considers important in making the decision to purchase the Shares, and
Purchaser has had ample opportunity to ask questions of the Company’s representatives concerning
such matters and this investment.

 

 

          3.3 Understanding of Risks. Purchaser has received and reviewed the Form S-8
prospectus for the Plan and Shares and is fully aware of: (i) the highly speculative nature of the
investment in the Shares; (ii) the financial hazards involved; (iii) the qualifications and
backgrounds of the management of the Company; and (iv) the tax consequences of investment in the
Shares. Purchaser is capable of evaluating the merits and risks of this investment, has the
ability to protect Purchaser’s own interests in this transaction and is financially capable of
bearing a total loss of this investment.

     4. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and acknowledges that the
exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the
Securities Act and all applicable state securities laws. Purchaser agrees to cooperate with the
Company to ensure compliance with such laws.

     5. RESTRICTED SECURITIES.

          5.1 No Transfer Unless Registered or Exempt. Purchaser understands that Purchaser may
not transfer any Shares except when such Shares are registered under the Securities Act or
qualified under applicable state securities laws or unless, in the opinion of counsel to the
Company, exemptions from such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC and that the
Company is under no obligation to do so with respect to the Shares, and may withdraw any such
registration statement at any time after filing. Purchaser has also been advised that exemptions
from registration and qualification may not be available or may not permit Purchaser to transfer
all or any of the Shares in the amounts or at the times proposed by Purchaser.

          5.2 SEC Rule 144. If Purchaser is an “affiliate” for purposes of Rule 144 promulgated
under the Securities Act, then in addition, Purchaser has been advised that Rule 144 requires that
the Shares be held for a minimum of one (1) year, and in certain cases two (2) years, after they
have been purchased and paid for (within the meaning of Rule 144). Purchaser understands
that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an
“affiliate” of the Company or if “current public information” about the Company (as defined in Rule
144) is not publicly available.

     6. RIGHTS AS A STOCKHOLDER. Subject to the terms and conditions of this Exercise
Agreement, Purchaser will have all of the rights of a stockholder of the Company with respect to
the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser
disposes of the Shares.

     7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

          7.1 Legends. Purchaser understands and agrees that the Company will place any legends
that may be required by state or U.S. Federal securities laws, the Company’s Certificate of
Incorporation or Bylaws, any other agreement between Purchaser and the Company or, subject to the
assent of the Company, any agreement between Purchaser and any third party.

          7.2 Stop-Transfer Instructions. Purchaser agrees that, to ensure compliance with any
restrictions imposed by this Exercise Agreement, the Company may issue appropriate “stop-transfer”
instructions to its transfer agent, if any, and if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

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

     8. TAX CONSEQUENCES. PURCHASER UNDERSTANDS AND REPRESENTS: (i) THAT PURCHASER HAS
REVIEWED THE PROSPECTUS PREPARED FOR THE PLAN AND

 

 

CONSULTED PURCHASER’S PERSONAL TAX ADVISER IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF
THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE. SET FORTH
BELOW IS A BRIEF SUMMARY AS OF THE DATE THE PLAN WAS ADOPTED BY THE BOARD OF SOME OF THE U.S.
FEDERAL TAX CONSEQUENCES OF EXERCISE OF THE OPTION AND DISPOSITION OF THE SHARES. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PURCHASER SHOULD
CONSULT THE PROSPECTUS AND PURCHASER’S PERSONAL TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

          8.1 Exercise of Incentive Stock Option. If the Option qualifies as an ISO, there will
be no regular U.S. Federal income tax liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise
Price will be treated as a tax preference item for U.S. Federal alternative minimum tax purposes
and may subject Purchaser to the alternative minimum tax in the year of exercise.

          8.2 Exercise of Nonqualified Stock Option. If the Option does not qualify as an ISO,
there may be a regular U.S. Federal income tax liability upon the exercise of the Option.
Purchaser will be treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Purchaser is or was an employee of the Company, the Company may be
required to withhold from Purchaser’s compensation or collect from Purchaser and pay to the
applicable taxing authorities an amount equal to a percentage of this compensation income at the
time of exercise.

          8.3 Disposition of Shares. The following tax consequences may apply upon disposition
of the Shares.

               (a) Incentive Stock Options. If the Shares are held for more than twelve (12) months
after the date of the transfer of the Shares pursuant to the exercise of an ISO and are disposed of
more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares
will be treated as long term capital gain for federal income tax purposes. If Shares purchased
under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain
realized on such disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price.

               (b) Nonqualified Stock Options. If the Shares are held for more than twelve (12)
months after the date of the transfer of the Shares pursuant to the exercise of an NQSO, any gain
realized on disposition of the Shares will be treated as long-term capital gain.

               (c) Withholding. The Company may be required to withhold from the Purchaser’s
compensation or collect from the Purchaser and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income.

     9. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of the Shares will
be subject to and conditioned upon compliance by the Company and Purchaser with all applicable
state and federal laws and regulations and with all applicable requirements of any stock exchange
or automated quotation system on which the Company’s Common Stock may be listed or quoted at the
time of such issuance or transfer.

     10. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under this
Exercise Agreement. No other party to this Exercise Agreement may assign, whether voluntarily or
by operation of law, any of its rights and obligations under this Exercise Agreement, except with
the prior written consent of the Company. This Exercise Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this

 

 

Exercise Agreement will be binding upon Purchaser and Purchaser’s heirs, executors,
administrators, legal representatives, successors and assigns.

     11. GOVERNING LAW. This Exercise Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to that body of laws
pertaining to conflict of laws.

     12. NOTICES. Any and all notices required or permitted to be given to a party
pursuant to the provisions of this Exercise Agreement will be in writing and will be effective and
deemed to provide such party sufficient notice under this Exercise Agreement on the earliest of the
following: (i) at the time of personal delivery, if delivery is in person; (ii) one (1) business
day after deposit with an express overnight courier for United States deliveries, or two (2)
business days after such deposit for deliveries outside of the United States, with proof of
delivery from the courier requested; or (iii) three (3) business days after deposit in the United
States mail by certified mail (return receipt requested) for United States deliveries. All notices
for delivery outside the United States will be sent by express courier. All notices not delivered
personally will be sent with postage and/or other charges prepaid and properly addressed to the
party to be notified at the address set forth below the signature lines of this Exercise Agreement,
or at such other address as such other party may designate by one of the indicated means of notice
herein to the other parties hereto. Notices to the Company will be marked “Attention: Stock Plan
Administration”.

     13. FURTHER ASSURANCES. The parties agree to execute such further documents and
instruments and to take such further actions as may be reasonably necessary to carry out the
purposes and intent of this Exercise Agreement.

     14. TITLES AND HEADINGS. The titles, captions and headings of this Exercise Agreement
are included for ease of reference only and will be disregarded in interpreting or construing this
Exercise Agreement. Unless otherwise specifically stated, all references herein to “sections” will
mean “sections” to this Exercise Agreement.

     15. ENTIRE AGREEMENT. The Plan, the Notice, the Stock Option Agreement and this
Exercise Agreement constitute the entire agreement and understanding of the parties with respect to
the subject matter of this Exercise Agreement, and supersede all prior understandings and
agreements, whether oral or written, between or among the parties hereto with respect to the
specific subject matter hereof.

     16. COUNTERPARTS. This Exercise Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of
which together shall constitute one and the same agreement.

     17. SEVERABILITY. If any provision of this Exercise Agreement is determined by any
court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such provision will be enforced to the maximum extent possible given the intent of the
parties hereto. If such clause or provision cannot be so enforced, such provision shall be
stricken from this Exercise Agreement and the remainder of this Exercise Agreement shall be
enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Exercise Agreement. Notwithstanding the forgoing, if the
value of this Exercise Agreement based upon the substantial benefit of the bargain for any party is
materially impaired, which determination as made by the presiding court or arbitrator of competent
jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good
faith negotiations.

 

 

     IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be executed in
triplicate by its duly authorized representative and Purchaser has executed this Exercise Agreement
as of the Effective Date, indicated above.

	 	 	 	 
	ARCSIGHT, INC.

	 	PURCHASER
	 
	By:
	 	 	 
	 	 

	 	 

	 	 	 	 	 
	 

	 	 	(Signature)
	 
	 

	 	 
	(Please print name)

	 	(Please print name)
	 
	
(Please print title)
	 	 	 
	 
	Address:

	 	Address:
	 
	 

	 	 
	 
	 

	 	 
	 
	 

	 	 
	 
	Fax No.:

	 	 	Fax No.	 
	 	 

	 	 	 
	 
	Phone No.: 

	 	 	Phone No.: 	 
	 	 

	 	 	 

[Signature page to ArcSight, Inc. Stock Option Exercise Agreement]

 

 

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK AWARD

GRANT NUMBER: __________

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same meanings in this Notice of Restricted Stock Award (the “Notice”).

	 	 	 	 	 
	 

	 	Name:
	 	                                                                            
                        
	 
	 	 	 	 
	 

	 	Address:
	 	                                                                            
                        

You (“Participant”) have been granted an award of Restricted Shares of Common Stock of ArcSight,
Inc. (the “Company”) under the Plan subject to the terms and conditions of the Plan, this Notice
and the attached Restricted Stock Agreement (the “Restricted Stock Purchase Agreement”).

	 	 	 
	Total Number of Restricted Shares Awarded:

	 	 
	 
	 	 
	Fair Market Value per Restricted Share:

	 	$ 

	 
	 	 
	Total Fair Market Value of Award:

	 	$ 

	 
	 	 
	Purchase Price per Restricted Share:

	 	$ 

	 
	 	 
	Total Purchase Price for all Restricted Shares:

	 	$ 

	 
	 	 
	Date of Grant:

	 	 
	 
	 	 
	Vesting Commencement Date:

	 	 
	 
	 	 
	Vesting Schedule:

	 	Subject to the limitations set forth in this Notice, the Plan and the
Restricted Stock Purchase Agreement, the Restricted Shares will vest and the
right of repurchase shall lapse, in whole or in part, in accordance with the
following schedule: [INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship with the Company is for an
unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in this
Notice, the Restricted Stock Agreement or the Plan changes the at-will nature of that relationship.
Participant acknowledges that the vesting of the Restricted Shares pursuant to this Notice is
earned only by continuing service as an Employee, Director or Consultant of the Company. You also
understand that this Notice is subject to the terms and conditions of both the Restricted Stock
Agreement and the Plan, both of which are incorporated herein by reference. You have read both the
Restricted Stock Agreement and the Plan. If the Restricted Stock Purchase Agreement is not
executed by you within thirty (30) days of the Date of Grant above, then this grant shall be void.

	 	 	 	 	 	 	 	 	 	 	 
	ARCSIGHT, INC.	 	 	 	RECIPIENT:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	Signature	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Its:

	 	 	 	 	 	Please Print Name	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

 

 

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made as of                                         , 20    by
and between ArcSight, Inc., a Delaware corporation (the “Company”), and                                         
(“Participant”) pursuant to the Company’s 2007 Equity Incentive Plan (the “Plan”). Unless
otherwise defined herein, the terms defined in the Plan shall have the same meanings in this
Agreement.

     1. Sale of Stock. Subject to the terms and conditions of this Agreement, on the
Purchase Date (as defined below) the Company will issue and sell to Participant, and Participant
agrees to purchase from the Company the number of Shares shown on the Notice of Restricted Stock
Award at a purchase price of $                     per Share. The per Share purchase price of the Shares shall
be not less than the par value of the Shares as of the date of the offer of such Shares to the
Participant. The term “Shares” refers to the purchased Shares and all securities received in
replacement of or in connection with the Shares pursuant to stock dividends or splits, all
securities received in replacement of the Shares in a recapitalization, merger, reorganization,
exchange or the like, and all new, substituted or additional securities or other properties to
which Participant is entitled by reason of Participant’s ownership of the Shares.

     2. Time and Place of Exercise. The purchase and sale of the Shares under this
Agreement shall occur at the principal office of the Company simultaneously with the execution of
this Agreement by the parties, or on such other date as the Company and Participant shall agree
(the “Purchase Date”). On the Purchase Date, the Company will issue in Participant’s name a stock
certificate representing the Shares to be purchased by Participant against payment of the purchase
price therefor by Participant by (a) check made payable to the Company, (b) cancellation of
indebtedness of the Company to Participant, (c) Participant’s personal services that the Committee
has determined have already been rendered to the Company and have a value not less than aggregate
par value of the Shares to be issued Participant, or (d) a combination of the foregoing.

     3. Restrictions on Resale. By signing this Agreement, Participant agrees not to sell
any Shares acquired pursuant to the Plan and this Agreement at a time when applicable laws,
regulations or Company or underwriter trading policies prohibit exercise or sale. This restriction
will apply as long as Participant is providing service to the Company or a Subsidiary of the
Company.

          3.1 Repurchase Right on Termination Other Than for Cause. For the purposes of this
Agreement, a “Repurchase Event” shall mean an occurrence of one of the following:

               (i) termination of Participant’s service, whether voluntary or involuntary and with or without
cause;

               (ii) resignation, retirement or death of Participant; or

               (iii) any attempted transfer by Participant of the Shares, or any interest therein, in
violation of this Agreement.

Upon the occurrence of a Repurchase Event, the Company shall have the right (but not an obligation)
to purchase the Shares of Participant at a price equal to the Purchase Price per Share (the
“Repurchase Right”). The Repurchase Right shall lapse in accordance with the vesting schedule set
forth in the Notice

1

 

of Restricted Stock Award. For purposes of this Agreement, “Unvested Shares” means Stock pursuant
to which the Company’s Repurchase Right has not lapsed.

          3.2 Exercise of Repurchase Right. Unless the Company provides written notice to
Participant within 90 days from the date of termination of Participant’s service to the Company
that the Company does not intend to exercise its Repurchase Right with respect to some or all of
the Unvested Shares, the Repurchase Right shall be deemed automatically exercised by the Company as
of the 90th day following such termination, provided that the Company may notify Participant that
it is exercising its Repurchase Right as of a date prior to such 90th day. Unless Participant is
otherwise notified by the Company pursuant to the preceding sentence that the Company does not
intend to exercise its Repurchase Right as to some or all of the Unvested Shares, execution of this
Agreement by Participant constitutes written notice to Participant of the Company’s intention to
exercise its Repurchase Right with respect to all Unvested Shares to which such Repurchase Right
applies at the time of Termination of Participant. The Company, at its choice, may satisfy its
payment obligation to Participant with respect to exercise of the Repurchase Right by either (A)
delivering a check to Participant in the amount of the purchase price for the Unvested Shares being
repurchased, or (B) in the event Participant is indebted to the Company, canceling an amount of
such indebtedness equal to the purchase price for the Unvested Shares being repurchased, or (C) by
a combination of (A) and (B) so that the combined payment and cancellation of indebtedness equals
such purchase price. In the event of any deemed automatic exercise of the Repurchase Right by
canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being
repurchased, such cancellation of indebtedness shall be deemed automatically to occur as of the
90th day following termination of Participant’s employment or consulting relationship unless the
Company otherwise satisfies its payment obligations. As a result of any repurchase of Unvested
Shares pursuant to the Repurchase Right, the Company shall become the legal and beneficial owner of
the Unvested Shares being repurchased and shall have all rights and interest therein or related
thereto, and the Company shall have the right to transfer to its own name the number of Unvested
Shares being repurchased by the Company, without further action by Participant.

          3.3 Acceptance of Restrictions. Acceptance of the Shares shall constitute
Participant’s agreement to such restrictions and the legending of his or her certificates with
respect thereto. Notwithstanding such restrictions, however, so long as Participant is the holder
of the Shares, or any portion thereof, he or she shall be entitled to receive all dividends
declared on and to vote the Shares and to all other rights of a stockholder with respect thereto.

          3.4 Non-Transferability of Unvested Shares. In addition to any other limitation on
transfer created by applicable securities laws or any other agreement between the Company and
Participant, Participant may not transfer any Unvested Shares, or any interest therein, unless
consented to in writing by a duly authorized representative of the Company. Any purported transfer
is void and of no effect, and no purported transferee thereof will be recognized as a holder of the
Unvested Shares for any purpose whatsoever. Should such a transfer purport to occur, the Company
may refuse to carry out the transfer on its books, set aside the transfer, or exercise any other
legal or equitable remedy. In the event the Company consents to a transfer of Unvested Shares, all
transferees of Shares or any interest therein will receive and hold such Shares or interest subject
to the provisions of this Agreement, including, insofar as applicable, the Repurchase Right. In
the event of any purchase by the Company hereunder where the Shares or interest are held by a
transferee, the transferee shall be obligated, if requested by the Company, to transfer the Shares
or interest to the Participant for consideration equal to the amount to be paid by the Company
hereunder. In the event the Repurchase Right is deemed exercised by the Company, the Company may
deem any transferee to have transferred the Shares or interest to Participant prior to their
purchase by the Company, and payment of the purchase price by the Company to such transferee shall
be deemed to satisfy Participant’s obligation to pay such transferee for such Shares or interest,
and also to satisfy the Company’s obligation to pay Participant for such Shares or interest.

2

 

          3.5 Assignment. The Repurchase Right may be assigned by the Company in whole or in
part to any persons or organization.

     4. Restrictive Legends and Stop Transfer Orders.

          4.1 Legends. The certificate or certificates representing the Shares shall bear the
following legend (as well as any legends required by applicable state and federal corporate and
securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND
THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.

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

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

     5. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall
affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the
Company, to terminate Participant‘s service, for any reason, with or without cause.

     6. Miscellaneous.

          6.1 Acknowledgement. The Company and Participant agree that the Restricted Shares are
granted under and governed by the Notice, this Agreement and by the provisions of the Plan
(incorporated herein by reference). Participant: (i) acknowledges receipt of a copy of the Plan
and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar with
their provisions, and (iii) hereby accepts the Restricted Shares subject to all of the terms and
conditions set forth herein and those set forth in the Plan and the Notice.

          6.2 Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice
constitute the entire agreement and understanding of the parties relating to the subject matter
herein and supersede all prior discussions between them. Any prior agreements, commitments or
negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in writing and signed by the parties to this Agreement. The failure by either party to
enforce any rights under this Agreement shall not be construed as a waiver of any rights of such
party.

          6.3 Compliance with Laws and Regulations. The issuance of Shares will be subject to
and conditioned upon compliance by the Company and Participant with all applicable state and
federal laws and regulations and with all applicable requirements of any stock exchange or
automated quotation system on which the Company’s Common Stock may be listed or quoted at the time
of such issuance or transfer.

3

 

          6.4 Governing Law; Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement
for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance
of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance
of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

          6.5 Construction. This Agreement is the result of negotiations between and has been
reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this
Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be
construed in favor of or against any one of the parties hereto.

          6.6 Notices. Any notice to be given under the terms of the Plan shall be addressed to
the Company in care of its principal office, and any notice to be given to the Participant shall be
addressed to such Participant at the address maintained by the Company for such person or at such
other address as the Participant may specify in writing to the Company.

          6.7 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall he deemed an original and all of which together shall constitute one instrument.

          6.8 U.S. Tax Consequences. Upon vesting of Shares, Participant will include in
taxable income the difference between the fair market value of the vesting Shares, as determined on
the date of their vesting, and the price paid for the Shares. This will be treated as ordinary
income by Participant and will be subject to withholding by the Company when required by applicable
law. In the absence of an Election (defined below), the Company shall withhold a number of vesting
Shares with a fair market value (determined on the date of their vesting) equal to the minimum
amount the Company is required to withhold for income and employment taxes. If Participant makes an
Election, then Participant must, prior to making the Election, pay in cash (or check) to the
Company an amount equal to the amount the Company is required to withhold for income and employment
taxes.

     7. Section 83(b) Election. Participant hereby acknowledges that he or she has been
informed that, with respect to the purchase of the Shares, an election may be filed by the
Participant with the Internal Revenue Service, within 30 days of the purchase of the Shares,
electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the
purchase price of the Shares and their Fair Market Value on the date of purchase (the “Election”).
Making the Election will result in recognition of taxable income to the Participant on the date of
purchase, measured by the excess, if any, of the Fair Market Value of the Shares over the purchase
price for the Shares. Absent such an Election, taxable income will be measured and recognized by
Participant at the time or times on which the Company’s Repurchase Right lapses. Participant is
strongly encouraged to seek the advice of his or her own tax consultants in connection with the
purchase of the Shares and the advisability of filing of the Election. PARTICIPANT ACKNOWLEDGES
THAT IT IS SOLELY PARTICIPANT’S RESPONSIBILITY, AND NOT THE COMPANY’S RESPONSIBILITY, TO TIMELY
FILE THE

ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PARTICIPANT REQUESTS THE COMPANY, OR ITS
REPRESENTATIVE, TO MAKE THIS FILING ON PARTICIPANT’S BEHALF.

4

 

     The parties have executed this Agreement as of the date first set forth above.

	 	 	 	 	 
	 	ARCSIGHT, INC.

 	 
	 	By:  	 	 
	 	Its: 	 
	 

	 	 	 	 	 
	 	RECIPIENT:
	 
	 	Signature  	 	 
	 	Please Print Name 	 

5

 

	 	 	 	 	 

RECEIPT

ArcSight, Inc. hereby acknowledges receipt of (check as applicable):

o A check in the amount of $                                        

o The cancellation of indebtedness in the amount of $                                        

given by             
          
             
      as consideration for Certificate No. -  
              
     for       
              
              
      
shares of Common Stock of ArcSight, Inc.

Dated: ____________

	 	 	 	 	 
	 	ARCSIGHT, INC.

 	 
	 	By:  	 	 
	 
	 	Its: 	 

 

	 	 	 	 	 

RECEIPT AND CONSENT

     The undersigned Participant hereby acknowledges receipt of a photocopy of Certificate No.
-                     for                      shares of Common Stock of ArcSight, Inc. (the “Company”)

     The undersigned further acknowledges that the Secretary of the Company, or his or her
designee, is acting as escrow holder pursuant to the Restricted Stock Agreement that Participant
has previously entered into with the Company. As escrow holder, the Secretary of the Company, or
his or her designee, holds the original of the aforementioned certificate issued in the
undersigned’s name. To facilitate any transfer of Shares to the Company pursuant to the Restricted
Stock Agreement, Participant has executed the attached Assignment Separate from Certificate.

Dated: _____________________, 20____

	 	 	 	 	 
	Signature  	 	 	 
	 
	Please Print Name 	 	 

 

	 	 	 	 	 

STOCK POWER AND ASSIGNMENT

SEPARATE FROM STOCK CERTIFICATE

     FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of
                                                            ,                     ,
[COMPLETE AT THE TIME OF PURCHASE] (the “Agreement”), the undersigned
Participant hereby sells, assigns and transfers unto                                                             ,
             
        shares
of the Common Stock $0.001, par value per share, of ArcSight, Inc., a Delaware corporation (the
"Company”), standing in the undersigned’s name on the books of the Company represented by
Certificate No(s).                      [COMPLETE AT THE TIME OF PURCHASE] delivered herewith, and does hereby
irrevocably constitute and appoint the Secretary of the Company as the undersigned’s
attorney-in-fact, with full power of substitution, to transfer said stock on the books of the
Company. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.

Dated: _________________, ___

	 	 	 	 	 
	 	PARTICIPANT

 	 
	 	
 	 
	 	(Signature) 	 
	 	 	 
	 	
 	 
	 	(Please Print Name) 	 
	 	 	 
	 

Instructions to Participant: Please do not fill in any blanks other than the signature
line. The purpose of this document is to enable the Company and/or its assignee(s) to acquire the
shares upon exercise of its “Repurchase Right” set forth in the Agreement without requiring
additional action by the Participant.

 

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK UNIT AWARD

GRANT NUMBER:                     

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same meanings in this Notice of Restricted Stock Unit Award (the “Notice”).

	 	 	 
	Name:
	 	 
	 

	 	 
	 
	 	 
	Address:
	 	 
	 

	 	 

You (“Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan
subject to the terms and conditions of the Plan, this Notice and the attached Award Agreement
(Restricted Stock Units) (hereinafter “RSU Agreement”).

	 	 	 	 	 
	Number of RSUs:

	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Date of Grant:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Vesting Commencement Date:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Expiration Date:	 	The date on which settlement of all RSUs granted hereunder occurs, with
earlier expiration upon the Termination Date
	 
	 	 	 	 
	Vesting Schedule:	 	Subject to the limitations set forth in this Notice, the Plan and the
RSU Agreement, the RSUs will vest in accordance with the following schedule:
[INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship or service with the Company is for
an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in
this Notice, the RSU Agreement or the Plan changes the at-will nature of that relationship. You
acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing
service as an Employee, Director or Consultant of the Company. You also understand that this
Notice is subject to the terms and conditions of both the RSU Agreement and the Plan, both of which
are incorporated herein by reference. Participant has read both the RSU Agreement and the Plan.

	 	 	 	 	 	 	 	 	 	 	 
	PARTICIPANT	 	 	 	ARCSIGHT, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	 	 	 
	 	By:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	Print Name:

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

 

 

ARCSIGHT, INC.

AWARD AGREEMENT (RESTRICTED STOCK UNITS) TO THE

ARCSIGHT, INC 2007 EQUITY INCENTIVE PLAN

     Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan
(the “Plan”) shall have the same defined meanings in this Award Agreement (Restricted Stock Units)
(the “Agreement”).

You have been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions and
conditions of the Plan, the Notice of Restricted Stock Unit Award (the “Notice”) and this
Agreement.

1. Settlement. Settlement of RSUs shall be made within 30 days following the applicable
date of vesting under the vesting schedule set forth in the Notice. Settlement of RSUs shall be in
Shares.

2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of
vested RSUs, Participant shall have no ownership of the Shares allocated to the RSUs and shall have
no right dividends or to vote such Shares.

3. Dividend Equivalents. Dividends, if any (whether in cash or Shares), shall not be
credited to Participant.

4. No Transfer. The RSUs and any interest therein shall not be sold, assigned,
transferred, pledged, hypothecated, or otherwise disposed of.

5. Termination. If Participant’s service Terminates for any reason, all unvested RSUs
shall be forfeited to the Company forthwith, and all rights of Participant to such RSUs shall
immediately terminate. In case of any dispute as to whether Termination has occurred, the
Committee shall have sole discretion to determine whether such Termination has occurred and the
effective date of such Termination.

6. U.S. Tax Consequences. Participant acknowledges that there will be tax consequences
upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith,
and Participant should consult a tax adviser regarding Participant’s tax obligations prior to such
settlement or disposition. Upon vesting of the RSU, Participant will include in income the fair
market value of the Shares subject to the RSU. The included amount will be treated as ordinary
income by Participant and will be subject to withholding by the Company when required by applicable
law. Before any Shares subject to this Agreement are issued the Company shall withhold a number of
Shares with a fair market value (determined on the date the Shares are issued) equal to the minimum
amount the Company is required to withhold for income and employment taxes. Upon disposition of
the Shares, any subsequent increase or decrease in value will be treated as short-term or long-term
capital gain or loss, depending on whether the Shares are held for more than one year from the date
of settlement. Further, an RSU may be considered a deferral of compensation that may be subject to
Section 409A of the Code. Section 409A of the Code imposes special rules to the timing of making
and effecting certain amendments of this RSU with respect to distribution of any deferred
compensation. You should consult your personal tax advisor for more information on the actual and
potential tax consequences of this RSU.

7. Acknowledgement. The Company and Participant agree that the RSUs are granted under and
governed by the Notice, this Agreement and the provisions of the Plan. Participant: (i)
acknowledges receipt of a copy of the Plan and the Plan prospectus, (ii) represents that
Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the
RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan
and the Notice.

8. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice
constitute the entire agreement and understanding of the parties relating to the subject matter
herein and supersede all prior discussions between them. Any prior agreements, commitments or
negotiations concerning the purchase of the

 

 

Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver
of any rights under this Agreement, shall be effective unless in writing and signed by the parties
to this Agreement. The failure by either party to enforce any rights under this Agreement shall not
be construed as a waiver of any rights of such party.

9. Compliance with Laws and Regulations. The issuance of Shares will be subject to and
conditioned upon compliance by the Company and Participant with all applicable state and federal
laws and regulations and with all applicable requirements of any stock exchange or automated
quotation system on which the Company’s Common Stock may be listed or quoted at the time of such
issuance or transfer.

10. Governing Law; Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement
for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance
of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance
of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

11. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the
Company, to terminate Participant‘s service, for any reason, with or without cause.

     By your signature and the signature of the Company’s representative on the Notice, Participant
and the Company agree that this RSU is granted under and governed by the terms and conditions of
the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this
Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement, and fully understands all provisions of the Plan, the Notice and this
Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions relating to the Plan, the Notice and this
Agreement. Participant further agrees to notify the Company upon any change in Participant’s
residence address.

 

 

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF STOCK APPRECIATION RIGHT AWARD

GRANT NUMBER:                     

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same meanings in this Notice of Stock Appreciation Right Award (the
“Notice”).

	 	 	 
	Name:

	 	                                                            
	 
	 	 
	Address:

	 	                                                            

You (“Participant”) have been granted an award of Stock Appreciation Rights (“SARs”) under the Plan
subject to the terms and conditions of the Plan, this Notice and the attached Stock Appreciation
Right Award Agreement (hereinafter “SAR Agreement”).

	 	 	 
	Number of SARs:

	 	 
	 	 	 
	 
	 	 
	Maximum Number of Shares Issuable:

	 	 
	 	 	 
	 
	 	 
	Date of Grant:

	 	 
	 	 	 
	 
	 	 
	Fair Market Value of a Share on Date of Grant:

	 	 
	 	 	 
	 
	 	 
	Vesting Commencement Date:

	 	 
	 	 	 
	 
	 	 
	Expiration Date:

	 	The date on which settlement of all SARs granted hereunder occurs, with
earlier expiration upon the Termination Date
	 
	 	 
	Vesting Schedule:

	 	Subject to the limitations set forth in this Notice, the Plan and the SAR
Agreement, the SARs will vest in accordance with the following schedule: [INSERT
VESTING SCHEDULE]

You understand that your employment or consulting relationship or service with the Company is for
an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in
this Notice, the SAR Agreement or the Plan changes the at-will nature of that relationship. You
acknowledge that the vesting of the SARs pursuant to this Notice is earned only by continuing
service as an Employee, Director or Consultant of the Company. Participant also understands that
this Notice is subject to the terms and conditions of both the SAR Agreement and the Plan, both of
which are incorporated herein by reference. Participant has read both the SAR Agreement and the
Plan.

	 	 	 	 	 	 	 	 	 	 	 
	PARTICIPANT
 

	 	 	 	 	 	ARCSIGHT, INC.
	 	 
	Signature:
	 	 	 	 	 	By: 	 	 	 	 
	 

	 	 

	 	 	 	 
	 	 	 	 
	 
	Print Name:

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

1

 

ARCSIGHT, INC.

STOCK APPRECIATION RIGHT AWARD AGREEMENT TO THE

ARCSIGHT, INC. 2007 EQUITY INCENTIVE PLAN

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same meanings in this Stock Appreciation Right Award Agreement (the
“Agreement”).

You have been granted Stock Appreciation Rights (“SARs”) subject to the terms and conditions of the
Plan, the Notice of Stock Appreciation Right Award (the “Notice”) and this Agreement.

1. Settlement. Settlement of SARs shall be made within 30 days following the applicable
date of vesting under the vesting schedule set forth in the Notice. Settlement of SARs shall be in
Shares, except no fractional shares will be issued in settlement of SARs. Any amounts attributable
to a fractional share will be settled in cash.

2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of
SARs, Participant shall have no ownership of the Shares allocated to the SARs and shall have no
right to vote such Shares, subject to the terms, conditions and restrictions described in the Plan
and herein.

3. Dividend Equivalents. Dividends, if any (whether in cash or Shares), shall not be
credited to Participant.

4. No Transfer. The SARs and any interest therein shall not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of.

5. Termination. If Participant’s continuous service to the Company or any of its
subsidiaries shall terminate for any reason, all unvested SARs shall be forfeited to the Company
forthwith, and all rights of Participant to such SARs shall immediately terminate. Vested SARs
shall be treated in accordance with Section 5 of the Plan regarding exercisability of vested
Options. In case of any dispute as to whether Termination has occurred, the Committee shall have
sole discretion to determine whether such Termination has occurred and the effective date of such
Termination.

6. U.S. Tax Consequences. Participant acknowledges that there will be tax consequences
upon settlement of the SARs or disposition of the Shares, if any, received in connection therewith,
and Participant should consult a tax adviser prior to such settlement or disposition. Applicable
minimum withholding taxes shall be satisfied by the Company by withholding the applicable number of
Shares otherwise deliverable upon settlement of the SAR in accordance with rules and procedures
established by the Committee. There is no tax event upon granting of an SAR. Upon settlement of
the SAR, Participant will include in income the fair market value of the Shares subject to the
Shares payable in accordance with settlement of the SAR. The included amount will be treated as
ordinary income by Participant and will be subject to withholding by the Company. Upon disposition
of the Shares, any subsequent increase or decrease in value will be treated as short-term or
long-term capital gain or loss, depending on whether the Shares are held greater than one year from
the date of settlement.

7. Acknowledgement. The Company and Participant agree that the SARs are granted under and
governed by the Notice, this Agreement and the provisions of the Plan. Participant: (i)
acknowledges receipt of a copy of the Plan and the Plan prospectus, (ii) represents that
Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the
SARs subject to all of the terms and conditions set forth herein and those set forth in the Plan
and the Notice.

8. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice
constitute the entire agreement and understanding of the parties relating to the subject matter
herein and supersede all prior discussions between them. Any prior agreements, commitments or
negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or
amendment to this Agreement, nor any waiver of any

1

 

rights under this Agreement, shall be effective unless in writing and signed by the parties to this
Agreement. The failure by either party to enforce any rights under this Agreement shall not be
construed as a waiver of any rights of such party.

9. Compliance with Laws and Regulations. The issuance of Shares will be subject to and
conditioned upon compliance by the Company and Participant with all applicable state and federal
laws and regulations and with all applicable requirements of any stock exchange or automated
quotation system on which the Company’s Common Stock may be listed or quoted at the time of such
issuance or transfer.

10. Governing Law; Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement
for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance
of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance
of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

11. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the
Company, to terminate Purchaser‘s employment or consulting relationship, for any reason,
with or without cause.

     By your signature and the signature of the Company’s representative on the Notice, Participant
and the Company agree that this SAR is granted under and governed by the terms and conditions of
the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this
Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement, and fully understands all provisions of the Plan, the Notice and this
Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions relating to the Plan, the Notice and this
Agreement. Participant further agrees to notify the Company upon any change in Participant’s
residence address.

2

 

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF PERFORMANCE SHARES AWARD

GRANT NUMBER:                    

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same meanings in this Notice of Performance Shares Award (the “Notice”).

	 	 	 	 
	Name:

	 	 	 
	 
	 	 
	Address:

	 	 	 

You (“Participant”) have been granted an award of Performance Shares under the Plan subject to the
terms and conditions of the Plan, this Notice and the attached Performance Shares Award Agreement
(hereinafter “Performance Shares Agreement”).

	 	 	 	 
	Number of Shares:
	 	 
	 

	 	 
	 
	 	 
	Date of Grant:

	 	 

	 
	 	 
	Vesting Commencement Date:

	 	 
	 
	 	 
	Expiration Date:

	 	The date on which all the Shares granted hereunder become vested,

with earlier expiration upon the Termination Date
	 
	 	 
	Vesting Schedule:

	 	Subject to the limitations set forth in this Notice, the Plan and
the Performance Shares Agreement, the Shares will vest in accordance with the
following schedule: [INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship or service with the Company is for
an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in
this Notice, the Performance Shares Agreement or the Plan changes the at-will nature of that
relationship. You acknowledge that the vesting pursuant to this Notice is earned only upon the
applicable certification of attainment of the requisite Performance Factors enumerated above while
still in service as an Employee, Director or Consultant of the Company. You also understand that
this Notice is subject to the terms and conditions of both the Performance Shares Award Agreement
and the Plan, both of which are incorporated herein by reference. Participant has read both the
Performance Shares Agreement and the Plan.

	 	 	 	 	 	 	 	 	 
	PARTICIPANT	 	 	 	ARCSIGHT, INC.
	 
	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	Its:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	Signature:

	 	 	 	 	 	By:	 	 
	 
	 	 	 	 	 	 	 	 

 

ARCSIGHT, INC.

PERFORMANCE SHARES AGREEMENT TO THE

ARCSIGHT, INC. 2007 EQUITY INCENTIVE PLAN

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same defined meanings in this Performance Shares Agreement (the
“Agreement”).

You have been granted a Performance Shares Award (“Performance Shares Award”) subject to the terms,
restrictions and conditions of the Plan, the Notice of Performance Shares Award (“Notice”) and this
Agreement.

1. Settlement. Performance Shares shall be settled in Shares and the Company’s transfer
agent shall record ownership of such Shares in Participant’s name as soon as reasonably practicable
after achievement of the Performance Factors enumerated in the Notice.

2. Stockholder Rights. Participant shall have no right to dividends or to vote Shares
until Participant is recorded as the holder of such Shares on the stock records of the Company and
its transfer agent.

3. No-Transfer. Participant’s interest in this Performance Shares Award shall not be sold,
assigned, transferred, pledged, hypothecated, or otherwise disposed of.

4. Termination. Upon Participant’s Termination for any reason, all of Participant’s rights
under the Plan, this Agreement and the Notice in respect of this Award shall immediately terminate.
In case of any dispute as to whether Termination has occurred, the Committee shall have sole
discretion to determine whether such Termination has occurred and the effective date of such
Termination.

5. U.S. Tax Consequences. Participant acknowledges that there will be tax consequences
upon issuance of the Shares, and Participant should consult a tax adviser regarding Participant’s
tax obligations prior to such settlement or disposition. Upon vesting of the Shares, Participant
will include in income the fair market value of the Shares. The included amount will be treated as
ordinary income by Participant and will be subject to withholding by the Company when required by
applicable law. Before any Shares subject to this Agreement are issued the Company shall withhold
a number of Shares with a fair market value (determined on the date the Shares are issued) equal to
the minimum amount the Company is required to withhold for income and employment taxes. Upon
disposition of the Shares, any subsequent increase or decrease in value will be treated as
short-term or long-term capital gain or loss, depending on whether the Shares are held for more
than one year from the date of issuance.

6. Acknowledgement. The Company and Participant agree that the Performance Shares Award is
granted under and governed by the Notice, this Agreement and by the provisions of the Plan
(incorporated herein by reference). Participant: (i) acknowledges receipt of a copy of the Plan
and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar with
their provisions, and (iii) hereby accepts the Performance Shares Award subject to all of the terms
and conditions set forth herein and those set forth in the Plan, this Agreement and the Notice.

7. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice
constitute the entire agreement and understanding of the parties relating to the subject matter
herein and supersede all prior discussions between them. Any prior agreements, commitments or
negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in writing and signed by the parties to this Agreement. The failure by either party to
enforce any rights under this Agreement shall not be construed as a waiver of any rights of such
party.

 

8. Compliance with Laws and Regulations. The issuance of Shares will be subject to and
conditioned upon compliance by the Company and Participant with all applicable state and federal
laws and regulations and with all applicable requirements of any stock exchange or automated
quotation system on which the Company’s Common Stock may be listed or quoted at the time of such
issuance or transfer.

9. Governing Law; Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of
this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of
this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

10. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the
Company, to terminate Purchaser‘s service, for any reason, with or without cause.

     By your signature and the signature of the Company’s representative on the Notice, Participant
and the Company agree that this Performance Shares Award is granted under and governed by the terms
and conditions of the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the
Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and
this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Committee upon any questions relating to the Plan, the Notice and this
Agreement. Participant further agrees to notify the Company upon any change in Participant’s
residence address.

 

ARCSIGHT, INC.

2007 EQUITY INCENTIVE PLAN

NOTICE OF STOCK BONUS AWARD

GRANT NUMBER:                     

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same meanings in this Notice of Stock Bonus Award (the “Notice”).

	 	 	 	 	 
	 

	 	Name:
	 	                                                            
	 
	 	 	 	 
	 

	 	Address:
	 	                                                            

You (“Participant”) have been granted an award of Shares under the Plan subject to the terms and
conditions of the Plan, this Notice, and the attached Stock Bonus Award Agreement (the “Stock Bonus
Agreement”) to the Plan.

	 	 	 	 	 
	 

	 	Number of Shares:
	 	                                                            
	 
	 	 	 	 
	 

	 	Date of Grant:
	 	                                                            
	 
	 	 	 	 
	 

	 	Vesting Commencement Date:
	 	                                                            
	 
	 	 	 	 
	 

	 	Expiration Date:
	 	The date on which all the Shares granted hereunder become vested,

with earlier expiration upon the Termination Date
	 
	 	 	 	 
	 

	 	Vesting Schedule:
	 	Subject to the limitations set forth in this Notice, the Plan and
the Stock Bonus Agreement, the Shares will vest in accordance with the following
schedule: [INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship or service with the Company is for
an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in
this Notice, the Stock Bonus Agreement or the Plan changes the at-will nature of that relationship.
You acknowledge that the vesting of the Shares pursuant to this Notice is earned only by
continuing service as an Employee, Director or Consultant of the Company (to the vesting applies).
Participant also understands that this Notice is subject to the terms and conditions of both the
Stock Bonus Agreement and the Plan, both of which are incorporated herein by reference.
Participant has read both the Stock Bonus Agreement and the Plan.

	 	 	 	 	 	 	 	 	 	 	 
	PARTICIPANT	 	 	 	ARCSIGHT, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Print Name:

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

 

 

ARCSIGHT, INC.

STOCK BONUS AWARD AGREEMENT

ARCSIGHT, INC. 2007 EQUITY INCENTIVE PLAN

Unless otherwise defined herein, the terms defined in the Company’s 2007 Equity Incentive Plan (the
“Plan”) shall have the same defined meanings in this Stock Bonus Agreement (the “Agreement”).

You have been granted a Stock Bonus Award (“Stock Bonus Award”) subject to the terms, restrictions
and conditions of the Plan, the Notice of Stock Bonus Award (the “Notice”) and this Agreement.

1. Issuance. Stock Bonus Awards shall be issued in Shares, and the Company’s transfer
agent shall record ownership of such Shares in Participant’s name as soon as reasonably
practicable.

2. Stockholder Rights. Participant shall have no right to dividends or to vote Shares
until Participant is recorded as the holder of such Shares on the stock records of the Company and
its transfer agent.

3. No-Transfer. Unvested Shares, and unvested Stock Bonus Awards, and any interest in
either shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of by
Participant or any person whose interest derives from Participant’s interest. “Unvested Shares”
are Shares that have not yet vested pursuant to the terms of the vesting schedule set forth in the
Notice.

4. Termination. Upon Participant’s Termination for any reason, all Unvested Shares shall
immediately be forfeited to the Company, and all rights of Participant to such Unvested Shares
shall immediately terminate as of Participant’s Termination Date. In case of any dispute as to
whether Termination has occurred, the Committee shall have sole discretion to determine whether
such Termination has occurred and the effective date of such Termination.

5. U.S. Tax Consequences. Upon vesting of Shares, Participant will include in taxable
income the difference between the fair market value of the vesting Shares, as determined on the
date of their vesting, and the price paid for the Shares. This will be treated as ordinary income
by Participant and will be subject to withholding by the Company when required by applicable law.
Before any Shares subject to this Agreement are issued the Company shall withhold a number of
Shares with a fair market value (determined on the date the Shares are issued) equal to the minimum
amount the Company is required to withhold for income and employment taxes. Upon disposition of
the Shares, any subsequent increase or decrease in value will be treated as short-term or long-term
capital gain or loss, depending on whether the Shares are held for more than one year from the date
of settlement.

6. Acknowledgement. The Company and Participant agree that the Stock Bonus Award is
granted under and governed by the Notice, this Agreement and by the provisions of the Plan
(incorporated herein by reference). Participant: (i) acknowledges receipt of a copy of the Plan
and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar with
their provisions, and (iii) hereby accepts the Stock Bonus Award subject to all of the terms and
conditions set forth herein and those set forth in the Plan, this Agreement and the Notice.

7. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice
constitute the entire agreement and understanding of the parties relating to the subject matter
herein and supersede all prior discussions between them. Any prior agreements, commitments or
negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in writing and signed by the parties to this Agreement. The failure by either party to
enforce any rights under this Agreement shall not be construed as a waiver of any rights of such
party.

 

 

8. Compliance with Laws and Regulations. The issuance of Shares will be subject to and
conditioned upon compliance by the Company and Participant with all applicable state and federal
laws and regulations and with all applicable requirements of any stock exchange or automated
quotation system on which the Company’s Common Stock may be listed or quoted at the time of such
issuance or transfer.

9. Governing Law; Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of
this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of
this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

10. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the
Company, to terminate Purchaser‘s service, for any reason, with or without cause.

     By your signature and the signature of the Company’s representative on the Notice, Participant
and the Company agree that this Stock Bonus Award is granted under and governed by the terms and
conditions of the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the
Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and
this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Committee upon any questions relating to the Plan, the Notice and this
Agreement. Participant further agrees to notify the Company upon any change in Participant’s
residence address.

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