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Exhibit 10.7  

 
 

EPOCRATES, INC.
  2008 EQUITY INCENTIVE PLAN    
    

ADOPTED BY THE BOARD OF DIRECTORS: MARCH 19, 2008

APPROVED BY THE STOCKHOLDERS:                        , 2008

TERMINATION DATE: MARCH 18, 2018  

1.     GENERAL.  

        (a)    Amendment and Restatement.    The Plan is a complete amendment and restatement of the Company's 1999 Stock
Option Plan that was previously adopted on August 2, 1999 (the "Original Plan"). All outstanding options granted under the Original Plan shall
continue to be governed by the terms of the Original Plan. All Stock Awards granted after the Effective Date shall be governed by the terms contained herein. 

        (b)    Eligible Stock Award Recipients.    The persons eligible to receive discretionary Stock Awards are Employees,
Directors and Consultants. The persons eligible to receive non-discretionary Stock Awards under the Non-Discretionary Grant Program are Eligible Directors. 

        (c)    Available Stock Awards.    The Plan provides for the grant of the following Stock Awards: (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Bonus Awards, (iv) Stock Unit Awards, (v) Stock Appreciation Rights, (vi) Performance Stock Awards, and
(vii) Other Stock Awards. 

        (d)    Purpose.    The Company, by means of the Plan, seeks to secure and retain the services of the group of persons
eligible to receive Stock Awards as set forth in Section 1(b), to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and to provide a
means by which such eligible recipients may be given an opportunity to benefit from increases in value of the Common Stock through the granting of Stock Awards. 

2.     DEFINITIONS.  

        As used in the Plan, the following definitions shall apply to the capitalized terms indicated below: 

        (a)   "Affiliate" means (i) any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, provided each corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain, and (ii) any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. The Board shall have the authority to determine (i) the time or
times at which the foregoing ownership tests are applied, and (ii) whether "Affiliate" includes entities other than corporations within the foregoing definition. 

        (b)   "Annual Grant" means a Stock Award granted annually to each Eligible
Director who meets the specified criteria pursuant to Section 8(c). 

        (c)   "Annual Meeting" means the first meeting of the Company's stockholders
held each calendar year at which Directors of the Company are selected. 

        (d)   "Board" means the Board of Directors of the Company. 

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        (e)   "Capitalization Adjustment" means any change that is made in, or other
events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other similar transaction). Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as a Capitalization
Adjustment. 

        (f)    "Cause" means, with respect to a Participant, the occurrence of any of
the following events: (i) such Participant's commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof;
(ii) such Participant's attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) such Participant's intentional, material violation of any
material contract or agreement between the Participant and the Company or of any statutory duty owed to the Company; (iv) such Participant's unauthorized use or disclosure of the Company's
confidential information or trade secrets; or (v) such Participant's gross misconduct. The determination that a termination is for Cause shall be made by the Company in its sole discretion. Any
determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Stock Awards held by such Participant shall have no
effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose. 

        (g)   "Change in Control" means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events: 

        (i)    any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person from the
Company in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (B) solely because
the level of Ownership held by any Exchange Act Person (the "Subject Person") exceeds the designated percentage threshold of the outstanding voting
securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated
percentage threshold, then a Change in Control shall be deemed to occur; 

        (ii)   there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and,
immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either
(A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar
transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each
case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; 

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        (iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company shall otherwise occur, except for a liquidation into a parent corporation; 

        (iv)  there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions
as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or 

        (v)   individuals who, on the date the Plan is adopted by the Board, are members of the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the members of the Board; provided,
however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of the Plan, be considered as a member of the Incumbent Board. 

        The
term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company. 

        Notwithstanding
the foregoing or any other provision of the Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or
any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however,
that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply. 

        (h)   "Code" means the Internal Revenue Code of 1986, as amended. 

        (i)    "Committee" means a committee of one (1) or more members of the
Board to whom authority has been delegated by the Board in accordance with Section 3(d). 

        (j)    "Common Stock" means the common stock of the Company. 

        (k)   "Company" means Epocrates, Inc., a Delaware corporation. 

        (l)    "Consultant" means any person, including an advisor, who is
(i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an
Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a "Consultant" for purposes of
the Plan. 

        (m)  "Continuous Service" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an
Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's
service with the Company or an Affiliate, shall not terminate a Participant's Continuous Service; provided, however, if the Entity for which a
Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant's Continuous Service shall be considered to have terminated on
the date such Entity ceases to qualify as an Affiliate. For example, a change in status from an employee of the Company to a consultant of an Affiliate or to a Director shall not constitute an
interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service
shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, 

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military
leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may
be provided in the Company's leave of absence policy or in the written terms of the Participant's leave of absence. 

        (n)   "Corporate Transaction" means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following events: 

        (i)    the consummation of a sale or other disposition of all or substantially all, as determined by the Board in its sole
discretion, of the consolidated assets of the Company and its Subsidiaries; 

        (ii)   the consummation of a sale or other disposition of at least ninety percent
(90%) of the outstanding securities of the Company; 

        (iii) the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving
corporation; or 

        (iv)  the consummation of a merger, consolidation or similar transaction following which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of securities, cash or otherwise. 

        (o)   "Covered Employee" means the Company's principal executive officer and
the three (3) other highest compensated officers of the Company, excluding the Company's principal financial officer, for whom total compensation is required to be reported to stockholders
under the Exchange Act, as determined for purposes of Section 162(m) of the Code. 

        (p)   "Director" means a member of the Board. 

        (q)   "Disability" means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for
a continuous period of not less than 12 months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code. 

        (r)   "Effective Date" means the effective date of the Plan as set forth in
Section 14. 

        (s)   "Eligible Director" means a Director who is an "Eligible Director" under
the Company's Director Compensation Policy and is eligible to participate in the Non-Discretionary Grant Program. 

        (t)    "Employee" means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services, shall not cause a Director to be considered an "Employee" for purposes of the Plan. 

        (u)   "Entity" means a corporation, partnership, limited liability company or
other entity. 

        (v)   "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (w)  "Exchange Act Person" means any natural person, Entity or "group" (within
the meaning of Section 13(d) or 14(d) of the Exchange Act), except that "Exchange Act Person" shall not include (i) the Company or any Subsidiary of the Company, (ii) any employee
benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company,
(iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange
Act) that, as of the Effective Date, is the Owner, directly or indirectly, of 

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securities
of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities. 

        (x)   "Fair Market Value" means, as of any date, the value of the Common Stock
determined as follows: 

        (i)    If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market
Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the date in question, as reported in The Wall Street Journal or such other source as the Board
deems reliable. Unless otherwise provided by the Board, if there is no closing sales price (or closing bid if no sales were reported) for the Common Stock on the date in question, then the Fair Market
Value shall be the closing sales price (or closing bid if no sales were reported) on the last preceding date for which such quotation exists. 

        (ii)   In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good
faith and in a manner that complies with Sections 409A and 422 of the Code. 

        (y)   "Incentive Stock Option" means an Option that qualifies as an "incentive
stock option" within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 

        (z)   "Initial Grant" means a Stock Award granted to an Eligible Director who
meets the specified criteria pursuant to Section 8(b). 

        (aa) "IPO Date" means the date of the underwriting agreement between the
Company and the underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering. 

        (bb) "Non-Discretionary Grant Program" means the
non-discretionary grant program in effect under Section 8. 

        (cc) "Non-Employee Director" means a Director who either
(i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as
a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction for which disclosure would
be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. 

        (dd) "Nonstatutory Stock Option" means an Option that does not qualify as an
Incentive Stock Option. 

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

        (ff)  "Option" means an Incentive Stock Option or a Nonstatutory Stock Option
to purchase shares of Common Stock granted pursuant to the Plan. 

        (gg) "Option Agreement" means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. 

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        (hh) "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option. 

        (ii)   "Original Plan" means the Company's 1999 Stock Option Plan in effect
immediately prior to the Effective Date. 

        (jj)  "Other Stock Award" means an award based in whole or in part by
reference to the Common Stock which is granted pursuant to the terms and conditions of Section 7(e). 

        (kk) "Other Stock Award Agreement" means a written agreement between the
Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the
Plan. 

        (ll)   "Outside Director" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company
or an "affiliated corporation" who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of
the Company or an "affiliated corporation," and does not receive remuneration from the Company or an "affiliated corporation," either directly or indirectly, in any capacity other than as a Director,
or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code. 

        (mm)  "Own," "Owned,"
"Owner," "Ownership" A person or Entity shall be deemed to "Own," to have
"Owned," to be the "Owner" of, or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities. 

        (nn) "Participant" means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Stock Award. 

        (oo) "Performance Criteria" means the one or more criteria that the Board
shall select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that shall be used to establish such Performance Goals may be based on any one of, or
combination of, the following: (i) earnings per share; (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization
(EBITDA); (iv) net earnings; (v) return on equity; (vi) return on assets, investment, or capital employed; (vii) operating margin; (viii) gross margin;
(ix) operating income; (x) net income (before or after taxes); (xi) net operating income; (xii) net operating income after tax; (xiii) pre- and
after-tax income; (xiv) pre-tax profit; (xv) operating cash flow; (xvi) sales or revenue; (xvii) increases in revenue or product revenue;
(xvii) expenses and cost reductions; (xix) improvement in or attainment of expense levels; (xx) improvement in or attainment of working capital levels; (xxi) economic value
added; (xxii) market share; (xxiii) cash flow; (xxiv) cash flow per share; (xxv) share price performance; (xxvi) debt reduction; (xxvii) implementation or
completion of projects or processes; (xxviii) customer satisfaction; (xxix) total stockholder return; (xxx) stockholders' equity; and (xxxi) other measures of performance
selected by the Board. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement. The
Board shall, in its sole discretion, define the manner of calculating the Performance Criteria it selects to use for such Performance Period. 

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        (pp) "Performance Goals" means, for a Performance Period, the one or more
goals established by the Board for the Performance Period based upon the satisfaction of the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to
one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or
more relevant indices. At the time of the grant of any Stock Award, the Board is authorized to determine whether, when calculating the attainment of Performance Goals for a Performance Period:
(i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated net sales and operating
earnings; (iii) to exclude the effects of changes to generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) to exclude the effects of any
statutory adjustments to corporate tax rates; and (v) to exclude the effects of any "extraordinary items" as determined under generally accepted accounting principles. In addition, the Board
retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals. 

        (qq) "Performance Period" means the one or more periods of time, which may be
of varying and overlapping duration, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant's right to
and the payment of a Performance Stock Award. 

        (rr)  "Performance Stock Award" means a Stock Award granted pursuant to the
terms and conditions of Section 7(d). 

        (ss) "Plan" means this Epocrates, Inc. 2008 Equity Incentive Plan. 

        (tt)  "Rule 16b-3" means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time. 

        (uu) "Securities Act" means the Securities Act of 1933, as amended. 

        (vv) "Stock Appreciation Right" means a right to receive the appreciation on Common Stock that is
granted pursuant to the terms and conditions of Section 7(c). 

        (ww)  "Stock Appreciation Right Agreement" means a written agreement between
the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms
and conditions of the Plan. 

        (xx) "Stock Award" means any right granted under the Plan, including an
Option, a Stock Bonus Award, a Stock Unit Award, a Stock Appreciation Right, a Performance Stock Award, or any Other Stock Award. 

        (yy) "Stock Award Agreement" means a written agreement between the Company
and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 

        (zz) "Stock Bonus Award" means an award of shares of Common Stock which is
granted pursuant to the terms and conditions of Section 7(a). 

        (aaa)  "Stock Bonus Award Agreement" means a written agreement between the
Company and a holder of a Stock Bonus Award evidencing the terms and conditions of a Stock Bonus Award grant. Each Stock Bonus Award Agreement shall be subject to the terms and conditions of the Plan. 

        (bbb)  "Stock Unit Award" means a right to receive shares of Common Stock
which is granted pursuant to the terms and conditions of Section 7(b). 

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        (ccc)  "Stock Unit Award Agreement" means a written agreement between the
Company and a holder of a Stock Unit Award evidencing the terms and conditions of a Stock Unit Award grant. Each Stock Unit Award Agreement shall be subject to the terms and conditions of the Plan. 

        (ddd)  "Subsidiary" means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of
whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or
indirectly, Owned by the Company, and (ii) any partnership, limited liability company, or other entity in which the Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent (50%). 

        (eee)  "Ten Percent Stockholder" means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate. 

3.     ADMINISTRATION.  

        (a)    Administration by Board.    The Board shall administer the Plan unless and until the Board delegates
administration of the Plan to a Committee or Committees, as provided in Section 3(d). However, the Board may not delegate administration of the Non-Discretionary Grant Program. Any
discretionary Stock Award granted to an Eligible Director under Sections 6 and 7 shall be administered by a Committee consisting solely of Non-Employee Directors;  provided, however, that such
Non-Employee Directors sitting on the Committee may administer and grant discretionary Stock Awards to
themselves. 

        (b)    Powers of Board.    Except with respect to the Non-Discretionary Grant Program, the Board shall
have the power, subject to, and within the limitations of, the express provisions of the Plan: 

        (i)    To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective. 

        (ii)   To determine from time to time (1) which of the persons eligible under the Plan shall be granted Stock Awards;
(2) when and how each Stock Award shall be granted; (3) what type or combination of types of Stock Award shall be granted; (4) the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be permitted to receive cash or Common Stock pursuant to a Stock Award; (5) the number of shares of Common Stock with
respect to which a Stock Award shall be granted to each such person; and (6) the Fair Market Value applicable to a Stock Award. 

        (iii) To settle all controversies regarding the Plan and Stock Awards granted under it. 

        (iv)  To accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part
thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest. 

        (v)   To effect, at any time and from time to time, with the consent of any adversely affected Participant, (1) the
reduction of the exercise price of any outstanding Option or the strike price of any outstanding Stock Appreciation Right under the Plan; (2) the cancellation of any outstanding Option or Stock
Appreciation Right under the Plan and the grant in substitution therefor of (a) a 

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new
Option or Stock Appreciation Right under the Plan or another equity plan of the Company covering the same or a different number of shares of Common Stock, (b) a Stock Bonus Award,
(c) a Stock Unit Award, (e) an Other Stock Award, (e) cash, and/or (f) other valuable consideration (as determined by the Board, in its sole discretion); or (3) any
other action that is treated as a repricing under generally accepted accounting principles. 

        (vi)  To amend the Plan or a Stock Award as provided in Section 12. 

        (vii) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to
Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to bring the Plan or Stock Awards granted under the Plan into compliance therewith,
subject to the limitations, if any, of applicable law. However, except as provided in Section 11(a) relating to Capitalization Adjustments, stockholder approval shall be required for any
amendment of the Plan that either (1) materially increases the number of shares of Common Stock available for issuance under the Plan, (2) materially expands the class of individuals
eligible to receive Stock Awards under the Plan, (3) materially increases the benefits accruing to Participants under the Plan or materially reduces the price at which shares of Common Stock
may be issued or purchased under the Plan, (4) materially extends the term of the Plan, or (5) expands the types of Stock Awards available for issuance under the Plan, but in each of
(1) through (5) only to the extent required by applicable law or listing requirements. Except as provided above, rights under any Stock Award granted before amendment of the Plan shall
not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. 

        (viii)  To terminate or suspend the Plan as provided in Section 13. Suspension or termination of the Plan shall not
impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant. 

        (ix)  To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of (i) Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to Covered Employees, (ii) Section 422 of the Code regarding Incentive Stock Options, or (iii) Rule 16b-3. 

        (x)   To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards,
including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to
Board discretion; provided however, that, the rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the affected Participant, and (ii) such Participant consents in writing. Notwithstanding the foregoing, subject to the limitations of applicable law, if any, the Board
may amend the terms of any one or more Stock Awards without the affected Participant's consent if necessary to maintain the qualified status of the Stock Award as an Incentive Stock Option or to bring
the Stock Award into compliance with Section 409A of the Code and the related guidance thereunder. 

        (xi)  Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the
best interests of the Company which are not in conflict with the provisions of the Plan. 

        (xii) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan
by individuals who are foreign nationals or employed outside the United States. 

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        (c)    Administration of Non-Discretionary Grant Program.    The Board shall have the power, subject to
and within the limitations of, the express provisions of the Non-Discretionary Grant Program: 

        (i)    To determine the provisions of each Stock Awards to the extent not specified in the Non-Discretionary Grant
Program. 

        (ii)   To construe and interpret the Non-Discretionary Grant Program and the Stock Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Non-Discretionary Grant Program or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the
Non-Discretionary Grant Program or Stock Award fully effective. 

        (iii) To amend the Non-Discretionary Grant program or a Stock Award thereunder as provided in Section 12. 

        (iv)  Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the
best interests of the Company and that are not in conflict with the provisions of the Non-Discretionary Grant Program. 

        (d)    Delegation to Committee.    

        (i)    General.    The Board may delegate some or all of the administration of the Plan (except the
Non-Discretionary Grant Program) to a Committee or Committees. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan,
the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the
Committee is authorized to exercise (and references in the Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the
Board some or all of the powers previously delegated. Any Committee administering or granting a discretionary Stock Award to a Director under Sections 6 and 7 shall consist solely of
Non-Employee Directors; provided, however, that such Committee may administer and grant discretionary Stock Awards to members of such
Committee. 

        (ii)   Section 162(m) and Rule 16b-3 Compliance.    In the sole discretion of the Board,
the Committee may consist solely of two (2) or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3. In addition, the Board or the Committee, in its sole discretion, may (1) delegate to a Committee who need not be Outside Directors the authority
to grant Stock Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such
Stock Award, or (b) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code, and/or (2) delegate to a Committee who need not be
Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. 

        (e)    Delegation to Officers.    The Board may delegate to one or more Officers of the Company the authority to do
one or both of the following (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Options (and, to the extent permitted by Delaware law, other
Stock Awards) and the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees;  provided, however, that the
Board resolutions regarding such delegation shall specify the total number of shares of Common Stock that may be subject to
the Stock Awards granted by such Officers and that such Officers may not grant 

10

 

a
Stock Award to themselves. Notwithstanding anything to the contrary in this Section 3(e), the Board may not delegate to an Officer authority to determine the Fair Market Value of the Common
Stock pursuant to Section 2(x)(ii) above. 

        (f)    Effect of Board's Decision.    All determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons. 

4.     SHARES SUBJECT TO THE PLAN.  

        (a)    Share Reserve.    Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the
number of shares of Common Stock that may be issued pursuant to Stock Awards shall not exceed, in the aggregate Twelve Million One Hundred Seventy-Nine Thousand Two Hundred
Eighty-Five (12,179,285) shares of Common Stock. In addition, the number of shares of Common Stock available for issuance under the Plan shall automatically increase on
January 1st of each year commencing in 2009 and ending on (and including) January 1, 2018, in an amount equal to the lesser of (i) four percent (4%) of the total number of
shares of Common Stock outstanding on December 31st of the preceding calendar year, or (ii) Two Million Five Hundred Thousand (2,500,000) shares of Common Stock. Notwithstanding
the foregoing, the Board may act prior to the first day of any calendar year, to provide that there shall be no increase in the share reserve for such calendar year or that the increase in the share
reserve for such calendar year shall be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence. Shares may be issued in connection with a merger or
acquisition as permitted by NYSE Listed Company Manual Section 303A.08 or, if applicable, NASD Rule 4350(i)(1)(A)(iii), and such issuance shall not reduce the number of shares available
for issuance under the Plan. 

        (b)    Reversion of Shares to the Share Reserve.    If any (i) Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full, (ii) shares of Common Stock issued to a Participant pursuant to a Stock Award are forfeited to or repurchased by
the Company pursuant to the Company's reacquisition or repurchase rights under the Plan, including any
forfeiture or repurchase caused by the failure to meet a contingency or condition required for the vesting of such shares, (iii) Stock Award is settled in cash, or (iv) shares of Common
Stock are cancelled in accordance with the cancellation and regrant provisions of Section 3(b)(v), then the shares of Common Stock not issued under such Stock Award, or forfeited to or
repurchased by the Company, shall revert to and again become available for issuance under the Plan. If any shares subject to a Stock Award are not delivered to a Participant because such shares are
withheld for the payment of taxes or the Stock Award is exercised through a reduction of shares subject to the Stock Award (i.e., "net exercised") or an
appreciation distribution in respect of a Stock Appreciation Right is paid in shares of Common Stock, the number of shares subject to the Stock Award that are not delivered to the Participant shall
remain available for subsequent issuance under the Plan. If the exercise price of any Stock Award is satisfied by tendering shares of Common Stock held by the Participant (either by actual delivery or
attestation), then the number of shares so tendered shall remain available for subsequent issuance under the Plan. 

        (c)    Incentive Stock Option Limit.    Notwithstanding anything to the contrary in Section 4(b), subject to
the provisions of Section 11(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock
Options shall be Twelve Million One Hundred Seventy-Nine Thousand Two Hundred Eighty-Five (12,179,285) shares of Common Stock, plus the aggregate amount of any increase in the number of shares that
may be available for issuance pursuant to Stock Awards pursuant to Section 4(a). 

11

 

        (d)    Source of Shares.    The stock issuable under the Plan shall be shares of authorized but unissued or reacquired
Common Stock, including shares repurchased by the Company on the open market. 

5.     ELIGIBILITY.  

        (a)    Eligibility for Specific Stock Awards.    Incentive Stock Options may be granted only to employees of the
Company or a "parent corporation" or "subsidiary corporation" thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants. Non-discretionary Stock Awards granted under the Non-Discretionary Grant Program may be granted only to Eligible Directors. 

        (b)    Ten Percent Stockholders.    A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless
the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable after the expiration of
five (5) years from the date of grant. 

        (c)    Section 162(m) Limitation.    Subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, no Employee shall be eligible to be granted during any calendar year Options or Stock Appreciation Rights covering more than one million five hundred thousand (1,500,000)
shares of Common Stock. 

        (d)    Consultants.    A Consultant shall be eligible for the grant of a Stock Award only if, at the time of grant, a
Form S-8 Registration Statement under the Securities Act ("Form S-8") is available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or
because of any other rule governing the availability of Form S-8. 

6.     OPTION PROVISIONS.  

        Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased
on exercise of each type of Option. The provisions of separate Options need not be identical; provided, however, that each Option Agreement shall
include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions: 

        (a)    Term.    No Option shall be exercisable after the expiration of ten (10) years from the date of grant,
or such shorter period specified in the Option Agreement; provided, however, that an Incentive Stock Option granted to a Ten Percent Stockholder shall
be subject to the provisions of Section 5(b). 

        (b)    Exercise Price.    Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the
exercise price of each Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding
the foregoing, an Option may be granted with an exercise price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option if such Option is granted
pursuant to an assumption or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code (whether or not such options are Incentive Stock Options). 

        (c)    Consideration.    The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be
paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall have the authority
to grant Options that do not permit all of the following methods of payment (or 

12

 

otherwise
restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment. The methods of payment permitted by this
Section 6(c) are: 

        (i)    by cash, check, bank draft or money order payable to the Company; 

        (ii)   pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales
proceeds; provided, however, that such program is not in violation of the prohibition on the extension of credit to the Company's executive officers and
Directors under Section 402 of the Sarbanes-Oxley Act of 2002, in the opinion of counsel acceptable to the Company; 

        (iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock; 

        (iv)  by a "net exercise" arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable
upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, the
Company shall accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares
to be issued; provided, however, shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that
(i) shares issuable upon exercise are reduced to pay the exercise price pursuant to the "net exercise," (ii) shares are delivered to the Participant as a result of such exercise, and
(iii) shares are withheld to satisfy tax withholding obligations; or 

        (v)   in any other form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under
applicable law. 

        (d)    Transferability of Options.    The Board may, in its sole discretion, impose such limitations on the
transferability of Options as the Board shall determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options shall apply: 

        (i)    Restrictions on Transfer.    An Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder; provided, however, that the Board may, in its
sole discretion, permit transfer of the Option in a manner that is not prohibited by applicable tax and securities laws upon the Optionholder's request. 

        (ii)    Domestic Relations Orders.    Notwithstanding the foregoing, an Option may be transferred pursuant to a
domestic relations order, provided, however, that an Incentive Stock Option may be deemed to be a Nonstatutory Stock Option as a result of such
transfer. 

        (iii)    Beneficiary Designation.    Notwithstanding the foregoing, the Optionholder may, by delivering written notice
to the Company, in a form provided by or otherwise satisfactory to the Company and any broker designated by the Company to effect Option exercises, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option. In the absence of such a designation, the executor or administrator of the Optionholder's estate shall be entitled to
exercise the Option. 

        (e)    Vesting of Options Generally.    The total number of shares of Common Stock subject to an Option may vest and
therefore become exercisable in periodic installments that may or may not be equal. The Option may be subject to such other terms and conditions on the time or times when it may or may not be
exercised (which may be based on performance or other criteria) as the Board may 

13

 

deem
appropriate. The vesting provisions of individual Options may vary. The provisions of this Section 6(e) are subject to any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised. 

        (f)    Termination of Continuous Service.    In the event that an Optionholder's Continuous Service terminates (other
than for Cause or upon the Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date
of termination of Continuous Service) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after
termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

        (g)    Extension of Termination Date.    In the event that exercise of an Option following the termination of the
Optionholder's Continuous Service would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration of a period of three (3) months after the termination of the Optionholder's Continuous Service during which the exercise of
the Option would
not be in violation of such registration requirements, or (ii) the expiration of the term of the Option as set forth in the Option Agreement. 

        (h)    Disability of Optionholder.    In the event that an Optionholder's Continuous Service terminates as a result of
the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous
Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder does not
exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

        (i)    Death of Optionholder.    In the event that (i) an Optionholder's Continuous Service terminates as a
result of the Optionholder's death, or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for
a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's death, but only within the period ending on the earlier of
(i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such
Option as set forth in the Option Agreement. If, after the Optionholder's death, the Option is not exercised within the time specified herein or in the Option Agreement (as applicable), the Option
shall terminate. 

        (j)    Termination for Cause.    In the event that an Optionholder's Continuous Service is terminated for Cause, the
Option shall terminate immediately and cease to remain outstanding. 

        (k)    Non-Exempt Employees.    No Option granted to an Employee that is a non-exempt employee
for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for any shares of Common Stock until at least six months following the date of grant of the Option. The
foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option will be exempt from his or her
regular rate of pay. 

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7.     PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.  

        (a)    Stock Bonus Awards.    Each Stock Bonus Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. To the extent consistent with the Company's Bylaws, at the Board's election, shares of Common Stock may be (i) held in book entry form subject to
the Company's instructions until any restrictions relating to the Stock Bonus Award lapse; or (ii) evidenced by a certificate, which certificate shall be held in such form and manner as
determined by the Board. The terms and conditions of Stock Bonus Award Agreements may change from time to time, and the terms and conditions of separate Stock Bonus Award Agreements need not be
identical; provided, however, that each Stock Bonus Award Agreement shall include (through incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions: 

        (i)    Consideration.    A Stock Bonus Award may be awarded in consideration for (i) past or future services
actually or to be rendered to the Company or an Affiliate, or (ii) any other form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under
applicable law. 

        (ii)    Vesting.    Shares of Common Stock awarded under a Stock Bonus Award Agreement may be subject to forfeiture to
the Company in accordance with a vesting schedule to be determined by the Board. 

        (iii)    Termination of Participant's Continuous Service.    In the event a Participant's Continuous Service
terminates, the Company may receive via a forfeiture condition, any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination of Continuous
Service under the terms of the Stock Bonus Award Agreement. 

        (iv)    Transferability.    Rights to acquire shares of Common Stock under the Stock Bonus Award Agreement shall be
transferable by the Participant only upon such terms and conditions as are set forth in the Stock Bonus Award Agreement, as the Board shall determine in its sole discretion, so long as Common Stock
awarded under the Stock Bonus Award Agreement remains subject to the terms of the Stock Bonus Award Agreement. 

        (b)    Stock Unit Awards.    Each Stock Unit Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate Stock Unit Award
Agreements need not be identical; provided, however, that each Stock Unit Award Agreement shall include (through incorporation of the provisions hereof
by reference in the agreement or otherwise) the substance of each of the following provisions: 

        (i)    Consideration.    At the time of grant of a Stock Unit Award, the Board will determine the consideration, if
any, to be paid by the Participant upon delivery of each share of Common Stock
subject to the Stock Unit Award. The consideration to be paid (if any) by the Participant for each share of Common Stock subject to a Stock Unit Award may be paid in any form of legal consideration
that may be acceptable to the Board in its sole discretion and permissible under applicable law. 

        (ii)    Vesting.    At the time of the grant of a Stock Unit Award, the Board may impose such restrictions or
conditions to the vesting of the Stock Unit Award as it, in its sole discretion, deems appropriate. 

        (iii)    Payment.    A Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash
equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Stock Unit Award Agreement. 

15

  

        (iv)    Additional Restrictions.    At the time of the grant of a Stock Unit Award, the Board, as it deems
appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Stock Unit Award after the vesting of such Stock
Unit Award. 

        (v)    Dividend Equivalents.    Dividend equivalents may be credited in respect of shares of Common Stock covered by a
Stock Unit Award, as determined by the Board and contained in the Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of
Common Stock covered by the Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Stock Unit Award credited by reason of such dividend equivalents will be
subject to all the terms and conditions of the underlying Stock Unit Award Agreement to which they relate. 

        (vi)    Termination of Participant's Continuous Service.    Except as otherwise provided in the applicable Stock Unit
Award Agreement, such portion of the Stock Unit Award that has not vested will be forfeited upon the Participant's termination of Continuous Service. 

        (vii)    Compliance with Section 409A of the Code.    Notwithstanding anything to the contrary set forth
herein, any Stock Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of the Code shall incorporate terms and conditions necessary to avoid the
consequences of Section 409A(a)(1) of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Stock Unit Award Agreement evidencing such Stock Unit Award. 

        (c)    Stock Appreciation Rights.    Each Stock Appreciation Right Agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. Stock Appreciation Rights may be granted as stand-alone Stock Awards or in tandem with other Stock Awards. The terms and conditions of
Stock Appreciation Right Agreements may change from time to time, and the terms and conditions of separate Stock Appreciation Right Agreements need not be identical; provided,
however, that each Stock Appreciation Right Agreement shall include (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions: 

        (i)    Term.    No Stock Appreciation Right shall be exercisable after the expiration of ten (10) years from
the date of grant, or such shorter period specified in the Stock Appreciation Right Agreement. 

        (ii)    Strike Price.    Each Stock Appreciation Right will be denominated in shares of Common Stock equivalents. The
strike price of each Stock Appreciation Right granted as a stand-alone or tandem Stock Award shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock equivalents
subject to the Stock Appreciation Right on the date of grant. 

        (iii)    Calculation of Appreciation.    The appreciation distribution payable on the exercise of a Stock Appreciation
Right will be not greater than an amount equal to the excess of (i) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Common
Stock equal to the number of share of Common Stock equivalents in which the Participant is vested under such Stock Appreciation Right, and with respect to which the Participant is exercising the Stock
Appreciation Right on such date, over (ii) an amount (the strike price) that is determined by the Board on the date of grant of the Stock Appreciation Right. 

        (iv)    Vesting.    At the time of the grant of a Stock Appreciation Right, the Board may impose such restrictions or
conditions to the vesting of such Stock Appreciation Right as it, in its sole discretion, deems appropriate. 

16

 

        (v)    Exercise.    To exercise any outstanding Stock Appreciation Right, the Participant must provide written notice
of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. 

        (vi)    Payment.    The appreciation distribution in respect to a Stock Appreciation Right may be paid in Common
Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right. 

        (vii)    Termination of Continuous Service.    In the event that a Participant's Continuous Service terminates, the
Participant may exercise his or her Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation Right as of the date of termination of Continuous
Service) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant's Continuous Service (or such longer or
shorter period specified in the Stock Appreciation Right Agreement), or (ii) the expiration of the term of the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement.
If, after termination of Continuous Service, the Participant does not exercise his or her Stock Appreciation Right within the time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate. 

        (viii)    Compliance with Section 409A of the Code.    Notwithstanding anything to the contrary set forth
herein, any Stock Appreciation Rights granted under the Plan that are not exempt from the requirements of Section 409A of the Code shall incorporate terms and conditions necessary to avoid the
consequences described in Section 409A(a)(1) of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such
Stock Appreciation Right. 

        (d)    Performance Stock Awards.    A Performance Stock Award is either a Stock Bonus Award or Stock Unit Award that
may be granted or may vest based upon the attainment during a Performance Period of certain Performance Goals. A Performance Stock Award may, but need not, require the completion of a specified period
of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals
have been attained shall be conclusively determined by the Committee in its sole discretion. The maximum benefit to be received by any Participant in a calendar year attributable to Performance Stock
Awards described in this Section 7(d) shall not exceed the value of one million five hundred thousand (1,500,000) shares of Common Stock. In addition, to the extent permitted by applicable law
and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance Stock Awards. 

        (e)    Other Stock Awards.    Other forms of Stock Awards valued in whole or in part by reference to, or otherwise
based on, Common Stock may be granted either alone or in addition to Stock Awards provided for under Section 6 and the preceding provisions of this Section 7. Subject to the provisions
of the Plan, the Board shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares of Common
Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards. 

8.     NON-DISCRETIONARY GRANTS TO ELIGIBLE DIRECTORS.

        (a)    General.    The Non-Discretionary Grant Program in this Section 8 allows Eligible Directors
to receive specified Stock Awards automatically at designated intervals over their period of Continuous Service on the Board provided that such individuals meet the specified criteria. 

17

 

        (b)    Initial Grants.    Without any further action of the Board, (i) each person who is serving as an
Eligible Director on the Effective Date, and (ii) each person who, after the Effective Date, is elected or appointed for the first time to be an Eligible Director automatically shall, upon the
Effective Date or the date of his or her initial election or appointment to be an Eligible Director, as applicable, be granted an Initial Grant as described in Section 8(d) below. 

        (c)    Annual Grants.    Without any further action of the Board, on the date of each Annual Meeting, commencing on
the date of the Annual Meeting in 2009, each person who is an Eligible Director immediately following the close of the Annual Meeting automatically shall be granted an Annual Grant as described in
Section 8(d) below, if as of such date, he or she has served on the Board for at least the preceding six (6) months. 

        (d)    Form of Initial Grants and Annual Grants.    On or before the end of the Company's fiscal year, the Board shall
determine if all Initial Grants and Annual Grants to be granted in the subsequent fiscal year shall be in the form of Options described in Section 6 (subject to Section 8(d)(i) below),
Stock Bonus Awards described in Section 7(a), Stock Unit Awards described in Section 7(b), or Stock Appreciation Rights described in Section 7(c). If the Board does not make such
a determination on or before the end of the Company's fiscal year, all Initial Grants and Annual Grants to be granted in the subsequent fiscal year shall be in the form of Options described in
Section 6 (subject to Section 8(d)(i) below). 

        (i)    Options.

        (1)   Initial Grants.    If the Initial Grant is in the form of an Option, the Initial Grant shall be a Nonstatutory
Stock Option to purchase twenty-five thousand (25,000) shares of Common Stock on the terms and conditions set forth in Section 6, provided that each Initial Grant shall vest and
become exercisable in a series of twelve (12) successive equal monthly installments over the one year period measured from the date of grant. 

        (2)   Annual Grants.    Subject to Section 8(c), if the Annual Grant is in the form of an Option, the Annual
Grant shall be a Nonstatutory Stock Option to purchase fifteen thousand (15,000) shares of Common Stock on the terms and conditions set forth in Section 6, provided that each Annual Grant shall
vest and become exercisable in a series of twelve (12) successive equal monthly installments over the one year period measured from the date of grant. 

        (ii)   Other Types of Stock Awards.    If the Initial or Annual Grant is in the form of a Stock Bonus Award, Stock
Unit Award, or Stock Appreciation Right, the number of shares of Common Stock subject to such Initial or Annual Grant shall be determined by the Board in its sole discretion. 

        (iii) Remaining Terms.    The remaining terms and conditions of each Stock Award granted under the
Non-Discretionary Grant Program shall be as set forth in a Stock Award Agreement in the form adopted from time to time by the Board; provided,
however, that the terms of such Stock Award Agreement shall be consistent with the terms of the Plan. 

9.     COVENANTS OF THE COMPANY.  

        (a)    Availability of Shares.    During the terms of the Stock Awards, the Company shall keep available at all times
the number of shares of Common Stock required to satisfy such Stock Awards. 

        (b)    Securities Law Compliance.    The Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; 

18

 

 provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable
pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless
and until such authority is obtained. A Participant shall not be eligible for the grant of a Stock Award or the subsequent issuance of Common Stock pursuant to the Stock Award if such grant or
issuance would be in violation of any applicable securities laws. 

        (c)    No Obligation to Notify.    The Company shall have no duty or obligation to any holder of a Stock Award to
advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pending termination
or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder
of such Stock Award. 

10.   MISCELLANEOUS.  

        (a)    Use of Proceeds.    Proceeds from the sale of shares of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company. 

        b)    Corporate Action Constituting Grant of Stock Awards.    Corporate action constituting a grant by the Company of
a Stock Award to any Participant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter
evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant. 

        (c)    Stockholder Rights.    No Participant shall be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares of Common Stock subject to such Stock Award unless and until (i) such Participant has satisfied all requirements for exercise of the Stock Award pursuant to
its terms, and (ii) the issuance of the Common Stock pursuant to such exercise has been entered into the books and records of the Company. 

        (d)    No Employment or Other Service Rights.    Nothing in the Plan, any Stock Award Agreement or other instrument
executed thereunder or in connection with any Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in
effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without
cause, (ii) the service of a Consultant pursuant to the terms of such Consultant's agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws
of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be. 

        (e)    Incentive Stock Option $100,000 Limitation.    To the extent that the aggregate Fair Market Value (determined
at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and
any Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s). 

        (f)    Investment Assurances.    The Company may require a Participant, as a condition of exercising or acquiring
Common Stock under any Stock Award, (i) to give written assurances satisfactory to the 

19

 

Company
as to the Participant's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and
(ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant's own account and not with any
present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.
The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer of the Common Stock. 

        (g)    Withholding Obligations.    Unless prohibited by the terms of a Stock Award Agreement, the Company may, in its
sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means (in addition to the Company's right to withhold from any
compensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from
the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of
Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of the Stock Award as a
liability for financial accounting purposes); (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant;
or (v) by such other method as may be set forth in the Stock Award Agreement. 

        (h)    Electronic Delivery.    Any reference herein to a "written" agreement or document shall include any agreement
or document delivered electronically or posted on the Company's intranet. 

        (i)    Deferrals.    To the extent permitted by applicable law, the Board, in its sole discretion, may determine that
the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish programs and procedures for
deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may
provide for distributions while a Participant is still an employee. The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may
receive payments, including lump sum payments, following the Participant's termination of employment or retirement, and implement such other terms and conditions consistent with the provisions of the
Plan and in accordance with applicable law. 

        (j)    Compliance with Section 409A.    To the extent that the Board determines that any Stock Award granted
under the Plan is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award shall incorporate the terms and conditions necessary to avoid the consequences
described in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Stock Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department
of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued or amended after the Effective Date.
Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Board determines that any Stock Award may be subject to Section 409A of the Code
and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Board may adopt such amendments to the Plan and the 

20

 

applicable
Stock Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines
are necessary or appropriate to (1) exempt the Stock Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Stock
Award, or (2) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance. 

11.   ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.

        (a)    Capitalization Adjustments.    In the event of a Capitalization Adjustment, the Board shall appropriately and
proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 4(a), (ii) the class(es) and maximum number of securities by
which the share reserve is to increase automatically each year pursuant to Section 4(a), (iii) the class(es) and maximum number of securities that may be issued pursuant to the exercise
of Incentive Stock Options pursuant to Section 4(c), (iv) the class(es) and maximum number of securities that may be awarded to any person pursuant to Sections 5(c) and 7(d),
(v) the class(es) and number of securities subject to each Stock Award granted under the Non-Discretionary Grant Program under Section 8, and (vi) the class(es) and
number of securities and price per share of stock subject to outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. 

        (b)    Dissolution or Liquidation.    In the event of a dissolution or liquidation of the Company, all outstanding
Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the Company's right of repurchase) shall terminate immediately prior to the completion
of such dissolution or liquidation, and the shares of Common Stock subject to the Company's repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such Stock
Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully
vested, exercisable and/or no longer
subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion. 

        (c)    Corporate Transaction.    The following provisions shall apply to Stock Awards in the event of a Corporate
Transaction unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of the Stock Award: 

        (i)    Stock Awards May Be Assumed.    In the event of a Corporate Transaction, any surviving corporation or acquiring
corporation (or the surviving or acquiring corporation's parent company) may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock
Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), and any
reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor's
parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation may choose to assume or continue only a portion of a Stock Award or substitute
a similar stock award for only a portion of a Stock Award. The terms of any assumption, continuation or substitution shall be set by the Board in accordance with the provisions of Section 3. 

        (ii)   Stock Awards Held by Current Participants.    In the event of a Corporate Transaction in which the surviving
corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then
with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose 

21

 

Continuous
Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the "Current Participants"), the vesting
of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date
prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any
reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction). No vested Stock Unit Award shall
terminate pursuant to this Section 11(c)(ii) without being settled by delivery of shares of Common Stock, their cash equivalent, any combination thereof, or in any other form of consideration,
as determined by the Board, prior to the effective time of the Corporate Transaction. 

        (iii) Stock Awards Held by Former Participants.    In the event of a Corporate Transaction in which the surviving
corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then
with respect to Stock Awards that have not been assumed, continued or substituted and
that are held by persons other than Current Participants, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall not be accelerated and such
Stock Awards (other than a Stock Award consisting of vested and outstanding shares of Common Stock not subject to the Company's right of repurchase) shall terminate if not exercised (if applicable)
prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with
respect to such Stock Awards shall not terminate and may continue to be exercised notwithstanding the Corporate Transaction. No vested Stock Unit Award shall terminate pursuant to this
Section 11(c)(iii) without being settled by delivery of shares of Common Stock, their cash equivalent, any combination thereof, or in any other form of consideration, as determined by the
Board, prior to the effective time of the Corporate Transaction. 

        (iv)  Payment for Stock Awards in Lieu of Exercise.    Notwithstanding the foregoing, in the event a Stock Award
will terminate if not exercised prior to the effective time of a Corporate Transaction, the Board may provide, in its sole discretion, that the holder of such Stock Award may not exercise such Stock
Award but will receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (i) the value of the property the holder of the Stock Award would have
received upon the exercise of the Stock Award, over (ii) any exercise price payable by such holder in connection with such exercise. 

        (d)    Change in Control.    A Stock Award may be subject to additional acceleration of vesting and exercisability
upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the
Participant. A Stock Award may vest as to all or any portion of the shares subject to the Stock Award (i) immediately upon the occurrence of a Change in Control, whether or not such Stock Award
is assumed, continued, or substituted by a surviving or acquiring entity in the Change in Control, or (ii) in the event a Participant's Continuous Service is terminated, actually or
constructively, within a designated period following the occurrence of a Change in Control. In the absence of such provisions, no such acceleration shall occur. 

22

 

12.   AMENDMENT OF THE PLAN AND STOCK AWARDS.

        (a)    Amendment of Plan.    Subject to the limitations, if any, of applicable law, the Board at any time, and from
time to time, may amend the Plan. However, except as provided in Section 11(a) relating to Capitalization Adjustments, no amendment shall be effective unless approved by the stockholders of the
Company to the extent stockholder approval is necessary to satisfy applicable law. 

        (b)    Stockholder Approval.    The Board, in its sole discretion, may submit any other amendment to the Plan for
stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to Covered Employees. 

        (c)    Contemplated Amendments.    It is expressly contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 

        (d)    No Impairment of Rights.    Rights under any Stock Award granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. 

        (e)    Amendment of Stock Awards.    The Board, at any time and from time to time, may amend the terms of any one or
more Stock Awards, including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are
not subject to Board discretion; provided, however, that the rights under any Stock Award shall not be impaired by any such amendment unless
(i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. 

13.   TERMINATION OR SUSPENSION OF THE PLAN.

        (a)    Plan Term.    The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the
Company. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated. 

        (b)    No Impairment of Rights.    Suspension or termination of the Plan shall not impair rights and obligations under
any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant. 

14.   EFFECTIVE DATE OF PLAN.

        The Plan shall become effective on the IPO Date (the "Effective Date"), but no Stock Award shall be exercised (or,
in the case of a Stock Bonus Award, Stock Unit Award, or Other Stock Award shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the Board. 

15.   CHOICE OF LAW.  

        The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of the Plan, without regard to that state's
conflict of laws rules. 

23

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Exhibit 10.8  

 
 

EPOCRATES, INC.
  2008 EQUITY INCENTIVE PLAN  
  

OPTION GRANT NOTICE  

        Epocrates, Inc. (the "Company"), pursuant to its 2008 Equity Incentive Plan (the
"Plan"), hereby grants to Optionholder an option to purchase the number of shares of the Company's Common Stock set forth below. This option is subject
to all of the terms and conditions as set forth herein and in the Option Agreement, the Plan, and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. 

	Optionholder:	 	 
	 	 	

	Date of Grant:	 	 
	 	 	

	Vesting Commencement Date:	 	 
	 	 	

	Number of Shares Subject to Option:	 	 
	 	 	

	Exercise Price (Per Share):	 	 
	 	 	

	Total Exercise Price:	 	 
	 	 	

	Expiration Date:	 	 
	 	 	

	 
	 	 
	 	 
	 	 
	 	 

	Type of Grant:	 	o	 	Incentive Stock Option(1)	 	o	 	Nonstatutory Stock Option
	
Exercise Schedule:	
 	

[Initial Grant: 1/4th of the shares vest and become exercisable one year after the Vesting Commencement Date; the balance of the shares vest and become exercisable in a series of thirty-six (36) successive equal monthly
installments measured from the first anniversary of the Vesting Commencement Date.]
	

 	
 	

[Refresher Grant: The shares vest and become exercisable in a series of forty-eight (48) successive equal monthly installments over the four (4)-year period measured from the Vesting Commencement Date.]
	
Payment:	
 	

By one or a combination of the following items (described in the Option Agreement):
	 	 	ý	 	By cash or check
	 	 	ý	 	Pursuant to a Regulation T Program if the Shares are publicly traded
	 	 	ý	 	By delivery of already-owned shares if the Shares are publicly traded

	(1)
	If
this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than
$100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option. 

        Additional Terms/Acknowledgements:    The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this
Option Grant Notice, the Option Agreement, and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Option Grant Notice, the Option Agreement, and the Plan set forth the
entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements
on that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the following agreements only: 

	 
	 	 

	OTHER AGREEMENTS:	 	 
	 	 	

	

 	
 	

	 
	 	 
	 	 
	 	 

	EPOCRATES, INC.	 	OPTIONHOLDER:
	

By:	
 	

 	
 	

 	
 	

 
	 	 	
	 	

	 	 	Signature	 	Signature
	

Title:	
 	

 	
 	

Date:	
 	

 
	 	 	
	 	 	 	

	Date:	 	 	 	 	 	 
	 	 	
	 	 	 	 

Attachments:    Option Agreement, 2008 Equity Incentive Plan, and Notice of Exercise 

ATTACHMENT I  

OPTION AGREEMENT  

 
 

EPOCRATES, INC.
  2008 EQUITY INCENTIVE PLAN    
    

OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)  

        Pursuant to your Option Grant Notice ("Grant Notice") and this Option Agreement, Epocrates, Inc. (the
"Company") has granted you an option under its 2008 Equity Incentive Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly defined in this Option Agreement but
defined in the Plan shall have the same definitions as in the Plan. 

        The
details of your option are as follows: 

        1.    VESTING.    Subject to the limitations contained herein, your option will vest as provided in your Grant Notice,
provided that vesting will cease upon the termination of your Continuous Service. 

        2.    NUMBER OF SHARES AND EXERCISE PRICE.    The number of shares of Common Stock subject to your option and your
exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments. 

        3.    EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES.    In the event that you are an Employee eligible for
overtime compensation under the Fair Labor Standards Act of 1938, as amended (i.e., a "Non-Exempt
Employee"), you may not exercise your option until you have completed at least six (6) months of Continuous Service measured from the Date of Grant specified in your
Grant Notice, notwithstanding any other provision of your option. 

        4.    METHOD OF PAYMENT.    Payment of the exercise price is due in full upon exercise of all or any part of your
option. You may elect to make payment of the exercise price in cash or by check or in one or more of the following manners: 

        (a)   Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in  The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales
proceeds. 

        (b)   Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in  The Wall Street Journal, by delivery to the
Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned
free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion of the
Company at the time you exercise your option, shall include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding
the foregoing, you may not exercise your option by tender to the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement restricting the
redemption of the Company's stock. 

        5.    WHOLE SHARES.    You may exercise your option only for whole shares of Common Stock. 

        6.    SECURITIES LAW COMPLIANCE.    Notwithstanding anything to the contrary contained herein, you may not exercise
your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option also must comply with other applicable laws and
regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations. 

        7.    TERM.    You may not exercise your option before the commencement or after the expiration of its term. The term
of your option commences on the Date of Grant and expires upon the earliest of the following: 

        (a)   immediately upon the termination of your Continuous Service for Cause; 

        (b)   three (3) months after the termination of your Continuous Service for any reason other than your Disability or
death; provided, however, that (i) if during any part of such three (3) month period your option is not exercisable solely because of the
condition set forth in Section 6, your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service and (ii) if (x) you are a Non-Exempt Employee, (y) you terminate your Continuous
Service within six (6) months after the Date of Grant specified in your Grant Notice, and (z) you have vested in a portion of your option at the time of your termination of Continuous
Service, your option shall not expire until the earlier of (A) the later of the date that is seven (7) months after the Date of Grant specified in your Grant Notice or the date that is
three (3) months after the termination of your Continuous Service, or (B) the Expiration Date; 

        (c)   twelve (12) months after the termination of your Continuous Service due to your Disability; 

        (d)   eighteen (18) months after your death if you die either during your Continuous Service or within three
(3) months after your Continuous Service terminates for any reason other than Cause; 

        (e)   the Expiration Date indicated in your Grant Notice; or 

        (f)    the day before the seventh (7th) anniversary of the Date of Grant. 

        If
your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times
beginning on the date of grant of your option and ending on the day three (3) months before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in
the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment with the Company or an Affiliate terminates. 

        8.    EXERCISE.    

        (a)   You may exercise the vested portion of your option during its term by delivering a Notice of Exercise (in a form
designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require. 

        (b)   By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to
enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, or
(ii) the disposition of shares of Common Stock acquired upon such exercise. 

        (c)   If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option. 

        9.    TRANSFERABILITY.    Your option is not transferable, except by will or by the laws of descent and distribution,
and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a 

third
party who, in the event of your death, shall thereafter be entitled to exercise your option. In addition, you may transfer your option to a trust if you are considered to be the sole beneficial
owner (determined under Section 671 of the Code and applicable state law) while the option is held in the trust, provided that you and the trustee enter into transfer and other agreements
required by the Company. 

        10.    OPTION NOT A SERVICE CONTRACT.    Your option is not an employment or service contract, and nothing in your
option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any relationship that
you might have as a Director or Consultant for the Company or an Affiliate. 

        11.    WITHHOLDING OBLIGATIONS.    

        (a)   At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option. 

        (b)   Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable
legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount required to be withheld by law (or such lower amount as may be
necessary to avoid classification of your option as a liability for financial accounting purposes). Any adverse consequences to you arising in connection with such share withholding procedure shall be
your sole responsibility. 

        (c)   You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for herein unless such obligations are satisfied. 

        12.    NOTICES.    Any notices provided for in your option or the Plan shall be given in writing and shall be deemed
effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at
the last address you provided to the Company. 

        13.    GOVERNING PLAN DOCUMENT.    Your option is subject to all the provisions of the Plan, the provisions of which
are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

 
 

ATTACHMENT II
  
  2008 EQUITY INCENTIVE PLAN    
    

 
 

ATTACHMENT III
  
  NOTICE OF EXERCISE    
    

  

 
 

NOTICE OF EXERCISE    
    

	Epocrates, Inc.

1100 Park Place, Suite 300

San Mateo, CA 94403	 	Date of Exercise:	    

Ladies
and Gentlemen: 

        This
constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below. 

	 	 	Type of option (check one):	 	o  Incentive	 	o  Nonstatutory
	

 	
 	

Stock option dated:	
 	

    
	
 	

 
	

 	
 	

Number of shares as to which option is exercised:	
 	

    
	
 	

 
	

 	
 	

Certificates to be issued in name of:	
 	

    
	
 	

 
	

 	
 	

Total exercise price:	
 	

$
	
 	

 
	

 	
 	

Cash payment delivered herewith:	
 	

$
	
 	

 
	

 	
 	

Value of                shares of Epocrates, Inc. Common Stock delivered herewith(2):	
 	

$
	
 	

 

	(2)
	Shares
must meet the public trading requirements set forth in the option. Shares must be valued on the date of exercise in accordance with the terms of the Plan and the option being
exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate. 

        By
this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Epocrates, Inc. 2008 Equity Incentive Plan,
(ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise
relates to an incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of this
option that occurs within two (2) years after the date of grant of this option or within one (1) year after such shares of Common Stock are issued upon exercise of this option. 

	 	 	Very truly yours,
	

 	
 	

1

QuickLinks

EPOCRATES, INC. 2008 EQUITY INCENTIVE PLAN

EPOCRATES, INC. 2008 EQUITY INCENTIVE PLAN

ATTACHMENT II 2008 EQUITY INCENTIVE PLAN

ATTACHMENT III NOTICE OF EXERCISE

NOTICE OF EXERCISE

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