Document:

Exhibit 10.2.1

 

Q2 HOLDINGS, INC.

2007 STOCK PLAN

 

1.                                      ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1                               Establishment.  Q2 Holdings, Inc. 2007 Stock Plan (the “Plan”) is hereby established effective as of July 27, 2007.

 

1.2                               Purpose.  The purpose of the Plan is to advance the interests of the Participating Company Group and its shareholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group.

 

1.3                               Term of Plan.  The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed.  However, all Awards shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the shareholders of the Company.  The Company intends that the Plan comply with Section 409A of the Code (including any amendments or replacements of such section), and the Plan shall be so construed.

 

2.                                      DEFINITIONS AND CONSTRUCTION.

 

2.1                               Definitions.  Whenever used herein, the following terms shall have their respective meanings set forth below:

 

(a)                                 “Affiliate” means (i) an entity, other than a Parent Corporation, that directly, or indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other than a Subsidiary Corporation, that is controlled by the Company directly or indirectly through one or more intermediary entities.  For this purpose, the term “control” (including the term “controlled by”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the relevant entity, whether through the ownership of voting securities, by contract or otherwise; or shall have such other meaning assigned such term for the purposes of registration on Form S-8 under the Securities Act.

 

(b)                                 “Award” means an Option or Stock Purchase Right granted under the Plan.

 

(c)                                  “Board” means the Board of Directors of the Company.  If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s).

 

(d)                                 “Cause” means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Option Agreement, Stock Purchase Agreement or written contract of employment or service, any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to

 

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confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Company’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment or service agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with a Participating Company.

 

(e)                                  “Change in Control” means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Option Agreement, Stock Purchase Agreement or written contract of employment or service, the occurrence of any of the following:

 

(i)                                     an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) in which the shareholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the Company or, in the case of an Ownership Change Event described in Section 2.1(u)(iii), the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or

 

(ii)                                  the liquidation or dissolution of the Company.

 

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities.  The Board shall have the right to determine whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

 

(f)                                   “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

 

(g)                                  “Committee” means the compensation committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board.  Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.

 

(h)                                 “Company” means Q2 Holdings, Inc., a Delaware corporation, or any successor corporation thereto.

 

(i)                                     “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance

 

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on either the exemption from registration provided by Rule 701 under the Securities Act or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act.

 

(j)                                    “Director” means a member of the Board or of the board of directors of any other Participating Company.

 

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

 

(l)                                     “Employee” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.  The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be.  For purposes of an individual’s rights, if any, under the terms of the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.

 

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

 

(n)                                 “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:

 

(i)                                     If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable.  If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion.

 

(ii)                                  If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Board in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse, and subject to compliance with Section 409A of the Code. .

 

(o)                                 “Incentive Stock Option” means an Option intended to be (as set forth in the Option Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.

 

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(p)                                 “Insider” means an Officer, a Director of the Company or other person whose transactions in Stock are subject to Section 16 of the Exchange Act.

 

(q)                                 “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Option Agreement) or which does not qualify as an Incentive Stock Option.

 

(r)                                    “Officer” means any person designated by the Board as an officer of the Company.

 

(s)                                   “Option” means a right granted under Section 6 to purchase Stock pursuant to the terms and conditions of the Plan.  An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.

 

(t)                                    “Option Agreement” means a written agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Option granted to the Participant and any shares acquired upon the exercise thereof.  An Option Agreement may consist of a form of “Notice of Grant of Stock Option” and a form of “Stock Option Agreement” incorporated therein by reference, or such other form or forms as the Board may approve from time to time.

 

(u)                                 “Ownership Change Event” means the occurrence of any of the following with respect to the Company:  (i) the direct or indirect sale or exchange in a single or series of related transactions by the shareholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company.

 

(v)                                 “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.

 

(w)                               “Participant” means any eligible person who has been granted one or more Awards.

 

(x)                                 “Participating Company” means the Company or any Parent Corporation, Subsidiary Corporation or Affiliate.

 

(y)                                 “Participating Company Group” means, at any point in time, all entities collectively which are then Participating Companies.

 

(z)                                  “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.

 

(aa)                          “Securities Act” means the Securities Act of 1933, as amended.

 

(bb)                          “Service” means a Participant’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant.  A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Participating Company Group or a change in the Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant’s Service.  Furthermore, a Participant’s Service shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company; provided, however, that if any such leave exceeds ninety (90) days, on the one hundred eighty-first (181st) day following the commencement of such leave any Incentive

 

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Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and instead shall be treated thereafter as a Nonstatutory Stock Option unless the Participant’s right to return to Service is guaranteed by statute or contract.  Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Option Agreement or Stock Purchase Agreement.  Except as otherwise provided by the Board, in its discretion, the Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Participant performs Service ceasing to be a Participating Company.  Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of and reason for such termination.

 

(cc)                            “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2.

 

(dd)                          “Stock Purchase Agreement” means a written agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Stock Purchase Right granted to the Participant and any shares acquired upon the exercise thereof.  A Stock Purchase Agreement may consist of a form of “Notice of Grant of Stock Purchase Right” and a form of “Stock Purchase Agreement” incorporated therein by reference, or such other form or forms as the Board may approve from time to time.

 

(ee)                            “Stock Purchase Right” means a right granted under Section 7 to purchase Stock pursuant to the terms and conditions of the Plan.

 

(ff)                              “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

 

(gg)                            “Ten Percent Shareholder” means a person who, at the time an Award is granted to such person, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the Code.

 

2.2                               Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

3.                                      ADMINISTRATION.

 

3.1                               Administration by the Board.  The Plan shall be administered by the Board.  All questions of interpretation of the Plan or of any Award shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award.

 

3.2                               Authority of Officers.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election.

 

3.3                               Powers of the Board.  In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority, in its discretion:

 

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(a)                                 to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock to be subject to each Award;

 

(b)                                 to designate Options as Incentive Stock Options or Nonstatutory Stock Options;

 

(c)                                  to determine the Fair Market Value of shares of Stock or other property;

 

(d)                                 to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Award, (ii) the method of payment for shares purchased upon the exercise of the Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Award or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the Award or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Award, (vi) the effect of the Participant’s termination of Service on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Award or such shares not inconsistent with the terms of the Plan;

 

(e)                                  to approve one or more forms of Option Agreement and Stock Purchase Agreement;

 

(f)                                   to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired upon the exercise thereof;

 

(g)                                  to accelerate, continue, extend or defer the exercisability of any Award or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following a Participant’s termination of Service;

 

(h)                                 to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Awards; and

 

(i)                                     to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement or Stock Purchase Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.

 

3.4                               Administration with Respect to Insiders.  With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.

 

3.5                               Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement

 

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is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

 

4.                                      SHARES SUBJECT TO PLAN.

 

4.1                               Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be 2,238,159 (after giving effect to the reverse three to one Common Stock split on July 27, 2007) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than three million (3,000,000) shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Limit”).

 

4.2                               Adjustments for Changes in Capital Structure.  Subject to any required action by the shareholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the shareholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Awards, in the ISO Share Limit set forth in Section 4.1, and in the exercise or purchase price per share of any outstanding Awards in order to prevent dilution or enlargement of Participants’ rights under the Plan.  For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.”  Any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and in no event may the exercise price of any Award be decreased to an amount less than the par value, if any, of the stock subject to the Award.  Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

 

5.                                      ELIGIBILITY AND OPTION LIMITATIONS.

 

5.1                               Persons Eligible for Awards.  Awards may be granted only to Employees, Consultants and Directors of a Participating Company.  Eligible persons may be granted more than one (1) Award.  However, eligibility in accordance with this Section 5.1 shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.

 

5.2                               Option Grant Restrictions.  An Incentive Stock Option may be granted only to a person who is an Employee on the effective date of grant of the Option to such person.  Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option.

 

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5.3                               Fair Market Value Limitation.  To the extent that options designated as Incentive Stock Options (granted under all stock plans of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options.  For purposes of this Section 5.3, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted.  If the Code is amended to provide for a different limitation from that set forth in this Section 5.3, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code.  If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 5.3, the Participant may designate which portion of such Option the Participant is exercising.  In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first.  Separate certificates representing each such portion shall be issued upon the exercise of the Option.

 

6.                                      TERMS AND CONDITIONS OF OPTIONS.

 

Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish.  No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement.  Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

6.1                               Exercise Price.  The exercise price for each Option shall be established in the discretion of the Board, subject to compliance with Section 409A of the Code; provided, however, that (a) the exercise price per share shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no Option granted to a Ten Percent Shareholder shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option.  Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code.

 

6.2                               Exercisability and Term of Options.  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Shareholder shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, and (c) with the exception of an Option granted to an Officer, a Director or a Consultant, no Option shall become exercisable at a rate less than twenty percent (20%) per year over a period of five (5) years from the effective date of grant of such Option, subject to the Participant’s continued Service.  Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.

 

6.3                               Payment of Exercise Price.

 

(a)                                 Forms of Consideration Authorized.  Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any

 

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Option shall be made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (v) by any combination thereof.  The Board may at any time or from time to time, by approval of or by amendment to the standard forms of Option Agreement described in Section 8, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

 

(b)                                 Limitations on Forms of Consideration.

 

(i)                                     Tender of Stock.  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for more than six (6) months (and were not used for another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

 

(ii)                                  Cashless Exercise.  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise.

 

6.4                               Effect of Termination of Service.

 

(a)                                 Option Exercisability.  Subject to earlier termination of the Option as otherwise provided herein and unless otherwise provided by the Board in the grant of an Option and set forth in the Option Agreement, an Option shall be exercisable after a Participant’s termination of Service only during the applicable time period determined in accordance with this Section 6.4 and thereafter shall terminate:

 

(i)                                     Disability.  If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Option Agreement evidencing such Option (the “Option Expiration Date”).

 

(ii)                                  Death.  If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.  The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months (or such longer period of time as determined by the Board, in its discretion) after the Participant’s termination of Service.

 

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(iii)                               Termination for Cause.  Notwithstanding any other provision of the Plan to the contrary, if the Participant’s Service with the Participating Company Group is terminated for Cause, the Option shall terminate and cease to be exercisable immediately upon such termination of Service.

 

(iv)                              Other Termination of Service.  If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.

 

(b)                                 Extension if Exercise Prevented by Law.  Notwithstanding the foregoing other than termination for Cause, if the exercise of an Option within the applicable time periods set forth in Section 6.4(a) is prevented by the provisions of Section 11 below, the Option shall remain exercisable until three (3) months (or such longer period of time as determined by the Board, in its discretion) after the date the Participant is notified by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date.

 

(c)                                  Extension if Participant Subject to Section 16(b).  Notwithstanding the foregoing other than termination for Cause, if a sale within the applicable time periods set forth in Section 6.4(a) of shares acquired upon the exercise of the Option would subject the Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Participant would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Participant’s termination of Service, or (iii) the Option Expiration Date.

 

6.5                               Transferability of Options.  During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative.  No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution.  Notwithstanding the foregoing, to the extent permitted by the Board, in its discretion, and set forth in the Option Agreement evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to the applicable limitations, if any, described in Rule 701 under the Securities Act, and the General Instructions to Form S-8 Registration Statement under the Securities Act.

 

7.                                      TERMS AND CONDITIONS OF STOCK PURCHASE RIGHTS.

 

Stock Purchase Rights shall be evidenced by Stock Purchase Agreements, specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish.  No Stock Purchase Right or purported Stock Purchase Right shall be a valid and binding obligation of the Company unless evidenced by a fully executed Stock Purchase Agreement.  Stock Purchase Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

 

7.1                               Purchase Price.  The purchase price under each Stock Purchase Right shall be established by the Board; provided, however, that (a) the purchase price per share shall be at least eighty-five percent (85%) of the Fair Market Value of a share of Stock either on the effective date of grant of the Stock Purchase Right or on the date on which the purchase is consummated and (b) the purchase price per share under a Stock Purchase Right granted to a Ten Percent Shareholder shall be at least one hundred percent (100%) of the Fair Market Value of a share of Stock either on the effective date of grant of the Stock Purchase Right or on the date on which the purchase is consummated.

 

10

 

7.2                               Purchase Period.  A Stock Purchase Right shall be exercisable within a period established by the Board, which shall in no event exceed thirty (30) days from the effective date of the grant of the Stock Purchase Right.

 

7.3                               Payment of Purchase Price.  Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Stock Purchase Right shall be made (a) in cash, by check, or cash equivalent, (b) in the form of the Participant’s past service rendered to a Participating Company or for its benefit having a value not less than the aggregate purchase price of the shares being acquired, (c) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (d) by any combination thereof.  The Board may at any time or from time to time, by adoption of or by amendment to the standard form of Stock Purchase Agreement described in Section 8, or by other means, grant Stock Purchase Rights which do not permit all of the foregoing forms of consideration to be used in payment of the purchase price or which otherwise restrict one or more forms of consideration.

 

7.4                               Vesting and Restrictions on Transfer.  Shares issued pursuant to any Stock Purchase Right may or may not be made subject to vesting conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria (the “Vesting Conditions”) as shall be established by the Board and set forth in the Stock Purchase Agreement evidencing such Award.  During any period (the “Restriction Period”) in which shares acquired pursuant to a Stock Purchase Right remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section 7.5.  Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

 

7.5                               Effect of Termination of Service.  Unless otherwise provided by the Board in the grant of a Stock Purchase Right and set forth in the Stock Purchase Agreement, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then the Company shall have the option to repurchase for the purchase price paid by the Participant any shares acquired by the Participant pursuant to a Stock Purchase Right which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service; provided, however, that with the exception of shares acquired pursuant to a Stock Purchase Right by an Officer, a Director or a Consultant, the Company’s repurchase option must lapse at the rate of at least twenty percent (20%) of the shares per year over the period of five (5) years from the effective date of grant of the Stock Purchase Right (without regard to the date on which the Stock Purchase Right was exercised) and the repurchase option must be exercised, if at all, for cash or cancellation of purchase money indebtedness for the shares within ninety (90) days following the Participant’s termination of Service.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.

 

7.6                               Nontransferability of Stock Purchase Rights.  Rights to acquire shares of Stock pursuant to a Stock Purchase Right may not be assigned or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant.

 

8.                                      STANDARD FORMS OF AGREEMENTS.

 

8.1                               Option Agreement.  Unless otherwise provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and conditions set forth in the

 

11

 

form of Option Agreement approved by the Board concurrently with its adoption of the Plan and as amended from time to time.

 

8.2                               Stock Purchase Agreement.  Unless otherwise provided by the Board at the time the Stock Purchase Right is granted, a Stock Purchase Right shall be subject to the terms and conditions set forth in the form of Stock Purchase Agreement approved by the Board concurrently with its adoption of the Plan and as amended from time to time.

 

8.3                               Authority to Vary Terms.  The Board shall have the authority from time to time to vary the terms of any standard form of agreement described in this Section 8 either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of agreement are not inconsistent with the terms of the Plan.

 

9.                                      CHANGE IN CONTROL.

 

9.1                               Effect of Change in Control on Options.

 

(a)                                 Accelerated Vesting.  Notwithstanding any other provision of the Plan to the contrary, the Board, in its sole discretion, may provide in any Award Agreement or, in the event of a Change in Control, may take such actions as it deems appropriate to provide for the acceleration of the exercisability and vesting in connection with such Change in Control of any or all outstanding Options and shares acquired upon the exercise of such Options, subject to compliance with Section 409A of the Code.

 

(b)                                 Assumption or Substitution of Options.  In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, either assume or continue the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiror’s stock.  Any Options which are neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement.

 

(c)                                  Cash-Out of Options.  The Board may, in its sole discretion and without the consent of any Participant, determine that, upon the occurrence of a Change in Control, each or any Option outstanding immediately prior to the Change in Control shall be canceled in exchange for a payment with respect to each vested share (and each unvested share, if so determined by the Board) of Stock subject to such canceled Option in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control over the exercise price per share under such Option (the “Spread”).  In the event such determination is made by the Board, the Spread (reduced by applicable withholding taxes, if any) shall be paid to Participants in respect of their canceled Options as soon as practicable following the date of the Change in Control and in respect of the unvested portion of their canceled Options in accordance with the vesting schedule applicable to such Options as in effect prior to the Change in Control.

 

12

 

9.2                               Effect of Change in Control on Stock Purchase Right.  In the event of a Change in Control, the Acquiror, may, without the consent of any Participant, either assume or continue the Company’s rights and obligations under outstanding Stock Purchase Rights or substitute for outstanding Stock Purchase Rights substantially equivalent purchase rights for the Acquiror’s stock.  Any Stock Purchase Rights which are neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of a Stock Purchase Right prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Stock Purchase Agreement evidencing such Stock Purchase Right except as otherwise provided in such Stock Purchase Agreement.

 

9.3                               Federal Excise Tax Under Section 4999 of the Code.

 

(a)                                 Excess Parachute Payment.  In the event that any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant would subject the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, the Participant may elect, in his or her sole discretion, to reduce the amount of any acceleration of vesting called for under the Award in order to avoid such characterization.

 

(b)                                 Determination by Independent Accountants.  To aid the Participant in making any election called for under Section 9.3(a), no later than the date of the occurrence of any event that might reasonably be anticipated to result in an “excess parachute payment” to the Participant as described in Section 9.3(a), the Company shall request a determination in writing by independent public accountants selected by the Company (the “Accountants”).  As soon as practicable thereafter, the Accountants shall determine and report to the Company and the Participant the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant.  For the purposes of such determination, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make their required determination.  The Company shall bear all fees and expenses the Accountants may reasonably charge in connection with their services contemplated by this Section 9.3(b).

 

10.                               TAX WITHHOLDING.

 

10.1                        Tax Withholding in General.  The Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for, the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to an Award or the shares acquired pursuant thereto.  The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to an Option Agreement or Stock Purchase Agreement until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant.

 

10.2                        Withholding in Shares.  The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of the Participating Company Group.  The Fair Market Value of any shares of Stock withheld or tendered to

 

13

 

satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates.

 

11.                               COMPLIANCE WITH SECURITIES LAW.

 

The grant of Awards and the issuance of shares of Stock upon exercise of Awards shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities.  Awards may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed.  In addition, no Award may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Award be in effect with respect to the shares issuable upon exercise of the Award or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of any Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

12.                               AMENDMENT OR TERMINATION OF PLAN.

 

The Board may amend, suspend or terminate the Plan at any time.  However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s shareholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s shareholders under any applicable law, regulation or rule, including the rules of any stock exchange or market system upon which the Stock may then be listed.  No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Board. Except as provided by the next sentence, no amendment, suspension or termination of the Plan may adversely affect any then outstanding Award without the consent of the Participant.  Notwithstanding any other provision of the Plan to the contrary, the Board may, in its sole and absolute discretion and without the consent of any participant, amend the Plan or any Award agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A of the Code.

 

13.                               MISCELLANEOUS PROVISIONS.

 

13.1                        Repurchase Rights.  Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Award is granted.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock

 

14

 

acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

 

13.2                        Provision of Information. At least annually, copies of the Company’s balance sheet and income statement for the just completed fiscal year shall be made available to each Participant and purchaser of shares of Stock upon the exercise of an Award.  The Company shall not be required to provide such information to key employees whose duties in connection with the Company assure them access to equivalent information.  Furthermore, the Company shall deliver to each Participant such disclosures as are required in accordance with Rule 701 under the Securities Act.

 

13.3                        Shareholder Approval.  The Plan or any increase in the maximum aggregate number of shares of Stock issuable thereunder as provided in Section 4.1 (the “Authorized Shares”) shall be approved by a majority of the outstanding securities of the Company entitled to vote within twelve (12) months before or after the date of adoption thereof by the Board.  Awards granted prior to security holder approval of the Plan or in excess of the Authorized Shares previously approved by the security holders shall become exercisable no earlier than the date of security holder approval of the Plan or such increase in the Authorized Shares, as the case may be.

 

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets forth the Q2 Holdings, Inc. 2007 Stock Plan as duly adopted by the Board on July 27, 2007.

 

	
 
    	
 
    
	
 
    	
/s/   R.H. Seale
    
	
 
    	
R.H.   “Hank” Seale, III
    
	
 
    	
Secretary
    

 

15

 

AMENDMENT TO THE

CBG HOLDINGS, INC.

2007 STOCK PLAN

 

This Amendment (this “Amendment”) to the CBG Holdings, Inc. (the “Company”) 2007 Stock Plan, attached hereto as Exhibit A (the “Existing Plan”), is effective as of October 26, 2007 (the “Effective Date”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Existing Plan.

 

RECITALS

 

A.                                    Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Company wishes to amend Section 4.1 therein to reflect certain changes in the maximum number of shares of Stock issuable under the Plan.

 

B.                                    The Board duly approved and adopted this Amendment on October 26, 2007.

 

C.                                    The Company’s stockholders duly approved and adopted this Amendment on October 29, 2007.

 

AMENDMENT TO THE EXISTING PLAN

 

In consideration of the recitals referenced above and effective upon the Effective Date, Section 4.1 of the Existing Plan is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:

 

“Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be two million three hundred thousand six hundred thirty-nine (2,300,639) (after giving effect to the reverse three to one Common Stock split on July 27, 2007) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than three million (3,000,000) shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Limit”).”

 

Signature page follows.

 

 

IN WITNESS WHEREOF, the undersigned officer of the Company certifies that this Amendment was duly adopted by the Board and the Company’s stockholders as of the respective dates set forth above.  The Company hereby executes the Amendment as of the Effective Date.

 

 

	
 
    	
CBG HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   R. H. Seale
    
	
 
    	
 
    	
R.   H. “Hank” Seale, III
    
	
 
    	
 
    	
Chief   Executive Officer and President
    

 

SIGNATURE PAGE TO AMENDMENT TO CBG HOLDINGS, INC. 2007 STOCK PLAN

 

 

SECOND AMENDMENT TO THE

CBG HOLDINGS, INC.

2007 STOCK PLAN

 

This Second Amendment (this “Amendment”) to the CBG Holdings, Inc. (the “Company”) 2007 Stock Plan, attached hereto as Exhibit A (the “Existing Plan”), is effective as of February 17, 2009 (the “Effective Date”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Existing Plan.

 

RECITALS

 

A.                                    The Existing Plan was amended on October 26, 2007.

 

B.                                    On June 27, 2007, the Company acquired 100% of the outstanding stock of Q2 Software, Inc. (“Q2”) and Cardinal Software, Inc. (“Cardinal”) and assumed all outstanding options under the Q2 Software, Inc. 2005 Stock Plan and Cardinal Software, Inc. 2005 Stock Option Plan (the “Mergers”);

 

C.                                    The options of Cardinal and Q2 assumed by CBG in the Mergers, in accordance with the terms and conversion rates of the respective Mergers were exercisable for an aggregate of 1,546,332 shares of Common Stock of the Company (the “Assumed Options”);

 

D.                                    In connection with the Mergers, the Company adopted the CBG Holdings, Inc. 2007 Stock Plan (the “Plan”) with 2,238,159 shares reserved under the Plan (which was soon thereafter increased to 2,300,639 shares) and believed that the Assumed Options would be assumed into the Plan and such shares would be additive to the initial share reserve under the Plan;

 

E.                                     Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Company wishes to further amend Section 4.1 therein to clarify that the Assumed Options were assumed by the Company into the Plan and increase the Company’s common stock share reserve under the Plan and the ISO Share Limit (as define below) to specifically include the number of Assumed Options;

 

F.                                      Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Company also wishes to further amend Section 4.1 therein to increase the number of shares the Company may issue pursuant to the Plan and the ISO Share Limit by an additional 1,000,000 shares;

 

G.                                    The Board duly approved and adopted this Amendment on December 12, 2008 and on February 17, 2009.

 

H.                                   The Company’s stockholders duly approved and adopted this Amendment on February 17, 2009.

 

AMENDMENT TO THE EXISTING PLAN

 

In consideration of the recitals referenced above and effective upon the Effective Date, Section 4.1 of the Existing Plan is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:

 

 

“Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be four million eight hundred forty-six thousand nine hundred seventy-one (4,846,971) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than four million eight hundred forty-six thousand nine hundred seventy-one (4,846,971) shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Limit”).”

 

Signature page follows.

 

 

IN WITNESS WHEREOF, the undersigned officer of the Company certifies that this Amendment was duly adopted by the Board and the Company’s stockholders as of the respective dates set forth above.  The Company hereby executes the Amendment as of the Effective Date.

 

 

	
 
    	
CBG HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   R. H. Seale
    
	
 
    	
 
    	
R.   H. “Hank” Seale, III
    
	
 
    	
 
    	
Chief   Executive Officer and President
    

 

SIGNATURE PAGE TO SECOND AMENDMENT TO CBG HOLDINGS, INC. 2007 STOCK PLAN

 

 

THIRD AMENDMENT TO THE

CBG HOLDINGS, INC.

2007 STOCK PLAN

 

This Third Amendment (this “Amendment”) to the 2007 Stock Plan, as amended, attached hereto as Exhibit A (the “Existing Plan”) of CBG Holdings, Inc. (the “Corporation”), is effective as of November 17, 2011 (the “Effective Date”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Existing Plan.

 

RECITALS

 

A.                                    Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Corporation wishes to amend Section 4.1 therein to reflect certain changes in the maximum number of shares of Stock issuable under the Plan.

 

B.                                    The Board duly approved and adopted this Amendment on July 13, 2011.

 

C.                                    The Corporation’s stockholders duly approved and adopted this Amendment on November 17, 2011.

 

AMENDMENT TO THE EXISTING PLAN

 

In consideration of the recitals referenced above and effective upon the Effective Date, Section 4.1 of the Existing Plan is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:

 

“Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be six million four hundred twenty-eight thousand four hundred thirty-three (6,428,433) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than six million four hundred twenty-eight thousand four hundred thirty-three (6,428,433) shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Limit”).”

 

Signature page follows.

 

 

IN WITNESS WHEREOF, the undersigned officer of the Corporation certifies that this Amendment was duly adopted by the Board and the Corporation’s stockholders as of the respective dates set forth above.  The Corporation hereby executes the Amendment as of the Effective Date.

 

 

	
 
    	
CBG HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   R. H. Seale
    
	
 
    	
 
    	
R.   H. “Hank” Seale, III
    
	
 
    	
 
    	
Chief   Executive Officer and President
    

 

 

FOURTH AMENDMENT TO THE

CBG HOLDINGS, INC.

2007 STOCK PLAN

 

This Fourth Amendment (this “Amendment”) to the 2007 Stock Plan, as amended, attached hereto as Exhibit A (the “Existing Plan”) of CBG Holdings, Inc. (the “Corporation”), is effective as of February 8, 2012 (the “Effective Date”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Existing Plan.

 

RECITALS

 

A.                                    Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Corporation wishes to amend Section 4.1 therein to reflect certain changes in the maximum number of shares of Stock issuable under the Plan and amend Section 9.1 to allow for immediate vesting of options issued to the Corporation’s directors on or after the Effective Date upon a change in control of the Corporation.

 

B.                                    The Board duly approved and adopted this Amendment on February 8, 2012.

 

C.                                    The requisite stockholders duly approved and adopted this Amendment on February 8, 2012.

 

AMENDMENTS TO THE EXISTING PLAN

 

In consideration of the recitals referenced above and effective upon the Effective Date, Section 4.1 of the Existing Plan is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:

 

“Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be seven million six hundred seventy-eight thousand four hundred thirty-three (7,678,433) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than seven million six hundred seventy-eight thousand four hundred thirty-three (7,678,433) shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Limit”).”

 

In consideration of the recitals referenced above and effective upon the Effective Date, shall be added to the end of Section 9.1(a):

 

“Notwithstanding any other provision set forth in this Section 9.1, any Option granted to a member of the Board on or after February 8, 2012 shall become fully vested and exercisable the day immediately prior to, but contingent upon, a Change in Control.”

 

Signature page follows.

 

 

IN WITNESS WHEREOF, the undersigned officer of the Corporation certifies that this Amendment was duly adopted by the Board and the Corporation’s stockholders as of the respective dates set forth above.  The Corporation hereby executes the Amendment as of the Effective Date.

 

 

	
 
    	
CBG HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   R. H. Seale
    
	
 
    	
 
    	
R.   H. “Hank” Seale, III
    
	
 
    	
 
    	
Chief   Executive Officer and President
    

 

[Signature Page to Fourth Amendment to the CBG Holdings, Inc. 2007 Stock Plan]

 

 

FIFTH AMENDMENT TO THE

CBG HOLDINGS, INC.

2007 STOCK PLAN

 

This Fifth Amendment (this “Amendment”) to the 2007 Stock Plan, as amended, attached hereto as Exhibit A (the “Existing Plan”) of CBG Holdings, Inc. (the “Corporation”), is effective as of February 28, 2013 (the “Effective Date”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Existing Plan.

 

RECITALS

 

A.                                    Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Corporation wishes to amend Section 1.1 therein to change the name of the Plan from the “CBG Holdings, Inc. 2007 Stock Plan” to the “Q2 Holdings, Inc. 2007 Stock Plan.”

 

B.                                    The Board duly approved and adopted this Amendment on February 28, 2013.

 

C.                                    The requisite stockholders duly approved and adopted this Amendment on February 28, 2013.

 

AMENDMENTS TO THE EXISTING PLAN

 

In consideration of the recitals referenced above and effective upon the Effective Date, Section 1.1 of the Existing Plan is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:

 

Establishment.  Q2 Holdings, Inc. 2007 Stock Plan (the “Plan”) is hereby established effective as of July 27, 2007.

 

Signature page follows.

 

 

IN WITNESS WHEREOF, the undersigned officer of the Corporation certifies that this Amendment was duly adopted by the Board and the Corporation’s stockholders as of the respective dates set forth above.  The Corporation hereby executes the Amendment as of the Effective Date.

 

 

	
 
    	
Q2 HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Barry Benton
    
	
 
    	
 
    	
Barry   Benton
    
	
 
    	
 
    	
Assistant   Secretary
    

 

 

SIXTH AMENDMENT TO THE

Q2 HOLDINGS, INC.

2007 STOCK PLAN

 

This Sixth Amendment (this “Amendment”) to the 2007 Stock Plan, as amended, attached hereto as Exhibit A (the “Existing Plan”) of Q2 Holdings, Inc. (the “Corporation”), is effective as of December 11, 2013 (the “Effective Date”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Existing Plan.

 

RECITALS

 

A.                                    Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Corporation wishes to amend Section 4.1 therein to reflect certain changes in the maximum number of shares of Stock issuable under the Plan.

 

B.                                    The Board duly approved and adopted this Amendment on December 11, 2013.

 

C.                                    The requisite stockholders duly approved and adopted this Amendment on December 11, 2013.

 

AMENDMENTS TO THE EXISTING PLAN

 

In consideration of the recitals referenced above and effective upon the Effective Date, Section 4.1 of the Existing Plan is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:

 

“Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be seven million nine hundred twenty-eight thousand four hundred thirty-three (7,928,433) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than seven million nine hundred twenty-eight thousand four hundred thirty-three (7,928,433) shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Limit”).”

 

Signature page follows.

 

 

IN WITNESS WHEREOF, the undersigned officer of the Corporation certifies that this Amendment was duly adopted by the Board and the Corporation’s stockholders as of the respective dates set forth above.  The Corporation hereby executes the Amendment as of the Effective Date.

 

 

	
 
    	
Q2 HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matt Flake
    
	
 
    	
 
    	
Matt   Flake
    
	
 
    	
 
    	
Chief   Executive Officer and President
    

 

 

SEVENTH AMENDMENT TO THE

Q2 HOLDINGS, INC.

2007 STOCK PLAN

 

This Seventh Amendment (this “Amendment”) to the 2007 Stock Plan, as amended, attached hereto as Exhibit A (the “Existing Plan”) of Q2 Holdings, Inc. (the “Corporation”), is effective as of February 19, 2014 (the “Effective Date”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Existing Plan.

 

RECITALS

 

A.                                    Pursuant to the powers vested in the Board in Section 12 of the Existing Plan, the Corporation wishes to amend Section 4.1 therein to reflect certain changes in the maximum number of shares of Stock issuable under the Plan.

 

B.                                    The Board duly approved and adopted this Amendment on February 19, 2014.

 

C.                                    The requisite stockholders duly approved and adopted this Amendment on February 19, 2014.

 

AMENDMENTS TO THE EXISTING PLAN

 

In consideration of the recitals referenced above and effective upon the Effective Date, Section 4.1 of the Existing Plan is hereby deleted in its entirety and the following is hereby inserted in lieu thereof:

 

“Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be nine million three hundred twenty eight thousand four hundred thirty three (9,328,433) which shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Award subject to a Company repurchase option and are repurchased by the Company at the Participant’s exercise or purchase price, the shares of Stock allocable to the unexercised portion of such Award or such repurchased shares of Stock shall again be available for issuance under the Plan.  However, except as adjusted pursuant to Section 4.2, in no event shall more than nine million three hundred twenty eight thousand four hundred thirty three (9,328,433) shares of Stock be available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Limit”).”

 

Signature page follows.

 

 

IN WITNESS WHEREOF, the undersigned officer of the Corporation certifies that this Amendment was duly adopted by the Board and the Corporation’s stockholders as of the respective dates set forth above.  The Corporation hereby executes the Amendment as of the Effective Date.

 

	
 
    	
Q2 HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matt Flake
    
	
 
    	
 
    	
Matt   Flake
    
	
 
    	
 
    	
Chief   Executive Officer and PresidentExhibit 10.5

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Third Amended and Restated Employment Agreement (“Restated Agreement”), which shall amend and restate in its entirety the Employment Agreement by and between Q2 Holdings, Inc., a Delaware corporation (“Company”), Matthew Flake (“Executive”) and Q2 Holdings, Inc., formerly CBG Holdings, Inc. (“Q2H”) dated February 4, 2013 (“Original Agreement”), is made and entered into by the Company, Q2H and Executive effective as of February 20, 2014 (the “Effective Date”).

 

WHEREAS, Paragraph 14 of the Original Agreement provides that it may be amended or modified only with a written instrument executed by all parties.

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined, and the undersigned parties hereto agree, that it is in the best interest of the Company and its stockholders to amend and restate the Original Agreement in its entirety to clarify certain terms and conditions of employment of Executive as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises and agreements contained in this Restated Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Company hereby agree as follows:

 

The parties agree as follows:

 

1.                                      Employment.  Company agrees to continue to employ Executive, and Executive agrees to accept such continuing employment on the terms and conditions set forth herein.

 

2.                                      Duties.

 

2.1                               Position.  Executive is employed as Company’s Chief Executive Officer and President and shall have the duties and responsibilities assigned by the Board.  Executive shall perform faithfully and diligently all duties assigned to Executive.  Company reserves the right to modify Executive’s position and duties at any time in its sole and absolute discretion.

 

2.2                               Best Efforts/Full-time.  During this Agreement, Executive will (A) expend Executive’s best efforts on behalf of Company, and will abide by all policies and decisions made by Company, as well as all applicable federal, state and local laws, regulations or ordinances; (B) act in the best interest of Company at all times; and (C) devote Executive’s full business time and efforts to the performance of Executive’s assigned duties for Company.

 

3.                                      Compensation.

 

3.1                               Base Salary.  As compensation for Executive’s performance of Executive’s duties hereunder, Company shall pay to Executive an initial Base Salary of $28,750 per month ($345,000 per year), to be paid in accordance with Company’s regular payroll cycle, less required deductions for federal withholding tax, social security and all other employment taxes and payroll deductions.  In the event Executive’s employment under this Agreement is terminated by either party, for any reason, Executive will earn the Base Salary prorated to the date of termination.

 

3.2                               Incentive Compensation.  Executive may be eligible to receive an annual cash incentive bonus of $250,000 at target, on such terms and subject to such conditions as may be decided from time to time by the Company.  Executive must be employed by the Company at the time such bonus

 

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is paid in order to be eligible such bonus, subject to Section 7.1 hereof.  The Company reserves the right to vary or terminate any bonus scheme in place from time to time, on a prospective basis.  Company shall pay out the annual cash incentive bonus, if any, within 60 days following the end of the year in which the bonus is earned.

 

3.3                               Customary Fringe Benefits.  Executive will be eligible for all customary and usual fringe benefits generally available to Executives of Company, subject to the terms and conditions of Company’s benefit plan documents.  Executive shall be entitled to Paid Time Off benefits (“PTO”) subject to the terms and conditions of the Company’s PTO policy.

 

4.                                      At-Will Employment.  Executive’s employment with Company is at-will and not for any specified period and may be terminated at any time, with or without Cause (as defined below) or advance notice, by either Executive or Company, although subject to the provisions of Sections 5 through 7 below.  No representative of Company, other than the Board, has the authority to alter the at-will employment relationship.  Any change to the at-will employment relationship must be by specific, written agreement signed by Executive and the Board.  Nothing in this Agreement is intended to or should be construed to contradict, modify or alter this at-will relationship.

 

5.                                      Termination.  The termination provisions of this Agreement regarding the parties’ respective obligations in the event Executive’s engagement is terminated are intended to be exclusive and in lieu of any other rights to which Executive may otherwise be entitled by law, in equity, or otherwise.  This Agreement, and Executive’s engagement hereunder, may be terminated at any time after the Effective Date, as follows:

 

5.1                               Termination by Mutual Consent.  This Agreement may be terminated at any time by the written mutual consent of Company and Executive.

 

5.2                               Termination by Company For Cause.  This Agreement may be terminated by Company at any time for Cause.  For purposes of this Agreement, “Cause” is defined as: (a) acts or omissions constituting gross negligence, recklessness or willful misconduct on the part of Executive with respect to Executive’s obligations or otherwise relating to the business of Company; (b) Executive’s material breach of this Agreement or Company’s Executive Proprietary Information and Inventions Agreement (the “PRIA”); (c) Executive’s conviction or entry of a plea of nolo contendere for fraud, misappropriation or embezzlement, or any felony or crime of moral turpitude; (d) Executive’s willful neglect of duties as determined in the sole and exclusive discretion of the Board; (e) Executive is cited by the Board, in writing, at least two (2) times during any 12-month period for unsatisfactory performance; (f) Executive’s failure to perform the essential functions of Executive’s position, with or without reasonable accommodation, due to a mental or physical disability; or (g) Executive’s death.

 

5.3                               Termination by Company Without Cause.  This Agreement may be terminated by Company, without Cause, with or without notice, by the delivery to Executive of written notice of termination.

 

5.4                               Resignation by Executive.  Executive shall have the right to terminate his employment hereunder by providing the Company with a notice of termination at least thirty (30) days prior to such termination.

 

6.                                      Payments Upon Termination.  Upon termination of employment for any reason, Executive shall receive payment of his Base Salary, pro-rated to the date of termination, as well as any other accrued, but unpaid benefits (collectively the “Accrued Compensation”).  Accrued Compensation will be paid in a lump sum on the date required under applicable law.  Except as expressly stated in this

 

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Agreement, all other employment related obligations of Company to Executive shall be automatically terminated and completely extinguished with the termination of Executive’s employment.

 

7.                                      Severance.

 

7.1                               Severance Payment.  In the event Company terminates Executive’s employment without Cause, Company shall provide Executive with a “Severance Payment” equivalent to (a) twelve (12) months of Executive’s then Base Salary and (b) an amount equal to Executive’s cash incentive performance bonus, assuming the performance metrics were achieved at the targeted levels. Such bonus shall be payable in equal installments over a twelve month period, with the first installment payment made on the first payday occurring 30 days after the termination date and the remaining installments made on the following Company paydays.  The Company’s obligation to pay and Executive’s right to receive the Severance Payment shall cease in the event of Executive’s breach of any of his obligations under this Agreement or the PRIA.  The Company’s obligation to provide Executive with the Severance Payment is conditioned precedent upon Executive’s execution of a full general release in a form acceptable to the Company and such release has become effective in accordance with its terms prior to the 30th day following the termination date.  For the sake of clarity, Executive shall not be eligible to receive severance in connection with any other form of termination, other than a termination without Cause.

 

7.2                               Acceleration of Options in the Event of a Termination without Cause Following a Change of Control.  In the event of a “Change of Control” (as defined in the CBG Holdings, Inc. 2007 Stock Plan (the “Stock Plan”), but specifically excluding from its definition an Initial Public Offering) of CBG and (i) Executive is terminated without Cause within one year following such Change of Control; or (ii) Executive resigns for Good Reason (as defined below) within one year following such Change of Control; or (iii) the “Acquiror” (as defined in the Stock Plan) does not assume, substitute or replace with substantially equivalent options any “Options” (as defined in the Stock Plan) then held by Executive, CBG agrees that, in addition to the Severance Payments described above, all Options then held by Executive shall immediately vest in full without regard to the vesting provisions set forth in the Stock Plan or the related agreements respecting such Options (the “Option Agreements”), subject to all other terms and conditions thereof (other than any vesting provisions).  For the purposes of this Paragraph 7.2 only, Executive shall have “Good Reason” to resign within one year following a Change of Control if, without Executive’s written consent:  (i) Company materially reduces Executive’s title or position or an assignment to Executive of operational authority or duties which are materially inconsistent with the usual and customary operational authority and duties of a person in Executive’s position in similarly-situated companies, (ii) Company materially reduces Executive’s base compensation, or (iii) Company requires Executive to relocate to any place outside a fifty (50) mile radius of the Company’s current headquarters.  Notwithstanding the foregoing, Executive will not resign for Good Reason without first providing the Company with written notice of the acts or omissions constituting the grounds for “Good Reason” within thirty (30) days of the initial existence of the grounds for “Good Reason” and providing Company with a reasonable cure period of thirty (30) days following the date of such notice.

 

7.3                               Application of Section 409A.

 

(a)                                 Notwithstanding anything set forth in this Agreement to the contrary, no amount payable pursuant to this Agreement which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations issued pursuant to Section 409A (the “Section 409A Regulations”) of the Internal Revenue Code of 1986, as amended (the “Code”) shall be paid unless and until Executive has incurred a “separation from service” within the meaning of the Section 409A Regulations.  Furthermore, to the extent that Executive is a “specified Executive” within the meaning of the Section 409A Regulations as of the date of Executive’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Executive’s separation from service

 

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shall be paid to Executive before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of Executive’s separation from service or, if earlier, the date of Executive’s death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

 

(b)                                 The Company intends that income provided to Executive pursuant to this Agreement will not be subject to taxation under Section 409A of the Code.  The provisions of this Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the Code.  However, the Company does not guarantee any particular tax effect for income provided to Executive pursuant to this Agreement.  In any event, except for the Company’s responsibility to withhold applicable income and employment taxes from compensation paid or provided to Executive, the Company shall not be responsible for the payment of any applicable taxes on compensation paid or provided to Executive pursuant to this Agreement.

 

(c)                                  Notwithstanding anything herein to the contrary, the reimbursement of expenses or in-kind benefits provided pursuant to this Agreement shall be subject to the following conditions: (1) the expenses eligible for reimbursement or in-kind benefits in one taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year; (2) the reimbursement of eligible expenses or in-kind benefits shall be made promptly, subject to the Company’s applicable policies, but in no event later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

(d)                                 For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

8.                                      Business Expenses.  Executive will be reimbursed for all reasonable, out-of-pocket business expenses incurred in the performance of Executive’s duties on behalf of Company.  To obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation in accordance with Company’s policies.

 

9.                                      No Conflict of Interest.  During Executive’s employment with Company and at all times Executive is receiving Severance Payments pursuant to this Agreement,  Executive must not engage in any work, paid or unpaid, that creates an actual conflict of interest with Company.  Such work shall include, but is not limited to, directly or indirectly competing with Company in any way, or acting as an officer, director, Executive, consultant, stockholder, volunteer, lender, or agent of any business enterprise of the same nature as, or which is in direct competition with, the business in which Company is now engaged or in which Company becomes engaged during Executive’s employment with Company, as may be determined by the Board in its sole discretion.  If the Board believes such a conflict exists during the term of this Agreement, the Board may ask Executive to choose to discontinue the other work or resign employment with Company.  In addition, Executive agrees not to refer any client or potential client of Company to competitors of Company, without obtaining Company’s prior written consent, during Executive’s employment and any period of time Executive is receiving Severance Payments pursuant to this Agreement.

 

10.                               Confidentiality and Proprietary Rights.  Executive agrees to continue to abide by the PRIA and any nondisclosure or other policies or obligations of Executive to Company or other affiliated entities, each which PRIA and other policies and obligations is incorporated herein by reference.

 

11.                               Injunctive Relief.  Executive acknowledges that Executive’s breach of the covenants contained in Sections 9-10 (collectively “Covenants”) would cause irreparable injury to Company and

 

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agrees that in the event of any such breach, Company shall be entitled to seek temporary, preliminary and permanent injunctive relief without the necessity of proving actual damages or posting any bond or other security.

 

12.                               No Violation of Rights of Third Parties.  During Executive’s employment with Company, Executive will not (a) breach any agreement to keep in confidence any confidential or proprietary information, knowledge or data acquired by Executive prior to Executive’s employment with Company or (b) disclose to Company, or use or induce Company to use, any confidential or proprietary information or material belonging to any previous employer or any other third party.  Executive is not currently a party, and will not become a party, to any other agreement that is in conflict, or will prevent Executive from complying, with this Agreement.

 

13.                               General Provisions.

 

13.1                        Successors and Assigns.  The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company.  Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.

 

13.2                        Waiver.  Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

 

13.3                        Severability.  In the event any provision of this Agreement is found to be unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law.  If a deemed modification is not satisfactory in the judgment of such court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

 

13.4                        Interpretation; Construction.  The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement.  This Agreement has been drafted by legal counsel representing Company, but Executive has participated in the negotiation of its terms.  Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

13.5                        Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the United States and the State of Texas.  Each party consents to the jurisdiction and venue of the state or federal courts in Travis County, Texas, if applicable, in any action, suit, or proceeding arising out of or relating to this Agreement.

 

13.6                        Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated:  (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy, facsimile, or e-mail transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt.  Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

 

13.7                        Survival.  Sections 9 (“No Conflict of Interest”), 10 (“Confidentiality and Proprietary Rights”), 11 (“Injunctive Relief”), 12 (“No Violation of Rights of Third Parties”),

 

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13 (“General Provisions”) and 14 (“Entire Agreement”) of this Agreement shall survive Executive’s employment by Company.

 

14.                               Entire Agreement.  This Agreement, and the PRIA constitute the entire among the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral.  This agreement may be amended or modified only with the written consent of Executive and the Company.  No oral waiver, amendment or modification will be effective under any circumstances whatsoever and any such oral waiver, amendment or modification will be null and void.

 

[Signature page follows.]

 

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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

 

 

	
Dated:
    	
February 20,   2014
    	
 
    	
/s/   Matthew Flake
    
	
 
    	
Matthew   Flake
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Q2   Software, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:
    	
February 20,   2014
    	
 
    	
By:
    	
/s/   R.H. Seale
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
R.H. “Hank” Seale, III
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Executive   Chairman
    
	
 
    	
 
    
	
SIGNING AS A PARTY SOLELY FOR PURPOSES OF SECTIONS   7.2, 13 AND 14:
    
	
 
    	
 
    
	
 
    	
Q2   Holdings, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:
    	
February 20,   2014
    	
 
    	
By:
    	
/s/   R.H. Seale
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
R.H. “Hank” Seale, III
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Executive   Chairman
    

 

SIGNATURE PAGE TO AMENDED EMPLOYMENT AGREEMENT

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