Document:

Exhibit 10.149

 

FOURTH AMENDMENT TO THE

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS
FOURTH AMENDMENT TO THE AMENDED AND
RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of May 2,
2008, is made by and among GCI HOLDINGS, INC., an Alaska corporation (“Holdings”),
GCI COMMUNICATION CORP., an Alaska corporation (“GCICC”), GCI CABLE,
INC., an Alaska corporation, GCI FIBER COMMUNICATION CO., INC., an Alaska
corporation, POTTER VIEW DEVELOPMENT CO., INC., an Alaska corporation, and ALASKA
UNITED FIBER SYSTEM PARTNERSHIP, an Alaska partnership (each individually, a “Borrower”
and, collectively, the “Borrowers”), the banks, financial institutions,
and other lenders party hereto (the “Lenders”), and CALYON NEW YORK
BRANCH, as administrative agent (the “Administrative Agent” and, in its
capacity hereunder as arranger, the “Arranger”).  All capitalized terms used herein and not
otherwise expressly defined herein shall have the respective meanings given to
such terms in the Credit Agreement (as defined below).

 

WHEREAS, the Borrowers, Administrative Agent,
Initial Lenders and the other parties thereto entered into that certain Amended
and Restated Credit Agreement, dated as of August 31, 2005 (as amended,
supplemented or modified from time to time, the “Credit Agreement”);

 

WHEREAS, the Borrowers,
Administrative Agent and Lenders (as such term is defined in the Third
Amendment) entered into that certain Third Amendment to the Amended and
Restated Credit Agreement, dated as of September 14, 2007 (the “Third
Amendment”), which implemented an incremental facility for the Borrowers in
an amount equal to one hundred million dollars ($100,000,000.00) pursuant to Section 2.2(g) of
the Credit Agreement;

 

WHEREAS, the Borrowers
have requested that the Administrative Agent and the Lenders agree to amend the
Credit Agreement to provide for additional incremental term loans (the “Additional
Incremental Term Loans”) to be issued in an amount not to exceed one
hundred forty five million dollars ($145,000,000.00), as more fully set forth
herein;

 

WHEREAS, GCII wishes to
consummate the AKD Transaction and the UUI Acquisition (each, as defined
herein);

 

WHEREAS, the
Administrative Agent and the Lenders are willing to amend the Credit Agreement
to provide for the Additional Incremental Term Loans, subject to the terms and
conditions more fully set forth herein, and to allow the consummation of the
AKD Transaction and the UUI Acquisition, in each case subject to the terms and
conditions more fully set forth herein; and

 

WHEREAS, the Lenders and Administrative Agent are willing to agree to such
amendments more fully set forth herein, subject to the terms and conditions set
forth herein;

 

 

NOW, THEREFORE,
in consideration of the foregoing premises, and other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.                                       Amendments to the Credit Agreement.

 

(a)                                  Section 1.1
of the Credit Agreement is hereby amended by deleting the definition of “AKD
Investment” in its entirety and, in lieu thereof, inserting the following:

 

“‘AKD Investment’ shall
mean AKD Debt in a total aggregate outstanding principal amount not to exceed
thirty seven million dollars ($37,000,000) at any time.”

 

(b)                                 Section 1.1
of the Credit Agreement is hereby amended by deleting clause (iii) from
the definition of “Excluded Asset Sales” and, in lieu thereof, inserting the
following clause (iii):

 

“(iii) 
any transfer of assets by any Loan Party to another Loan Party, by any UUI
Entity that is not a Loan Party to any other UUI Entity that is not a Loan
Party or by any UUI Entity that is not a Loan Party to a Loan Party (so long as
such transferred assets are unencumbered at the time of transfer except for
Permitted Liens specified in clauses (a) through (j) of the
definition thereof), so long as the security interests granted to the
Administrative Agent for the benefit of the Lenders pursuant to the Security
Documents, if any, in the assets so transferred shall remain in full force and
effect and remain perfected and of the same priority (to at least the same
extent as in effect immediately prior to such transfer), provided  that
this clause (iii) shall not permit any Loan Party to transfer any assets
to any of the UUI Entities (unless such UUI Entity is a Loan Party at the time
of transfer) at any time or for any purpose without the prior written consent
of the Administrative Agent;”

 

(c)                                  Section 1.1
of the Credit Agreement is hereby amended by deleting the definition of “Excess
Cash Flow” in its entirety and, in lieu thereof, inserting the following:

 

“‘Excess
Cash Flow’ shall mean, for any fiscal quarter of the Borrowers and their
Subsidiaries ended on a Calculation Date, based on the financial statements for
such fiscal quarter required to be provided under Article 6 hereof, an
amount not less than zero (0) and otherwise equal to the remainder, if any,
without duplication, of (a) the Holdings Operating Cash Flow for such
fiscal quarter minus (b) the sum of the following, in each case for and
with respect to such fiscal quarter or as of such Calculation Date:  (i) Capital Expenditures; (ii) Pro
Forma Debt Service; (iii) cash income tax expense for the Borrowers and
their Subsidiaries; and (iv) to the extent not included in the calculation
of Holdings Operating Cash Flow, legal fees and expenses of, or the payment of
any judgment against, any Loan Party paid by any Borrowers.

 

(d)                                 Section 1.1
of the Credit Agreement is hereby amended by deleting the definition of “First
Adjustment Date” in its entirety and, in lieu thereof, inserting the following:

 

“‘First
Adjustment Date’ shall mean the date on which the respective Applicable
Margins determined pursuant to Section 2.3(e) hereof in
respect of the financial statements for the 

 

2

 

fiscal
period ended June 30, 2008 (as described in and delivered pursuant to Section 6.1
hereof) first become effective in accordance with Section 2.3(e) hereof.”

 

(e)                                  Section 1.1
of the Credit Agreement is hereby amended by deleting the definition of “Fixed
Charge Coverage Ratio” in its entirety and, in lieu thereof, inserting the
following:

 

“‘Fixed
Charge Coverage Ratio’ shall mean, as of any Calculation Date and for the
four fiscal-quarter period then ended, for GCII, the Borrowers and their
respective Subsidiaries on a consolidated basis, the ratio of (a) Operating
Cash Flow for GCII, the Borrowers and their respective Subsidiaries on a
consolidated basis for such period to (b) Fixed Charges; provided  that,
for any Calculation Date occurring during the period beginning December 31,
2009, and ending March 31, 2010, the Fixed Charge Coverage Ratio shall be
calculated on the basis of Operating Cash Flow for the two fiscal-quarter
period then ended as of such Calculation Date multiplied by two (2).”

 

(f)                                    Section 1.1
of the Credit Agreement is hereby amended by deleting the definition of “Fixed
Charges” in its entirety and, in lieu thereof, inserting the following:

 

“‘Fixed
Charges’ shall mean, for the four fiscal-quarter period ending on any
Calculation Date, for GCII, the Borrowers and their respective Subsidiaries on
a consolidated basis in each case for such fiscal period or as of such
Calculation Date, the sum of (a) Pro Forma Debt Service, plus (b) Capital
Expenditures paid in cash, plus (c) cash income tax expense.”

 

(g)                                 Section 1.1
of the Credit Agreement is hereby amended by deleting the definition of “Lenders”
in its entirety and, in lieu thereof, inserting the following:

 

“‘Lenders’
shall mean the Initial Lenders, any Incremental Lenders, any Additional
Incremental Lenders and each Person that shall become a Lender hereunder
pursuant to Section 11.5 for so long as such Initial Lender,
Incremental Lender, Additional Incremental Lender or Person, as the case may
be, shall be a party to this Agreement.”

 

(h)                                 Section 1.1
of the Credit Agreement is hereby amended by inserting in the definition of “Operating
Cash Flow” the words “, the two fiscal-quarter period” immediately after the
words “for the fiscal quarter” and immediately before the words “or the four
fiscal-quarter period” therein.

 

(i)                                     Section 1.1
of the Credit Agreement is hereby amended by deleting from the definition of “Permitted
Liens” (A) the word “and” at the end of clause (m) thereof and (B) the
period at the end of clause (n) thereof, by inserting the phrase “; and”
at the end of clause (n) thereof and by adding the following clause (o) at
the end thereof:

 

“(o) 
Liens on the assets of the UUI Entities while such UUI Entities are not Loan
Parties, to the extent such Liens secure only the Indebtedness of the UUI
Entities while such UUI Entities are not Loan Parties to the extent that such
Indebtedness is permitted pursuant to Section 7.1(k) and Section 7.22  hereof.”

 

3

 

(j)                                     Section 1.1
of the Credit Agreement is hereby amended by inserting the following
definitions in the appropriate place based on alphabetical order:

 

“Additional
Incremental Lenders” shall have the meaning ascribed to such term in Section 2.2(g) hereof.

 

“Additional
Incremental Term Loans” shall have the meaning ascribed to such term in Section 2.2(g) hereof.

 

“AKD
Transaction” shall mean the acquisition by GCII of the remaining minority
interest in AKD not currently held by GCII (such that, after such acquisition,
GCII shall own one hundred percent (100%) of the equity interest in AKD) and
the acquisition of one hundred percent (100%) of the Capital Stock of Fire Lake
Partners, L.L.C. (“Fire Lake”), a holding company whose only asset
consists of the Capital Stock of AKD, and the subsequent or simultaneous
mandatory contribution by GCII to Holdings or another Borrower of one hundred
percent (100%) of the Capital Stock of each of AKD and Fire Lake, in all
respects subject to the terms and conditions of Section 5.16
hereof.”

 

“AKD
Transaction Documents” shall mean (i) that certain Notice of Intent to
Acquire Alaska Digitel, LLC Interests & Fire Lake Partners, L.L.C.,
dated as of December 28, 2007, among GCII, AKD Holdings, LLC, Fire Lake
Partners, L.L.C., Stephen Roberts and William M. Yandell, III, and (ii) a
contribution agreement between GCII and Holdings or another Borrower in form
and substance satisfactory to the Administrative Agent.

 

“First
Additional Incremental Loan” shall have the meaning ascribed to such term
in Section 2.2(g) hereof.

 

“Funding
Period” shall have the meaning ascribed to such term in Section 2.2(g) hereof.

 

“Initial
Additional Incremental Funding Date” shall mean the date on which the First
Additional Incremental Loan is funded in accordance with Section 2.2(g) hereof.

 

“Initial
Incremental Loans” shall have the meaning ascribed to such term in Section 2.2(g) hereof.

 

“Interest
Coverage Ratio” shall mean, with respect to GCII, the Borrowers and their
respective Subsidiaries on a consolidated basis for any fiscal period, the
ratio of (a) Operating Cash Flow for GCII, the Borrowers and their
respective Subsidiaries on a consolidated basis for such period to (b) Interest
Expense.”

 

“Maximum
UUI Investment Amount” shall mean an amount equal to forty three million
dollars ($43,000,000).

 

“UUI
Acquisition” shall mean the acquisition of the UUI Entities by any of the
Borrowers or any of their Subsidiaries in accordance with Section 5.17
hereof.

 

4

 

“UUI
Acquisition Date” shall mean the date on which the UUI Acquisition is
consummated.

 

“UUI
Acquisition Documents” shall mean the Stock Purchase Agreement dated as of October 12,
2007, by and between GCICC, United Companies, Inc., Sea Lion Corporation
and Togiak Natives Limited.

 

“UUI
Debt Documents” shall mean the documents listed on Schedule A
attached hereto relating to loans from Rural Utilities Services or CoBank, ACB
to any of the UUI Entities, in each case as such documents exist as of the UUI
Acquisition Date (as the same may be amended or refinanced as permitted
pursuant to the terms hereof and subject to the limitations set forth herein)
or as of the date of any refinancing permitted pursuant to the terms herein;
together with any and all documents relating to indebtedness incurred by any
UUI Entity pursuant to Section 7.1(k)(ii) hereof.

 

“UUI
Entities” shall mean each, any or all of United Utilities, Inc.,
Unicom, Inc. and United-KUC, Inc., as the context may require.

 

(k)                                  Section 1.1
of the Credit Agreement is hereby amended by deleting the definitions of “Excluded
Capital Expenditure Period” and “Excluded Capital Expenditures” in
their respective entireties.

 

(l)                                     Section 2.2(g) of
the Credit Agreement is hereby amended by deleting the first sentence of clause
(i) thereof in its entirety and, in lieu thereof, inserting the following
text:

 

“Subject
to the conditions set forth below, at any time and from time to time prior to
the Maturity Date applicable to Revolving Loans, Borrowers shall have the
right, in consultation with the Administrative Agent (but without the consent
of any individual Lender), and upon not less than thirty (30) days’ prior
written notice (other than with respect to the First Additional Incremental
Loan) (a “Request for Incremental Loan”) to the Administrative Agent, to
increase the aggregate Commitment as of the Agreement Date, provided  that
(x) the aggregate amount of the initial increase under this 

Section 2.2(g) shall not exceed one hundred million dollars
($100,000,000), such amount having been funded in full on or prior to September 28,
2007 (individually, an “Initial Incremental Loan” and, collectively, the
“Initial Incremental Loans”) and (y) the aggregate amount of any
subsequent increase under this Section 2.2(g) shall not exceed
one hundred forty five million dollars ($145,000,000) (individually, an “Additional
Incremental Term Loan” and, collectively, the “Additional Incremental
Term Loans”), such that the aggregate amount of all increases under this Section 2.2(g) shall
not exceed two hundred forty five million dollars ($245,000,000) (each
individual increase hereunder, an “Incremental Loan” and, collectively,
the “Incremental Loans”), in each case, subject to the receipt by the
Administrative Agent of written commitments totaling such requested increased
amount of any such Incremental Loan from one or more existing Lenders and/or
one or more banks or financial institutions approved in writing by the
Administrative Agent (such existing Lenders and other banks or financial
institutions that commit to any Incremental Loan, collectively, the “Incremental
Lenders” and the “Initial Incremental Lenders” and/or the “Additional
Incremental Lenders”, with 

 

5

 

respect
to Initial Incremental Loans and Additional Incremental Term Loans,
respectively).  Each Incremental Loan
shall be pari  passu in right
of payment with all other existing Obligations.”

 

(m)                               Section 2.2(g) of
the Credit Agreement is hereby amended by inserting the following text at the
end of clause (i) thereof:

 

“The
Additional Incremental Term Loans shall be available in multiple drawings
during the period beginning on the Initial Additional Incremental Funding Date
and ending ninety (90) days after the Initial Additional Incremental Funding
Date (the “Funding Period”).  The
first drawing shall be on the Initial Additional Incremental Funding Date in a
minimum amount of seventy five million dollars ($75,000,000) (the “First
Additional Incremental Loan”). 
Subsequent to the Initial Additional Incremental Funding Date and
through the last day of the Funding Period, Additional Incremental Term Loans
may be funded in an aggregate amount not to exceed the difference between (i) one
hundred forty five million dollars ($145,000,000) and (ii) the amount of
the First Additional Incremental Loan, provided  that any
Additional Incremental Term Loan funded after the First Additional Incremental
Loan shall be in a minimum amount of ten million dollars ($10,000,000).”

 

(n)                                 Section 2.2(g)(iii) of
the Credit Agreement is hereby amended by (A) deleting the word “and”
after clause (d) thereof, (B) deleting the period at the end of
clause (e) thereof, (C) inserting the phrase “; and” at the end of
clause (e) thereof and (D) inserting the following clause (f) at
the end thereof:

 

“(f) 
each of the conditions precedent to the making of each Loan hereunder in
accordance with Section 3.2 shall have been satisfied.”

 

(o)                                 Section 2.3(e) of
the Credit Agreement is hereby amended by deleting the first paragraph thereof,
including the grid following the first paragraph, in its entirety and
substituting the following paragraph and grid in lieu thereof:

 

“(e) 
Applicable Margin.  With respect
to all Loans hereunder, including, without limitation, any Incremental Loans or
Additional Incremental Term Loans funded in accordance with Section 2.2(g),
from and after May [   ], 2008, and
until one (1) day prior to the First Adjustment Date, the Applicable
Margin with respect to any Loans shall be at Level I as specified in the grid
below.  On and after the First Adjustment
Date, the Applicable Margin shall be, with respect to all Loans, a percentage,
per annum, determined by reference to the Total Leverage Ratio in effect from
time to time as set forth below:”

 

6

 

	
   

  	
   

  	
   

  	
   

  	
  Applicable Margin for
 Eurodollar Loans

  	
   

  	
  Applicable Margin for

  Base Rate Loans

  
	
  Level

  	
   

  	
  Total Leverage Ratio

  	
   

  	
  Revolving Loans

  	
   

  	
  Term Loans

  	
   

  	
  Revolving Loans

  	
   

  	
  Term Loans

  
	
  I

  	
   

  	
  > 3.75

  	
   

  	
  425 bps

  	
   

  	
  425 bps

  	
   

  	
  325 bps

  	
   

  	
  325 bps

  
	
  II

  	
   

  	
  > 3.25 but < 3.75

  	
   

  	
  375 bps

  	
   

  	
  425 bps

  	
   

  	
  275 bps

  	
   

  	
  325 bps

  
	
  III

  	
   

  	
  > 2.75 but < 3.25

  	
   

  	
  325 bps

  	
   

  	
  425 bps

  	
   

  	
  225 bps

  	
   

  	
  325 bps

  
	
  IV

  	
   

  	
  < 2.75

  	
   

  	
  275 bps

  	
   

  	
  425 bps

  	
   

  	
  175 bps

  	
   

  	
  325 bps

  

 

(p)                                 Section 2.4(b) of
the Credit Agreement is hereby amended by deleting the text of clause (ii) thereof
in its entirety and, in lieu thereof, inserting the following:

 

“(ii) 
Commencing on the last day of the first calendar quarter following the issuance
of any Incremental Term Loan, and at the end of each calendar quarter
thereafter through and including June 30, 2011, the outstanding principal
balance of any Incremental Term Loan shall be repaid in an amount, subject to Section 2.6(b),
equal to the product of the outstanding principal balance of the Incremental
Term Loan as of the end of such quarter multiplied by the percentage set forth
in the table below as of the applicable calendar quarter end.

 

	
  Calendar 

  Quarters Ending During the 

  Period:

  	
   

  	
  Percentage of Term 

  Loans Outstanding as of 

  the close of business on 

  August 31, 2005 to be 

  Reduced Each Quarter:

  	
   

  	
  Percentage of Incremental

  Term Loans Outstanding, if 

  any, as of the end of each 

  designated Quarter to be 

  reduced at the end of such 

  Quarter:

  	
   

  
	
  September 30, 2005 through and including June 30, 2011

  	
   

  	
  0.25

  	
  %

  	
  0.25

  	
  %

  

 

The
remaining balance of all Term Loans as of December 31, 2011, shall be
repaid in two (2) equal installments on December 31, 2011, and August 31,
2012.  Notwithstanding anything to the
contrary contained herein, any unpaid principal and interest owing on the Term
Loans shall be due and payable in full on August 31, 2012.”

 

(q)                                 Section 2.5(b) of
the Credit Agreement is hereby amended by deleting the reference to “.375%”
therein and, in lieu thereof, inserting “0.50%”.

 

(r)                                    Section 5
of the Credit Agreement is hereby amended by adding the following Sections
5.16, 5.17, 5.18, 5.19 and 5.20 at the end thereof:

 

“Section 5.16.  AKD Transaction.  Notwithstanding anything contained herein to
the contrary, the Borrowers and their Subsidiaries shall be permitted to
consummate the AKD Transaction subject to the following terms and
conditions:  (i) the delivery to the
Administrative Agent of executed counterparts to documentation in form and
substance reasonably satisfactory to the Administrative Agent pursuant to Section 5.12
hereof and such other documentation as the Administrative Agent may reasonably
request and (ii) 

 

7

 

the
delivery to the Administrative Agent of evidence satisfactory to the Administrative
Agent in its sole discretion of the Borrowers’, and their Subsidiaries’, pro
forma compliance with the financial covenants set forth in Section 7.5
hereof.  For the avoidance of doubt and
in accordance with Section 5.12 hereof, the Administrative Agent
shall retain the right, upon the consummation of the AKD Transaction, to elect
whether AKD shall become a Borrower or a Guarantor hereunder.”

 

“Section 5.17.  UUI Acquisition.  (i)  Notwithstanding anything contained
herein to the contrary, and subject to Section 7.1(k) hereof,
the Borrowers and their Subsidiaries shall be permitted to consummate the UUI
Acquisition in accordance with the terms of the UUI Acquisition Documents as
disclosed to the Administrative Agent and so long as such documents, as disclosed,
are not amended or modified in any way without the prior written consent of the
Administrative Agent; provided  that in no event shall the
aggregate amount of cash (whether the proceeds of Loans or other cash on hand)
and other assets of the Borrowers and their Subsidiaries (other than cash or
assets of the UUI Entities that are not Loan Parties) used directly or
indirectly to directly or indirectly acquire the UUI Entities, any of the
Capital Stock of the UUI Entities or any of the assets of the UUI Entities
exceed the Maximum UUI Investment Amount; for the avoidance of doubt, the
aggregate amount of proceeds of Loans, cash or assets of the Borrowers and
their Subsidiaries (other than cash or assets of the UUI Entities that are not
Loan Parties) used directly or indirectly to directly or indirectly acquire the
UUI Entities, any of the Capital Stock of the UUI Entities or any of the assets
of the UUI Entities shall be Investments for purposes of Section 7.21.  Upon the consummation of the UUI Acquisition,
no UUI Entity shall become a Loan Party nor shall any UUI Entity be required to
comply with the provisions of Section 5.12, including, but not
limited to, the requirement that such UUI Entity pledge its assets; provided
that, in the event that either (1) the UUI Debt Documents expire or
terminate and are not otherwise refinanced or replaced in accordance with the
terms of Section 7.22 or (2) the Indenture no longer prohibits
a Restricted Subsidiary from being an obligor under the UUI Debt Documents, and
the UUI Debt Documents no longer contain restrictions that restrict or prohibit
the ability of the UUI Entities to incur Liens or pledge assets in order to
secure indebtedness or assume obligations are no longer applicable, then the
UUI Entities shall become Loan Parties hereunder as if the UUI Acquisition were
permitted at the time of such acquisition and shall, within five (5) Business
Days of such event, comply in all respects with each of the provisions of Section 5.12.

 

(ii)                                  The
consummation of the UUI Acquisition is further conditioned upon the execution
and delivery of a Pledge Amendment in substantially the same form as Exhibit B
to that certain Borrower Pledge Agreement, dated as of August 31, 2005, by
and between GCICC and the Administrative Agent, by which GCICC shall pledge to
the Administrative Agent and shall grant to the Administrative Agent, for
itself and for the benefit of the Lenders, a first priority security interest
in all of the capital stock of the UUI Entities that is or shall be held by
GCICC upon the consummation of the UUI Acquisition.”

 

8

 

“Section 5.18.  Interest Rate Hedge Agreements.  Within sixty (60) days from the date of
funding of any Additional Incremental Term Loan pursuant to Section 2.2(g) hereof,
Holdings shall have entered into Hedge Agreements, in form and substance
satisfactory to the Administrative Agent, for not less than fifty percent (50%)
of the aggregate principal balance of all Term Loans.”

 

“Section 5.19.  Mortgages.  Borrowers shall deliver to the Administrative
Agent no later than (30) days following the last day of the Funding Period
amended and restated mortgages securing the aggregate amount of all Loans,
including but not limited to any Incremental Loans, under this Agreement.”

 

“Section 5.20.  Taxes on Account of the UUI Entities.  In the event that GCI will be required to
make any payment on account of any cash income Taxes attributable to the UUI
Entities that are not Loan Parties, (i) the Borrowers and their
Subsidiaries other than the UUI Entities that are not Loan Parties shall cause
the UUI Entities that are not Loan Parties to make an aggregate cash
Distribution to GCICC in an amount equal to the amount of such Tax payment that
will be made by GCI that is attributable to income of the UUI Entities that are
not Loan Parties, and (ii) GCICC shall make a cash Distribution to
Holdings in the same amount as the cash Distribution received from such UUI
Entities and, in turn, Holdings shall make a Restricted Payment of a cash
Distribution to GCII in the same amount as the cash Distribution that Holdings
received from such UUI Entity.  For the
avoidance of doubt, any such cash Distribution received by Holdings and in turn
made to GCII shall reduce the amount of Distributions otherwise permitted to be
made by the Borrowers and their Subsidiaries pursuant to clause (iii) of
the second paragraph of Section 7.6(b).  Notwithstanding the foregoing, to the extent
that GCI has the ability to fund the aforementioned Tax payments on account of
income attributable to the UUI Entities that are not Loan Parties from sources
other than Restricted Payments from any of the Borrowers or their Subsidiaries,
GCICC shall not be required to make a Distribution to Holdings and, in turn,
Holdings shall not be required to make a Distribution to GCII.”

 

(s)           Section 7.1 of the Credit
Agreement is hereby amended by (A) amending clause (g) thereof by
deleting the text thereof in its entirety and, in lieu thereof, inserting the
following clause (g) and (B) adding the following clauses (k) and
(l) at the end thereof:

 

“(g)  Indebtedness owed by
a Loan Party to another Loan Party;”

 

“(k)  Indebtedness in an
amount equal to (i) the actual amount of indebtedness of the UUI Entities
owed to CoBank, ACB and the Rural Utilities Services as of the UUI Acquisition
Date and reported to the Administrative Agent no later than one (1) Business
Day following the consummation of the UUI Acquisition, provided  that
the principal amount of such indebtedness shall not exceed forty five million
dollars ($45,000,000) and (ii) additional secured indebtedness incurred by
the UUI Entities that are not Loan Parties following the UUI Acquisition, provided
that the aggregate principal amount of such additional secured
indebtedness of the UUI Entities shall not at any time exceed twenty million
dollars ($20,000,000); provided  further that such additional
secured indebtedness shall not be secured at any time by any assets of any Loan
Party or any assets of GCII; 

 

9

 

provided  further that any refinancing or replacement in
compliance with Section 7.22(ii)(A) shall not be additional
secured indebtedness for purposes of this clause (ii).”

 

“(l) 
Indebtedness owed by a UUI Entity to another UUI Entity, so long as neither the
obligor nor the obligee is a Loan Party hereunder.”

 

(t)            Section 7.3(a) of
the Credit Agreement is hereby amended by deleting clause (iii) thereof in
its entirety and, in lieu thereof, inserting the following:

 

“(iii) 
so long as there exists no Default or Event of Default both before and after
giving effect to such disposition, assets sales do not exceed an aggregate
amount of $20,000,000 over the term of this Agreement.”

 

(u)           Section 7.3(b) of
the Credit Agreement is hereby amended by adding the following proviso at the
end thereof:

 

“provided
that, notwithstanding anything contained herein to the contrary, in no
event shall any Borrower or any Subsidiary of a Borrower enter into any of the
permitted transactions, as described more fully in clauses (i) through (iv) of
this Section 7.3(b), with any of the UUI Entities that are not Loan
Parties at the time of such merger, consolidation or other transaction without
the prior written consent of the Administrative Agent; provided  further
that mergers and consolidations shall be permitted between UUI Entities, so
long as each UUI Entity party to such merger or consolidation is not a Loan
Party.”

 

(v)           Section 7.4(c) of
the Credit Agreement is hereby amended by (A) amending clauses (iv), (v) and
(vi) thereof by deleting the text thereof in its entirety and, in lieu
thereof, inserting the following clauses (iv), (v) and (vi) and (B) adding
the following clauses (ix), (x), (xi), (xii), (xiii) and (xiv) at the end
thereof:

 

“(iv) 
the Loan Parties may make intercompany loans and advances between and among one
another (collectively, the “Intercompany Loans”), provided that each
obligor and obligee in respect of such Intercompany Loan shall have executed
and delivered to the Administrative Agent a counterpart of the Subordination
Agreement or a joinder agreement making such obligor or obligee a party to the
Subordination Agreement;”

 

“(v) 
the Borrowers and their Subsidiaries may make capital contributions to their
Subsidiaries that are Loan Parties;”

 

“(vi) 
The Borrowers and their Subsidiaries (other than the non-Loan Party UUI Entities
) may (x) establish Subsidiaries in compliance with Section 5.12 and (y) make
Investments in such Subsidiaries to the extent permitted by the other
applicable clauses of this Section 7.4; provided  that the
UUI Entities that have not become Loan Parties hereunder may not establish any
Subsidiaries without the prior written consent of the Administrative Agent;”

 

“(ix) 
the AKD Investment;”

 

10

 

“(x) 
the Loan Parties may make Investments in any UUI Entity that is not a Loan
Party so long as the aggregate amount of all such Investments does not exceed
the Maximum UUI Investment Amount or are made pursuant to Section 7.21(ii);”

 

“(xi)  the UUI Entities may make intercompany loans
and advances between and among one another so long as neither party to such
intercompany loans or advances is a Loan Party;”

 

“(xii)  any UUI Entity that is not a Loan Party may
make capital contributions to its Subsidiaries;”

 

“(xiii)  GCICC may make cash Investments in any UUI
Entity that is not a Loan Party so long as such Investment is funded by a
concurrent cash distribution from a UUI Entity that is not a Loan Party (other
than the UUI Entity into which GCICC is making such Investment) to GCICC in an
amount equal to such cash Investment by GCICC, and the Administrative Agent
hereby releases any Liens in favor of the Administrative Agent that may
otherwise attach to such cash Investment pursuant to the terms of the Security
Documents; for the avoidance of doubt, in the event that a UUI Entity that is
not a Loan Party makes a cash distribution to GCICC that is not immediately
used to fund a cash Investment in another UUI Entity that is not a Loan Party,
there shall be no release by the Administrative Agent of any Lien in favor of
the Administrative Agent pursuant to the terms of the Security Documents with
respect to such cash;”

 

“(xiv)  GCICC may make Investments of assets in any
UUI Entity that is not a Loan Party so long as such Investment of assets is
made with an asset received directly from a UUI Entity that is not a Loan Party
(other than the UUI Entity into which GCICC is making such asset Investment) by
GCICC immediately prior to the Investment of such asset by GCICC, and the
Administrative Agent hereby releases any Liens in favor of the Administrative
Agent that may otherwise attach to such asset Investment pursuant to the terms
of the Security Documents; for the avoidance of doubt, in the event that a UUI
Entity that is not a Loan Party makes an asset distribution to GCICC that is
not immediately used to make an asset Investment in another UUI Entity that is
not a Loan Party, there shall be no release by the Administrative Agent of any
Lien in favor of the Administrative Agent pursuant to the terms of the Security
Documents with respect to such asset.”

 

(w)          Section 7.5 of the Credit
Agreement is hereby amended by deleting the text thereof in its entirety and,
in lieu thereof, inserting the following:

 

“Financial Covenants.  The Borrowers and their Subsidiaries shall
not, as of any Calculation Date:

 

(a)  Total Leverage
Ratio:  permit the Total Leverage
Ratio to exceed (i) 5.25:1.00 for the period beginning on the Initial
Additional Incremental Funding Date and ending on June 30, 2009, (ii) 5.00:1.00
for the period beginning on July 1, 2009, and ending on December 31,
2009, and (iii) 4.50:1.00 for the period beginning January 1, 2010,
and ending on August 31, 2012.

 

11

 

(b)  Senior Debt Ratio:  permit the Senior Debt Ratio to exceed (i) 3.25:1.00
for the period beginning on the Initial Additional Incremental Funding Date and
ending on June 30, 2009, and (ii) 3.00:1.00 for the period beginning July 1,
2009, and ending on August 31, 2012.

 

(c)  Fixed Charge
Coverage Ratio:  beginning December 31,
2009, permit the Fixed Charge Coverage Ratio to be less than 1.0:1.0.

 

(d)  Interest Coverage
Ratio:  permit the Interest Coverage
Ratio to be less than (i) 2.50:1.00 for the period beginning on the
Initial Additional Incremental Funding Date and ending on September 30,
2009, and (ii) 2.75:1.00 for the period beginning October 1, 2009,
and ending on August 31, 2012.

 

(e)  Capital
Expenditures:  permit Capital
Expenditures to exceed the amount set forth below for the applicable period:

 

	
  Fiscal Year Ended

  	
   

  	
  Maximum Capital

  Expenditure Amount

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  225,000,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  125,000,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  125,000,000

  	
   

  
	
  December 31, 2011, and each fiscal year ended thereafter

  	
   

  	
  $

  	
  100,000,000

  	
   

  

 

For purposes of this Section 7.5(d),
“Maximum Capital Expenditure Amount” shall mean, for each fiscal year of
the Borrowers and their Subsidiaries, the amount set forth in the grid above
opposite such fiscal year.

 

However, to the extent that
the aggregate Capital Expenditures made or otherwise incurred by the Borrowers
and their Subsidiaries on a consolidated basis during the fiscal year ended December 31,
2008, are less than the Maximum Capital Expenditure Amount set forth above for
such fiscal year (such difference, the “2008 Carryover Amount”), then
for the fiscal year that will commence on January 1, 2009 (the “2009
Fiscal Year”), in addition to making or otherwise incurring aggregate
Capital Expenditures in an amount up to the Maximum Capital Expenditure Amount
for the 2009 Fiscal Year, the Borrowers and their Subsidiaries on a
consolidated basis may expend or otherwise incur additional Capital
Expenditures during the 2009 Fiscal Year in an aggregate amount not to exceed
the 2008 Carryover Amount.  For each
fiscal year of the Borrowers and their Subsidiaries commencing on or after January 1,
2010 (each such subsequent fiscal year, a “Subsequent Fiscal Year”), the
Borrowers and their Subsidiaries on a consolidated basis may make or otherwise
incur Capital Expenditures during a Subsequent Fiscal Year in an 

 

12

 

aggregate amount not to
exceed the sum of (x) the Maximum Capital Expenditure Amount for such
Subsequent Fiscal Year and (y) the Prior Year Carryover Amount (as defined
below) for such Subsequent Fiscal Year, if any. 
Except as set forth below, with respect to any fiscal year of the
Borrowers and their Subsidiaries on a consolidated basis, the Prior Year
Carryover Amount shall mean the Dollar amount equal to the lesser of (a) the
Maximum Capital Expenditure Amount for the Borrowers and their Subsidiaries for
the prior fiscal year and (b) the positive difference, if any, between (x) the
sum of (i) the Maximum Capital Expenditure Amount for the Borrowers and
their Subsidiaries for the prior fiscal year and (ii) the Prior Year
Carryover amount for the prior fiscal year, if any, and (y) the aggregate
amount of actual Capital Expenditures made or otherwise incurred by the
Borrowers and their Subsidiaries on a consolidated basis during the prior
fiscal year; provided, however, the Prior Year Carryover Amount for the fiscal
year of the Borrowers and their Subsidiaries that will commence on January 1,
2009, will be an amount equal to the 2008 Carryover Amount.”

 

(x)            Section 7.6(b) of
the Credit Agreement is hereby amended by (i) deleting the third paragraph
thereof in its entirety (for the avoidance of doubt, the deleted paragraph
begins with the words “Notwithstanding the foregoing, to the extent that any
Loan Party” and ends with the words “solely for the purpose of making
Investments in AKD”) and (ii) deleting the second paragraph thereof in its
entirety and, in lieu thereof, inserting the following:

 

“Notwithstanding anything to the
contrary contained in this Agreement, no Restricted Payments shall be made by
any Loan Party to a UUI Entity or on behalf of or on account of any UUI Entity
so long as such UUI Entity is not a Loan Party. 
Further notwithstanding anything to the contrary set forth in this
Agreement and other than Restricted Payments permitted by exceptions expressly
set forth in this sentence and the exception expressly set forth in the
following sentence, the Borrowers shall not, and shall cause each of their
respective Subsidiaries not to make any Restricted Payments other than (i) those
payments permitted pursuant to clause (c) of the definition of Restricted
Payments (other than payments to any UUI Entity that is not a Loan Party which
shall at all times be prohibited); (ii) payments from one Loan Party to
another Loan Party or from a UUI Entity that is not a Loan Party to a Loan
Party; or (iii) so long as there is no Default or Event of Default both
immediately before and after giving effect to any such Restricted Payment,
Restricted Payments in the form of Distributions to GCII in an amount not in
excess of cash income Taxes paid by GCI on income attributable to the Borrowers
and their Subsidiaries; provided, however, that the restrictions
set forth in this sentence shall not apply so long as (x) for the two
consecutive quarters ended immediately preceding any such Restricted Payment
and (y) immediately following any such Restricted Payment, after giving
effect to indebtedness, if any, incurred in connection therewith, on a pro
forma basis, the Total Leverage Ratio is less than 4.00:1.00.

 

Notwithstanding anything to the
contrary contained in this Agreement, Borrowers and their Subsidiaries may make
Restricted Payments to GCII for the purpose of, and in an amount sufficient to
fund, the payment of interest in respect of the Senior Notes (provided, that
such payment is due or to become due within 30 days from the date of such
Restricted Payment) at a time where there does not exist a Default (provided
that, in 

 

13

 

no event, shall the Borrowers
and their Subsidiaries be prohibited from making such Restricted Payments as
set forth in this paragraph for more than 180 days in any consecutive 360-day
period, unless (x) there exists an Event of Default under Section 8.1(b) or
(y) the maturity of the Loans has been accelerated).”

 

(y)           Section 7.8 of the Credit
Agreement is hereby amended by deleting clause (ii) thereof in its
entirety and, in lieu thereof, inserting the following:

 

“(ii) 
any transaction or series of transactions between one Loan Party and another
Loan Party or between one UUI Entity and another UUI Entity, so long as no Loan
Party engages in any such transaction with any UUI Entity that is not a Loan
Party;”

 

(z)            Section 7.10 of the
Credit Agreement is hereby amended by adding the following clause (c) to
the end thereof:

 

“or
(c) any negative pledge on the property of any UUI Entity under any UUI
Debt Document.”

 

(aa)         Section 7.11 of the Credit
Agreement is hereby amended by adding the following clause (d) to the end
thereof:

 

“and
(d) the UUI Debt Documents.”

 

(bb)         Section 7 of the Credit
Agreement is hereby amended by adding the following Sections 7.20, 7.21 and
7.22 at the end thereof:

 

“Section 7.20.  Capital Stock Repurchase.  The Borrowers shall not, and shall cause each
of their Subsidiaries not to, make any distributions to GCII that, either
directly or indirectly, would provide liquidity to GCI to fund the repurchase
or redemption of shares of GCI’s Capital Stock; provided  that,
such distributions shall be permitted to be made to GCII to fund the repurchase
or redemption of shares of GCI’s Capital Stock so long as (x) for the two
consecutive quarters ended immediately preceding any such distribution and (y) immediately
following any such repurchase, after giving effect to indebtedness, if any,
incurred in connection therewith, on a pro forma basis, the Total Leverage
Ratio is less than 4.00:1.00.

 

Section 7.21.  UUI Investments.  (i)  Notwithstanding the provisions of Sections
7.4 and 7.6, and except as set forth in Section 7.21(ii) below,
the Borrowers, GCII and their respective Subsidiaries (other than the UUI
Entities that have not become Loan Parties) shall not make any direct or
indirect Investments in the UUI Entities (other than Investments in UUI
Entities that have become Loan Parties) in an aggregate amount exceeding the
Maximum UUI Investment Amount; for the avoidance of doubt, any proceeds of
Loans, any cash or any other assets of the Borrowers or any of their
Subsidiaries (other than the UUI Entities that have not become Loan Parties)
used directly or indirectly (i) to directly or indirectly acquire the UUI
Entities, any of the Capital Stock of any of the UUI Entities or any of the
assets of the UUI Entities or (ii) to make any other Investment in any of
the UUI Entities (other than Investments in any UUI 

 

14

 

Entity
that has become a Loan Party) after the consummation of the UUI Acquisition, in
each case, shall constitute Investments for purposes of this provision.  For the further avoidance of doubt, the
amount of any cash Investment or asset Investment made by GCICC in accordance
with the terms and restrictions of Sections 7.4(c)(xiii) and 7.4(c)(xiv),
respectively, shall not constitute Investments for purposes of this Section 7.21(i).

 

(ii) 
Following the consummation of the UUI Acquisition, the Borrowers and their
Subsidiaries (other than the UUI Entities that are not Loan Parties) may make
additional Investments in the UUI Entities that are not Loan Parties in an
aggregate amount not to exceed at any time one million dollars ($1,000,000) for
working capital purposes only, and such Investments shall not constitute
Investments for purposes of Section 7.21(i).

 

Section 7.22.  UUI Indebtedness.  (i)  Notwithstanding the provisions of Section 7.15,
in no event shall the Borrowers, GCII or their Subsidiaries (other than the UUI
Entities that have not become Loan Parties) be permitted to guarantee or
otherwise become liable for Indebtedness of any kind of any UUI Entity that is
not a Loan Party.

 

(ii)           From and after
the UUI Acquisition Date, the Borrowers shall not, and shall cause each of
their Subsidiaries (other than the UUI Entities) not to, permit the UUI
Entities to:

 

(A)          refinance or otherwise replace the
indebtedness existing under the terms of the UUI Debt Documents relating to
Indebtedness of the UUI Entities pursuant to Section 7.1(k)(i), in
each case in accordance with the terms thereof, with indebtedness other than
indebtedness to Rural Utilities Services and CoBank, ACB, as applicable, as
lenders under the UUI Debt Documents;

 

(B)           refinance or otherwise replace any
indebtedness incurred pursuant to Section 7.1(k)(ii) with
indebtedness other than indebtedness to the initial lender or lenders providing
such financing; and

 

(C)           incur additional indebtedness in the
event that the indebtedness of the UUI Entities under the UUI Debt Documents
relating to Indebtedness of the UUI Entities pursuant to Section 7.1(k)(i) terminates
or is otherwise satisfied other than as a result of a refinancing or
replacement pursuant to subsection (A).”

 

(cc)         Section 8.1(j) of the Credit Agreement is hereby amended by adding the
following proviso at the end of clause (i) thereof:

 

“provided  that,
this Section 8.1(j) shall not apply to a default by any UUI
Entity under the UUI Debt Documents so long as the Indenture remains in full
force and effect.”

 

2.             Conditions to the Effectiveness of this Amendment.  The effectiveness of this Amendment is
conditioned upon (i) the delivery to the Administrative Agent of (A) counterparts
to this Amendment executed by each of the Borrowers, the Majority Lenders, the
Administrative Agent and any other Lender required pursuant to the provisions
of Section 11.12(b) of the Credit Agreement, (B) an
executed amendment to the GCII Guaranty in form and substance reasonably 

 

15

 

satisfactory
to the Administrative Agent which shall include, without limitation, a negative
pledge with respect to the Capital Stock of the UUI Entities subject to
exceptions to allow for the pledge of the Capital Stock of United-KUC, Inc.
as security for the indebtedness permitted pursuant to Section 7.1(k) of
the Credit Agreement and (C) such other documentation as the
Administrative Agent may reasonably request; (ii) the payment of all fees
and expenses due and owing to the Administrative Agent and the Arranger; (iii) one
or more legal opinions of counsel to the Borrowers, in each case, in form,
scope and substance satisfactory to the Administrative Agent; and (iv) the
receipt by the Administrative Agent of written commitments totaling the amount
of the First Additional Incremental Loan, and reflected on a revised Schedule
4-B to the Credit Agreement to be provided to the Administrative Agent on
the date hereof, from one or more Additional Incremental Lenders.  Upon the Administrative Agent’s receipt of
each such items above, this Amendment shall become effective as of the date
hereof and the Additional Incremental Term Loans shall become available for
funding to the Borrowers and their Subsidiaries in accordance with Section 2.2(g) of
the Credit Agreement.

 

3.             Representations and Warranties.  To induce the Administrative Agent and the
Lenders to enter into this Amendment, each of the Borrowers and their
Subsidiaries that are Loan Parties does hereby represent and warrant that as of
the date hereof:

 

(a)            there
exists no Default or Event of Default under the Credit Agreement or any of the
other Loan Documents;

 

(b)           each
Borrower has the power and authority and has taken all the necessary action to
authorize the execution, delivery and performance of this Amendment and the
incurrence of the Additional Incremental Term Loans;

 

(c)            this
Amendment and the incurrence of the Additional Incremental Term Loans have been
duly executed and delivered by the duly authorized officers of the Borrowers,
and this Amendment and the Credit Agreement, as amended hereby, are the legal,
valid and binding obligation of each Borrower enforceable against each Borrower
in accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors’ rights generally and by general principles of equity;

 

(d)           the execution, delivery and
performance of this Amendment and the incurrence of the Additional Incremental
Term Loans and in accordance with the terms herein do not and will not, with
the passage of time, the giving of notice or otherwise: (i) require any
consent, approval, authorization, permit or license, governmental or otherwise
which has not already been obtained or is not in full force and effect or
violate any applicable law relating to any Borrower; (ii) conflict with,
result in a breach of or constitute a default under (A) the articles or
certificate of incorporation or bylaws, operating agreement or the partnership
agreement, as the case may be, of any Borrower, (B) any indenture,
material agreement or other material instrument to which any Borrower is a
party or by which any of its properties may be bound, or (C) any material
Licenses; or (iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by
the Borrowers other than Permitted Liens;

 

16

 

(e)                                  Fire Lake is a holding company
with no assets, other than the capital stock of AKD, and owes no liabilities to
any party whatsoever;

 

(f)                                    Neither GCI nor any of its
Affiliates has an ownership interest of any kind in United Companies, Inc.

 

4.                                       [Intentionally
Reserved]

 

5.                                       General.   This Amendment:

 

(a)                                   shall be deemed to be a Loan
Document;

 

(b)                                  embodies the entire
understanding and agreement among the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersedes all prior agreements,
understandings and inducements, whether express or implied, oral or written;
and

 

(c)                                   may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.  Delivery of an executed counterpart by
facsimile shall be equally effective as delivery of a manually executed
counterpart to this Amendment.

 

6.                                       No Course of Dealing or
Performance.  Each of the Borrowers acknowledges and agrees
that the execution, delivery and performance of this Amendment by the
Administrative Agent and each of the Lenders does not and shall not create (nor
shall Borrowers rely upon the existence of or claim or assert that there
exists) any obligation of any of the Lenders and the Administrative Agent to
consider or agree to any other amendment of or consent with respect to any of
the Loan Documents, or any other instrument or agreement to which the
Administrative Agent or any Lender is a party (collectively an “Amendment or
Consent”), and in the event that the Administrative Agent or any of the
Lenders subsequently agree to consider any requested Amendment or Consent,
neither the existence of this Amendment, nor any other conduct of the
Administrative Agent or any of the Lenders related hereto, shall be of any
force or effect on the Administrative Agent’s or any of the Lenders’
consideration or decision with respect to any such requested Amendment or
Consent, and the Administrative Agent and the Lenders shall not have any
obligation whatsoever to consider or agree to any such Amendment or Consent.

 

7.                                       Fees and
Expenses.  The Borrowers and their Subsidiaries hereby
acknowledge and agree that all fees and expenses as described in Section 11.2
of the Credit Agreement incurred by the Administrative Agent, including,
without limitation, those related to the preparation, arrangement, negotiation,
documentation, syndication, closing and administration of the transactions
contemplated by this Amendment, whether or not such transactions are
consummated, shall be for the account of the Borrowers.

 

8.                                       Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the successors and permitted assigns of the parties
hereto.

 

9.                                       Governing Law.  THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF 

 

17

 

NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN NEW YORK.

 

18

 

IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be executed by their
respective duly authorized representatives as of the date first written above.

 

	
   

  	
  Borrowers:

  
	
   

  	
   

  
	
   

  	
  GCI
  HOLDINGS, INC.

  
	
   

  	
  GCI
  COMMUNICATION CORP.

  
	
   

  	
  GCI
  CABLE, INC.

  
	
   

  	
  GCI
  FIBER COMMUNICATION CO., INC.

  
	
   

  	
  POTTER
  VIEW DEVELOPMENT CO., INC.

  
	
   

  	
  each
  an Alaska corporation,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John M. Lowber

  
	
   

  	
  Name:
  John M. Lowber

  
	
   

  	
  Title:  Secretary/Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALASKA
  UNITED FIBER SYSTEM

  PARTNERSHIP,

  
	
   

  	
  an
  Alaska partnership

  
	
   

  	
   

  
	
   

  	
  By:
  GCI COMMUNICATION CORP.,

  
	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John M. Lowber

  
	
   

  	
  Name:
  John M. Lowber

  
	
   

  	
  Title: Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  GCI HOLDINGS, INC.,

  
	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John M. Lowber

  
	
   

  	
  Name:
  John M. Lowber

  
	
   

  	
  Title: Senior
  Vice President

  

 

19

 

	
   

  	
  CALYON
  NEW YORK BRANCH,

  
	
   

  	
  as
  Administrative Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  W. Michael George

  
	
   

  	
  Name:
  W. Michael George

  
	
   

  	
  Title: Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  McCloskey

  
	
   

  	
  Name:
  John McCloskey

  
	
   

  	
  Title: Managing
  Director

  
				

 

 

	
   

  	
  UNION
  BANK OF CALIFORNIA, N.A.,

  
	
   

  	
  as
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Vian

  
	
   

  	
  Name:
  Richard Vian

  
	
   

  	
  Title: Vice
  President

  

 

 

	
   

  	
  COBANK,
  ACB,

  
	
   

  	
  as
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ted Koerner

  
	
   

  	
  Name:
  Ted Koerner

  
	
   

  	
  Title: Managing
  Director

  

 

 

	
   

  	
  WELLS
  FARGO BANK, N.A., as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steve Taylor

  
	
   

  	
  Name:
  Steve Taylor

  
	
   

  	
  Title: Manager,
  Alaska Commercial Banking

  Group

  

 

 

	
   

  	
  GENERAL
  ELECTRIC CAPITAL

  CORPORATION, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Julie Meade

  
	
   

  	
  Name:
  Julie Meade

  
	
   

  	
  Title: Authorized
  Signatory

  

 

 

	
   

  	
  CIT
  LENDING SERVICES CORPORATION, as

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tom Westdyk

  
	
   

  	
  Name:
  Tom Westdyk

  
	
   

  	
  Title: Vice
  President

  

 

 

	
   

  	
  BNP
  PARIBAS, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ola Anderssen

  
	
   

  	
  Name:
  Ola Anderssen

  
	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Yung Wu

  
	
   

  	
  Name:
  Yung Wu

  
	
   

  	
  Title: Vice
  President

  

 

 

	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas G. Gunder

  
	
   

  	
  Name:
  Thomas G. Gunder

  
	
   

  	
  Title: SVPEXHIBIT 4.1

 

Internet
Brands, Inc.

2007 Equity
Plan

(as amended
and restated December 21, 2007)

 

1. Purpose. The purpose of the Internet Brands, Inc. 2007 Equity Plan is to
provide a means through which the Company and its Affiliates may attract and
retain key personnel and to provide a means whereby directors, officers,
employees, consultants and advisors (and prospective directors, officers,
employees, consultants and advisors) of the Company and its Affiliates can
acquire and maintain an equity interest in the Company, or be paid incentive
compensation measured by reference to the value of Common Stock, thereby
strengthening their commitment to the welfare of the Company and its Affiliates
and aligning their interests with those of the Company’s shareholders.

 

2. Definitions. The following definitions shall be applicable
throughout the Plan.

 

(a)   “Affiliate” means (i) any
person or entity that directly or indirectly controls, is controlled by or is
under common control with the Company and/or (ii) to the extent provided by the
Committee, any person or entity in which the Company has a significant
interest. For purposes of this definition, the term “control” (including, with
correlative meaning, the terms “controlled by” and “under common control
with”), as applied to any person or entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting or
other securities, by contract or otherwise.

 

(b)   “Award” means, individually
or collectively, any Incentive Stock Option, Nonstatutory Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Bonus Award,
or Performance Compensation Award granted under the Plan.

 

(c)   “Board” means the Board of
Directors of the Company.

 

(d)   “Change of Control” shall,
unless in the case of a particular Award the applicable Award agreement states
otherwise or contains a different definition of “Change of Control,” mean the
occurrence of any one of the following events: (i) the acquisition by any
“Person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) of more than 50% of
the combined voting power of the then outstanding securities entitled to vote
generally in the election of directors of the Company; or (ii) any merger,
consolidation, reorganization, recapitalization, tender, or exchange offer or
any other transaction with or affecting the Company as a result of which a
Person owns after such transaction more than 50% of the combined voting power
of the then outstanding securities entitled to vote generally in the election
of the directors of the Company, or (iii) the sale, lease, exchange, transfer,
or other disposition to any Person of all or substantially all, of the assets
of the Company and its consolidated subsidiaries, or (iv) the adoption by the
Company of any plan of liquidation providing for the distribution of all or
substantially all of its assets, or (v) a change in the composition of the
Board over a period of thirty-six (36) months or less such that a majority of
the Board members (rounded up to the next whole number) ceases, by reason of
one or more contested elections for Board membership, to be comprised of
individuals who are continuing directors.

 

Notwithstanding the foregoing, in no event shall the
initial public offering of shares of Common Stock (the “IPO”) or any corporate
transactions effected in connection with the reorganization of the Company and
its Affiliates (and their predecessors) associated with the IPO and described
in the Registration Statement on Form S-1 under the Securities Act (including
all amendments thereto) filed with the Securities and Exchange Commission in
connection with the IPO, individually or in the aggregate, constitute a Change
of Control.

 

(e)   “Code” means the Internal
Revenue Code of 1986, as amended, and any successor thereto. Reference in the
Plan to any section of the Code shall be deemed to include any Treasury
Regulations or other interpretative guidance under such section, and any
amendments or successor provisions to such section, regulations or guidance.

 

(f)    “Committee” means a
committee of at least two people as the Board may appoint to administer the
Plan pursuant to Section 4 of the Plan or, if no such committee has been
appointed by the Board, the Board.

 

(g)   “Common Stock” means the
Class A common stock, par value $0.001 per share, of the Company (and any stock
or other securities into which such Class A common stock may be converted or
into which it may be exchanged).

 

(h)   “Company” means Internet
Brands, Inc., a Delaware corporation, and any successor thereto.

 

(i)    “Date of Grant” means
the date on which the granting of an Award is authorized, or such other date as
may be specified in such authorization.

 

(j)    “Disability” means the
inability of an individual, in the opinion of a qualified physician acceptable
to the Company, to perform the major duties of that individual’s position with
the Company because of the sickness or injury of that individual.

 

(k)   “Effective Date” means
October 23, 2007.

 

(l)    “Eligible Director”
means a person who is (i) a “non-employee director” within the meaning of Rule
16b-3 under the Exchange Act, (ii) an “outside director” within the meaning of
Section 162(m) of the Code, and (iii) an “independent director” under the rules
of any established stock exchange or national market system on which the Common
Stock is listed or quoted, or a person meeting any similar requirement under
any successor rule or regulation.

 

(m)  “Eligible Person” means (i) any
individual who is employed by the Company or an Affiliate such that the Company
is an “eligible issuer of service recipient stock” with respect to such
Affiliate’s employees, within the meaning of Section 409A of the Code and
Treasury Regulation Section 1.409A-1(b)(5)(iii)(E), and who satisfies all of
the requirements of Section 6 of the Plan; provided, however,  that no
such employee covered by a collective bargaining agreement shall be an Eligible
Person unless and to the extent that such eligibility is set forth in such
collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) any director or officer of the Company or an Affiliate described
in clause (i) above; (iii) any consultant or advisor to the Company or an
Affiliate described in clause (i) above who may be offered securities
registrable on Form S-8 under the Securities Act; or (iv) with respect to Awards
granted on or after the Registration Date, any prospective employee, director,
officer, consultant, or advisor who has accepted an offer of employment or
consultancy from the Company or an Affiliate described in clause (i) above (and
would satisfy the provisions of clauses (i) through (iii) above once he or she
begins employment with or providing services to the Company or such Affiliate).

 

(n)   “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and any successor thereto.
Reference in the Plan to any section of (or rule promulgated under) the
Exchange Act shall be deemed to include any rules, regulations or other
interpretative guidance under such section or rule, and any amendments 

 

1

 

or
successor provisions to such section, rules, regulations or guidance.

 

(o)   “Exercise Price” has the
meaning given such term in Section 7(b) of the Plan.

 

(p)   “Fair Market Value” means, on
a given date: (i) if the Common Stock is listed on any established stock
exchange or a national market system, the closing sales price of the Common
Stock on such date (or the closing bid, if no sales were reported) as quoted on
the primary exchange or system on which the Common Stock is listed and traded
on the day of determination, as reported in The Wall Street Journal 
or such other source as the Committee deems reliable; (ii) if the Common Stock
is regularly quoted by a recognized securities dealer but selling prices are
not reported, the mean between the closing bid price and ask price for the
Common Stock on the day of determination, as reported in The Wall
Street Journal  or such other source as the Committee deems
reliable; (iii) for purposes of any Awards granted on the Registration Date,
the initial price to the public as set forth in the final prospectus included
within the registration statement in Form S-1 filed with the Securities and
Exchange Commission for the IPO; or (iv) in the absence of an established
market for the Common Stock, the amount determined by the Committee in good
faith to be the fair market value of the Common Stock.

 

(q)   “Immediate Family Members”
has the meaning given such term in Section 16(b) of the Plan.

 

(r)   “Incentive Stock Option”
means an Option which is designated by the Committee as an incentive stock
option as described in Section 422 of the Code and otherwise meets the
requirements set forth in the Plan.

 

(s)   “Indemnifiable Person” has
the meaning given such term in Section 4(d) of the Plan.

 

(t)    “Investor” has the
meaning given such term in the definition of “Change of Control”.

 

(u)   “IPO” has the meaning given
such term in the definition of “Change of Control”.

 

(v)   “Mature Shares” means shares
of Common Stock either (i) previously acquired on the open market, (ii) not
acquired from the Company in the form of compensation, or (iii) acquired from
the Company in the form of compensation that have been owned by a Participant
for at least six (6) months.

 

(w)  “Negative Discretion” shall mean
the discretion authorized by the Plan to be applied by the Committee to
eliminate or reduce the size of a Performance Compensation Award consistent
with Section 162(m) of the Code.

 

(x)   “Nonstatutory Stock Option”
means an Option which is not designated by the Committee as an Incentive Stock
Option.

 

(y)   “Option” means an Award
granted under Section 7 of the Plan.

 

(z)   “Option Period” has the
meaning given such term in Section 7(c) of the Plan.

 

(aa) “Participant” means an Eligible Person
who has been selected by the Committee to participate in the Plan and to
receive an Award pursuant to Section 6 of the Plan.

 

(bb) “Performance Compensation Award” shall
mean any Award designated by the Committee as a Performance Compensation Award
pursuant to Section 11 of the Plan.

 

(cc) “Performance Criteria” shall mean the
criterion or criteria that the Committee shall select for purposes of
establishing the Performance Goal(s) for a Performance Period with respect to
any Performance Compensation Award under Section 11 of the Plan.

 

(dd) “Performance Formula” shall mean, for a
Performance Period, the one or more objective formulae applied against the
relevant Performance Goal to determine, with regard to the Performance
Compensation Award of a particular Participant, whether all, some portion but
less than all, or none of the Performance Compensation Award has been earned
for the Performance Period.

 

(ee) “Performance Goals” shall mean, for a
Performance Period, the one or more goals established by the Committee for the Performance
Period based upon the Performance Criteria.

 

(ff)  “Performance Period” shall mean
the one or more periods of time, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, a Performance
Compensation Award.

 

(gg) “Permitted Transferee” has the meaning
given such term in Section 15(b) of the Plan.

 

(hh) “Person” has the meaning given such term
in the definition of “Change of Control”.

 

(ii)   “Plan” means this Internet
Brands, Inc. 2007 Equity Plan.

 

(jj)   “Predecessor Plans” means
the Internet Brands, Inc. 1998 Stock Plan and the Internet Brands, Inc. 2000
Stock Plan, including any and all amendments thereto.

 

(kk) “Registration Date” means the effective
date of the first registration statement that is filed by the Company and
declared effective pursuant to Section 12(g) of the Exchange Act, with respect
to any class of the Company’s securities.

 

(ll)   “Restricted Period” means
the period of time determined by the Committee during which an Award is subject
to restrictions or, as applicable, the period of time within which performance
is measured for purposes of determining whether an Award has been earned.

 

(mm) “Restricted Stock” means Common Stock,
subject to certain specified restrictions (including, without limitation, a
requirement that the Participant remain continuously employed or provide
continuous services for a specified period of time), granted under Section 9 of
the Plan.

 

                (nn)
“Restricted Stock Unit” means an unfunded and unsecured promise to
deliver shares of Common Stock, cash, other securities or other property,
subject to certain restrictions (including, without limitation, a requirement
that the Participant remain continuously employed or provide continuous
services for a specified period of time), granted under Section 9 of the Plan.

 

(oo) “SAR Period” has the meaning given such
term in Section 8(c) of the Plan.

 

2

 

(pp) “Section 162(m) Effective Date” means
the first date on which Awards granted under the Plan do not qualify for an
exemption from the deduction limitations of Section 162(m) of the Code on
account of an exemption, or a transition or grandfather rule.

 

(qq) “Section 409A Award” has the meaning
given such term in Section 15(a) of the Plan.

 

(rr)  “Securities Act” means the Securities Act
of 1933, as amended, and any successor thereto. Reference in the Plan to any
section of the Securities Act shall be deemed to include any rules, regulations
or other interpretative guidance under such section, and any amendments or
successor provisions to such section, rules, regulations or guidance.

 

(ss)  “Service Provider” means (i) any
individual who is employed by the Company or an Affiliate, (ii) any director or
officer of the Company or an Affiliate; and (iii) any consultant or advisor to
the Company or an Affiliate, subject to Section 16(h) of the Plan.

 

(tt)  “Share Limit” has the meaning given
such term in Section 5(b) of the Plan.

 

(uu) “Stock Appreciation Right” or “SAR”
means an Award granted under Section 8 of the Plan.

 

(vv) “Stock Bonus Award” means an Award
granted under Section 10 of the Plan.

 

(ww) “Strike Price” means, (i) in the case of
a SAR granted in tandem with an Option, the Exercise Price of the related
Option, or (ii) in the case of a SAR granted independent of an Option, the Fair
Market Value on the Date of Grant.

 

(xx) “Substitute Award” has the meaning given
such term in Section 5(e) of the Plan.

 

(yy) “Vesting Commencement Date” has the
meaning given such term in an applicable Award agreement under the Plan.

 

3. Effective Date; Duration. The Plan shall be effective as of the
Effective Date. The expiration date of the Plan, on and after which date no
Awards may be granted hereunder, shall be the tenth anniversary of the
Effective Date; provided, however,  that such expiration shall not affect
Awards then outstanding, and the terms and conditions of the Plan shall continue
to apply to such Awards.

 

4. Administration. (a) The Committee shall administer the Plan.
To the extent required to comply with the provisions of Rule 16b-3 promulgated
under the Exchange Act (if the Board is not acting as the Committee under the
Plan) or necessary to obtain the exception for performance-based compensation
under Section 162(m) of the Code, as applicable, it is intended that each
member of the Committee shall, at the time he takes any action with respect to
an Award under the Plan, be an Eligible Director. However, the fact that a
Committee member shall fail to qualify as an Eligible Director shall not
invalidate any Award granted by the Committee that is otherwise validly granted
under the Plan. The majority of the members of the Committee shall constitute a
quorum. The acts of a majority of the members present at any meeting at which a
quorum is present or acts approved in writing by a majority of the Committee
shall be deemed the acts of the Committee.

 

(b)   Subject to the provisions of the
Plan and applicable law, the Committee shall have the sole and plenary
authority, in addition to other express powers and authorizations conferred on
the Committee by the Plan, to: (i) designate Participants; (ii) determine the
type or types of Awards to be granted to a Participant; (iii) determine the
number of shares of Common Stock to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, shares of Common Stock, other securities, other Awards or
other property, or canceled, forfeited, or suspended and the method or methods
by which Awards may be settled, exercised, canceled, forfeited, or suspended;
(vi) determine whether, to what extent, and under what circumstances the
delivery of cash, Common Stock, other securities, other Awards or other
property and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the Participant or of the Committee,
subject to the requirements of Section 409A of the Code; (vii) interpret,
administer, reconcile any inconsistency in, correct any defect in and/or supply
any omission in the Plan and any instrument or agreement relating to, or Award
granted under, the Plan; (viii) establish, amend, suspend, or waive any rules
and regulations and appoint such agents as the Committee shall deem appropriate
for the proper administration of the Plan; (ix) accelerate the vesting or
exercisability of, payment for or lapse of restrictions on, Awards, subject to
the requirements of Section 409A of the Code; (x) extend the period during
which Awards may be exercised, subject to the requirements of Section 409A of
the Code; and (xi) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan.

 

(c)   Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award or any documents
evidencing Awards granted pursuant to the Plan shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all persons or entities, including, without
limitation, the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, and any shareholder of the Company.

 

(d)   No member of the Board, the
Committee or any employee or agent of the Company (each such person, an “Indemnifiable
Person”) shall be liable for any action taken or omitted to be taken or any
determination made in good faith with respect to the Plan or any Award
hereunder. Each Indemnifiable Person shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense (including
attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable
Person in connection with or resulting from any action, suit or proceeding to
which such Indemnifiable Person may be a party or in which such Indemnifiable
Person may be involved by reason of any action taken or omitted to be taken
under the Plan or any Award agreement and against and from any and all amounts
paid by such Indemnifiable Person with the Company’s approval, in settlement
thereof, or paid by such Indemnifiable Person in satisfaction of any judgment
in any such action, suit or proceeding against such Indemnifiable Person, 
provided that the Company shall have the right, at its own expense, to
assume and defend any such action, suit or proceeding and once the Company
gives notice of its intent to assume the defense, the Company shall have sole
control over such defense with counsel of the Company’s choice. The foregoing
right of indemnification shall not be available to an Indemnifiable Person to
the extent that a final judgment or other final adjudication (in either case
not subject to further appeal) binding upon such Indemnifiable Person
determines that the acts or omissions of such Indemnifiable Person giving rise
to the indemnification claim resulted from such Indemnifiable Person’s bad
faith, fraud or willful criminal act or omission or that such right of indemnification
is otherwise prohibited by law or by the Company’s Certificate of Incorporation
or Bylaws. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such Indemnifiable Persons may be
entitled under the Company’s Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any other power that the Company may have to
I    ndemnify such Indemnifiable Persons or hold them harmless.

 

(e)   Notwithstanding anything to the
contrary contained in the Plan, the Board may, in its sole discretion, at any
time and from time to time, grant Awards and administer the Plan with respect
to such Awards. In any such case, the Board shall have all the authority
granted to the Committee under the Plan.

 

5. Grant of Awards; Shares Subject to the Plan;
Limitations. (a) The
Committee may, from time to time, grant Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Stock Bonus Awards and/or Performance
Compensation Awards to one or more Eligible Persons.

 

(b)   Awards granted under the Plan shall
be subject to the following limitations:

 

(i)    Subject to this Section 5 and
Section 12 of the Plan, the maximum number of shares of Common Stock that may
be delivered in the aggregate pursuant to 

 

3

 

Awards
granted under the Plan is 1,868,251 (following the 1-for-2 reverse stock split
of the Company’s Class A and Class B common stock effected on November 21,
2007); provided that on each of January 1, 2009, January 1, 2010,
January 1, 2011, January 1, 2012, and January 1, 2013, the maximum number of
shares deliverable under this clause (i) as in effect on the immediately
preceding December 31 shall be increased by the lesser of (A) a number of
shares of Common Stock equal to two and one half percent (2.5%) of the total
number of outstanding shares of Common Stock (on a fully-diluted basis) on such
date, (B) 1,500,000 shares of Common Stock, or (C) such other amount as the
Committee may determine on or before the immediately preceding December
31;  provided, further, that the maximum number of shares
deliverable pursuant to this Section 5 (including paragraph (c) herein) (such
maximum number of shares, as in effect at any time hereunder, the “Share
Limit”) shall not exceed 12,282,006.

 

(ii)   Subject to Section 12 of the Plan,
no more than the lesser of (A) the Share Limit or (B) 12,282,006 shares of
Common Stock may be delivered in the aggregate pursuant to the exercise of
Incentive Stock Options granted under the Plan.

 

(iii)  Subject to Section 12 of the Plan, no
more than 1,500,000 shares of Common Stock may be subject to grants of Options
or SARs under the Plan to any single Participant during any calendar year.

 

(iv)  Subject to Section 12 of the Plan, no
more than 1,500,000 shares of Common Stock may be delivered in respect of
Performance Compensation Awards granted in a calendar year to any single
Participant pursuant to Section 11 of the Plan, or in the event such
Performance Compensation Award is paid in cash, other securities, other Awards
or other property, no more than the Fair Market Value of 1,500,000 shares of
Common Stock on the last day of the calendar year in which the Award is made.

 

(v)   The maximum amount that can be paid
to any single Participant in a calendar year pursuant to a cash bonus Award
described in Section 11(a) of the Plan shall be $3,000,000.

 

(c)   Shares of Common Stock shall be
deemed to have been used in settlement of Awards whether or not they are actually
delivered or the Fair Market Value equivalent of such shares is paid in cash; provided,
however,  that if shares of Common Stock issued upon exercise, vesting
or settlement of an Award or a stock option or stock purchase right granted
under the Predecessor Plans, or shares of Common Stock owned by a Participant,
are surrendered or tendered to the Company (either directly or by means of
attestation) on or after the Effective Date in payment of the Exercise Price of
an Award or the exercise price of a stock option or stock purchase right
granted under the Predecessor Plans, or of any taxes required to be withheld in
respect of an Award or a stock option or stock purchase right granted under the
Predecessor Plans, in each case, in accordance with the terms and conditions of
the Plan or Predecessor Plans and any applicable Award, or stock option, or
stock purchase right agreement, such surrendered or tendered shares shall again
become available for other Awards under the Plan; provided, further,
that in no event shall such shares increase the number of shares of Common
Stock that may be delivered pursuant to Incentive Stock Options granted under
the Plan. In accordance with (and without limitation upon) the preceding
sentence, if and to the extent an Award under the Plan or a stock option or
stock purchase right granted under the Predecessor Plans expires, terminates or
is canceled or forfeited for any reason whatsoever on or after the Effective
Date without the Participant having received any benefit therefrom, the shares
covered by such Award, stock option, or stock purchase right shall become
available for other Awards under the Plan; provided, however, that in
the case of an award designated as a Performance Compensation Award or any
Option or SAR, cancellation of such Award shall not increase the number of
shares of Common Stock available for Performance Compensation Awards to the
Participant granted such Award in a calendar year under the Plan. For purposes
of the foregoing sentence, a Participant shall not be deemed to have received
any “benefit” (i) in the case of forfeited Restricted Stock by reason of having
enjoyed voting rights and dividend rights prior to the date of forfeiture or
(ii) in the case of an Award, stock option, or stock purchase right canceled by
reason of a new Award, stock option, or stock purchase right being granted
under the Plan or the Predecessor Plans in substitution therefor.

 

(d)   Shares of Common Stock delivered by
the Company in settlement of Awards may be authorized and unissued shares,
shares held in the treasury of the Company, shares purchased on the open market
or by private purchase, or a combination of the foregoing.

 

(e)   Awards may, in the sole discretion
of the Committee, be granted under the Plan to Eligible Persons in assumption
of, or in substitution for, outstanding awards previously granted by the
Company or any Affiliate or an entity acquired by the Company or with which the
Company combines (“Substitute Awards”). The number of shares of Common
Stock underlying any Substitute Awards shall be counted against the aggregate
number of shares of Common Stock available for Awards under Section 5(b) of the
Plan; provided, however,  that Substitute Awards issued in
connection with the assumption of, or the substitution for, outstanding awards
previously granted by an entity that is acquired by the Company or any
Affiliate through a merger or acquisition shall not be counted against the
aggregate number of shares of Common Stock available for Awards under Section
5(b) of the Plan; provided, further, that Substitute Awards issued in
connection with the assumption of, or in substitution for, outstanding options
intended to qualify as “incentive stock options” within the meaning of Section
422 of the Code that were previously granted by an entity that is acquired by
the Company or any Affiliate through a merger or acquisition shall be counted
against the aggregate number of shares of Common Stock available for Incentive
Stock Options under Section 5(b) the Plan.

 

6. Eligibility. Participation shall be limited to Eligible
Persons who have entered into an Award agreement or who have received written
notification from the Committee, or from a person designated by the Committee,
that they have been selected to participate in the Plan.

 

7. Options. (a) Generally. Each Option granted under the Plan shall be
evidenced by an Award agreement. Each Option so granted shall be subject to the
conditions set forth in this Section 7, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
agreement. All Options granted under the Plan shall be Nonstatutory Stock
Options unless the applicable Award agreement expressly states that the Option
is intended to be an Incentive Stock Option. Incentive Stock Options shall be
granted only to Eligible Persons who are employees of the Company or Affiliates
that are parents or subsidiaries of the Company within the meaning of Section
424(e) and (f) of the Code, and no Incentive Stock Option shall be granted to
any Eligible Person who is ineligible to receive an Incentive Stock Option
under the Code. No Option shall be treated as an Incentive Stock Option unless
the Plan has been approved by the shareholders of the Company in a manner
intended to comply with the shareholder approval requirements of Section
422(b)(1) of the Code, provided that any Option intended to be an
Incentive Stock Option shall not fail to be effective solely on account of a
failure to obtain such approval, but rather such Option shall be treated as a
Nonstatutory Stock Option unless and until such approval is obtained. In the
case of an Incentive Stock Option, the terms and conditions of such grant shall
be subject to and comply with such rules as may be prescribed by Section 422 of
the Code. If for any reason an Option intended to be an Incentive Stock Option
(or any portion thereof) shall not qualify as an Incentive Stock Option, then,
to the extent of such nonqualification, such Option or portion thereof shall be
regarded as a Nonstatutory Stock Option appropriately granted under the Plan.
Notwithstanding any designation of Options as Incentive Stock Options, to the
extent that the aggregate Fair Market Value of the Shares with respect to which
such Options are exercisable for the first time during any calendar year (under
all plans of the Company and any Affiliate) exceeds $100,000, such Options
shall be treated as Nonstatutory Stock Options. For purposes of the preceding
sentence, Incentive Stock Options shall be taken into account in the order in
which they were granted, and the Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

 

(b)   Exercise Price. Except as
otherwise provided by the Committee in the case of Substitute Awards, the
exercise price (“Exercise Price”) per share of Common Stock for each
Option shall not be less than 100% of the Fair Market Value of such share
(determined as of the Date of Grant); provided, however,  that in
the case of an Incentive Stock Option granted to an employee who, at the time
of the grant of such Option, owns stock representing more than 10% of the
voting power of all classes of stock of the Company or any Affiliate, the
Exercise Price per share shall be no less than 110% of the Fair Market Value
per share on the Date of Grant.

 

(c)   Vesting and Expiration. (i)
Options shall vest and become exercisable in such manner and on such date or
dates determined by the Committee and shall expire after such period, not to
exceed ten (10) years, as may be determined by the Committee (the “Option
Period”); provided, however, that in the case of an Incentive Stock
Option granted to a Participant who on the Date of Grant owns stock
representing more than 10% of the voting power of all classes of stock of the
Company or any 

 

4

 

Affiliate,
the Option Period shall not exceed five (5) years from the Date of Grant.
Notwithstanding any vesting dates, exercisability period, or Option Period set
by the Committee, the Committee may, in its sole discretion, (A) accelerate the
exercisability of any Option, which acceleration shall not affect the terms and
conditions of such Option other than with respect to exercisability; and (B)
extend the period during which the vested portion of an Option shall be
exercisable after the Participant granted the Option ceases to be a Service
Provider, provided, however, that such period shall not be extended
beyond the earlier of the latest date upon which the Option could have expired
by its original terms or ten (10) years following the date on which the Option
was granted.

 

(ii)   Unless otherwise provided by the
Committee in an Award agreement, the unvested portion of an Option shall expire
on the date the Participant granted the Option ceases to be a Service Provider,
and the vested portion of such Option shall remain exercisable for (A) one year
following termination of the Participant’s relationship as a Service Provider
by reason of such Participant’s death or Disability, but not later than the
expiration of the Option Period or (B) three (3) months following termination
of the Participant’s relationship as a Service Provider for any reason other
than such Participant’s death or Disability, but not later than the expiration
of the Option Period. In the case of any Option granted before the Registration
Date, the following additional requirements shall apply: the vested portion of
such Option shall remain exercisable until (A) at least six (6) months from the
date of Participant’s termination of employment by reason of such Participant’s
death or Disability (or, if earlier, the Registration Date) and (B) at least
thirty (30) days from the date of Participant’s termination of employment for
any reason other than such Participant’s death or Disability, and other than
termination of employment for cause as defined in the applicable Award
agreement (or, if earlier, the Registration Date), provided, however,
that such Option shall not be exercisable after the expiration of the Option
Period. For purposes of the foregoing sentence only, “termination of
employment” shall have the meaning ascribed thereto under section 260.140.41 of
title 10 of the California Code of Regulations.

 

(d)   Method of Exercise and Form of
Payment. No shares of Common Stock shall be delivered pursuant to any
exercise of an Option until payment in full of the Exercise Price therefor is
received by the Company and the Participant has paid to the Company an amount
equal to any Federal, state, local and non-U.S. income and employment taxes
required to be withheld. Options which have become exercisable may be exercised
by delivery of written or electronic notice of exercise to the Company in
accordance with the terms of the Option accompanied by payment of the Exercise
Price. The Exercise Price shall be payable (i) in cash, check, cash equivalent,
and/or shares of Common Stock valued at the Fair Market Value at the time the
Option is exercised (including, pursuant to procedures approved by the
Committee, by means of attestation of ownership of a sufficient number of
shares of Common Stock in lieu of actual delivery of such shares to the
Company); provided that such shares of Common Stock are not subject to any
pledge or other security interest and are Mature Shares; or (ii) by such other
method as the Committee may permit in its sole discretion, including without
limitation: (A) in other property having a fair market value on the date of
exercise equal to the Exercise Price or (B) if there is a public market for the
shares of Common Stock at such time, by means of a broker-assisted “cashless
exercise” pursuant to which the Company is delivered a copy of irrevocable
instructions to a stockbroker to sell the shares of Common Stock otherwise
deliverable upon the exercise of the Option and to deliver promptly to the
Company an amount equal to the Exercise Price or (C) by means of a “net
exercise” procedure approved by the Committee.

 

(e)   Notification upon Disqualifying
Disposition of an Incentive Stock Option. Each Participant awarded an
Incentive Stock Option under the Plan shall notify the Company in writing
immediately after the date he makes a disqualifying disposition of any Common
Stock acquired pursuant to the exercise of such Incentive Stock Option. A
disqualifying disposition is any disposition (including, without limitation,
any sale) of such Common Stock before the later of (A) two (2) years after the
Date of Grant of the Incentive Stock Option or (B) one (1) year after the date
of exercise of the Incentive Stock Option. The Company may, if determined by
the Committee and in accordance with procedures established by the Committee,
retain possession of any Common Stock acquired pursuant to the exercise of an
Incentive Stock Option as agent for the applicable Participant until the end of
the period described in the preceding sentence.

 

(f)    Buyout. The Committee
may, in its sole discretion, at any time before the Registration Date, buy out
for a payment in cash or the delivery of shares of Common Stock or other
property (including, without limitation, another Award) an Option previously
granted, based on such terms and conditions as the Committee shall establish
and communicate to the Participant at the time such offer is made. If the
Committee so determines, the consent of the affected Participant shall not be
required to effect such buyout.

 

(g)   Compliance with Laws, etc.
Notwithstanding the foregoing, in no event shall a Participant be permitted to
exercise an Option in a manner which the Committee determines would violate the
Sarbanes-Oxley Act of 2002, or any other applicable law or the applicable rules
and regulations of the Securities and Exchange Commission or the applicable
rules and regulations of any securities exchange or inter-dealer quotation system
on which the securities of the Company are listed or traded.

 

8. Stock Appreciation Rights. (a) Generally. Each SAR granted under
the Plan shall be evidenced by an Award agreement. Each SAR so granted shall be
subject to the conditions set forth in this Section 8, and to such other
conditions not inconsistent with the Plan as may be reflected in the applicable
Award agreement. Any Option granted under the Plan may include tandem SARs. The
Committee also may award SARs to Eligible Persons independent of any Option.

 

(b)   Strike Price. Except as
otherwise provided by the Committee in the case of Substitute Awards, the
strike price (“Strike Price”) per share of Common Stock for each SAR
shall not be less than 100% of the Fair Market Value of such share (determined
as of the Date of Grant).

 

(c)   Vesting and Expiration. (i) A
SAR granted in connection with an Option shall become exercisable and shall
expire according to the same vesting schedule and expiration provisions as the
corresponding Option. A SAR granted independent of an Option shall vest and
become exercisable and shall expire in such manner and on such date or dates
determined by the Committee and shall expire after such period, not to exceed
ten (10) years, as may be determined by the Committee (the “SAR Period”);
provided, however,  that notwithstanding any vesting dates set by
the Committee, the Committee may, in its sole discretion, accelerate the
exercisability of any SAR, which acceleration shall not affect the terms and
conditions of such SAR other than with respect to exercisability.

 

                (ii)  
Unless otherwise provided by the Committee in an Award agreement, the unvested
portion of a SAR shall expire on the date the Participant granted the SAR
ceases to be a Service Provider, and the vested portion of such SAR shall
remain exercisable for (i) one year following termination of the Participant’s
relationship as a Service Provider by reason of such Participant’s death or
Disability, but not later than the expiration of the SAR Period or (ii) three
(3) months following termination of the Participant’s relationship as a Service
Provider for any reason other than such Participant’s death or Disability, but
not later than the expiration of the SAR Period. In the case of any SAR granted
before the Registration Date, the following additional requirements shall
apply: the vested portion of such SAR shall remain exercisable until (A) at
least six (6) months from the date of Participant’s termination of employment
by reason of such Participant’s death or Disability (or, if earlier, the
Registration Date) and (B) at least thirty (30) days from the date of
Participant’s termination of employment for any reason other than such
Participant’s death or Disability, and other than termination of employment for
cause as defined in the applicable Award agreement (or, if earlier, the
Registration Date), provided, however, that such SAR shall not be
exercisable after the expiration of the SAR Period. For purposes of the
foregoing sentence only, “termination of employment” shall have the meaning
ascribed thereto under section 260.140.41 of title 10 of the California Code of
Regulations.

 

(d)   Method of Exercise. SARs
which have become exercisable may be exercised by delivery of written or
electronic notice of exercise to the Company in accordance with the terms of
the Award, specifying the number of SARs to be exercised and the date on which
such SARs were awarded.

 

(e)   Payment. Upon the exercise of
a SAR, the Company shall pay to the Participant an amount equal to the number
of shares subject to the SAR that are being exercised multiplied by the excess,
if any, of the Fair Market Value of one share of Common Stock on the exercise
date over the Strike Price, less an amount equal to any Federal, state, local
and non-U.S. income and employment taxes required to be withheld. The Company
shall pay such amount in cash, in shares of Common Stock valued at Fair Market
Value, or any combination thereof, as determined by the Committee. Any
fractional shares of Common Stock shall be settled in cash.

 

(f)    Substitution of SARs for
Nonstatutory Stock Options. The Committee shall have the authority in its
sole discretion to substitute, without the consent of the 

 

5

 

affected
Participant or any holder or beneficiary of SARs, SARs settled in shares of
Common Stock (or settled in shares or cash in the sole discretion of the
Committee) for outstanding Nonstatutory Stock Options, provided that (i) the
substitution shall not otherwise result in a modification of the terms of any
such Nonstatutory Stock Option, (ii) the number of shares of Common Stock
underlying the substituted SARs shall be the same as the number of shares of
Common Stock underlying such Nonstatutory Stock Options, and (iii) the Strike
Price of the substituted SARs shall be equal to the Exercise Price of such
Nonstatutory Stock Options; provided, however, that if, in the opinion
of the Company’s independent public auditors, the foregoing provision creates
adverse accounting consequences for the Company, such provision shall be
considered null and void.

 

9. Restricted Stock and Restricted Stock Units. (a) Generally. Each grant of
Restricted Stock and Restricted Stock Units shall be evidenced by an Award
agreement. Each such grant shall be subject to the conditions set forth in this
Section 9, and to such other conditions not inconsistent with the Plan as may
be reflected in the applicable Award agreement.

 

(b)   Stock Certificates; Escrow or
Similar Arrangement. Upon the grant of Restricted Stock, the Committee
shall cause a stock certificate registered in the name of the Participant to be
issued, or shall cause uncertificated shares to be issued pursuant to a direct
registration system adopted by the Company; and, if the Committee determines
that the Restricted Stock shall be held by the Company or in escrow rather than
delivered to the Participant pending the release of the applicable
restrictions, the Committee may require the Participant to additionally execute
and deliver to the Company (i) an escrow agreement satisfactory to the
Committee, if applicable, and (ii) the appropriate stock power (endorsed in
blank) with respect to the Restricted Stock covered by such agreement. If a
Participant shall fail to execute an agreement evidencing an Award of
Restricted Stock and, if applicable, an escrow agreement and blank stock power
within the amount of time specified by the Committee, the Award shall be null
and void. Subject to the restrictions set forth in this Section 9 and the
applicable Award agreement, the Participant generally shall have the rights and
privileges of a shareholder as to such Restricted Stock, including without
limitation the right to vote such Restricted Stock. To the extent shares of
Restricted Stock are forfeited, such shares shall be returned to the Company,
and all rights of the Participant to such shares and as a shareholder with
respect thereto shall terminate without further obligation on the part of the
Company.

 

(c)   Vesting; Acceleration of Lapse of
Restrictions. Unless otherwise provided by the Committee in an Award
agreement, the unvested portion of Restricted Stock and Restricted Stock Units
shall terminate and be forfeited on the date the Participant granted the
applicable Award ceases to be a Service Provider. The Committee may in its sole
discretion accelerate the lapse of any or all of the restrictions on the
Restricted Stock and Restricted Stock Units which acceleration shall not affect
any other terms and conditions of such Awards.

 

(d)   Delivery of Restricted Stock and
Settlement of Restricted Stock Units. (i) Upon the expiration of the
Restricted Period with respect to any shares of Restricted Stock, the
restrictions set forth in the applicable Award agreement shall be of no further
force or effect with respect to such shares, except as set forth in the
applicable Award agreement. If an escrow arrangement is used, upon such
expiration, the Company shall deliver to the Participant, or his beneficiary,
without charge, any shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (rounded
down to the nearest full share). Dividends, if any, that may have been withheld
by the Committee and attributable to any particular share of Restricted Stock
shall be distributed to the Participant in cash or, at the sole discretion of
the Committee, in shares of Common Stock having a Fair Market Value equal to
the amount of such dividends, upon the release of restrictions on such share
and, if such share is forfeited, the Participant shall have no right to such
dividends.

 

(ii)   Unless otherwise provided by the
Committee in an Award agreement that complies with the requirements of Section
409A of the Code and Section 15 of the Plan, upon the expiration of the
Restricted Period with respect to any outstanding Restricted Stock Units, the
Company shall deliver to the Participant, or his beneficiary, without charge,
one share of Common Stock for each such outstanding Restricted Stock Unit; provided,
however, that the Committee may, in its sole discretion, elect to pay cash
or part cash and part Common Stock in lieu of delivering only shares of Common
Stock in respect of such Restricted Stock Units. If a cash payment is made in
lieu of delivering shares of Common Stock, the amount of such payment shall be
equal to the Fair Market Value of the Common Stock as of the date on which the
Restricted Period lapsed with respect to such Restricted Stock Units, less an
amount equal to any Federal, state, local and non-U.S. income and employment
taxes required to be withheld.

 

(e)   Legends on Restricted Stock.
Any certificate representing Restricted Stock awarded under the Plan shall bear
a legend substantially in the form of the following in addition to any other
information the Company deems appropriate until the lapse of all restrictions
with respect to such Common Stock:

 

TRANSFER OF THIS CERTIFICATE AND THE SHARES
REPRESENTED HEREBY IS RESTRICTED PURSUANT TO THE TERMS OF THE INTERNET BRANDS,
INC. 2007 EQUITY PLAN AND A RESTRICTED STOCK AWARD AGREEMENT, DATED AS
OF                       ,
BETWEEN INTERNET BRANDS, INC. AND                       .
A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF INTERNET BRANDS, INC.

 

In the case of any
uncertificated shares of Restricted Stock issued pursuant to a direct
registration system adopted by the Company, the Company shall issue appropriate
stop transfer instructions to its transfer agent, if any, and, if the Company
transfers its own securities, it shall make appropriate notations to the same
effect in its own records.

 

10. Stock Bonus Awards. The Committee may issue unrestricted Common
Stock, or other Awards denominated in Common Stock, under the Plan to Eligible
Persons, alone or in tandem with other Awards, in such amounts as the Committee
shall from time to time in its sole discretion determine. Each Stock Bonus
Award granted under the Plan shall be evidenced by an Award agreement. Each
Stock Bonus Award so granted shall be subject to such conditions not
inconsistent with the Plan as may be reflected in the applicable Award
agreement.

 

11. Performance Compensation Awards. (a) Generally. The Committee shall
have the authority, at the time of grant of any Award described in Sections 7
through 10 of the Plan, to designate such Award as a Performance Compensation
Award intended to qualify as “performance-based compensation” under Section
162(m) of the Code. The Committee shall have the authority to grant cash
bonuses under the Plan with the intent that such bonuses shall qualify for the
exemption from Section 162(m) of the Code provided pursuant to Treasury
Regulation Section 1.162-27(f)(1), for the reliance period described in
Treasury Regulation Section 1.162-27(f)(2). In addition, the Committee shall
have the authority to make an award of a cash bonus to any Participant and
designate such Award as a Performance Compensation Award intended to qualify as
“performance-based compensation” under Section 162(m) of the Code.

 

                (b)   Discretion of
Committee with Respect to Performance Compensation Awards. With regard to a
particular Performance Period, the Committee shall have sole discretion to
select the length of such Performance Period, the type(s) of Performance
Compensation Awards to be issued, the Performance Criteria that will be used to
establish the Performance Goal(s), the kind(s) and/or level(s) of the
Performance Goal(s) that is (are) to apply, and the Performance Formula. Within
the first 90 days of a Performance Period (or, if longer or shorter, within the
maximum period allowed under Section 162(m) of the Code), the Committee shall,
with regard to the Performance Compensation Awards to be issued for such
Performance Period, exercise its discretion with respect to each of the matters
enumerated in the immediately preceding sentence and record the same in
writing.

 

(c)   Performance Criteria. The
Performance Criteria that will be used to establish the Performance Goal(s)
shall be based on the attainment of specific levels of performance of the
Company (and/or one or more Affiliates, divisions or operational units, or any
combination of the foregoing) and shall be limited to the following: (i) net
earnings or net income (before or after taxes); (ii) basic or diluted earnings
per share (before or after taxes); (iii) net revenue or net revenue growth;
(iv) gross profit or gross profit growth; (v) net operating profit (before or
after taxes); (vi) return measures (including, but not limited to, return on
assets, capital, invested capital, equity, or sales); (vii) cash flow
(including, but not limited to, operating cash flow, free cash flow, and cash
flow return on capital); (viii) earnings before or after taxes, 

 

6

 

interest,
depreciation and/or amortization; (ix) gross or operating margins; (x)
productivity ratios; (xi) share price (including, but not limited to, growth
measures and total shareholder return); (xii) expense targets; (xiii) margins;
(xiv) operating efficiency; (xv) objective measures of customer satisfaction;
(xvi) working capital targets; (xvii) measures of economic value added; and
(xviii) enterprise value. Any one or more of the Performance Criteria may be
used on an absolute or relative basis to measure the performance of the Company
and/or one or more Affiliates as a whole or any business unit(s) of the Company
and/or one or more Affiliates or any combination thereof, as the Committee may
deem appropriate, or any of the above Performance Criteria may be compared to
the performance of a group of comparator companies, or a published or special
index that the Committee, in its sole discretion, deems appropriate, or as
compared to various stock market indices. The Committee also has the authority
to provide for accelerated vesting of any Award based on the achievement of
Performance Goals pursuant to the Performance Criteria specified in this
paragraph. To the extent required under Section 162(m) of the Code, the
Committee shall, within the first 90 days of a Performance Period (or, if
longer or shorter, within the maximum period allowed under Section 162(m) of
the Code), define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period.

 

(d)   Modification of Performance
Goal(s). In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing Performance Criteria without
obtaining shareholder approval of such alterations, the Committee shall have
sole discretion to make such alterations without obtaining shareholder
approval. The Committee is authorized at any time during the first 90 days of a
Performance Period (or, if longer or shorter, within the maximum period allowed
under Section 162(m) of the Code), or at any time thereafter to the extent the
exercise of such authority at such time would not cause the Performance
Compensation Awards granted to any Participant for such Performance Period to
fail to qualify as “performance-based compensation” under Section 162(m) of the
Code, in its sole discretion, to adjust or modify the calculation of a
Performance Goal for such Performance Period, based on and in order to
appropriately reflect the following events: (i) asset write-downs; (ii)
litigation or claim judgments or settlements; (iii) the effect of changes in
tax laws, accounting principles, or other laws or regulatory rules affecting
reported results; (iv) any reorganization and restructuring programs; (v)
extraordinary nonrecurring items as described in Accounting Principles Board
Opinion No. 30 (or any successor pronouncement thereto) and/or in management’s
discussion and analysis of financial condition and results of operations
appearing in the Company’s annual report to shareholders for the applicable year;
(vi) acquisitions or divestitures; (vii) any other specific unusual or
nonrecurring events, or objectively determinable category thereof; (viii)
foreign exchange gains and losses; and (ix) a change in the Company’s fiscal
year.

 

(e)   Payment of Performance
Compensation Awards. (i) Condition to Receipt of Payment. Unless
otherwise provided in the applicable Award agreement, a Participant must be
employed by the Company on the last day of a Performance Period to be eligible
for payment in respect of a Performance Compensation Award for such Performance
Period.

 

(ii)   Limitation. A Participant
shall be eligible to receive payment in respect of a Performance Compensation
Award only to the extent that: (A) the Performance Goals for such period are
achieved; and (B) all or some of the portion of such Participant’s Performance
Compensation Award has been earned for the Performance Period based on the
application of the Performance Formula to such achieved Performance Goals.

 

(iii)  Certification. Following the
completion of a Performance Period, the Committee shall review and certify in
writing whether, and to what extent, the Performance Goals for the Performance
Period have been achieved and, if so, calculate and certify in writing that
amount of the Performance Compensation Awards earned for the period based upon
the Performance Formula. The Committee shall then determine the amount of each
Participant’s Performance Compensation Award actually payable for the
Performance Period and, in so doing, may apply Negative Discretion.

 

(iv)  Use of Negative Discretion. In
determining the actual amount of an individual Participant’s Performance
Compensation Award for a Performance Period, the Committee may reduce or
eliminate the amount of the Performance Compensation Award earned under the
Performance Formula in the Performance Period through the use of Negative
Discretion if, in its sole judgment, such reduction or elimination is
appropriate. The Committee shall not have the discretion to (A) grant or
provide payment in respect of Performance Compensation Awards for a Performance
Period if the Performance Goals for such Performance Period have not been
attained; or (B) increase a Performance Compensation Award above the applicable
limitations set forth in Section 5 of the Plan.

 

(f)    Timing of Award Payments.
Performance Compensation Awards granted for a Performance Period shall be paid
to Participants as soon as administratively practicable following completion of
the certifications required by this Section 11. Any Performance Compensation
Award that has been deferred shall not (between the date as of which the Award
is deferred and the payment date) increase (i) with respect to a Performance
Compensation Award that is payable in cash, by a measuring factor for each
fiscal year greater than a reasonable rate of interest set by the Committee or
(ii) with respect to a Performance Compensation Award that is payable in shares
of Common Stock, by an amount greater than the appreciation of a share of
Common Stock from the date such Award is deferred to the payment date.

 

12. Changes in Capital Structure and Similar Events. (a) Subject to this Section 12, (i) Awards
granted under the Plan and any agreements evidencing such Awards, (ii) any or
all of the number of shares of Common Stock or other securities of the Company
(or number and kind of other securities or other property) which may be
delivered in respect of Awards or with respect to which Awards may be granted
under the Plan (including, without limitation, any or all of the limitations
under Section 5 of the Plan) and (iii) the terms of any outstanding Award,
including, without limitation, (A) the number of shares of Common Stock or
other securities of the Company (or number and kind of other securities or
other property) subject to outstanding Awards or to which outstanding Awards
relate, (B) the Exercise Price or Strike Price with respect to any Award, or
(C) any applicable performance measures (including, without limitation,
Performance Criteria and Performance Goals) shall be adjusted or substituted,
in such manner as the Committee may determine, as to the number, price, or kind
of share of Common Stock or other consideration subject to such Awards or as
otherwise determined by the Committee to be equitable, to preserve the economic
value of such Awards (i.e., such that such value shall be neither increased nor
decreased on account of such transaction or event) (1) in the event of changes
in the outstanding Common Stock or in the capital structure of the Company by reason
of stock or extraordinary cash dividends, stock splits, reverse stock splits,
recapitalization, reclassification, reorganizations, mergers, consolidations,
separations, combinations, exchanges, spin-offs, liquidations, other
substantial distributions of the assets of the Company, or other relevant
corporate transactions or changes in capitalization occurring after the Date of
Grant of any such Award or (2) in the event of any change in applicable laws or
any change in circumstances which results in or would result in any substantial
dilution or enlargement of the rights granted to, or available for,
Participants, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan. In the event that a stock split,
reverse stock split, stock dividend, recapitalization, combination,
reclassification, or other distribution of securities of the Company of or on
Common Stock without receipt of consideration of the Company occurs prior to
the Registration Date, a proportionate adjustment shall be made to (1) the
number of shares of Common Stock purchasable under any Option or SAR, and the
Exercise Price or Strike Price thereof, or (2) the number of shares of Common
Stock allocated to a Participant under any other Award.

 

(b)   Any adjustment in Incentive Stock
Options under this Section 12 shall be made only to the extent not constituting
a “modification” within the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 12 shall be made in a manner which does not
adversely affect the exemption provided pursuant to Rule 16b-3 under the
Exchange Act. Further, (i) with respect to any Award granted during the
reliance period described in Treasury Regulation Section 1.162-27(f)(2) which
is intended to qualify for the exemption from Section 162(m) of the Code
provided pursuant to Treasury Regulation Section 1.162-27(f)(1) or any Award
granted on or after the Section 162(m) Effective Date which is intended to
qualify as “performance-based compensation” under Section 162(m) of the Code,
such adjustments or substitutions shall be made only to the extent that the
Committee determines that such adjustments or substitutions may be made without
causing the Company to be denied a tax deduction on account of Section 162(m)
of the Code; and (ii) with respect to any Section 409A Award as defined in
Section 15(a) of the Plan, such adjustments or modifications shall be made only
to the extent that the Committee determines that such adjustments or
substitutions may be made without causing such Section 409A Award to violate
the requirements of Section 409A of the Code and Section 15 of the Plan. The
Company shall give each Participant notice of an adjustment hereunder and, upon
notice, such adjustment shall be conclusive and binding for all purposes.

 

(c)   Notwithstanding paragraphs (a) and
(b) above, in the event of any of the following:

 

7

 

A. The Company is merged or consolidated with
another corporation or entity and, in connection therewith, consideration is
received by shareholders of the Company in a form other than stock or other
equity interests of the surviving entity;

 

B. All or substantially all of the stock or assets
of the Company are acquired by another person;

 

C. The reorganization or liquidation of the Company;
or

 

D. The Company shall enter into a written agreement
to undergo an event described in clauses A, B or C above,

 

then
the Committee may, in its discretion and upon at least 10 days advance notice
to the affected persons, cancel any outstanding Awards and cause to be paid to
the holders thereof, in cash or stock, or any combination thereof, the value of
such Awards (whether or not vested or exercisable) based upon the price per
share of Common Stock received or to be received by other shareholders of the
Company in the event. The terms of this Section 12 may be varied by the
Committee in any particular Award agreement.

 

13. Effect of Change of Control. Except to the extent otherwise provided in
an Award agreement, in the event of a Change of Control, notwithstanding any
provision of the Plan to the contrary, the Committee may in its sole discretion
provide that, with respect to any particular outstanding Award or Awards:

 

(a)   all then-outstanding Options and
SARs shall become immediately exercisable as of immediately prior to the Change
of Control with respect to up to 100 percent of the shares subject to such
Option or SAR;

 

(b)   the Restricted Period shall expire
as of immediately prior to the Change of Control with respect to up to 100
percent of then-outstanding shares of Restricted Stock or Restricted Stock
Units (including without limitation a waiver of any applicable Performance
Goals); and

 

(c)   all incomplete Performance Periods in
effect on the date the Change of Control occurs shall end on such date, and the
Committee may (i) determine the extent to which Performance Goals with respect
to each such Performance Period have been met based upon such audited or
unaudited financial information or other information then available as it deems
relevant and (ii) cause the Participant to receive partial or full payment of
Awards for each such Performance Period based upon the Committee’s
determination of the degree of attainment of Performance Goals, or assuming
that the applicable “target” levels of performance have been attained, or on
such other basis determined by the Committee.

 

To the extent practicable, any actions taken by the
Committee under the immediately preceding clauses (a) through (c) shall occur
in a manner and at a time which allows affected Participants the ability to
participate in the Change of Control transaction with respect to the Common
Stock subject to their Awards.

 

14. Amendments and Termination. (a) Amendment and Termination of the
Plan. The Board may amend, alter, suspend, discontinue, or terminate the
Plan or any portion thereof at any time; provided that no such
amendment, alteration, suspension, discontinuation or termination shall be made
without shareholder approval if such approval is necessary to comply with any
tax or regulatory requirement applicable to the Plan (including, without
limitation, as necessary to comply with any rules or requirements of any
securities exchange or inter-dealer quotation system on which the shares of
Common Stock may be listed or quoted or to prevent the Company from being
denied a tax deduction under Section 162(m) of the Code); provided, further,
that any such amendment, alteration, suspension, discontinuance or termination
that would materially and adversely affect the rights of any Participant or any
holder or beneficiary of any Award theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder or
beneficiary.

 

(b)   Amendment of Award Agreements.
The Committee may, to the extent consistent with the terms of any applicable
Award agreement, waive any conditions or rights under, amend any terms of, or
alter, suspend, discontinue, cancel or terminate, any Award theretofore granted
or the associated Award agreement, prospectively or retroactively; provided
that any such waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination that would materially and adversely affect the
rights of any Participant with respect to any Award theretofore granted shall
not to that extent be effective without the consent of the affected
Participant; provided, further, that without shareholder approval,
except as otherwise permitted under Section 12 of the Plan, (i) no amendment or
modification may reduce the Exercise Price of any Option or the Strike Price of
any SAR, (ii) the Committee may not cancel any outstanding Option or SAR and
replace it with a new Option or SAR (with a lower Exercise Price or Strike
Price, as the case may be) in a manner which would either (A) be reportable on
the Company’s proxy statement as Options which have been “repriced” (as such
term is used in Item 402 of Regulation S-K promulgated under the Exchange Act)
or (B) result in any “repricing” for financial statement reporting purposes (or
otherwise cause the Award to fail to qualify for equity accounting treatment),
and (iii) the Committee may not take any other action which is considered a
“repricing” for purposes of the shareholder approval rules of the applicable
securities exchange or inter-dealer quotation system on which the Common Stock
is listed or quoted.

 

15. Compliance with Section 409A of the Code. (a) Awards Subject to Code Section 409A.
Any Award that constitutes, or provides for, a deferral of compensation subject
to Section 409A of the Code (a “Section 409A Award”) shall satisfy the
requirements of Section 409A of the Code, the Treasury Regulations thereunder,
and this Section 15, to the extent applicable. The Award agreement with respect
to a Section 409A Award shall incorporate the terms and conditions required by
Section 409A of the Code, the Treasury Regulations thereunder, and this Section
15.

 

(b)   Distributions Under a Section
409A Award. (i) Subject to paragraph (ii) below, any shares of Common
Stock, cash, or other property or amounts to be paid or distributed upon the
grant, issuance, vesting, exercise, or payment of a Section 409A Award shall be
distributed in accordance with the requirements of Section 409A(a)(2) of the
Code, and shall not be distributed earlier than: (A) the Participant’s
separation from service, as determined by the Secretary of the Treasury, (B)
the date the Participant becomes disabled within the meaning of Section
409A(a)(2)(C) of the Code, (C) the Participant’s death, (D) a specified time
(or pursuant to a fixed schedule) specified under the Award agreement at the
date of the deferral of such compensation, (E) a change in the ownership or
effective control of the Company or an Affiliate, or in the ownership of a
substantial portion of the assets of the Company or an Affiliate, to the extent
permitted under Section 409A of the Code and Treasury Regulation Section
1.409A-3(i)(5), or (F) the occurrence of an unforeseeable emergency with
respect to the Participant.

 

                (ii)   In the case of
a Participant who is a “Specified Employee,” the requirement of clause (A) of
paragraph (i) above shall be met only if the distributions with respect to the
Section 409A Award may not be made before the date which is six months after
the Participant’s separation from service (or, if earlier, the date of the
Participant’s death). For purposes of this paragraph (ii), a Holder shall be a
Specified Employee if such holder is a key employee (as defined in Section
416(i) of the Code without regard to paragraph (5) thereof) of a
corporation any stock in which is publicly traded on an established securities
market or otherwise, as determined under Section 409A(a)(2)(B)(i) of the Code.

 

(iii)  The requirement of paragraph (i)(F) above
shall be met only if, as determined under Section 409A(a)(2)(B)(ii) of the
Code, the amounts distributed with respect to the unforeseeable emergency do
not exceed the amounts necessary to satisfy such unforeseeable emergency plus
amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such unforeseeable
emergency is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship).

 

(iv)  For purposes of this Section 15, the
terms specified herein shall have the respective meanings ascribed thereto
under Section 409A of the Code and the Treasury Regulations thereunder.

 

8

 

(c)   Prohibition on Acceleration of
Benefits. The time or schedule of any distribution or payment of any shares
of Common Stock, cash, or other property or amounts under a Section 409A Award
shall not be accelerated, except as otherwise permitted under Section
409A(a)(3) of the Code.

 

(d)   Elections Under Section 409A
Awards. (i) Any deferral election provided under or with respect to an
Award to any Eligible Person or Participant shall satisfy the requirements of
Section 409A(a)(4)(B) of the Code, to the extent applicable, and, except as
otherwise permitted under sub-paragraph (A) or (B) below, any such deferral
election with respect to compensation for services performed during a taxable
year shall be made not later than the close of the preceding taxable year, or
at such other time as provided in Treasury Regulations.

 

(A)  In the case of the first year in which an
Eligible Person or Participant becomes eligible to participate in the Plan, any
such deferral election may be made with respect to services to be performed
subsequent to the election within thirty (30) days after the date the Eligible
Person or Participant becomes eligible to participate in the Plan, as provided
under Section 409A(a)(4)(B)(ii) of the Code.

 

(B)  In the case of any performance-based
compensation based on services performed by an Eligible Person or Participant
over a period of at least twelve (12) months, any such deferral election may be
made no later than six (6) months before the end of the period, as provided
under Section 409A(a)(4)(B)(iii) of the Code.

 

(ii)   In the event that a Section 409A
Award permits, under a subsequent election by the Participant, a delay in a distribution
or payment of any shares of Common Stock, cash, or other property or amounts
under such Section 409A Award, or a change in the form of distribution or
payment, such subsequent election shall satisfy the requirements of Section
409A(a)(4)(C) of the Code, and:

 

(A)  such subsequent election may not take
effect until at least twelve (12) months after the date on which the election
is made,

 

(B)  in the case such subsequent election
relates to a distribution or payment not described in clauses (B), (C), or (F)
of paragraph (b)(i) above, the first payment with respect to such election may
be deferred for a period of not less than five (5) years from the date such
distribution or payment otherwise would have been made, and

 

(C)  in the case such subsequent election
relates to a distribution or payment described in clause (D) of paragraph
(b)(i) above, such election may not be made less than twelve (12) months prior
to the date of the first scheduled distribution or payment under clause (D) of
paragraph (b)(i).

 

(e)   Compliance in Form and Operation.
A Section 409A Award, and any election under or with respect to such Section
409A Award, shall comply in form and operation with the requirements of Section
409A of the Code and the Treasury Regulations thereunder.

 

16. General. (a) Award Agreements. Each Award under the Plan shall be
evidenced by an Award agreement, which shall be delivered to the Participant
and shall specify the terms and conditions of the Award and any rules
applicable thereto, including without limitation, the effect on such Award of a
Participant’s death, Disability, or termination of relationship as Service
Provider, or of such other events as may be determined by the Committee.

 

(b)   Nontransferability. (i) Each
Award shall be exercisable only by a Participant during the Participant’s
lifetime, or, if permissible under applicable law, by the Participant’s legal
guardian or representative. No Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant other
than by will or by the laws of descent and distribution and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or an Affiliate; provided
that the designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance.

 

(ii)   Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit Awards (other than Incentive
Stock Options) to be transferred by a Participant, without consideration or
pursuant to a domestic relations order, subject to such rules as the Committee
may adopt consistent with any applicable Award agreement to preserve the
purposes of the Plan, to: (A) any person who is a “family member” of the
Participant, as such term is used in the instructions to Form S-8 under the
Securities Act (collectively, the “Immediate Family Members”); (B) a
trust solely for the benefit of the Participant and his or her Immediate Family
Members; (C) a partnership or limited liability company whose only partners or
shareholders are the Participant and his or her Immediate Family Members; or
(D) on or after the Registration Date, any other transferee as may be approved
either (I) by the Board or the Committee in its sole discretion, or (II) as
provided in the applicable Award agreement; (each transferee described in
clauses (A), (B), (C) or (D) above is hereinafter referred to as a “Permitted
Transferee”); provided that the Participant gives the Committee
advance written notice describing the terms and conditions of the proposed
transfer and the Committee notifies the Participant in writing that such a
transfer would comply with the requirements of the Plan.

 

(iii)  The terms of any Award transferred in
accordance with the immediately preceding sentence shall apply to the Permitted
Transferee and any reference in the Plan, or in any applicable Award agreement,
to a Participant shall be deemed to refer to the Permitted Transferee, except
that (A) Permitted Transferees shall not be entitled to transfer any Award,
other than by will or the laws of descent and distribution; (B) Permitted
Transferees shall not be entitled to exercise any transferred Option unless
there shall be in effect a registration statement on an appropriate form
covering the shares of Common Stock to be acquired pursuant to the exercise of
such Option if the Committee determines, consistent with any applicable Award
agreement, that such a registration statement is necessary or appropriate; (C)
the Committee or the Company shall not be required to provide any notice to a
Permitted Transferee, whether or not such notice is or would otherwise have
been required to be given to the Participant under the Plan or otherwise; and
(D) the consequences of the termination of the Participant’s relationship as a
Service Provider under the terms of the Plan and the applicable Award agreement
shall continue to be applied with respect to the Participant, including,
without limitation, that an Option shall be exercisable by the Permitted
Transferee only to the extent, and for the periods, specified in the Plan and
the applicable Award agreement.

 

(c)   Dividends and Dividend
Equivalents. In the sole discretion of the Committee, an Award may provide
a Participant with dividends or dividend equivalents, payable in cash, shares
of Common Stock, other securities, other Awards or other property, on a current
or deferred basis, on such terms and conditions as may be determined by the Committee
in its sole discretion, including without limitation, payment directly to the
Participant, withholding of such amounts by the Company subject to vesting of
the Award or reinvestment in additional shares of Common Stock, Restricted
Stock or other Awards.

 

(d)   Tax Withholding. (i) A
Participant shall be required to pay to the Company or any Affiliate, and the
Company or any Affiliate shall have the right and is hereby authorized to
withhold, from any cash, shares of Common Stock, other securities or other
property deliverable under any Award or from any compensation or other amounts
owing to a Participant, the amount (in cash, Common Stock, other securities or
other property) of any required withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of the Committee or
the Company to satisfy all obligations for the payment of such withholding and
taxes.

 

(ii)   Without limiting the generality of
clause (i) above, the Committee may, in its sole discretion, permit a
Participant to satisfy, in whole or in part, the foregoing withholding
liability by (A) the delivery of shares of Common Stock (which are not subject
to any pledge or other security interest and are Mature Shares) owned by the
Participant having a Fair Market Value equal to such withholding liability or
(B) having the Company withhold from the number of shares of Common Stock
otherwise issuable or deliverable pursuant to the exercise or settlement of the
Award a number of shares with a Fair Market Value equal to such withholding
liability (but no more than the minimum required statutory withholding
liability).

 

9

 

(e)   No Claim to Awards; No Rights to
Continued Employment; Waiver. No employee of the Company or an Affiliate,
or other person, shall have any claim or right to be granted an Award under the
Plan or, having been selected for the grant of an Award, to be selected for a
grant of any other Award. There is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards. The terms and conditions of
Awards and the Committee’s determinations and interpretations with respect
thereto need not be the same with respect to each Participant and may be made
selectively among Participants, whether or not such Participants are similarly
situated. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company or an Affiliate, nor shall it be construed as giving any Participant
any rights to continued service on the Board. The Company or any of its
Affiliates may at any time dismiss a Participant from employment or discontinue
any consulting relationship, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or any Award agreement.
By accepting an Award under the Plan, a Participant shall thereby be deemed to
have waived any claim to continued exercise or vesting of an Award or to
damages or severance entitlement related to non-continuation of the Award
beyond the period provided under the Plan or any Award agreement,
notwithstanding any provision to the contrary in any written employment
contract or other agreement between the Company and its Affiliates and the
Participant, whether any such agreement is executed before, on or after the
Date of Grant.

 

(f)    International Participants.
With respect to Participants who reside or work outside of the United States of
America and who are not (and who are not expect to be) “covered employees”
within the meaning of Section 162(m) of the Code, the Committee may in its sole
discretion amend the terms of the Plan or outstanding Awards with respect to
such Participants in order to conform such terms with the requirements of local
law or to obtain more favorable tax or other treatment for a Participant, the
Company or its Affiliates.

 

(g)   Designation and Change of
Beneficiary. Each Participant may file with the Committee a written
designation of one or more persons as the beneficiary(ies) who shall be
entitled to receive the amounts payable with respect to an Award, if any, due
under the Plan upon his death. A Participant may, from time to time, revoke or
change his beneficiary designation without the consent of any prior beneficiary
by filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant’s death, and in no event
shall it be effective as of a date prior to such receipt. If no beneficiary
designation is filed by a Participant, the beneficiary shall be deemed to be
his or her spouse or, if the Participant is unmarried at the time of death, his
or her estate.

 

(h)   Termination of Employment.
Unless determined otherwise by the Committee, (i) a temporary absence from employment
or service approved by the Company due to illness, vacation, or leave of
absence; a transfer between locations of the Company or an Affiliate; a
transfer from employment or service with the Company to employment or service
with an Affiliate (or vice-versa); or a transfer from employment or service
with an Affiliate to employment or service with another Affiliate shall not be
considered a termination of the Participant’s relationship as a Service
Provider; and (ii) if a Participant’s employment with the Company and its
Affiliates terminates, but such Participant continues to provide services to
the Company and its Affiliates in a non-employee capacity as a Service Provider
(or vice-versa), such change in status shall not be considered a termination of
the Participant’s relationship as a Service Provider. Notwithstanding the
foregoing, with respect to any Section 409A Award, a termination of the
relationship as a Service Provider shall be considered to occur if and only if
there has been a separation from service within the meaning of Section 409A of
the Code.

 

(i)    No Rights as a Shareholder.
Except as otherwise specifically provided in the Plan or any Award agreement,
no person shall be entitled to the privileges of ownership in respect of shares
of Common Stock which are subject to Awards hereunder until such shares have
been issued or delivered to that person.

 

(j)    Government and Other
Regulations. (i) The obligation of the Company to settle Awards in Common
Stock or other consideration shall be subject to all applicable laws, rules,
and regulations, and to such approvals by governmental agencies as may be
required. Notwithstanding any terms or conditions of any Award to the contrary,
the Company shall be under no obligation to offer to sell or to sell, and shall
be prohibited from offering to sell or selling, any shares of Common Stock
pursuant to an Award unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or
unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act any of the shares of
Common Stock to be offered or sold under the Plan. The Committee shall have the
authority to provide that all shares of Common Stock or other securities of the
Company or any Affiliate delivered under the Plan shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable
under the Plan, the applicable Award agreement, the Federal securities laws, or
the rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or inter-dealer quotation system upon which
such shares or other securities are then listed or quoted and any other
applicable Federal, state, local or non-U.S. laws, and, without limiting the
generality of Section 9 of the Plan, the Committee may cause a legend or
legends to be put on any certificates evidencing such shares to make
appropriate reference to such restrictions. Notwithstanding any provision in
the Plan to the contrary, the Committee reserves the right to add any
additional terms or provisions to any Award granted under the Plan that it in
its sole discretion deems necessary or advisable in order that such Award
complies with the legal requirements of any governmental entity to whose
jurisdiction the Award is subject.

 

(ii)   The Committee may cancel an Award
or any portion thereof if it determines, in its sole discretion, that legal or
contractual restrictions and/or blockage and/or other market considerations
would make the Company’s acquisition of shares of Common Stock from the public
markets, the Company’s issuance of Common Stock to the Participant, the
Participant’s acquisition of Common Stock from the Company and/or the Participant’s
sale of Common Stock to the public markets, illegal, impracticable or
inadvisable. If the Committee determines to cancel all or any portion of an
Award in accordance with the foregoing, the Company shall pay to the
Participant an amount equal to the excess of (A) the aggregate Fair Market
Value of the shares of Common Stock subject to such Award or portion thereof
canceled (determined as of the applicable exercise date, or the date that the
shares would have been vested or delivered, as applicable), over (B) the
aggregate Exercise Price or Strike Price (in the case of an Option or SAR,
respectively) or any amount payable as a condition of delivery of shares of
Common Stock (in the case of any other Award). Such amount shall be delivered
to the Participant as soon as practicable following the cancellation of such
Award or portion thereof, except that in the case of a Section 409A Award, the
timing of such payment shall be subject to the requirements of Section 409A of
the Code.

 

                (k)   No Code Section
83(b) Elections Without Consent of Company. No election under Section 83(b)
of the Code or under a similar provision of law may be made unless expressly
permitted by the terms of the applicable Award agreement or by action of the
Committee in writing prior to the making of such election. If a Participant, in
connection with the acquisition of shares of Common Stock under the Plan or
otherwise, is expressly permitted to make such election and the Participant
makes the election, the Participant shall notify the Company of such election
within ten (10) days of filing notice of the election with the Internal Revenue
Service or other governmental authority, in addition to any filing and
notification required pursuant to Section 83(b) of the Code or other applicable
provision.

 

(l)    Payments to Persons Other
Than Participants. If the Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, or has died, then any payment due to such
person or his estate (unless a prior claim therefor has been made by a duly
appointed legal representative) may, if the Committee so directs the Company,
be paid to his spouse, child, relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of the Committee
and the Company therefor.

 

(m)  Nonexclusivity of the Plan. Neither
the adoption of this Plan by the Board nor the submission of this Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan (subject to Section 17
of the Plan), and such arrangements may be either applicable generally or only
in specific cases.

 

10

 

(n)   No Trust or Fund Created.
Neither the Plan nor any Award shall create or be construed to create a trust
or separate fund of any kind or a fiduciary relationship between the Company or
any Affiliate, on the one hand, and a Participant or other person or entity, on
the other hand. No provision of the Plan or any Award shall require the
Company, for the purpose of satisfying any obligations under the Plan, to
purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence of
the existence of a segregated or separately maintained or administered fund for
such purposes. Participants shall have no rights under the Plan other than as
unsecured general creditors of the Company, except that insofar as they may
have become entitled to payment of additional compensation by performance of
services, they shall have the same rights as other employees under general law.

 

(o)   Reliance on Reports. Each
member of the Committee and each member of the Board shall be fully justified
in acting or failing to act, as the case may be, and shall not be liable for
having so acted or failed to act in good faith, in reliance upon any report
made by the independent public accountant of the Company and its Affiliates
and/or any other information furnished in connection with the Plan by any agent
of the Company or the Committee or the Board, other than himself.

 

(p)   Relationship to Other Benefits.
No payment under the Plan shall be taken into account in determining any
benefits under any pension, retirement, profit sharing, group insurance or
other benefit plan of the Company except as otherwise specifically provided in
such other plan.

 

(q)   Governing Law. The Plan shall
be governed by and construed in accordance with the internal laws of the State
of California applicable to contracts made and performed wholly within the
State of California, without giving effect to the conflict of laws provisions
thereof.

 

(r)   Severability. If any
provision of the Plan or any Award or Award agreement is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to
any person or entity or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall be construed
or deemed amended to conform to the applicable laws, or if it cannot be construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be construed
or deemed stricken as to such jurisdiction, person or entity or Award and the
remainder of the Plan and any such Award shall remain in full force and effect.

 

(s)   Obligations Binding on
Successors. The obligations of the Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company.

 

(t)    Code Section 162(m)
Re-approval. If so determined by the Committee, (i) the Plan shall be
submitted for re-approval by the shareholders of the Company no later than the
first meeting of shareholders at which directors are to be elected that occurs
after the close of the third calendar year following the calendar year in which
the IPO is consummated, and (ii) the provisions of the Plan regarding
Performance Compensation Awards shall be submitted for re-approval by the
shareholders of the Company no later than the first shareholder meeting that
occurs in the fifth year following the year that shareholders previously
approved such provisions following the IPO, in each case for purposes of
exempting certain Awards granted after such time from the deduction limitations
of Section 162(m) of the Code. Nothing in this paragraph, however, shall affect
the validity of Awards granted after such time if such shareholder approval has
not been obtained.

 

(u)   Expenses; Gender; Titles and
Headings. The expenses of administering the Plan shall be borne by the
Company and its Affiliates. Masculine pronouns and other words of masculine
gender shall refer to both men and women. The titles and headings of the
sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings shall
control.

 

17. Predecessor Plans. No new stock options or stock purchase
rights will be granted under the Predecessor Plans on or after the Effective
Date.

 

* * *

 

11

 

INTERNET BRANDS, INC.

2007 EQUITY PLAN

RESTRICTED STOCK AGREEMENT

 

Unless
otherwise defined herein, the terms defined in the Internet Brands, Inc.
2007 Equity Plan (the “Plan”) shall have the same defined meanings in this
Restricted Stock Agreement (the “Agreement”).

 

I.              NOTICE
OF RESTRICTED STOCK GRANT

 

	
  Participant:

  	
                                                      

  
	
  Address:

  	
                                                      

  
	
   

  	
   

  
	
   

  	
                                                      

  

 

The
above named Participant has been granted an Award of Restricted Stock of the
Company, subject to the terms and conditions of the Plan and this Agreement, as
follows:

 

	
  Grant
  Number

  	
   

  	
                            

  
	
  Date
  of Grant

  	
   

  	
                            

  
	
  Vesting
  Commencement Date

  	
                                

  
	
  Number
  of Shares

  	
                                

  
	
  Vesting
  Schedule:

  	
   

  

 

Subject to accelerated vesting as set forth in this
Agreement or in the Plan, the Restricted Stock shall vest according to the
following vesting schedule, subject also to Participant having been
continuously a Service Provider from the Date of Grant through the date such
vesting is scheduled to occur:

 

**VESTING
SCHEDULE**

 

II.            TERMS
AND CONDITIONS OF RESTRICTED STOCK GRANT

 

1.             Grant of Restricted Stock.  The Committee hereby grants to the
Participant named in Section I herein, for past services and as a separate
incentive in connection with his or her services and not in lieu of any salary
or other compensation for his or her services, the Number of Shares of
Restricted Stock (the “Shares”) as set forth in Section I herein, subject
to the terms and conditions of this Agreement and the Plan, which is
incorporated herein by reference.

 

2.             Escrow of Shares.

 

a.             All Shares awarded by this
Agreement shall, upon execution of this Agreement, be delivered to and
deposited with an escrow holder designated by the Company (the “Escrow Holder”).  The Shares shall be held by the Escrow Holder
until such time as the Shares vest or the date Participant ceases to be a
Service Provider.

 

12

 

b.             The Escrow Holder shall not
be liable for any act it may do or omit to do with respect to holding the
Shares in escrow while acting in good faith and in the exercise of its judgment.

 

c.             Upon the termination of
Participant’s relationship as a Service Provider for any reason, the Escrow
Holder, upon receipt of written notice of such termination, shall take all
steps necessary to accomplish the transfer of the unvested Shares to the
Company.  Participant hereby appoints the
Escrow Holder with full power of substitution, as Participant’s true and lawful
attorney-in-fact with irrevocable power and authority in the name and on behalf
of Participant, to take any action and execute all documents and instruments,
including without limitation stock powers which may be necessary to transfer
such unvested Shares to the Company upon such termination.

 

d.             The Escrow Holder shall take
all steps necessary to accomplish the transfer of Shares to Participant after
they vest following Participant’s request that the Escrow Holder do so.

 

e.             Except as otherwise provided
in this Agreement or the Plan, Participant shall have all the rights of a
stockholder with respect to the Shares while they are held in escrow, including
without limitation the right to vote such Shares.

 

3.             Vesting Schedule.  Except as provided in Section II.4 and
subject to Section II.5 of this Agreement, the Shares awarded by this
Agreement shall vest in accordance with the Vesting Schedule set forth in Section I
herein.  Shares scheduled to vest on a
certain date or upon the occurrence of a certain condition shall not vest in
Participant in accordance with any of the provisions of this Agreement unless
Participant will have been continuously a Service Provider from the Date of
Grant through the date such vesting is scheduled to occur.

 

4.             Acceleration of Vesting.  The Committee, in its discretion, may
accelerate the vesting of the balance, or some lesser portion of the balance,
of the unvested Shares at any time, subject to the terms of the Plan.  If so accelerated, such Shares shall be
considered as having vested as of the date or upon the occurrence of the
condition specified by the Committee.

 

5.             Forfeiture upon Termination
of Status as a Service Provider.  Notwithstanding any contrary provision of
this Agreement, the balance of the Shares that have not vested at the time of
the termination of Participant’s relationship as a Service Provider for any
reason shall be forfeited and automatically transferred to and reacquired by
the Company at no cost to the Company upon the date of such termination, and
Participant shall have no further rights thereunder.

 

6.             Dividends.  Any cash dividends, additional shares of
Common Stock, other securities of the Company, or other property distributed
with respect to the Shares prior to the date the Shares vest shall be subject
to the same restrictions, terms, and conditions as the Shares under this
Agreement and the Plan, including without limitation the provisions of this
Agreement relating to vesting, forfeiture, escrow, and, with respect to shares
or other securities of the Company, transferability.

 

13

 

7.             Withholding of Taxes.  Notwithstanding any contrary provision of
this Agreement, no Shares shall be released from the escrow established
pursuant to Section II.2 of this Agreement unless and until satisfactory
arrangements (as determined by the Committee) will have been made by
Participant with respect to the payment of income, employment, and other taxes
which the Company determines must be withheld with respect to such Shares.  To the extent determined appropriate by the
Company in its discretion, it shall have the right (but not the obligation) to
satisfy any tax withholding obligations by reducing the number of Shares
otherwise deliverable to Participant.  If
Participant fails to make satisfactory arrangements for the payment of any
required tax withholding obligations hereunder at the time any applicable
Shares otherwise are scheduled to vest pursuant to Sections II.3 and II.4 of
this Agreement, Participant acknowledges and agrees that Participant shall
permanently forfeit such Shares and such Shares shall be returned to the
Company at no cost to the Company.

 

8.             Additional Conditions to
Issuance and Release from Escrow.  The Company shall not be required to issue
any Shares hereunder or to release such Shares from the escrow established
pursuant to Section II.2 of this Agreement unless such issuance or release
complies with all applicable U.S. federal and state laws, the requirements of
any stock exchange or quotation system on which the Common Stock is listed or
quoted, and the applicable laws of any other jurisdiction where Shares are
granted under the Plan.  The Committee
may, in its sole discretion and in connection with the issuance or delivery of
Shares in compliance with applicable laws, rules, and regulations, postpone the
issuance or delivery of Shares as the Committee may consider appropriate,
require Participant to make such representations and furnish such information
as it may consider appropriate, and cause such legends to be put on any
certificates evidencing the Shares or subject the Shares to such stop transfer
orders or other restrictions as it may consider appropriate.

 

9.             Changes in Capital
Structure.  In the event
of any stock dividend, stock split, reverse stock split, recapitalization,
reclassification, reorganization, merger, consolidation, separation,
combination, exchange, spin-off, liquidation, other substantial distribution of
the assets of the Company, or other relevant corporate transaction or change in
capitalization occurring after the Date of Grant and affecting the Shares of
Restricted Stock, the Shares shall be increased, reduced, or otherwise changed
as to the number or kind of share in the same manner as other shares of Common
Stock outstanding.  If by virtue of any
such change Participant shall in his or her capacity as owner of unvested
Shares be entitled to new or additional or different shares of stock, cash, or
securities (other than rights or warrants to purchase securities), such new or
additional or different shares, cash, or securities shall thereupon be
considered to be unvested Shares of Restricted Stock and shall be subject to
all of the conditions and restrictions which were applicable to the unvested
Shares pursuant to this Agreement.  If
Participant receives rights or warrants with respect to any unvested Shares, such
rights or warrants may be held or exercised by Participant, provided that until
such exercise any such rights or warrants and after such exercise any shares or
other securities acquired by the exercise of such rights or warrants shall be
considered to be unvested Shares of Restricted Stock and shall be subject to
all of the conditions and restrictions which were applicable to the unvested
Shares of Restricted Stock pursuant to this Agreement.  Subject to the terms of the Plan, the
Committee in its absolute discretion at any time may accelerate the vesting of
all or any portion of such new or additional shares of stock, cash, securities,
rights or warrants to purchase securities or shares, or other securities
acquired by the exercise of such rights or warrants.

 

14

 

10.           Non-Transferability of
Unvested Restricted Stock.  The unvested Shares subject to this Agreement
may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution.  If Participant
is deceased, any distribution or delivery to be made to Participant under this
Agreement shall be made to Participant’s designated beneficiary, or if no
beneficiary survives Participant, the administrator or executor of Participant’s
estate.  Any such transferee must furnish
the Company with (a) written notice of his or her status as transferee and
(b) evidence satisfactory to the Company to establish the validity of the
transfer and compliance with any laws or regulations pertaining to said
transfer.  The terms of the Plan and this
Agreement shall be binding upon the executors, administrators, heirs,
successors, and assigns of Participant. 
Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise
dispose of any unvested Shares subject to this Agreement, or any right or
privilege conferred hereby, or upon any attempted sale under any execution,
attachment, or similar process, this Agreement and the rights and privileges
conferred hereby immediately shall become null and void.

 

11.           Rights as Stockholder.  Neither Participant nor any person claiming
under or through Participant shall have any of the rights or privileges of a
stockholder of the Company in respect of any Shares granted under this
Agreement unless and until such Shares will have been issued and recorded on
the records of the Company or its transfer agents or registrars.  Except as otherwise provided in this
Agreement or the Plan, after such issuance and recordation, Participant shall
have all the rights of a stockholder with respect to the Shares, including
without limitation the right to vote such Shares.

 

12.           No Guarantee of Continued
Service.  PARTICIPANT
ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES OF RESTRICTED STOCK PURSUANT
TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY OR AN AFFILIATE, AND NOT THROUGH THE ACT OF
BEING HIRED OR BEING GRANTED SHARES HEREUNDER. 
PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER, AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S (OR AN
AFFILIATE’S) RIGHT TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

13.           Successors and Assigns.  The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer
herein set forth, this Agreement shall be binding upon Participant and his or
her heirs, executors, administrators, successors, and assigns.

 

14.           Address for Notices.  Any notice to be given to the Company under
the terms of this Agreement shall be addressed to the Company at Internet
Brands, Inc., 909 N. Sepulveda Blvd., 11th Floor, El Segundo,
CA 90245, or at such other address as the Company may hereafter designate in
writing.

 

15

 

15.           Electronic Delivery.  The Company may, in its sole discretion,
decide to deliver any documents related to the Shares or future Awards of
Restricted Stock under the Plan by electronic means or request Participant’s
consent to participate in the Plan by electronic means.  Participant hereby consents to receive such
documents by electronic delivery and agrees to participate in the Plan through
any on-line or electronic system established and maintained by the Company or a
third party designated by the Company.

 

16.           Plan Governs.  This Agreement is subject to all terms and
provisions of the Plan.  In the event of
a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan shall govern.  Capitalized terms used but not defined in
this Agreement shall have the meaning set forth in the Plan.

 

17.           Amendment, Suspension, or
Termination of the Plan. 
Participant understands that the Plan is discretionary in nature and may
be amended, suspended, or terminated by the Company at any time.

 

18.           Committee Authority.  Subject to the limitations of the Plan, the
Committee shall have the power to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation, and application
of the Plan as are consistent therewith and to interpret or revoke any such rules (including,
but not limited to, the determination of whether or to what degree the Shares have
vested).  All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon Participant, the Company, and all other interested
persons.  No member of the Committee
shall be personally liable for any action, determination, or interpretation
made in good faith with respect to the Plan or this Agreement.

 

19.           Interpretation.  Any dispute regarding the interpretation of
this Agreement shall be submitted by Participant or by the Company forthwith to
the Committee which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the
Committee made in good faith shall be final and binding on all parties.

 

20.           Captions.  Captions provided herein are for convenience
only and are not to serve as a basis for interpretation or construction of this
Agreement.

 

21.           Severability.  In the event that any provision in this
Agreement will be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.

 

22.           Entire Agreement.  This Agreement and the Plan as incorporated
by reference constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Participant with respect to the subject
matter hereof, and may not be modified adversely to Participant’s interest
except by means of a writing signed by the Company and Participant.  Participant expressly warrants that he or she
is not accepting this Agreement in reliance on any promises, representations,
or inducements other than those contained herein.

 

16

 

23.           Governing Law.  This Agreement is governed by the internal
substantive laws, but not the choice of law rules, of the State of
California.  For purposes of litigating
any dispute that arises under this Award or this Agreement, the parties hereby
submit to and consent to the jurisdiction of the State of California, and agree
that such litigation shall be conducted in the courts of Los Angeles County,
California, or the federal courts of the United States for the Central District
of California, and no other courts.

 

[Signatures appear on next page.]

 

17

 

Participant
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Award
subject to all of the terms and provisions thereof.  Participant has reviewed the Plan and this
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Agreement, and fully understands all provisions
of the Agreement.  Participant hereby
agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Committee upon any questions arising under the Plan or
this Agreement.  Participant further
agrees to notify the Company upon any change in the residence address indicated
below.

 

	
  PARTICIPANT

  	
   

  	
  INTERNET
  BRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NAME

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Internet
  Brands, Inc.

  
	
   

  	
   

  	
  909
  N. Sepulveda Blvd., 11th Floor

  
	
   

  	
   

  	
  El
  Segundo, CA 90245

  

 

18

 

INTERNET BRANDS, INC.

2007 EQUITY PLAN

 

STOCK OPTION AGREEMENT

 

Unless
otherwise defined herein, the terms defined in the Internet Brands, Inc.
2007 Equity Plan (the “Plan”) shall have the same defined meanings in this
Stock Option Agreement (the “Agreement”).

 

III.           NOTICE
OF STOCK OPTION GRANT

 

	
  Participant:

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

The
above named Participant has been granted an option (the “Option”) to purchase
Common Stock of the Company, subject to the terms and conditions of the Plan
and this Agreement, as follows:

 

	
  Grant
  Number

  	
   

  	
   

  
	
  Date
  of Grant

  	
   

  	
   

  
	
  Vesting
  Commencement Date

  	
   

  	
   

  
	
  Number
  of Shares

  	
   

  	
   

  
	
  Exercise
  Price per Share

  	
   

  	
   

  
	
  Total
  Exercise Price

  	
   

  	
   

  
	
  Type
  of Option

  	
   

  	
        Incentive
  Stock Option

  
	
   

  	
   

  	
        Nonstatutory
  Stock Option

  
	
   

  	
   

  	
   

  
	
  Term/Expiration
  Date

  	
   

  	
   

  
	
  Vesting
  Schedule:

  	
   

  	
   

  

 

Subject to accelerated vesting as set forth in this
Agreement or in the Plan, this Option shall be exercisable in whole or in part,
and shall vest according to the following vesting schedule, subject also to Participant
having been continuously a Service Provider from the Date of Grant through the
date such vesting is scheduled to occur:

 

                **VESTING
SCHEDULE**

 

Post-Termination Exercisability Period:

 

If
Participant ceases to be a Service Provider without cause, this Option shall be
exercisable for the earlier to occur of (i) twelve (12) months after the
date Participant ceases to be a Service Provider or (ii) 190 days after
the Registration Date; provided, however, that if the termination of
Participant’s relationship as a Service Provider occurs subsequent to the 100
day anniversary of the Registration Date, this Option shall be exercisable for
three (3) months following the termination of Participant’s relationship
as a Service Provider.  If Participant
ceases to be a 

 

19

 

Service
Provider by reason of Participant’s death or Disability, this Option may be
exercised for twelve (12) months after the termination of Participant’s
relationship as a Service Provider.  In
no event may Participant exercise this Option after the Term/Expiration Date as
provided above.

 

Accelerated
Vesting:

 

Upon
the occurrence of a Change of Control, 50% of the unvested portion of this
Option shall immediately vest and become exercisable in full.  In the event of (i) a material
diminution of Participant’s duties as a Service Provider, (ii) a material
change in the geographic location at which the Service Provider must perform
services, or (iii) termination of Participant’s relationship as a Service
Provider without cause within six (6) months prior to or twelve (12)
months after such Change of Control, the remaining unvested portion of this
Option shall immediately vest.

 

IV.           TERMS
AND CONDITIONS OF STOCK OPTION GRANT

 

1.             Grant of Option.  The Committee hereby grants to the
Participant named in Section I herein this Option to purchase the Number
of Shares of Common Stock as set forth in Section I herein, at the
Exercise Price per Share set forth in Section I herein, and subject to the
terms and conditions of this Agreement and the Plan, which is incorporated
herein by reference.

 

If
designated in Section I herein as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an Incentive Stock Option as defined in Section 422
of the Code.  Nevertheless, to the extent
that it exceeds the $100,000 rule of Section 422(d) of the Code,
this Option shall be treated as a Nonstatutory Stock Option (“NSO”).

 

2.             Vesting Schedule.  Except as provided in Section II.3 of
this Agreement, the Option shall vest in accordance with the Vesting Schedule
set forth in Section I of this Agreement. 
Any portion of the Option scheduled to vest on a certain date or upon
the occurrence of a certain condition shall not vest in Participant in
accordance with any of the provisions of this Agreement unless Participant will
have been continuously a Service Provider from the Date of Grant through the
date such vesting is scheduled to occur.

 

3.             Acceleration of Vesting.  The Committee, in its discretion, may accelerate
the vesting of the balance, or some lesser portion of the balance, of the
unvested Option at any time, subject to the terms of the Plan.  If so accelerated, such balance or such
portion of the balance of the Option shall be considered as having vested as of
the date or upon the occurrence of the condition specified by the Committee.

 

4.             Exercise of Option.

 

a.             Right to Exercise.  This Option shall be exercisable only within
its term as set out in Section I of this Agreement, and may be exercised
during such term only in accordance with the Vesting Schedule and with the
applicable provisions of the Plan and this Agreement.

 

b.             Method of Exercise.  This Option shall be exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the “Exercise
Notice”) which shall state the election to exercise the Option, the number of
shares of Common Stock with respect to which the Option is being exercised (the
“Exercised Shares”), and such other representations and 

 

20

 

agreements as may be
required by the Company.  The Exercise
Notice shall be completed by Participant and delivered to the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares together with any applicable tax withholding
pursuant to Section II.6 of this Agreement.  This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by the aggregate Exercise Price.

 

c.             Additional Conditions to
Issuance of Stock.  No shares
shall be issued pursuant to the exercise of an Option unless such issuance and
such exercise complies with all applicable U.S. federal and state laws, the
requirements of any stock exchange or quotation system on which the Common
Stock is listed or quoted, and the applicable laws of any other jurisdiction
where Options are granted under the Plan. 
The Committee may, in its sole discretion and in connection with the
issuance or delivery of Shares in compliance with applicable laws, rules, and
regulations, postpone the issuance or delivery of Shares as the Committee may
consider appropriate, require Participant to make such representations and
furnish such information as it may consider appropriate, and cause such legends
to be put on any certificates evidencing the Shares or subject the Shares to
such stop transfer orders or other restrictions as it may consider
appropriate.  Assuming such compliance,
for income tax purposes the Exercised Shares shall be considered transferred to
Participant on the date on which the Option is exercised with respect to such
shares.

 

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

 

a.             cash or check;

 

b.             surrender of other shares of
Common Stock which (i) have a Fair Market Value on the date of surrender
equal to the aggregate Exercise Price of the Exercised Shares, and (ii) are
Mature Shares not subject to any pledge or other security interest;

 

c.             with the consent of the
Committee, consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or

 

d.             with the consent of the
Committee, by means of a net exercise procedure approved by the Committee in
connection with the Plan.

 

6.             Non-Transferability of
Option.  This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant only by
Participant.  If Participant is deceased,
this Option may be exercised by Participant’s designated beneficiary, or if no
beneficiary survives Participant, the administrator or executor of Participant’s
estate, and any distribution or delivery to be made to Participant under this
Agreement shall be made to such transferee, provided that such transferee must
furnish the Company with (a) written notice of his or her status as
transferee and (b) evidence satisfactory to the Company to establish the
validity of the transfer and compliance with any laws or regulations pertaining
to said transfer.  The terms of the Plan
and this 

 

21

 

Agreement shall be binding
upon the executors, administrators, heirs, successors, and assigns of
Participant.

 

7.             Withholding of Taxes.  Notwithstanding any contrary provision of
this Agreement, no shares shall be issued to Participant pursuant to the
exercise of this Option unless and until satisfactory arrangements (as
determined by the Committee) will have been made by Participant with respect to
the payment of income, employment, and other taxes which the Company determines
must be withheld with respect to such shares. 
To the extent determined appropriate by the Company in its discretion,
it shall have the right (but not the obligation) to satisfy any tax withholding
obligations by reducing the number of shares otherwise deliverable to
Participant.  If Participant fails to
make satisfactory arrangements for the payment of any required tax withholding
obligations hereunder at the time of the Option exercise, Participant
acknowledges and agrees that the Company may refuse to honor the exercise and
refuse to deliver shares if such withholding amounts are not delivered at the
time of exercise.

 

8.             Notice of Disqualifying
Disposition of ISO Shares.  If the Option granted to Participant herein
is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (i) the date two
years after the Date of Grant, or (ii) the date one year after the date of
exercise, Participant shall immediately notify the Company in writing of such
disposition.  Participant agrees that
Participant may be subject to income tax withholding by the Company on the
compensation income recognized by Participant.

 

9.             Code Section 409A.  Under Code Section 409A, an option that
was granted with a per share exercise price that is determined by the Internal
Revenue Service (the “IRS”) to be less than the Fair Market Value of a share on
the date of grant (a “Discount Option”) may be considered “deferred
compensation.”  A Discount Option may
result in adverse tax consequences, including (i) income recognition by
the option grantee prior to the exercise of the option, (ii) an additional
twenty percent (20%) federal income tax, and (iii) potential penalty and
interest charges.  The Discount Option
may also result in additional state income, penalty, and interest charges to
the grantee.  Participant acknowledges
that the Company cannot and has not guaranteed that the IRS will agree that the
Exercise Price per Share of this Option equals or exceeds the fair market value
of a share on the Date of Grant in a later examination.  Participant agrees that if the IRS determines
that the Option was granted with an Exercise Price per Share that was less than
the fair market value of a share on the Date of Grant, Participant shall be
solely responsible for Participant’s costs related to such a determination.

 

10.           Rights as Stockholder.  Neither Participant nor any person claiming
under or through Participant shall have any of the rights or privileges of a
stockholder of the Company in respect of any shares deliverable under this
Option unless and until such shares will have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
Participant.  After such issuance,
recordation, and delivery, Participant shall have all the rights of a
stockholder of the Company with respect to voting such shares and receipt of
dividends and distributions on such shares.

 

11.           No Guarantee of Continued
Service.  PARTICIPANT
ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE 

 

22

 

WILL OF THE COMPANY OR AN
AFFILIATE, AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION,
OR ACQUIRING SHARES HEREUNDER. 
PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER, AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S (OR AN
AFFILIATE’S) RIGHT TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

12.           Address for Notices.  Any notice to be given to the Company under
the terms of this Agreement shall be addressed to the Company at Internet
Brands, Inc., 909 N. Sepulveda Blvd., 11th Floor, El Segundo,
CA 90245, or at such other address as the Company may hereafter designate in
writing.

 

13.           Electronic Delivery.  The Company may, in its sole discretion,
decide to deliver any documents related to Options awarded under the Plan or
future Options that may be awarded under the Plan by electronic means or
request Participant’s consent to participate in the Plan by electronic
means.  Participant hereby consents to
receive such documents by electronic delivery and agrees to participate in the
Plan through any on-line or electronic system established and maintained by the
Company or a third party designated by the Company.

 

14.           Plan Governs.  This Agreement is subject to all terms and
provisions of the Plan.  In the event of
a conflict between one or more provisions of this Agreement and one or more
provisions of the Plan, the provisions of the Plan shall govern.  Capitalized terms used but not defined in
this Agreement shall have the meaning set forth in the Plan.

 

15.           Amendment, Suspension, or
Termination of the Plan. 
Participant understands that the Plan is discretionary in nature and may
be amended, suspended, or terminated by the Company at any time.

 

16.           Committee Authority.  Subject to the limitations of the Plan, the
Committee shall have the power to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation, and application
of the Plan as are consistent therewith and to interpret or revoke any such rules (including,
but not limited to, the determination of whether or to what degree the Option
has vested).  All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon Participant, the Company, and all other interested
persons.  No member of the Committee
shall be personally liable for any action, determination, or interpretation
made in good faith with respect to the Plan or this Agreement.

 

17.           Captions.  Captions provided herein are for convenience
only and are not to serve as a basis for interpretation or construction of this
Agreement.

 

18.           Severability.  In the event that any provision in this
Agreement will be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or 

 

23

 

unenforceability shall not
be construed to have any effect on, the remaining provisions of this Agreement.

 

19.           Entire Agreement.  This Agreement, the Plan as incorporated by
reference, and the Stock Option Exercise Notice constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Participant
with respect to the subject matter hereof, and may not be modified adversely to
Participant’s interest except by means of a writing signed by the Company and
Participant.  Participant expressly
warrants that he or she is not accepting this Agreement in reliance on any
promises, representations, or inducements other than those contained herein.

 

20.           Governing Law. This Agreement
is governed by the internal substantive laws, but not the choice of law rules,
of the State of California.  For purposes
of litigating any dispute that arises under this Option or this Agreement, the
parties hereby submit to and consent to the jurisdiction of the State of
California, and agree that such litigation shall be conducted in the courts of
Los Angeles County, California, or the federal courts of the United States for
the Central District of California, and no other courts.

 

[Signatures appear on next page.]

 

24

 

Participant
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof.  Participant has reviewed the Plan and this
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Agreement, and fully understands all provisions
of the Agreement.  Participant hereby
agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Committee upon any questions arising under the Plan or
this Agreement.  Participant further
agrees to notify the Company upon any change in the residence address indicated
below.

 

	
  PARTICIPANT

  	
   

  	
  INTERNET
  BRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Internet
  Brands, Inc.

  
	
   

  	
   

  	
  909
  N. Sepulveda Blvd., 11th Floor

  
	
   

  	
   

  	
  El
  Segundo, CA 90245

  

 

25

 

EXHIBIT A

 

2007 EQUITY PLAN

STOCK OPTION EXERCISE NOTICE

 

Internet
Brands, Inc.

909 N. Sepulveda Blvd., 11th Floor

El
Segundo, CA 90245

 

1

 

1.             Exercise of Option.  Effective as of today,                                ,
the undersigned Participant hereby elects to exercise Participant’s option to
purchase
                  
shares (the “Shares”) of the Common Stock of Internet Brands, Inc. (the “Company”)
under and pursuant to the 2007 Equity Plan (the “Plan”) and the Stock Option
Agreement between Participant and the Company dated
                          
(the “Agreement”).

 

2.             Delivery of Payment.  Purchaser herewith delivers to the Company
the full purchase price of the Shares and any required tax withholding to be
paid in connection with the exercise of the Option, as set forth in the
Agreement.

 

3.             Representations of Participant.  Participant acknowledges that Participant has
received, read, and understood the Plan and the Agreement and agrees to abide
by and be bound by their terms and conditions.

 

4.             Rights as Shareholder.  Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
optioned stock, notwithstanding the exercise of the Option.  The Shares shall be issued to Participant as
soon as practicable after the Option is exercised.  No adjustment shall be made for a dividend or
other right for which the record date is prior to the date of issuance, except
as provided in Section 12 of the Plan.

 

5.             Tax Consultation.  Participant understands that Participant may
suffer adverse tax consequences as a result of Participant’s purchase or
disposition of the Shares.  Participant
represents that Participant has consulted with any tax consultants Participant
deems advisable in connection with the purchase or disposition of the Shares
and that Participant is not relying on the Company for any tax advice.

 

6.             Successors and Assigns.  The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein
set forth, this Agreement shall be binding upon Participant and his or her
heirs, executors, administrators, successors, and assigns.

 

7.             Interpretation.  Any dispute regarding the interpretation of
this Agreement shall be submitted by Participant or by the Company forthwith to
the Committee which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the
Committee made in good faith shall be final and binding on all parties.

 

26

 

8.             Governing Law.  This Agreement is governed by the internal
substantive laws, but not the choice of law rules, of the State of
California.  For purposes of litigating
any dispute that arises under this Option or this Agreement, the parties hereby
submit to and consent to the jurisdiction of the State of California, and agree
that such litigation shall be conducted in the courts of Los Angeles County,
California, or the federal courts of the United States for the Central District
of California, and no other courts.

 

9.             Entire Agreement.  The Plan and Agreement are incorporated
herein by reference.  This Stock Option
Exercise Notice, the Plan, and the Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Participant
with respect to the subject matter hereof, and may not be modified adversely to
Participant’s interest except by means of a writing signed by the Company and
Participant.

 

[Signatures appear on next
page.]

 

27

 

	
  Submitted
  by:

  	
   

  	
  Accepted
  by:

  
	
   

  	
   

  	
   

  
	
  PARTICIPANT:

  	
   

  	
  INTERNET
  BRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  909
  N. Sepulveda Blvd., 11th Floor

  
	
   

  	
   

  	
  El
  Segundo, CA 90245

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date
  Received

  

 

28

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]