Document:

exv10w7

 

Exhibit
10.7

Vocus, Inc.

 

2005 Stock Award Plan

 

 

Vocus, Inc.

2005 Stock Award Plan

     1. Purpose. The purpose of this 2005 Stock Award Plan (the “Plan”) is to
assist Vocus, Inc., a Delaware corporation (the “Company”) and its Related Entities in
attracting, motivating, retaining and rewarding high-quality Employees, officers, Directors and
Consultants by enabling such persons to acquire or increase a proprietary interest in the Company
in order to strengthen the mutuality of interests between such persons and the Company’s
shareholders, and providing such persons with annual and long-term performance incentives to expend
their maximum efforts in the creation of shareholder value. The Plan is intended to qualify
certain compensation awarded under the Plan for tax deductibility under Section 162(m) of the Code
(as hereafter defined) to the extent deemed appropriate by the Plan Administrator.

     2. Definitions. For purposes of the Plan, the following terms shall be defined as set
forth below, in addition to such terms defined in Section 1 hereof.

          (a) “Applicable Laws” means the requirements relating to the administration of equity
compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, the rules and regulations of any stock exchange upon which the Common Stock is listed and the
applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.

          (b) “Award” means any award granted pursuant to the terms of this Plan, including an
Option, Stock Appreciation Right, Restricted Stock, Stock Unit, Stock granted as a bonus or in lieu
of another award, Dividend Equivalent, Other Stock-Based Award or Performance Award, together with
any other right or interest, granted to a Participant under the Plan.

          (c) “Award Agreement” means the written agreement evidencing an Award granted under
the Plan.

          (d) “Beneficiary” means the person, persons, trust or trusts which have been
designated by a Participant in his or her most recent written beneficiary designation filed with
the Plan Administrator to receive the benefits specified under the Plan upon such Participant’s
death or to which Awards or other rights are transferred if and to the extent permitted under
Section 10(b) hereof. If, upon a Participant’s death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive such benefits.

          (e) “Beneficial Owner”, “Beneficially Owning” and “Beneficial
Ownership” shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act
and any successor to such Rule.

          (f) “Board” means the Company’s Board of Directors.

 

 

          (g) “Cause” shall, with respect to any Participant, have the equivalent meaning (or
the same meaning as “cause” or “for cause”) set forth in any employment agreement or option
agreement between the Participant and the Company or a Related Entity or, in the absence of any
such definition in such agreement(s), such term shall mean (i) the material failure by the
Participant to perform his or her duties as assigned by the Company (or a Related Entity) in a
reasonable manner, (ii) any material violation or breach by the Participant of his or her
employment agreement with the Company (or a Related Entity), if any, (iii) any violation or breach
by the Participant of his or her confidentiality, intellectual property and non-competition
agreement (or any similar agreement) with the Company (or a Related Entity), if any, (iv) any act
by the Participant of theft, dishonesty or falsification with respect to the Company (or a Related
Entity), (v) any material violation or breach by the Participant of the Company’s or a Related
Entity’s policy for employee conduct, if any, (vi) any action by the Participant which has a
detrimental effect on the Company’s (or a Related Entity’s) reputation or business, (vii) use of
alcohol, drugs or other similar substances affecting the Participant’s work performance or (viii)
the Participant’s conviction (including any plea of guilty or nolo contendre) of any criminal act
which reflects unfavorably upon the Company. The good faith determination by the Plan
Administrator of whether the Participant’s Continuous Service was terminated by the Company for
“Cause” shall be final and binding for all purposes hereunder.

          (h) “Change in Control” means and shall be deemed to have occurred on the earliest of
the following dates:

               (i) the date on which any “person” or “group” (as such term are used in Sections 13(d) and
14(d) of the Exchange Act), other than an Excluded Owner (as defined below), obtains “beneficial
ownership” (as defined in Rule 13d-3 of the Exchange Act) or a pecuniary interest in fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding securities
(“Voting Stock”);

               (ii) the consummation by the Company of a merger, consolidation, reorganization or similar
transaction other than a transaction: (1) (a) in which substantially all of the holders of the
Company’s Voting Stock immediately prior to the consummation of the transaction hold or receive
directly or indirectly fifty percent (50%) or more of the voting stock of the resulting entity or a
parent company thereof, in substantially the same proportions as their ownership of the Company
immediately prior to the transaction; or (2) in which the holders of the Company’s capital stock
immediately before such transaction will, immediately after such transaction, hold as a group on a
fully diluted basis the ability to elect at least a majority of the directors of the surviving
corporation (or a parent company);

               (iii) there is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries (as determined by
the Plan Administrator), other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries to (A) an Excluded
Owner or (B) an entity, fifty percent (50%) or more of the combined voting power of the voting
securities of which are owned by shareholders of the
Company in substantially the same proportions as their ownership of the Company immediately
prior to such sale, lease, license or other disposition; or

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

     For purposes hereof, an “Excluded Owner” consists of the Company, any Subsidiary of
the Company, any Company benefit plan, and any underwriter temporarily holding securities for an
offering of such securities. For purposes of determining whether a Change in Control has occurred,
a transaction includes all transactions in a series of related transactions. The Plan
Administrator shall have the right to determine whether multiple sales or exchanges of the voting
securities of the Company or multiple Corporate Transactions are related, and its determination
shall be final, binding and conclusive. The term Change in Control shall not include a sale of
assets, merger or other transaction effected exclusively for the purpose of changing the domicile
of the Company.

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

          (i) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.

          (j) “Committee” means a committee designated by the Board to administer the Plan with
respect to at least a group of Employees, Directors or Consultants.

          (k) “Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.

          (l) “Continuous Service” means uninterrupted provision of services to the Company as
an Employee, a Director or a Consultant. Continuous Service shall not be considered to be
interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any
Related Entities or any successor entities, as either an Employee, a Director or a Consultant or
(iii) any change in status as long as the individual remains in the service of the Company or a
Related Entity as either an Employee, a Director or a Consultant (except as otherwise provided in
the applicable Award Agreement). An approved leave of absence shall include sick leave, military
leave or any other authorized personal leave.

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

               (i) a sale, lease, exclusive license or other disposition of all or substantially all, as
determined by the Plan Administrator, in its discretion, of the consolidated assets of the Company
and its Subsidiaries;

               (ii) a sale or other disposition of more than twenty percent (20%) of the outstanding
securities of the Company; or

               (iii) a merger, consolidation, reorganization or similar transaction, whether or not the
Company is the surviving corporation.

          (n) “Covered Employee” means an Eligible Person who is a Covered Employee as specified
in Section 7(d) of the Plan.

          (o) “Director” means a member of the Board or the board of directors of any Related
Entity.

          (p) “Disability” means a permanent and total disability (within the meaning of Section
22(e) of the Code), as determined by a medical doctor satisfactory to the Plan Administrator.

          (q) “Dividend Equivalent” means a right, granted to a Participant under Section 6(g)
hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid
with respect to a specified number of Shares or other periodic payments.

          (r) “Effective Date” means the effective date of this Plan, which shall be the date
this Plan is adopted by the Board, subject to the approval of the shareholders of the Company.

          (s) “Eligible Person” means all Employees (including officers), Directors and
Consultants of the Company or of any Related Entity. The foregoing notwithstanding, only employees
of the Company, the Parent or any Subsidiary shall be Eligible Persons for purposes of receiving
any Incentive Stock Options. An Employee on leave of absence may be considered as still in the
employ of the Company or a Related Entity for purposes of eligibility for participation in the
Plan.

          (t) “Employee” means any person, including an officer or Director, who is an employee
of the Company or any Related Entity. The Payment of a director’s fee by the Company or a Related
Entity shall not be sufficient to constitute “employment” by the Company.

          (u) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.

          (v) “Executive Officer” means an executive officer of the Company as defined under the
Exchange Act.

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          (w) “Fair Market Value” means the fair market value of Shares, Awards or other
property as determined by the Plan Administrator in good faith, or under procedures established by
the Plan Administrator. Unless otherwise determined by the Plan Administrator, the Fair Market
Value of Shares as of any given date, after which the Shares are publicly traded on a stock
exchange or market, shall be the closing sale price per share reported on a consolidated basis for
stock listed on the principal stock exchange or market on which Shares is traded on the date as of
which such value is being determined or, if there is no sale on that date, then on the last
previous day on which a sale was reported.

          (x) “Good Reason” shall, with respect to any Participant, have the equivalent meaning
(or the same meaning as “good reason” or “for good reason”) set forth in any employment agreement
or option agreement between the Participant and the Company or a Related Entity or, in the absence
of any such definition in an such agreement(s), such term shall mean (i) the assignment to the
Participant of any duties inconsistent in any material respect with the Participant’s position
(including status, offices, titles and reporting requirements), authority, duties or
responsibilities as assigned by the Company (or a Related Entity) or any other action by the
Company (or a Related Entity) which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company (or a Related Entity) promptly
after receipt of notice thereof given by the Participant; (ii) any failure by the Company (or a
Related Entity) to comply with its obligations to the Participant as agreed upon, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by
the Company (or a Related Entity) promptly after receipt of notice thereof given by the
Participant; (iii) the Company’s (or Related Entity’s) requiring the Participant to be based at any
office or location more than fifty miles from the location of employment as of the date of Award,
except for travel reasonably required in the performance of the Participant’s responsibilities;
(iv) any purported termination by the Company (or a Related Entity) of the Participant’s Continuous
Service otherwise than for Cause as defined in Section 2(f) or by reason of the Participant’s
Disability as defined in Section 2(o); or (v) any reduction in the Participant’s base salary.

          (y) “Incentive Stock Option” means any Option intended to be designated as an
incentive stock option within the meaning of Section 422 of the Code or any successor provision
thereto.

          (z) “Non-Employee Director” means a Director of the Company who is not an Employee.

          (aa) “Non-Qualified Stock Option” means any Option that is not intended to be
designated as an incentive stock option within the meaning of Section 422 of the Code or any
successor provision thereto.

          (bb) “Option” means a right, granted to a Participant under Section 6(b) hereof, to
purchase Shares or other Awards at a specified price during specified time periods.

          (cc) “Other Stock-Based Awards” means Awards granted to a Participant pursuant to
Section 6(h) hereof.

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          (dd) “Parent” means any corporation (other than the Company), whether now or hereafter
existing, in an unbroken chain of corporations ending with the Company, if each of the corporations
in the chain (other than the Company) owns stock possessing 50 percent or more of the combined
voting power of all classes of stock in one of the other corporations in the chain.

          (ee) “Participant” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.

          (ff) “Performance Award” means a right, granted to an Eligible Person under Section 7
hereof, to receive Awards based upon performance criteria specified by the Plan Administrator.

          (gg) “Performance Period” means that period established by the Plan Administrator at
the time any Performance Award is granted or at any time thereafter during which any performance
goals specified by the Plan Administrator with respect to such Award are to be measured.

          (hh) “Person” has the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section
12(d) thereof.

          (ii) “Plan Administrator” means the Board or any Committee delegated by the Board to
administer the Plan.

          (jj) “Related Entity” means any Parent, Subsidiary and any business, corporation,
partnership, limited liability company or other entity in which the Company, a Parent or a
Subsidiary, directly or indirectly, holds a substantial ownership interest.

          (kk) “Restricted Stock” means Stock, granted to a Participant under Section 6(d)
hereof, that is subject to certain restrictions and to a risk of forfeiture.

          (ll) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and Participants,
promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

          (mm) “Shares” means the shares of the Company’s Common Stock, and the shares of such
other securities as may be substituted (or resubstituted) for Stock pursuant to Section 10(c)
hereof.

          (nn) “Stock” means the Company’s Common Stock, and such other securities as may be
substituted (or resubstituted) for the Company’s Common Stock pursuant to Section 10(c) hereof.

          (oo) “Stock Appreciation Right” means a right granted to a Participant pursuant to
Section 6(c) hereof.

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          (pp) “Stock Unit” means a right, granted to a Participant pursuant to Section 6(e)
hereof, to receive Shares, cash or a combination thereof at the end of a specified period of time.

          (qq) “Subsidiary” means any corporation (other than the Company), whether now or
hereafter existing, in an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.

     3. Administration.

          (a) Administration by Board. The Board shall administer the Plan unless and until the
Board delegates administration to a Committee, as provided in Section 3(c).

          (b) Powers of Plan Administrator. The Plan Administrator shall have the power,
subject to, and within the limitations of, the express provisions of the Plan:

               (i) To determine from time to time which of the persons eligible under the Plan shall be
granted Awards; when and how each Award shall be granted; what type or combination of types of
Award shall be granted; the provisions of each Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive Shares or cash pursuant to
an Award; and the number of Shares or amount of cash with respect to which an Award shall be
granted to each such person.

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

               (iii) To amend the Plan or an Award as provided in Section 10(e).

               (iv) To terminate or suspend the Plan as provided in Section 10(e).

               (v) To effect, at any time and from time to time, with the consent of any adversely affected
Participant, (1) the reduction of the exercise price of any outstanding Award under the Plan, if
any, (2) the cancellation of any outstanding Award and the grant in substitution therefor of (A) a
new Award under the Plan or another equity plan of the Company covering the same or a different
number of Shares, (B) cash and/or (C) other valuable consideration (as determined by the Plan
Administrator, in its sole discretion) or (3) any other action that is treated as a repricing under
generally accepted accounting principles.

               (vi) To adopt such modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of foreign countries in which the Company or Related Entities
may operate to assure the viability of the benefits from Awards granted to Participants performing
services in such countries and to meet the objectives of the Plan.

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

          (c) Delegation to Committee.

               (i) General. The Board may delegate administration of the Plan to a Committee or
Committees of two (2) or more members of the Board, and the term “Committee” shall apply to any
person or persons to whom such authority has been delegated. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, to the extent delegated by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is authorized to
exercise, subject, however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan.

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

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

          (e) Limitation of Liability. The Committee and the Board, and each member thereof,
shall be entitled to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or Employee, the Company’s independent auditors, Consultants or any other
agents assisting in the administration of the Plan. Members of the Committee and the Board, and
any officer or Employee acting at the direction or on behalf of the Plan Administrator, shall not
be personally liable for any action or determination taken or made in good faith with respect to
the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the
Company with respect to any such action or determination.

     4. Stock Subject to Plan.

          (a) Limitation on Overall Number of Shares Subject to Awards. Subject to adjustment
as provided in Section 10(c) hereof, the total number of Shares reserved and available for delivery
in connection with Awards under the Plan shall not exceed in the aggregate 2,600,000 Shares plus an
annual increase to be added on January 1st of each year, commencing

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on January 1, 2007 and ending on January 1, 2015 (each such day, a “Calculation Date”), equal
to five percent (5%) of the Shares outstanding on each such Calculation Date (rounded down to the
nearest whole Share). Any Shares delivered under the Plan may consist, in whole or in part, of
authorized and unissued Shares or treasury shares. Notwithstanding the foregoing, (i) the Plan
Administrator may act, prior to the first day of any fiscal year of the Company, to increase the
share reserve by such number of Shares as the Plan Administrator shall determine, which number
shall be less than the amount described in the foregoing sentence, and (ii) the maximum number of
Shares that may be issued under the Plan as Incentive Stock Options is 5,200,000.

          (b) Availability of Shares Not Issued Pursuant to Awards.

               (i) If any Shares subject to an Award are forfeited, expire or otherwise terminate without
issuance of such Shares or any Award is settled for cash or otherwise does not result in the
issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent
of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available
for Awards under the Plan, subject to Section 4(b)(iv) below.

               (ii) If any Shares issued pursuant to an Award are forfeited back to or repurchased by the
Company, including, but not limited to, any repurchase or forfeiture caused by the failure to meet
a contingency or condition required for the vesting of such shares, then the Shares forfeited or
repurchased shall revert to and again become available for issuance under the Plan, subject to
Section 4(b)(iv) below.

               (iii) In the event that any Option or other Award granted hereunder is exercised through the
withholding of Shares from the Award by the Company or withholding tax liabilities arising from
such Option or other Award are satisfied by the withholding of Shares by the Company, then only the
number of Shares issued net of the Shares withheld shall be counted as issued for purposes of
determining the maximum number of Shares available for grant under the Plan, subject to Section
4(b)(iv) below.

               (iv) Notwithstanding anything in this Section 4(b) to the contrary and solely for purposes of
determining whether Shares are available for the grant of Incentive Stock Options, the maximum
aggregate number of shares that may be granted under this Plan shall be determined without regard
to any Shares restored pursuant to this Section 4(b) that, if taken into account, would cause the
Plan, for purposes of the grant of Incentive Stock Options, to fail the requirement under Code
Section 422 that the Plan designate a maximum aggregate number of shares that may be issued.

          (c) Application of Limitations. The limitation contained in this Section 4 shall
apply not only to Awards that are settled by the delivery of Shares but also to Awards relating to
Shares but settled only in cash (such as cash-only Stock Appreciation Rights). The Plan
Administrator may adopt reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the
number of Shares actually delivered differs from the number of shares previously counted in
connection with an Award.

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     5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to Eligible Persons. For each fiscal year in
which awards granted under the Plan are subject to the requirements of Section 162(m) of the Code,
an Eligible Person may not be granted an Award under which more than 1,000,000 Shares could be
received by the Participant, subject to adjustment as provided in Section 10(c).

     In addition, the maximum dollar value payable to any one Participant with respect to
Performance Awards is $5,000,000 per 12 month period in the Performance Period (pro-rated for any
Performance Period that is less than 12 months based upon the ratio of the number of days in the
Performance Period as compared to 365 and adjusted for any additional months in excess of 12 months
on a straight-line basis).

     6. Terms of Awards.

          (a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Plan Administrator may impose on any Award or the exercise thereof, at
the date of grant or thereafter (subject to Section 10(e)), such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Plan Administrator shall determine,
including terms requiring forfeiture of Awards in the event of termination of the Participant’s
Continuous Service and terms permitting a Participant to make elections relating to his or her
Award. The Plan Administrator shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not mandatory under the Plan.

          (b) Options. The Plan Administrator is authorized to grant Options to any Eligible
Person on the following terms and conditions:

               (i) Stock Option Agreement. Each grant of an Option shall be evidenced by an Option
agreement. Such Option agreement shall be subject to all applicable terms and conditions of the
Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan
and which the Plan Administrator deems appropriate for inclusion in a Option agreement. The
provisions of the various Option agreements entered into under the Plan need not be identical.

               (ii) Number of Shares. Each Option agreement shall specify the number of Shares that
are subject to the Option and shall provide for the adjustment of such number in accordance with
Section 10(c) hereof. The Option agreement shall also specify whether the Stock Option is an
Incentive Stock Option or a Non-Qualified Stock Option.

               (iii) Exercise Price.

                    (A) In General. Each Option agreement shall state the price at which Shares subject
to the Option may be purchased (the “Exercise Price”), which shall be, with respect to Incentive
Stock Options, not less than 100% of the Fair Market Value of the Stock on the date of grant. In
the case of Non-Qualified Stock Options, the Exercise Price shall be determined in the sole
discretion of the Plan Administrator; provided, however, that notwithstanding any other provision
of the Plan, any Non-Qualified Stock Option granted with a per Share exercise price less than the
per Share Fair Market Value on the date of grant shall be

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structured to avoid the imposition of any excise tax under Code Section 409A, unless otherwise
specifically determined by the Plan Administrator.

                    (B) Ten Percent Shareholder. If a Participant owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any Parent or Subsidiary, any Incentive
Stock Option granted to such Employee must have an exercise price per Share of at least 110% of the
Fair Market Value of a Share on the date of grant.

               (iv) Time and Method of Exercise. The Plan Administrator shall determine the time or
times at which or the circumstances under which an Option may be exercised in whole or in part
(including based on achievement of performance goals and/or future service requirements), the time
or times at which Options shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which the exercise price may be paid or
deemed to be paid (including, in the discretion of the Plan Administrator, a cashless exercise
procedure), the form of such payment, including, without limitation, cash, Stock, net exercise,
other Awards or awards granted under other plans of the Company or a Related Entity, other property
(including notes or other contractual obligations of Participants to make payment on a deferred
basis) or any other form of consideration legally permissible, and the methods by or forms in which
Stock will be delivered or deemed to be delivered to Participants.

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

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

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

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period of time as determined by the Plan Administrator, in its discretion) after the date on which
the Participant’s Continuous Service terminates.

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

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

               (vi) Incentive Stock Options. The terms of any Incentive Stock Option granted under
the Plan shall comply in all respects with the provisions of Section 422 of the Code. Anything in
the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options
(including any Stock Appreciation Rights in tandem therewith) shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be exercised, so as to
disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code, unless the
Participant has consented in writing to the change that will result in such disqualification. If
and to the extent required to comply with Section 422 of the Code, Options granted as Incentive
Stock Options shall be subject to the following special terms and conditions:

                    (1) The Option shall not be exercisable more than ten years after the date such Incentive
Stock Option is granted; provided, however, that if a Participant owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Parent or Subsidiary and the Incentive Stock
Option is granted to such Participant, the Incentive Stock Option shall not be exercisable (to the
extent required by the Code at the time of the grant) for no more than five years from the date of
grant; and

                    (2) If the aggregate Fair Market Value (determined as of the date the Incentive Stock Option
is granted) of the Shares with respect to which Incentive Stock Options granted under the Plan and
all other option plans of the Company, its Parent or any Subsidiary are exercisable for the first
time by a Participant during any calendar year in excess of $100,000, then such Participant’s
Incentive Stock Option(s) or portions thereof that exceed such $100,000 limit shall be treated as
Non-Qualified Stock Options (in the reverse order in which they were granted, so that the last
Incentive Stock Option will be the first treated as a Non-Qualified Stock Option). This paragraph
shall only apply to the extent such limitation is applicable under the Code at the time of the
grant.

               (vii) Repurchase Rights. The Plan Administrator shall have the discretion to grant
Options that are exercisable for unvested Shares. Should the Participant’s
Continuous Service cease while holding such unvested shares, the Company shall have the right

12

 

to repurchase any or all of those unvested shares, at either (a) the exercise price paid per share,
(b) the Fair Market Value or (c) the lower of the exercise price paid per share and the Fair Market
Value. The terms upon which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing such repurchase
right.

          (c) Stock Appreciation Rights. The Plan Administrator is authorized to grant Stock
Appreciation Rights to Participants on the following terms and conditions:

               (i) Agreement. Each grant of a Stock Appreciation Right shall be evidenced by an
Award Agreement. Such Award Agreement shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not inconsistent with the
Plan and which the Plan Administrator deems appropriate for inclusion in the Award Agreement. The
provisions of the various Award Agreements entered into under the Plan need not be identical.

               (ii) Right to Payment. A Stock Appreciation Right shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market
Value of one share of stock on the date of exercise over (B) the grant price of the Stock
Appreciation Right as determined by the Plan Administrator.

               (iii) Other Terms. The Plan Administrator shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right
may be exercised in whole or in part (including based on achievement of performance goals and/or
future service requirements), the time or times at which Stock Appreciation Rights shall cease to
be or become exercisable following termination of Continuous Service or upon other conditions, the
form of payment upon exercise of Shares, cash or other property, the method of exercise, method of
settlement, form of consideration payable in settlement (either cash, Shares or other property),
method by or forms in which Stock will be delivered or deemed to be delivered to Participants,
whether or not a Stock Appreciation Right shall be in tandem or in combination with any other
Award, and any other terms and conditions of any Stock Appreciation Right. Stock Appreciation
Rights may be either freestanding or in tandem with other Awards. Notwithstanding any other
provision of the Plan, unless otherwise exempt from Section 409A of the Code or otherwise
specifically determined by the Plan Administrator, each Stock Appreciation Right shall be
structured to avoid the imposition of any excise tax under Section 409A of the Code.

          (d) Restricted Stock. The Plan Administrator is authorized to grant Restricted Stock
Awards to any Eligible Person on the following terms and conditions:

               (i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Plan Administrator may
impose, or as otherwise provided in this Plan. The terms of any Restricted
Stock Award granted under the Plan shall be set forth in a written Award Agreement which shall
contain provisions determined by the Plan Administrator and not inconsistent with the Plan. The
restrictions may lapse separately or in combination at such times, under such circumstances

13

 

(including based on achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Plan Administrator may determine at the date of grant or
thereafter. Except to the extent restricted under the terms of the Plan and any Award Agreement
relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the
rights of a shareholder, including the right to vote the Restricted Stock and the right to receive
dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Plan
Administrator). During the restricted period applicable to the Restricted Stock, subject to
Section 10(b) below, the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.

               (ii) Forfeiture. Except as otherwise determined by the Plan Administrator at the time
of the Award, upon termination of a Participant’s Continuous Service during the applicable
restriction period, the Participant’s Restricted Stock that is at that time subject to restrictions
shall be forfeited and reacquired by the Company; provided that the Plan Administrator may provide,
by rule or regulation or in any Award Agreement or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in
part in the event of terminations resulting from specified causes, and the Plan Administrator may
in other cases waive in whole or in part the forfeiture of Restricted Stock.

               (iii) Certificates for Shares. Restricted Stock granted under the Plan may be
evidenced in such manner as the Plan Administrator shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant, the Plan Administrator may require
that such certificates bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the Company retain physical possession of
the certificates, that the certificates be kept with an escrow agent and that the Participant
deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.

               (iv) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Plan Administrator may require that any cash dividends paid on a share of Restricted
Stock be automatically reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise determined by the Plan
Administrator, Shares distributed in connection with a stock split or stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to
the same extent as the Restricted Stock with respect to which such Shares or other property has
been distributed.

          (e) Stock Units. The Plan Administrator is authorized to grant Stock Units to
Participants, which are rights to receive Shares, cash or a combination thereof at the end of a
specified time period, subject to the following terms and conditions:

               (i) Award and Restrictions. Satisfaction of an Award of Stock Units shall occur upon
expiration of the time period specified for such Stock Units by the Plan
Administrator (or, if permitted by the Plan Administrator, as elected by the Participant). In
addition, Stock Units shall be subject to such restrictions (which may include a risk of
forfeiture) as the Plan Administrator may impose, if any, which restrictions may lapse at the
expiration of

14

 

the time period or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in combination, in
installments or otherwise, as the Plan Administrator may determine. The terms of an Award of Stock
Units shall be set forth in a written Award Agreement which shall contain provisions determined by
the Plan Administrator and not inconsistent with the Plan. Stock Units may be satisfied by
delivery of Stock, cash equal to the Fair Market Value of the specified number of Shares covered by
the Stock Units, or a combination thereof, as determined by the Plan Administrator at the date of
grant or thereafter. Prior to satisfaction of an Award of Stock Units, an Award of Stock Units
carries no voting or dividend or other rights associated with share ownership. Notwithstanding any
other provision of the Plan, unless otherwise exempt from Section 409A of the Code or otherwise
specifically determined by the Plan Administrator, each Stock Unit shall be structured to avoid the
imposition of any excise tax under Section 409A of the Code.

               (ii) Forfeiture. Except as otherwise determined by the Plan Administrator, upon
termination of a Participant’s Continuous Service during the applicable time period thereof to
which forfeiture conditions apply (as provided in the Award Agreement evidencing the Stock Units),
the Participant’s Stock Units (other than those Stock Units subject to deferral at the election of
the Participant) shall be forfeited; provided that the Plan Administrator may provide, by rule or
regulation or in any Award Agreement or may determine in any individual case, that restrictions or
forfeiture conditions relating to Stock Units shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Plan Administrator may in other cases waive
in whole or in part the forfeiture of Stock Units.

               (iii) Dividend Equivalents. Unless otherwise determined by the Plan Administrator at
date of grant, any Dividend Equivalents that are granted with respect to any Award of Stock Units
shall be either (A) paid with respect to such Stock Units at the dividend payment date in cash or
in shares of unrestricted Shares having a Fair Market Value equal to the amount of such dividends
or (B) deferred with respect to such Stock Units and the amount or value thereof automatically
deemed reinvested in additional Stock Units, other Awards or other investment vehicles, as the Plan
Administrator shall determine or permit the Participant to elect.

          (f) Bonus Stock and Awards in Lieu of Obligations. The Plan Administrator is
authorized to grant Shares as a bonus or to grant Shares or other Awards in lieu of Company
obligations to pay cash or deliver other property under the Plan or under other plans or
compensatory arrangements, provided that, in the case of Participants subject to Section 16 of the
Exchange Act, the amount of such grants remains within the discretion of the Plan Administrator to
the extent necessary to ensure that acquisitions of Shares or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Shares or Awards granted hereunder shall be
subject to such other terms as shall be determined by the Plan Administrator.

          (g) Dividend Equivalents. The Plan Administrator is authorized to grant Dividend
Equivalents to any Eligible Person entitling the Eligible Person to receive cash, Shares, other
Awards, or other
property equal in value to dividends paid with respect to a specified number of Shares, or
other periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award. The terms of an Award of Dividend Equivalents shall be set forth in
a written Award Agreement which shall contain provisions determined by the Plan Administrator and
not inconsistent with the Plan. The Plan

15

 

Administrator may provide that Dividend Equivalents shall
be paid or distributed when accrued or shall be deemed to have been reinvested in additional Stock,
Awards, or other investment vehicles, and subject to such restrictions on transferability and risks
of forfeiture, as the Plan Administrator may specify. Notwithstanding any other provision of the
Plan, unless otherwise exempt from Section 409A of the Code or otherwise specifically determined by
the Plan Administrator, each Stock Unit shall be structured to avoid the imposition of any excise
tax under Section 409A of the Code.

          (i) Other Stock-Based Awards. The Plan Administrator is authorized, subject to
limitations under applicable law, to grant to any Eligible Person such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or
related to, Shares, as deemed by the Plan Administrator to be consistent with the purposes of the
Plan, including, without limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment
contingent upon performance of the Company or any other factors designated by the Plan
Administrator, and Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified Related Entities or business units. The Plan Administrator
shall determine the terms and conditions of such Awards. The terms of any Award pursuant to this
Section shall be set forth in a written Award Agreement which shall contain provisions determined
by the Plan Administrator and not inconsistent with the Plan. Stock delivered pursuant to an Award
in the nature of a purchase right granted under this Section 6(h) shall be purchased for such
consideration (including without limitation loans from the Company or a Related Entity), paid for
at such times, by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards or other property, as the Plan Administrator shall determine. Cash awards, as an
element of or supplement to any other Award under the Plan, may also be granted pursuant to this
Section 6(h). Notwithstanding any other provision of the Plan, unless otherwise exempt from
Section 409A of the Code or otherwise specifically determined by the Plan Administrator, each Stock
Unit shall be structured to avoid the imposition of any excise tax under Section 409A of the Code.

     7. Performance Awards.

          (a) Performance Conditions. The right of a Participant to exercise or receive a grant
or settlement of any Award, and the timing thereof, may be subject to such performance conditions
as may be specified by the Plan Administrator. The Plan Administrator may use such business
criteria and other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts payable under any
Award subject to performance conditions, except as limited under Section 7(b) hereof in the case of
a Performance Award intended to qualify under Code Section 162(m). If and to the extent required
under Code Section 162(m), any power or authority relating to a Performance
Award intended to qualify under Code Section 162(m) shall be exercised by the Committee as the
Plan Administrator and not the Board.

          (b) Performance Awards Granted to Designated Covered Employees. If and to the extent
that the Committee determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant,

16

 

exercise and/or settlement of such
Performance Award shall be contingent upon achievement of pre-established performance goals and
other terms set forth in this Section 7(b).

               (i) Performance Goals Generally. The performance goals for such Performance Awards
shall consist of one or more business criteria and a targeted level or levels of performance with
respect to each of such criteria, as specified by the Committee consistent with this Section 7(b).
Performance goals shall be objective and shall otherwise meet the requirements of Code Section
162(m) and regulations thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being “substantially
uncertain.” The Committee may determine that such Performance Awards shall be granted, exercised
and/or settled upon achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of such Performance
Awards. Performance goals may differ for Performance Awards granted to any one Participant or to
different Participants.

               (ii) Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or specified Related Entities or business units of the
Company (except with respect to the total shareholder return and earnings per share criteria),
shall be used exclusively by the Committee in establishing performance goals for such Performance
Awards: (1) total shareholder return; (2) such total shareholder return as compared to total return
(on a comparable basis) of a publicly available index such as, but not limited to, the Standard &
Poor’s 500 Stock Index or such other comparable stock index as may be deemed appropriate by the
Plan Administrator; (3) revenue; (4) gross margin; (5) operating margin; (6) operating income; (7)
pretax earnings; (8) net income; (9) earnings before interest expense, taxes, depreciation and
amortization; (10) operating cash flow; (11) free cash flow; (12) earnings per share; (13) return
on equity; (14) return on capital; (15) working capital or inventory; (16) number of customers and
(17) market share.

               (iii) Performance Period; Timing For Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a Performance Period
of up to ten (10) years, as specified by the Committee. Performance goals shall be established not
later than ninety (90) days after the beginning of any Performance Period applicable to such
Performance Awards or at such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).

               (iv) Performance Award Pool. The Committee may establish a Performance Award pool,
which shall be an unfunded pool, for purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business criteria set forth in Section
7(b)(ii) hereof during the given Performance Period,
as specified by the Committee in accordance with Section 7(b)(iii) hereof. The Committee may
specify the amount of the Performance Award pool as a percentage of any of such business criteria,
a percentage thereof in excess of a threshold amount or as another amount which need not bear a
strictly mathematical relationship to such business criteria.

               (v) Settlement of Performance Awards; Other Terms. Settlement of such Performance
Awards shall be in cash, Shares, other Awards or other property, in the

17

 

discretion of the
Committee. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance Awards. The Committee shall specify the circumstances in
which such Performance Awards shall be paid or forfeited in the event of termination of Continuous
Service by the Participant prior to the end of a Performance Period or settlement of Performance
Awards.

          (c) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and the achievement of performance goals relating to Performance
Awards under Section 7(b) shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility relating to such
Performance Awards if and to the extent required to comply with Code Section 162(m).

          (d) Status of Performance Awards Under Code Section 162(m). It is the intent of the
Company that Performance Awards under this Section 7 hereof granted to persons who are designated
by the Committee as likely to be Covered Employees within the meaning of Code Section 162(m) and
regulations thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 7(b), (c) and (d), including the definitions of
Covered Employee and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered Employee as used
herein shall mean only a person designated by the Committee, at the time of grant of Performance
Awards, as likely to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards does not comply or is inconsistent
with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such requirements.

     8. Certain Provisions Applicable to Awards or Sales.

          (a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Plan Administrator, be granted either alone or in addition to,
in tandem with or in substitution or exchange for, any other Award or any award granted under
another plan of the Company, any Related Entity or any business entity to be acquired by the
Company or a Related Entity or any other right of a Participant to receive payment from the Company
or any Related Entity. Such additional, tandem, and substitute or exchange Awards may be granted
at any time. If an Award is granted in substitution or
exchange for another Award or award, the Plan Administrator shall require the surrender of
such other Award or award in consideration for the grant of the new Award. In addition, Awards may
be granted in lieu of cash compensation, including in lieu of cash amounts payable under other
plans of the Company or any Related Entity.

          (b) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the
Plan and any applicable Award Agreement, payments to be made by the Company

18

 

or a Related Entity
upon the exercise of an Option or other Award or settlement of an Award may be made in such forms
as the Plan Administrator shall determine, including, without limitation, cash, other Awards or
other property, and may be made in a single payment or transfer, in installments or on a deferred
basis. The settlement of any Award may be accelerated, and cash paid in lieu of Shares in
connection with such settlement, in the discretion of the Plan Administrator or upon occurrence of
one or more specified events (in addition to a Change in Control). Installment or deferred
payments may be required by the Plan Administrator (subject to Section 10(g) of the Plan) or
permitted at the election of the Participant on terms and conditions established by the Plan
Administrator. Payments may include, without limitation, provisions for the payment or crediting
of a reasonable interest rate on installment or deferred payments or the grant or crediting of
Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in
Shares.

          (c) Exemptions from Section 16(b) Liability. It is the intent of the Company that
this Plan comply in all respects with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) to
the extent necessary to ensure that neither the grant of any Awards to nor other transaction by a
Participant who is subject to Section 16 of the Exchange Act is subject to liability under Section
16(b) thereof (except for transactions acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any Award Agreement does not comply
with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction,
such provision will be construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid
liability under Section 16(b).

          (d) Code Section 409A. If and to the extent that the Plan Administrator believes that
any Awards may constitute a “nonqualified deferred compensation plan” under Section 409A of the
Code, the terms and conditions set forth in the Award Agreement for that Award shall be drafted in
a manner that is intended to comply with, and shall be interpreted in a manner consistent with, the
applicable requirements of Section 409A of the Code, unless otherwise agreed to in writing by the
Participant and the Company.

     9. Change in Control; Corporate Transaction.

          (a) Change in Control.

               (i) The Plan Administrator may, in its discretion, accelerate the vesting, exercisability,
lapsing of restrictions or expiration of deferral of any Award, including upon a Change in Control.
In addition, the Plan Administrator may provide in an Award
Agreement that the performance goals relating to any Performance Award will be deemed to have
been met upon the occurrence of any Change in Control.

               (ii) In addition to the terms of Sections 9(a)(i) above, the effect of a “change in control,”
may be provided (1) in an employment, compensation or severance agreement, if any, between the
Company or any Related Entity and the Participant, relating to the Participant’s employment,
compensation or severance with or from the Company or such Related Entity or (2) in the agreement
evidencing the Award.

19

 

          (b) Corporate Transactions. In the event of a Corporate Transaction, any surviving
corporation or acquiring corporation (together, the “Successor Corporation”) may either (i) assume
or continue any or all Awards outstanding under the Plan or (ii) substitute similar stock awards
for outstanding Awards (it being understood that similar awards include, but are not limited to,
awards to acquire the same consideration paid to the shareholders or the Company, as the case may
be, pursuant to the Corporate Transaction). In the event that the Successor Corporation does not
assume or continue any or all such outstanding Awards or substitute similar stock awards for such
outstanding Awards, then with respect to Awards that have been not assumed, continued or
substituted, such Awards shall terminate if not exercised (if applicable) at or prior to such
effective time (contingent upon the effectiveness of the Corporate Transaction).

          In the event that the Successor Corporation in a Corporate Transaction refuses to assume,
continue or substitute for an Award, then the Award shall fully vest and be exercisable (if
applicable) as to all of the Shares subject to such Award, including Shares as to which such Award
would not otherwise be vested or, if applicable, exercisable. If an Award becomes fully vested
and, if applicable, exercisable in lieu of assumption, continuation or substitution in the event of
a Corporate Transaction, the Plan Administrator shall notify the Participant in writing or
electronically at least five (5) business days prior to the effective time of the Corporate
Transaction that the Award shall be fully vested and, if applicable, exercisable immediately prior
to and contingent upon the effective time of the Corporate Transaction. For the purposes of this
Section, an Award shall be considered assumed or substituted if, following the Corporate
Transaction, the assumed or substituted award confers the right to purchase or receive, for each
Share subject to the Award immediately prior to the Corporate Transaction, the consideration
(whether stock, cash, or other securities or property) received in the Corporate Transaction by
holders of Stock for each Share held on the effective time of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received in the Corporate
Transaction is not solely common stock of the Successor Corporation, the Plan Administrator may,
with the consent of the Successor Corporation, provide for the consideration to be received from
the Award (of, if applicable, upon the exercise of the Award), for each Share subject to the Award,
to be solely common stock of the Successor Corporation equal in fair market value to the per share
consideration received by holders of common stock in the Corporate Transaction. An Award shall be
considered continued if the Award continues in accordance with its terms and continues to be for
same number of Shares as prior to the Corporate Transaction. The Plan Administrator, in its sole
discretion, shall determine whether each Award has been assumed, continued, substituted or
terminated pursuant to the terms of this Section.

          The Plan Administrator, in its discretion and without the consent of any Participant, may (but
is not obligated to) either (i) accelerate the vesting of all Awards, including permitting the
lapse of any repurchase rights held by the Company (and, if applicable, the time at which such
Awards may be exercised), in full or as to some percentage of the Award, to a date prior to the
effective time of such Corporate Transaction as the Plan Administrator shall determine (contingent
upon the effectiveness of the Corporate Transaction) or (ii) provide for a cash payment in exchange
for the termination of an Award or any portion thereof where such cash payment is equal to the Fair
Market Value of the Shares that the Participant would receive if

20

 

the Award were fully vested and
exercised (if applicable) as of such date (less any applicable exercise price).

          Notwithstanding any other provision in this Plan to the contrary, with respect to Restricted
Stock and any other Award granted under the Plan with respect to which the Company has any
reacquisition or repurchase rights, the reacquisition or repurchase rights for such Awards may be
assigned by the Company to the successor of the Company (or the successor’s parent company) in
connection with such Corporate Transaction. In the event any such rights are not continued or
assigned to the Successor Corporation, then such rights shall lapse and the Award shall be fully
vested as of the effective time of the Corporate Transaction. In addition, the Plan Administrator,
in its discretion, may (but is not obligated to) provide that any reacquisition or repurchase
rights held by the Company with respect to such Awards shall lapse in whole or in part (contingent
upon the effectiveness of the Corporate Transaction).

          (c) Dissolution or Liquidation. In the event of a dissolution or liquidation of the
Company, then all outstanding Awards shall terminate immediately prior to the completion of such
dissolution or liquidation, and Shares subject to the Company’s repurchase option may be
repurchased by the Company notwithstanding the fact that the holder of such stock is still in
Continuous Service.

     10. General Provisions.

          (a) Compliance With Legal and Other Requirements. The Company may, to the extent
deemed necessary or advisable by the Plan Administrator, postpone the issuance or delivery of
Shares or payment of other benefits under any Award until completion of such registration or
qualification of such Shares or other required action under any federal or state law, rule or
regulation, listing or other required action with respect to any stock exchange or automated
quotation system upon which the Shares or other Company securities are listed or quoted or
compliance with any other obligation of the Company, as the Plan Administrator may consider
appropriate, and may require any Participant to make such representations, furnish such information
and comply with or be subject to such other conditions as it may consider appropriate in connection
with the issuance or delivery of Shares or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall take or cause to be
taken no action, and shall undertake or permit to arise no legal or contractual obligation, that
results or would result in any postponement of the issuance or delivery of Shares or payment of
benefits under any Award or the imposition of any other conditions on such issuance, delivery or
payment, to the extent that such postponement or other condition would
represent a greater burden on a Participant than existed on the 90th day preceding the Change
in Control.

          (b) Limits on Transferability; Beneficiaries.

               (i) General. Except as provided in the Award Agreement, a Participant may not assign,
sell, transfer or otherwise encumber or subject to any lien any Award or other right or interest
granted under this Plan, in whole or in part, other than by will or by operation of the laws of
descent and distribution, and such Awards or rights that may be

21

 

exercisable shall be exercised
during the lifetime of the Participant only by the Participant or his or her guardian or legal
representative.

               (ii) Permitted Transfer of Option. The Plan Administrator, in its sole discretion,
may permit the transfer of an Option (but not an Incentive Stock Option or any other right to
purchase Shares other than an Option) as follows: (A) by gift to a member of the Participant’s
Immediate Family or (B) by transfer by instrument to a trust providing that the Option is to be
passed to beneficiaries upon death of the Participant. For purposes of this Section 10(b)(ii),
“Immediate Family” shall mean the Participant’s spouse (including a former spouse subject to terms
of a domestic relations order); child, stepchild, grandchild, child-in-law; parent, stepparent,
grandparent, parent-in-law; sibling and sibling-in-law, and shall include adoptive relationships.
If a determination is made by counsel for the Company that the restrictions contained in this
Section 10(b)(ii) are not required by applicable federal or state securities laws under the
circumstances, then the Plan Administrator, in its sole discretion, may permit the transfer of
Awards (other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) to
one or more Beneficiaries or other transferees during the lifetime of the Participant, which may be
exercised by such transferees in accordance with the terms of such Award, but only if and to the
extent permitted by the Plan Administrator pursuant to the express terms of an Award Agreement
(subject to any terms and conditions which the Plan Administrator may impose thereon, and further
subject to any prohibitions and restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee or other person claiming any rights under the Plan from or through any
Participant shall be subject to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except as otherwise determined by the Plan Administrator, and to
any additional terms and conditions deemed necessary or appropriate by the Plan Administrator.

          (c) Adjustments.

               (i) Adjustments to Awards. In the event that any dividend or other distribution
(whether in the form of cash, Shares or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event affects the Shares and/or
such other securities of the Company or any other issuer such that a substitution, exchange or
adjustment is determined by the Plan Administrator to be appropriate, then the Plan Administrator
shall, in such manner as it may deem equitable, substitute, exchange or adjust any or all of (A)
the number and kind of Shares which may be delivered in connection with Awards granted thereafter,
(B) the number and kind of Shares by which annual per-person Award limitations are measured under
Section 5 hereof, (C) the number and kind of Shares subject to or
deliverable in respect of outstanding Awards, (D) the exercise price, grant price or purchase
price relating to any Award and/or make provision for payment of cash or other property in respect
of any outstanding Award, and (E) any other aspect of any Award that the Plan Administrator
determines to be appropriate.

               (ii) Other Adjustments. The Plan Administrator (which shall be a Committee to the
extent such authority is required to be exercised by a Committee to comply with Code Section
162(m)) is authorized to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including Awards subject to performance goals) in recognition

22

 

of unusual or
nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and
assets) affecting the Company, any Related Entity or any business unit, or the financial statements
of the Company or any Related Entity, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in view of the Plan
Administrator’s assessment of the business strategy of the Company, any Related Entity or business
unit thereof, performance of comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, Stock Appreciation Rights or Performance Awards granted to
Participants designated by the Plan Administrator as Covered Employees and intended to qualify as
“performance-based compensation” under Code Section 162(m) and the regulations thereunder to
otherwise fail to qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder.

          (d) Taxes. The Company and any Related Entity are authorized to withhold from any
Award granted, any payment relating to an Award under the Plan, including from a distribution of
Shares or any payroll or other payment to a Participant, amounts of withholding and other taxes due
or potentially payable in connection with any transaction involving an Award, and to take such
other action as the Plan Administrator may deem advisable to enable the Company and Participants to
satisfy obligations for the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Shares or other property and
to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations, either
on a mandatory or elective basis in the discretion of the Plan Administrator.

          (e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue
or terminate the Plan or the Committee’s authority to grant Awards under the Plan, without the
consent of shareholders or Participants. Any amendment or alteration to the Plan shall be subject
to the approval of the Company’s shareholders if such shareholder approval is deemed necessary and
advisable by the Board. However, without the consent of an affected Participant, no such amendment,
alteration, suspension, discontinuance or termination of the Plan may materially and adversely
affect the rights of such Participant under any previously granted and outstanding Award. The Plan
Administrator may waive any conditions or rights under or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award Agreement relating thereto, except as
otherwise provided in the Plan; provided that, without the consent of an affected Participant, no
such action may materially and adversely affect the rights of such Participant under such Award.

          (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ of the Company or a Related Entity; (ii)
interfering in any way with the right of the Company or a Related Entity to terminate any Eligible
Person’s or Participant’s Continuous Service at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated uniformly with other
Participants and Employees or (iv) conferring on a Participant any of the

23

 

rights of a shareholder
of the Company unless and until the Participant is duly issued or transferred Shares in accordance
with the terms of an Award.

          (g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute
an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet
made to a Participant or obligations to deliver Shares pursuant to an Award, nothing contained in
the Plan or any Award shall give any such Participant any rights that are greater than those of a
general creditor of the Company; provided that the Plan Administrator may authorize the creation of
trusts and deposit therein cash, Shares, other Awards or other property or make other arrangements
to meet the Company’s obligations under the Plan. Such trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Plan Administrator otherwise
determines with the consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative investments, subject
to such terms and conditions as the Plan Administrator may specify and in accordance with
applicable law.

          (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its
submission to the shareholders of the Company for approval shall be construed as creating any
limitations on the power of the Plan Administrator to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not qualify under Code
Section 162(m).

          (i) Fractional Shares. No fractional Shares shall be issued or delivered pursuant to
the Plan or any Award. The Plan Administrator shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

          (j) Governing Law. The validity, construction and effect of the Plan, any rules and
regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws
of the State of Delaware without giving effect to principles of conflicts of laws, and applicable
federal law.

          (k) Plan Effective Date and Shareholder Approval; Termination of Plan. The Plan shall
become effective on the Effective Date, subject to subsequent approval within twelve (12) months of
its adoption by the Board by shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable Nasdaq requirements, and
other laws, regulations, and obligations of the Company applicable to the Plan. Awards may be
granted subject to shareholder approval, but may not be exercised or otherwise settled in the event
shareholder approval is not obtained. The Plan shall
terminate no later than ten (10) years from the date of the later of (x) the Effective Date
and (y) the date an increase in the number of shares reserved for issuance under the Plan is
approved by the Board (so long as such increase is also approved by the shareholders).

24exv10w8

 

Exhibit
10.8

Vocus, Inc.

2005 STOCK AWARD PLAN

STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the 2005 Stock Award Plan shall have the
same defined meanings in this Stock Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

	 	 	 	 	 
	 

	 	Name:	 	 
	 	 	 	 	 
	 

	 	Address:	 	 
	 	 	 	 	 

     The undersigned Optionee has been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as follows:

	 	 	 	 	 	 	 
	 

	 	Date of Grant:	 	 	 	 
	 	 	 	 	 
	 

	 	Vesting Commencement Date:	 	 	 	 
	 	 	 	 	 
	 

	 	Exercise Price per Share:	 	$	 	 
	 	 	 	 	 
	 

	 	Total Number of Shares Granted:
	 		 
	 	 	 	 	 
	 

	 	Total Exercise Price:
	 	$	 
	 	 	 	 	 

	 	 	 	 	 
	 

	 	Type of Option:
	 	                      Incentive Stock Option
	 

	 	 	 	                      Nonstatutory Stock Option

Expiration Date: As provided in Section 3 of the Agreement.

Vesting Schedule: This Option shall be vested according to the following vesting
schedule:

Exercise Schedule: To the extent vested, this Option shall be exercisable during
its term as provided in Section 3 of the Stock Option Agreement.

- 1 -

 

II. AGREEMENT

     1. Grant of Option. The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Stock Option Grant (the “Optionee”), an option (the “Option”) to
purchase the number of Shares set forth in the Notice of Stock Option Grant, at the exercise price
per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”), and subject to the
terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section
10(e) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this
Option Agreement, the terms and conditions of the Plan shall prevail.

     If designated in the Notice of Stock Option Grant 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 Code Section 422(d), this Option
shall be treated as a Nonstatutory Stock Option (“NSO”).

     2. Exercise of Option.

          (a) Right to Exercise. This Option shall be exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable
provisions of the Plan and this Option 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 with respect to which the Option is being
exercised, and such other representations and agreements as may be required by the Company.

     No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the Option is exercised
with respect to such Shares.

     The Option shall be deemed exercised when the Company receives (i) written or electronic
notice of exercise (in accordance with this Option Agreement) from the Optionee (or other person
entitled to exercise the Option), and (ii) full payment for the Shares with respect to which the
Option is exercised, and (iii) any other documents required by this Option Agreement or the
Exercise Notice. Full payment may consist of any consideration and method of payment permitted by
this Option Agreement. Shares issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise
of the Option. The Company shall issue (or cause to be issued)
such Shares promptly after the Option is exercised. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the Shares are issued, except as
provided in Section 10(c) of the Plan.

- 2 -

 

     Exercise of this Option in any manner shall result in a decrease in the number of Shares
thereafter available for sale under the Option, by the number of Shares as to which the Option is
exercised.

     3. Term. Optionee may not exercise the Option before the commencement of its term or
after its term expires. During the term of the Option, Optionee may only exercise the Option to
the extent vested. The term of the Option commences on the Date of Grant and expires upon the
earliest of the following:

          (a) With respect to the unvested portion of the Option, upon termination of Optionee’s
Continuous Service;

          (b) With respect to the vested portion of the Option, [three (3) months] after the termination
of Optionee’s Continuous Service for any reason other than Optionee’s Disability, death or
termination for Cause;

          (c) With respect to the vested portion of the Option, immediately upon the termination of
Optionee’s Continuous Service for Cause;

          (d) With respect to the vested portion of the Option, [twelve (12)] months after the
termination of Optionee’s Continuous Service due to Optionee’s Disability or death;

          (e) Immediately prior to the close of certain Corporate Transactions, pursuant to Section
10(c) of the Plan; or

          (f) The day before the [tenth (10th)] anniversary of the Date of Grant.

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

          (a) cash or check;

          (b) consideration received by the Company under a formal cashless exercise program adopted by
the Company in connection with the Plan, if any; or

          (c) surrender of other Shares which, (i) in the case of Shares acquired from the Company,
either directly or indirectly, have been owned by the Optionee for more than six (6) months on the
date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of the Exercised Shares.

     5. Optionee’s Representations. In the event the Shares have not been registered under
the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall,
if required by the Company, concurrently with the exercise of all or any portion of this Option,
deliver to the Company an investment representation statement in a form satisfactory to the
Company.

     6. Lock-Up Period. Optionee hereby agrees that Optionee shall not offer, pledge,
sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to

- 3 -

 

sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any Common Stock (or other securities) of the Company or enter into any
swap, hedging or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any Common Stock (or other securities) of the Company held by
Optionee (other than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the Company not to
exceed two hundred ten (210) days following the effective date of any registration statement of the
Company filed under the Securities Act of 1933, as amended.

     Optionee agrees to execute and deliver such other agreements as may be reasonably requested by
the Company or the underwriter which are consistent with the foregoing or which are necessary to
give further effect thereto. In addition, if requested by the Company or the representative of the
underwriters of Common Stock (or other securities) of the Company, Optionee shall provide, within
ten (10) days of such request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the Company’s securities
pursuant to a registration statement filed under the Securities Act. The obligations described in
this Section shall not apply to a registration relating solely to employee benefit plans on Form
S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating
solely to a Rule 145 (promulgated under the Securities Act of 1933, as amended) transaction on Form
S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities) subject to the
foregoing restriction until the end of said two hundred ten (210) day period. Optionee agrees that
any transferee of the Option or shares acquired pursuant to the Option shall be bound by this
Section.

     7. Restrictions on Exercise. This Option may not be exercised until such time as the
Plan has been approved by the stockholders of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such shares would constitute a
violation of any Applicable Law.

     8. 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 Optionee only by Optionee. The terms of the Plan and this Option Agreement shall be
binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

9. Tax Obligations.

          (a) Withholding Taxes. Optionee agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all
Federal, state, local and foreign income and employment tax withholding requirements applicable to
the Option exercise. Optionee 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.

          (b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to
Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of

- 4 -

 

Grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify
the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income
tax withholding by the Company on the compensation income recognized by the Optionee.

     10. Entire Agreement; Governing Law. The Plan is incorporated herein by reference.
The Plan and this Option 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 Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee’s interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not the choice of law
rules of the State of Delaware.

     11. No Guarantee of Continued Service. Optionee acknowledges and agrees that the
vesting of shares pursuant to the vesting schedule hereof is earned only by continuing as an
Employee, Consultant or Director (not through the act of being hired, being granted this Option or
acquiring shares hereunder). Optionee 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 an Employee, Consultant or Director for the
vesting period, for any period, or at all, and shall not interfere in any way with Optionee’s right
or the company’s right to terminate Optionee’s relationship as an Employee, Consultant or Director,
as applicable, at any time, with or without cause.

     Optionee 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. Optionee has reviewed the Plan and this Option in their entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option and fully understands
all provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Plan Administrator upon any
questions arising under the Plan or this Option. Optionee further agrees to notify the Company
upon any change in the residence address indicated below.

	 	 	 	 	 
	Optionee

	 	Vocus, Inc.	 	 
	 
	 	 	 	 
	 	 	 
	Signature

	 	By	 	 
	 
	 	 	 	 
	 	 	 
	Print Name

	 	Title	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Residence Address

	 	 	 	 

- 5 -

 

EXHIBIT A

2005 STOCK AWARD PLAN

EXERCISE NOTICE

Vocus, Inc.

4296 Forbes Blvd.

Lanham, MD 20706

Attention:

     1. Exercise of Option. Effective as of today,                                         ,                     , the undersigned
(“Optionee”) hereby elects to exercise Optionee’s option to purchase                      shares of the Common
Stock (the “Shares”) of Vocus, Inc. (the “Company”) under and pursuant to the 2005 Stock Award Plan
(the “Plan”) and the Stock Option Agreement dated                                         ,                      (the “Option Agreement”).
Unless otherwise defined herein, the terms defined in the 2005 Stock Award Plan or the Stock Option
Agreement shall have the same defined meanings in this Exercise Notice.

     2. Delivery of Payment. Optionee herewith delivers to the Company the full purchase
price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in
connection with the exercise of the Option.

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

     4. Rights as Stockholder. 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 stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall
be issued to the Optionee as soon as practicable after the Option is exercised in accordance with
the Option Agreement. 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 10(c) of the Plan.

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

     6. Restrictive Legends and Stop-Transfer Orders.

          (a) Legends. Optionee understands and agrees that the Company shall cause the legends
set forth below or legends substantially equivalent thereto, to be placed upon any

A-1

 

certificate(s)
evidencing ownership of the Shares together with any other legends that may be required by the
Company or by state or federal securities laws:

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER FOR A PERIOD NOT TO EXCEED 210 DAYS FOLLOWING THE EFFECTIVE DATE OF AN
UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE
MANAGING UNDERWRITER.

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

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

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

     8. Interpretation. Any dispute regarding the interpretation of this Exercise Notice
shall be submitted by Optionee or by the Company forthwith to the Plan Administrator which shall
review such dispute at its next regular meeting. The resolution of such a dispute by the Plan
Administrator shall be final and binding on all parties.

     9. Governing Law; Severability. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules of the State of Delaware. In the event that any
provision hereof becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Option Agreement will continue in full force and effect.

     10. Entire Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Notice, the Plan, the Option Agreement and the Investment Representation
Statement 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 Optionee
with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s
interest except by means of a writing signed by the Company and Optionee.

A-2

 

	 	 	 	 	 
	Optionee

	 	Vocus, Inc.	 	 
	 
	 	 	 	 
	 	 	 
	Signature

	 	By	 	 
	 
	 	 	 	 
	 	 	 
	Print Name

	 	Title	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Residence Address
	 	 	 	 

SIGNATURE PAGE OF STOCK OPTION EXERCISE NOTICE

A-3

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