Document:

1999 Stock Incentive Plan

 Exhibit 10.1 
  
 HOUSEVALUES, INC. 
  
 1999 STOCK INCENTIVE PLAN 
  
 (As Amended July 21, 2004) 
  
 SECTION 1. PURPOSE 
  
 The purpose of the HouseValues, Inc. 1999 Stock Incentive Plan (the “Plan”) is to enhance the long-term shareholder value of HouseValues, Inc.,
a Washington corporation (the “Company”), by offering opportunities to selected persons to participate in the Company’s growth and success, and to encourage them to remain in the service of the Company and its Related Corporations (as
defined in Section 2) and to acquire and maintain stock ownership in the Company. 
  
 SECTION 2. DEFINITIONS 
  
 For purposes of the Plan, the following terms shall be defined as set forth below: 
  
 “Award” means an award or grant made pursuant to the Plan, including, without limitation, awards or grants of Stock Awards and Options, or any combination of the foregoing. 
  
 “Board” means the Board of Directors of the Company.

  
 “Cause,” unless otherwise defined in the
instrument evidencing the Award or in a written employment or services agreement between the Company or a Related Company and a Participant where the context makes such definition applicable to the Award, means dishonesty, fraud, misconduct,
unauthorized use or disclosure of confidential information or trade secrets, or conviction or confession of a crime punishable by law (except minor violations), in each case as determined by the Plan Administrator, and its determination shall be
conclusive and binding. 
  
 “Code” means
the Internal Revenue Code of 1986, as amended from time to time. 
  
 “Common Stock” means the common stock, par value $0.001 per share, of the Company. 
  
 “Corporate Transaction,” unless otherwise defined in the instrument evidencing the Award or in a written employment or services agreement
between the Company or a Related Company and a Participant where the context makes such definition applicable to the Award, means either of the following events: 
  
 (a) Consummation of any merger or consolidation of the Company with or into another corporation; or 
  
 (b) Consummation of any sale, lease, exchange or other transfer in one
transaction or a series of related transactions of all or substantially all the Company’s outstanding securities or 

  

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substantially all the Company’s assets other than a transfer of the Company’s assets or securities to a majority-owned subsidiary corporation (as
defined in Section 8.3) of the Company. 
  
 “Disability,” unless otherwise defined by the Plan Administrator, means a mental or physical impairment of the Participant that is expected to result in death or that has lasted or is expected to last for a
continuous period of 12 months or more and that causes the Participant to be unable, in the opinion of the Company, to perform his or her duties for the Company or a Related Corporation and to be engaged in any substantial gainful activity.

  
 “Effective Date” has the meaning set forth in
Section 17. 
  
 “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 
  
 “Fair
Market Value” shall be as established in good faith by the Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National Market, the closing sales price for the Common Stock as reported by the Nasdaq National Market for a
single trading day or (b) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange, the closing sales price for the Common Stock as such price is officially quoted in the composite tape of transactions on such
exchange for a single trading day. If there is no such reported price for the Common Stock for the date in question, then such price on the last preceding date for which such price exists shall be determinative of Fair Market Value. 
  
 “Good Reason,” unless otherwise defined in the instrument
evidencing the Award or in a written employment or services agreement between the Company or a Related Company and a Participant where the context makes such definition applicable to the Award, means the occurrence of any of the following events or
conditions and the failure of the Successor Corporation to cure such event or condition within 30 days after receipt of written notice from the Participant: 
  
 (a) a change in the Participant’s status, title, position or responsibilities (including reporting responsibilities) that, in the Participant’s
reasonable judgment, represents a substantial reduction in the status, title, position or responsibilities as in effect immediately prior thereto; the assignment to the Participant of any duties or responsibilities that, in the Participant’s
reasonable judgment, are materially inconsistent with such status, title, position or responsibilities; or any removal of the Participant from or failure to reappoint or reelect the Participant to any of such positions, except in connection with the
termination of Participant’s employment for Cause, for Disability or as a result of his or her death, or by the Participant other than for Good Reason; 
  
 (b) a reduction in the Participant’s annual base salary; 
  
 (c) the Successor Corporation’s requiring the Participant (without the Participant’s consent) to be based at any place outside a 35-mile radius
of his or her place of employment prior to a Corporate Transaction, except as reasonably required travel on the Successor Corporation’s business that is not materially greater than such travel requirements prior to the Corporate Transaction;

  

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 (d) the Successor Corporation’s failure to (i) continue in effect any material compensation or
benefit plan (or the substantial equivalent thereof) in which the Participant was participating at the time of a Corporate Transaction, including, but not limited to, the Plan, or (ii) provide the Participant with compensation and benefits
substantially equivalent (in terms of benefit levels and/or reward opportunities) to those provided for under each material employee benefit plan, program and practice as in effect immediately prior to the Corporate Transaction; 
  
 (e) any material breach by the Successor Corporation of its obligations to
the Participant under the Plan or any substantially equivalent plan of the Successor Corporation; or 
  
 (f) any purported termination of the Participant’s employment or service relationship for Cause by the Successor Corporation that is not in
accordance with the definition of Cause under the Plan. 
  
 “Grant Date” means the date on which the Plan Administrator completes the corporate action authorizing the grant of an Award and all conditions precedent to the grant have been satisfied, provided that conditions to the
exercisability or vesting of Awards shall not defer the Grant Date. 
  
 “Incentive Stock Option” means an Option to purchase Common Stock granted under Section 7 with the intention that it qualify as an “incentive stock option” as that term is defined in Section 422 of the Code.

  
 “Nonqualified Stock Option” means an Option
to purchase Common Stock granted under Section 7 other than an Incentive Stock Option. 
  
 “Option” means the right to purchase Common Stock granted under Section 7. 
  
 “Option Term” has the meaning set forth in Section 7.3. 
  
 “Parent,” except as otherwise provided in Section 8.3 in connection with Incentive Stock
Options, means any entity, whether now or hereafter existing, that directly or indirectly controls the Company. 
  
 “Participant” means the person to whom an Award is granted. 
  
 “Plan Administrator” means the Board or any committee or committees designated by the Board to administer
the Plan under Section 3.1. 
  
 “Related
Corporation” means any Parent or Subsidiary of the Company. 
  
 “Related Party Transaction” means (a) a merger or consolidation of the Company in which the holders of shares of Common Stock immediately prior to the merger hold at least a majority of the shares of Common Stock of the
surviving corporation (or the parent corporation thereof) immediately after the merger, (b) a mere reincorporation of the Company or (c) a transaction undertaken for the sole purpose of creating a holding company. 
  

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 “Retirement” means retirement as of the individual’s normal retirement date under
the Company’s 401(k) Plan or other similar successor plan applicable to salaried employees, unless otherwise defined by the Plan Administrator from time to time for purposes of the Plan. 
  
 “Securities Act” means the Securities Act of 1933, as
amended. 
  
 “Stock Award” means shares of Common
Stock or units denominated in Common Stock granted under Section 9, the rights of ownership of which may be subject to restrictions prescribed by the Plan Administrator. 
  
 “Subsidiary,” except as otherwise provided in Section 8.3 in connection with Incentive Stock
Options, means any entity that is directly or indirectly controlled by the Company. 
  
 “Successor Corporation” has the meaning set forth in Section 12.3. 
  
 “Termination Date” has the meaning set forth in Section 7.6. 
  
 SECTION 3. ADMINISTRATION 
  

	3.1	Plan Administrator 

  
 The Plan shall be administered by the Board and/or a committee or committees (which term includes subcommittees) appointed by, and consisting of two or
more members of, the Board (a “Plan Administrator”). If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the members of any committee acting as Plan
Administrator, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) “outside directors” as contemplated by Section 162(m) of the Code and (b) “nonemployee
directors” as contemplated by Rule 16b-3 under the Exchange Act. Notwithstanding the foregoing, the Board may delegate the responsibility for administering the Plan with respect to designated classes of eligible persons to different committees
consisting of two or more members of the Board, subject to such limitations as the Board deems appropriate. Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time. 
  

	3.2	Administration and Interpretation by Plan Administrator 

  
 Except for the terms and conditions explicitly set forth in the Plan, the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection of individuals to be granted Awards, the type of Awards, the number of shares of Common Stock subject to an Award, all terms, conditions, restrictions and limitations,
if any, of an Award and the terms of any instrument that evidences the Award. The Plan Administrator shall also have exclusive authority to interpret the Plan and the terms of any instrument evidencing the Award and may from time to time adopt and
change rules and regulations of general application for the Plan’s administration. The Plan Administrator’s interpretation of the Plan and its rules and regulations, and all actions taken and determinations made by the Plan Administrator
pursuant to the Plan, shall be conclusive and binding on all 

  

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parties involved or affected. The Plan Administrator may delegate administrative duties to such of the Company’s officers as it so determines.

  
 SECTION 4. STOCK SUBJECT TO THE PLAN 
  

	4.1	Authorized Number of Shares 

  
 Subject to adjustment from time to time as provided in Section 12.1, a maximum of 5,453,644 shares of Common Stock shall be available for issuance under
the Plan. 
  
 Shares issued under the Plan shall be drawn from
authorized and unissued shares or shares now held or subsequently acquired by the Company. 
  

	4.2	Reuse of Shares 

  
 Any shares of Common Stock that have been made subject to an Award that cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for or settled in vested and nonforfeitable shares) shall again be available for issuance in connection with future grants of Awards under the Plan. In addition, if shares issued under the Plan are reacquired
by the Company pursuant to any forfeiture provision, right of repurchase or right of first refusal, such shares shall again be available for the purposes of the Plan. Notwithstanding the foregoing, the maximum number of shares that may be issued
upon the exercise of Incentive Stock Options shall equal the share number stated in Section 4.1, subject to adjustment from time to time as provided in Section 12.1. 
  
 SECTION 5. ELIGIBILITY 
  
 Awards may be granted under the Plan to those officers, directors and employees of the Company and its Related Corporations as the Plan Administrator from
time to time selects. Awards may also be made to consultants, agents, advisors and independent contractors who provide services to the Company and its Related Corporations; provided, however, that such Participants render bona fide services that are
not in connection with the offer and sale of the Company’s securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities. 
  
 SECTION 6. AWARDS 
  

	6.1	Form and Grant of Awards 

  
 The Plan Administrator shall have the authority, in its sole discretion, to determine the type or types of Awards to be made under the Plan. Such Awards
may include, but are not limited to, Incentive Stock Options, Nonqualified Stock Options and Stock Awards. Awards may be granted singly or in combination. 
  

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	6.2	Settlement of Awards 

  
 The Company may settle Awards through the delivery of shares of Common Stock, the granting of replacement Awards or any combination thereof as the Plan
Administrator shall determine. Any Award settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as the Plan Administrator shall determine. The Plan Administrator may permit or require the deferral
of any Award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred stock equivalents.

  

	6.3	Acquired Company Awards 

  
 Notwithstanding anything in the Plan to the contrary, the Plan Administrator may grant Awards under the Plan in substitution for awards issued under other
plans, or assume under the Plan awards issued under other plans, if the other plans are or were plans of other acquired entities (“Acquired Entities”) (or the parent of the Acquired Entity) and the new Award is substituted, or the old
award is assumed, by reason of a merger, consolidation, acquisition of property or stock, reorganization or liquidation (the “Acquisition Transaction”). In the event that a written agreement pursuant to which the Acquisition Transaction is
completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such awards shall be deemed to be Participants. 
  
 SECTION 7. AWARDS OF OPTIONS 
  

	7.1	Grant of Options 

  
 The Plan Administrator is authorized under the Plan, in its sole discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock Options,
which shall be appropriately designated. 
  

	7.2	Option Exercise Price 

  
 The exercise price for shares purchased under an Option shall be as determined by the Plan Administrator, but shall not be less than 100% of the Fair
Market Value of the Common Stock on the Grant Date with respect to Incentive Stock Options. For Incentive Stock Options granted to a more than 10% shareholder, the Option exercise price shall be as specified in Section 8.2. 
  

	7.3	Term of Options 

  
 The term of each Option (the “Option Term”) shall be as established by the Plan Administrator or, if not so established, shall be ten years from
the Grant Date. For Incentive Stock Options, the maximum Option Term shall be as specified in Sections 8.2 and 8.4. 
  

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	7.4	Exercise of Options 

  
 The Plan Administrator shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the
Option shall vest and become exercisable, which provisions may be waived or modified by the Plan Administrator at any time. If not so established in the instrument evidencing the Option, the Option shall vest and become exercisable according to the
following schedule, which may be waived or modified by the Plan Administrator at any time: 
  

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	 Period of Participant’s Continuous
 Employment or Service With the Company
 or Its Related Corporations From the
 Vesting Commencement Date
	  	 Percent of Total Option
 That Is Vested and
Exercisable

		
	After 1 year	  	25%
		
	Each additional three-month period of continuous service completed thereafter	  	An additional 6.25%
		
	After 4 years	  	100%

  
 The Plan Administrator
may adjust the vesting schedule of an Option held by a Participant who works less than “full-time” as that term is defined by the Plan Administrator or who takes a Company-approved leave of absence. 
  
 To the extent that an Option has vested and become exercisable, the Option
may be exercised from time to time by delivery to the Company of a written stock option exercise agreement or notice, in a form and in accordance with procedures established by the Plan Administrator, setting forth the number of shares with respect
to which the Option is being exercised, the restrictions imposed on the shares purchased under such exercise agreement, if any, and such representations and agreements as may be required by the Plan Administrator, accompanied by payment in full as
described in Section 7.5. An Option may not be exercised for less than a reasonable number of shares at any one time, as determined by the Plan Administrator. 
  

	7.5	Payment of Exercise Price 

  
 The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration must be paid in cash or by check or, unless the Plan Administrator in its sole discretion determines otherwise, either at the time the Option is granted or at any time
before it is exercised, in any combination of 
  
 (a) cash or
check; 
  
 (b) tendering (either actually or, if and so long as
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of Common Stock already owned by the Participant for at least six months (or any shorter period necessary to avoid a charge to the Company’s
earnings for financial reporting purposes) having a Fair Market Value on the day prior to the exercise date equal to the aggregate Option exercise price; 
  
 (c) if and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed exercise notice,
together with irrevocable instructions, to (i) a brokerage firm designated by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may
arise in connection with the exercise and (ii) the Company 

  

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to deliver the certificates for such purchased shares directly to such brokerage firm, all in accordance with the regulations of the Federal Reserve Board;
or 
  
 (d) such other consideration as the Plan Administrator may
permit. 
  
 In addition, to assist a Participant (including a
Participant who is an officer or a director of the Company) in acquiring shares of Common Stock pursuant to an Award granted under the Plan, the Plan Administrator, in its sole discretion, may authorize, either at the Grant Date or at any time
before the acquisition of Common Stock pursuant to the Award, (i) the payment by a Participant of a promissory note, (ii) the guarantee by the Company of a loan obtained by the Participant from a third party. Such notes or loans must be full
recourse to the extent necessary to avoid charges to the Company’s earnings for financial reporting purposes. Subject to the foregoing, the Plan Administrator shall in its sole discretion specify the terms of any loans or loan guarantees,
including the interest rate and terms of and security for repayment. 
  

	7.6	Post-Termination Exercises 

  
 The Plan Administrator shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable, and
the terms and conditions of such exercise, if a Participant ceases to be employed by, or to provide services to, the Company or its Related Corporations, which provisions may be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option shall be exercisable according to the following terms and conditions, which may be waived or modified by the Plan Administrator at any time: 
  
 (a) Any portion of an Option that is not vested and exercisable on the date
of termination of the Participant’s employment or service relationship (the “Termination Date”) shall expire on such date. 
  
 (b) Any portion of an Option that is vested and exercisable on the Termination Date shall expire upon the earliest to occur of 
  
 (i) the last day of the Option Term; 
  
 (ii) if the Participant’s Termination Date occurs for
reasons other than Cause, death, Disability, or Retirement, the three-month anniversary of such Termination Date; and 
  
 (iii) if the Participant’s Termination Date occurs by reason of Retirement, Disability or death, the one-year anniversary of such
Termination Date. 
  
 Notwithstanding the foregoing, if the
Participant dies after the Termination Date while the Option is otherwise exercisable, the portion of the Option that is vested and exercisable on such Termination Date shall expire upon the earlier to occur of (y) the last day of the Option Term
and (z) the first anniversary of the date of death, unless the Plan Administrator determines otherwise. 
  

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 Also notwithstanding the foregoing, in case of termination of the Participant’s employment or
service relationship for Cause, the Option shall automatically expire upon first notification to the Participant of such termination, unless the Plan Administrator determines otherwise. If a Participant’s employment or service relationship with
the Company is suspended pending an investigation of whether the Participant shall be terminated for Cause, all the Participant’s rights under any Option likewise shall be suspended during the period of investigation. 
  
 A Participant’s transfer of employment or service relationship between
or among the Company and its Related Corporations, or a change in status from an employee to a consultant, agent, advisor or independent contractor or a change in status from a consultant, agent, advisor or independent contractor to an employee,
shall not be considered a termination of employment or service relationship for purposes of this Section 7. The effect of a Company-approved leave of absence on the terms and conditions of an Option shall be determined by the Plan Administrator, in
its sole discretion. 
  
 SECTION 8. INCENTIVE STOCK OPTION
LIMITATIONS 
  
 To the extent required by Section 422 of the
Code, Incentive Stock Options shall be subject to the following additional terms and conditions: 
  

	8.1	Dollar Limitation 

  
 To the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all other stock option plans of the Company or of its parent or subsidiary corporations) exceeds $100,000, such portion in excess of $100,000 shall be treated as a
Nonqualified Stock Option. In the event the Participant holds two or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are
granted. 
  

	8.2	More Than 10% Shareholders 

  
 If an individual owns more than 10% of the total voting power of all classes of the Company’s stock or of its parent or subsidiary corporations, then
the exercise price per share of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date and the Option Term shall not exceed five years. The determination of more than 10% ownership shall
be made in accordance with Section 422 of the Code. 
  

	8.3	Eligible Employees 

  
 Individuals who are not employees of the Company or one of its parent corporations or subsidiary corporations may not be granted Incentive Stock Options.
For purposes of this Section, “parent corporation” and “subsidiary corporation” shall have the meanings attributed to those terms for purposes of Section 422 of the Code. 
  

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	8.4	Term 

  
 Except as provided in Section 8.2, the Option Term shall not exceed 10 years. 
  

	8.5	Exercisability 

  
 An Option designated as an Incentive Stock Option shall cease to qualify for favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months after the Termination Date for reasons other than death or Disability, (b) more than one year after the Termination Date by reason of Disability, or (c) after the
Participant has been on leave of absence for more than 90 days, unless the Participant’s reemployment rights are guaranteed by statute or contract. 
  
 For purposes of this Section 8.5, Disability shall mean “disability” as that term is defined for purposes of Section 422 of the Code.

  

	8.6	Taxation of Incentive Stock Options 

  
 In order to obtain certain tax benefits afforded to Incentive Stock Options under Section 422 of the Code, the Participant must hold the shares issued
upon the exercise of an Incentive Stock Option for two years after the Grant Date and one year from the date of exercise. A Participant may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option. The
Participant shall give the Company prompt notice of any disposition of shares acquired by the exercise of an Incentive Stock Option prior to the expiration of such holding periods. 
  

	8.7	Promissory Notes 

  
 The amount of any promissory note delivered pursuant to Section 7.5 in connection with an Incentive Stock Option shall bear interest at a rate specified
by the Plan Administrator, but in no case less than the rate required to avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax purposes. 
  
 SECTION 9. STOCK AWARDS 
  

	9.1	Grant of Stock Awards 

  
 The Plan Administrator is authorized to make Awards of Common Stock or Awards denominated in units of Common Stock on such terms and conditions and
subject to such restrictions, if any (which may be based on continuous service with the Company or the achievement of performance goals), as the Plan Administrator shall determine, in its sole discretion, which terms, conditions and restrictions
shall be set forth in the instrument evidencing the Award. The terms, conditions and restrictions that the Plan Administrator shall have the power to determine shall include, without limitation, the manner in which shares subject to Stock Awards are
held during the periods they are subject to restrictions and the circumstances under which forfeiture of the Stock Award shall occur by reason of termination of the Participant’s employment or service relationship. 
  

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	9.2	Issuance of Shares 

  
 Upon the satisfaction of any terms, conditions and restrictions prescribed in respect to a Stock Award, or upon the Participant’s release from any
terms, conditions and restrictions of a Stock Award, as determined by the Plan Administrator, the Company shall release, as soon as practicable, to the Participant or, in the case of the Participant’s death, to the personal representative of
the Participant’s estate or as the appropriate court directs, the appropriate number of shares of Common Stock. 
  

	9.3	Waiver of Restrictions 

  
 Notwithstanding any other provisions of the Plan, the Plan Administrator may, in its sole discretion, waive the forfeiture period and any other terms,
conditions or restrictions on any Stock Award under such circumstances and subject to such terms and conditions as the Plan Administrator shall deem appropriate. 
  
 SECTION 10. WITHHOLDING 
  
 The Company may require the Participant to pay to the Company the amount of any taxes that the Company is required by applicable federal, state, local or
foreign law to withhold with respect to the grant, vesting or exercise of an Award. The Company shall not be required to issue any shares of Common Stock under the Plan until such obligations are satisfied. 
  
 The Plan Administrator may permit or require a Participant to satisfy all or
part of his or her tax withholding obligations by (a) paying cash to the Company, (b) having the Company withhold from any cash amounts otherwise due or to become due from the Company to the Participant, or (c) having the Company withhold a number
of shares of Common Stock that would otherwise be issued to the Participant (or become vested in the case of Stock Awards) having a value equal to the tax withholding obligations, or (d) surrendering a number of shares of Common Stock the
Participant already owns having a value equal to the tax withholding obligations. The value of the shares so withheld may not exceed the employer’s minimum required tax withholding rate, and the value of the shares so tendered may not exceed
such rate to the extent the Participant has owned the tendered shares for less than six months if such limitation is necessary to avoid a charge to the Company for financial reporting purposes. 
  
 SECTION 11. ASSIGNABILITY 
  
 Awards granted under the Plan and any interest therein may not be assigned,
pledged or transferred by the Participant and may not be made subject to attachment or similar proceedings otherwise than by will or by the applicable laws of descent and distribution, and, during the Participant’s lifetime, such Awards may be
exercised only by the Participant. Notwithstanding the foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its sole discretion, may permit such assignment, transfer and exercisability and may permit a
Participant to designate a beneficiary who may exercise the Award or receive compensation under the Award after the Participant’s death; provided, however, that any Award so assigned or transferred shall be subject to all the same terms and
conditions contained in the instrument evidencing the Award. 
  

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 SECTION 12. ADJUSTMENTS 
  

	12.1	Adjustment of Shares 

  
 In the event that, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend, or other change in the Company’s corporate or capital structure results in (a) the outstanding shares, or any securities exchanged therefor or received in their
place, being exchanged for a different number or class of securities of the Company or of any other corporation or (b) new, different or additional securities of the Company or of any other corporation being received by the holders of shares of
Common Stock of the Company, then the Plan Administrator shall make proportional adjustments in (i) the maximum number and kind of securities subject to the Plan as set forth in Section 4.1 and (ii) the number and kind of securities that are subject
to any outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Plan Administrator as to the terms of any of the foregoing adjustments shall be conclusive
and binding. Notwithstanding the foregoing, a dissolution or liquidation of the Company or a Corporate Transaction shall not be governed by this Section 12.1 but shall be governed by Sections 12.2 and 12.3, respectively. 
  

	12.2	Dissolution or Liquidation 

  
 In the event of the proposed dissolution or liquidation of the Company, the Plan Administrator shall notify each Participant as soon as practicable prior
to the effective date of such proposed transaction. The Plan Administrator in its discretion may permit a Participant to exercise an Option until ten days prior to such transaction with respect to all vested and exercisable shares of Common Stock
covered thereby and with respect to such number of unvested shares as the Plan Administrator shall determine. In addition, the Plan Administrator may provide that any forfeiture provision or Company repurchase option applicable to any Award shall
lapse as to such number of shares as the Plan Administrator shall determine, contingent upon the occurrence of the proposed dissolution or liquidation at the time and in the manner contemplated. To the extent an Option has not been previously
exercised, the Option shall terminate automatically immediately prior to the consummation of the proposed action. To the extent a forfeiture provision applicable to a Stock Award has not been waived by the Plan Administrator, the Stock Award shall
be forfeited automatically immediately prior to the consummation of the proposed action. 
  

	12.3	Corporate Transaction 

  

	 	12.3.1 	Options 

  
 In the event of a Corporate Transaction, except as otherwise provided in the instrument evidencing the Award or in a written employment or services
agreement where the context makes such definition applicable to the Award, each outstanding Option shall be assumed or continued or an equivalent option or right substituted by the surviving corporation, the successor corporation or its parent
corporation, as applicable (the “Successor Corporation”). In the event that the Successor Corporation refuses to assume, continue or substitute for the Option, the 

  

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Participant shall fully vest in and have the right to exercise the Option as to all of the shares of Common Stock subject thereto, including shares as to
which the Option would not otherwise be vested or exercisable. If an Option will become fully vested and exercisable in lieu of assumption or substitution in the event of a Corporate Transaction, the Plan Administrator shall notify the Participant
in writing or electronically that the Option shall be fully vested and exercisable for a specified time period after the date of such notice, and the Option shall terminate upon the expiration of such period, in each case conditioned on the
consummation of the Corporate Transaction. For the purposes of this Section 12.3, the Option shall be considered assumed if, following the Corporate Transaction, the option or right confers the right to purchase or receive, for each share of Common
Stock subject to the Option, immediately prior to the Corporate Transaction, the consideration (whether stock, cash, or other securities or property) received in the merger, consolidation or sale of assets by holders of Common Stock for each share
held on the effective date 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 upon the exercise of the Option, for each
share of Common Stock subject thereto, 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. All Options shall terminate and
cease to remain outstanding immediately following the Corporate Transaction, except to the extent assumed by the Successor Corporation. 
  

	 	12.3.2 	Stock Awards 

  
 In the event of a Corporate Transaction, except as otherwise provided in the instrument evidencing the Award, the vesting of shares subject to Stock
Awards shall accelerate, and the forfeiture provisions to which such shares are subject shall lapse, if and to the same extent that the vesting of outstanding Options accelerates in connection with the Corporate Transaction. If unvested Options are
to be assumed, continued or substituted by a Successor Corporation without acceleration upon the occurrence of a Corporate Transaction, the forfeiture provisions to which such Stock Awards are subject shall continue with respect to shares of the
Successor Corporation that may be issued in exchange for such shares. 
  

	 	12.3.3 	Acceleration on Termination After a Corporate Transaction 

  
 If Awards are assumed, continued or substituted in the Corporate Transaction and do not otherwise accelerate at that time, a Participant (a) shall be
credited with additional vesting on a monthly basis for each full month of employment or service rendered between the Grant Date and the Corporate Transaction and (b) shall be credited with an additional six months of continuous employment or
service to the Company or a Related Corporation for the purposes of outstanding Awards’ vesting schedule in the event that the Participant’s employment or service relationship shall terminate within two years following such Corporate
Transaction, unless such employment or service relationship is terminated by the Successor Corporation for Cause or by the Participant voluntarily without Good Reason. For the purposes of this Section 12.3.3, a Related Party Transaction shall not be
considered to be a Corporate Transaction. 
  

 -14- 

	12.4	Further Adjustment of Awards 

  
 Subject to Sections 12.2 and 12.3, the Plan Administrator shall have the discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by the Plan Administrator, to take such further action as it determines to be necessary or advisable, and fair and equitable to the Participants, with respect to Awards.
Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Awards so as to provide for earlier, later, extended or additional time for exercise,
lifting restrictions and other modifications, and the Plan Administrator may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants. The Plan Administrator may take such action
before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation or change in control that is the reason for such action.

  

	12.5	Limitations 

  
 The grant of Awards shall in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
  

	12.6	Fractional Shares 

  
 In the event of any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full shares resulting from
such adjustment. 
  
 SECTION 13. REPURCHASE AND FIRST REFUSAL
RIGHTS 
  

	13.1	Repurchase Rights 

  
 Until the date on which the initial registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act first becomes effective, if a
Participant ceases to be employed by or provide services to the Company or a Related Corporation, then all vested shares of Common Stock issued pursuant to an Award (whether issued before or after cessation of employment or services) shall be
subject to repurchase by the Company, at the Company’s sole discretion, at the Fair Market Value of such shares on the date of such repurchase. The terms and conditions upon which such repurchase right shall be exercisable (including the period
and procedure for exercise) shall be established by the Plan Administrator and set forth in the stock purchase agreement evidencing the purchase of the Shares. 
  

	13.2	First Refusal Rights 

  
 Until the date on which the initial registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act first becomes effective, the Company
shall have the right of first refusal with respect to any proposed sale or other disposition by the Participant of any shares of Common Stock issued pursuant to an Award granted under the Plan. Such right of first refusal 

  

 -15- 

 
shall be exercisable in accordance with the terms and conditions established by the Plan Administrator and set forth in the agreement evidencing such
right. 
  

	13.3	General 

  
 The Company may not exercise its first refusal or repurchase rights under Sections 13.1 and 13.2 earlier than six months and one day following the date
the shares were purchased by the Participant (or any shorter period determined by the Company to be sufficient to avoid a charge to the Company’s earnings for financial reporting purposes or required by applicable law). 
  
 The Company’s repurchase and first refusal rights under this Section 13
are assignable by the Company at any time. 
  
 SECTION 14.
MARKET STANDOFF 
  
 In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, including the Company’s initial public offering, a person shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose of or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any shares issued pursuant to an Award granted under the Plan
without the prior written consent of the Company or its underwriters. Such limitations shall be in effect for such period of time as may be requested by the Company or such underwriters and agreed to by the Company’s officers and directors with
respect to their shares; provided, however, that in no event shall such period exceed 180 days. The limitations of this paragraph shall in all events terminate two years after the effective date of the Company’s initial public offering. Holders
of shares issued pursuant to an Award granted under the Plan shall be subject to the market standoff provisions of this paragraph only if the officers and directors of the Company are also subject to similar arrangements. 
  
 In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the Company’s outstanding Common Stock effected as a class without the Company’s receipt of consideration, any new, substituted or additional securities distributed with
respect to the purchased shares shall be immediately subject to the provisions of this Section 14, to the same extent the purchased shares are at such time covered by such provisions. 
  
 In order to enforce the limitations of this Section 14, the Company may impose stop-transfer instructions with respect to
the purchased shares until the end of the applicable standoff period. 
  
 SECTION 15. AMENDMENT AND TERMINATION OF PLAN 
  

	15.1	Amendment of Plan 

  
 The Plan may be amended only by the Board in such respects as it shall deem advisable; provided, however, that to the extent required for compliance with
Section 422 of the Code or 

  

 -16- 

 
any applicable law or regulation, shareholder approval shall be required for any amendment that would (a) increase the total number of shares available for
issuance under the Plan, (b) modify the class of persons eligible to receive Options, or (c) otherwise require shareholder approval under any applicable law or regulation. Any amendment made to the Plan that would constitute a
“modification” to Incentive Stock Options outstanding on the date of such amendment shall not, without the consent of the Participant, be applicable to such outstanding Incentive Stock Options but shall have prospective effect only.

  

	15.2	Termination of Plan 

  
 The Board may suspend or terminate the Plan at any time. The Plan shall have no fixed expiration date; provided, however, that no Incentive Stock Options
may be granted more than ten years after the later of (a) the Plan’s adoption by the Board and (b) the adoption by the Board of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the
Code. 
  

	15.3	Consent of Participant 

  
 The amendment or termination of the Plan or the amendment of an outstanding Award shall not, without the Participant’s consent, impair or diminish
any rights or obligations under any Award theretofore granted to the Participant under the Plan. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to
constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Section 12 shall not be subject to these
restrictions. 
  
 SECTION 16. GENERAL 
  

	16.1	Evidence of Awards 

  
 Awards granted under the Plan shall be evidenced by a written instrument that shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and that are not inconsistent with the Plan. 
  

	16.2	No Individual Rights 

  
 Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Related Corporation or limit in any way the right of the Company or any Related Corporation to terminate a Participant’s
employment or other relationship at any time, with or without Cause. 
  

	16.3	Registration 

  
 Notwithstanding any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Plan or
make any other distribution of benefits under the Plan unless such issuance, delivery or distribution would comply with all 

  

 -17- 

 
applicable laws (including, without limitation, the requirements of the Securities Act), and the applicable requirements of any securities exchange or
similar entity. 
  
 The Company shall be under no obligation to
any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state securities laws, any shares of Common Stock, security or interest in a security paid or issued under, or
created by, the Plan, or to continue in effect any such registrations or qualifications if made. 
  
 To the extent that the Plan or any instrument evidencing an Award provides for issuance of stock certificates to reflect the issuance of shares of Common
Stock, the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange. As a condition to the exercise of an Option or any other receipt of Common Stock
pursuant to an Award under the Plan, the Company may require the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or received only for the Participant’s own account and
without any present intention to sell or distribute such shares. At the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records of the Company, and a legend indicating that such
shares may not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on stock
certificates to ensure exemption from registration. The Plan Administrator may also require such other action or agreement by the Participant as may from time to time be necessary to comply with the federal and state securities laws. 
  

	16.4	No Rights as a Shareholder 

  
 No Option or Stock Award denominated in units shall entitle the Participant to any cash dividend, voting or other right of a shareholder unless and until
the date of issuance under the Plan of the shares that are the subject of such Award. 
  

	16.5	Compliance With Laws and Regulations 

  
 Notwithstanding anything in the Plan to the contrary, the Plan Administrator, in its sole discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Participants who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan with respect to other Participants. Additionally, in
interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422
of the Code. 
  

	16.6	Participants in Foreign Countries 

  
 The Plan Administrator shall have the authority 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 its Related Corporations may operate to assure the viability 

  

 -18- 

 
of the benefits from Awards granted to Participants employed in such countries and to meet the objectives of the Plan. 
  

	16.7	No Trust or Fund 

  
 The Plan is intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other
property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company. 
  

	16.8	Severability 

  
 If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Plan
Administrator’s determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and
effect. 
  

	16.9	Choice of Law 

  
 The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Washington without giving effect to principles of conflicts of laws. 
  

	16.10	Appendix Provisions 

  
 Participants who are residents of the State of California shall be subject to the additional terms and conditions set forth in Appendix A to the Plan.

  
 SECTION 17. EFFECTIVE DATE 
  
 The Effective Date is the date on which the Plan is adopted by the Board, so
long as it is approved by the Company’s shareholders at any time within 12 months of such adoption. 
  

 -19- 

 APPENDIX A FOR CALIFORNIA RESIDENTS 
 TO HOUSEVALUES, INC. 
 1999 STOCK INCENTIVE PLAN 
  
 This Appendix to the HouseValues, Inc. 1999 Stock Incentive Plan (the
“Plan”) shall have application only to Participants who are residents of the State of California. Capitalized terms contained herein shall have the same meanings given to them in the Plan, unless otherwise provided in this Appendix.
Notwithstanding any provision contained in the Plan to the contrary and to the extent required by applicable law, the following terms and conditions shall apply to all Awards granted to residents of the State of California, until such time as the
Common Stock becomes a “listed security” under the Securities Act: 
  
 1. Nonqualified Stock Options shall have an exercise price that is not less than 85% of the Fair Market Value of the stock at the time the Option is granted, as determined by the Board, except that the exercise price
shall be at least 110% of the Fair Market Value in the case of any person who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporations. 
  
 2. The purchase price for any Stock Awards that may be purchased under the
Plan (“Stock Purchase Rights”) shall be at least 85% of the Fair Market Value of the Common Stock at the time the Participant is granted the Stock Purchase Right or at the time the purchase is consummated. Notwithstanding the foregoing,
the purchase price shall be at least 100% of the Fair Market Value of the Common Stock at the time the Participant is granted the Stock Purchase Right or at the time the purchase is consummated in the case of any person who owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporations. 
  
 3. Options shall have a term of not more than ten years from the date the Option is granted. 
  
 4. Awards shall be nontransferable other than by will or the laws of descent and distribution. Notwithstanding the
foregoing, and to the extent permitted by Section 422 of the Code, the Plan Administrator, in its discretion, may permit distribution of an Option to an inter vivos or testamentary trust in which the Option is to be passed to beneficiaries upon the
death of the trustor (settlor), or by gift to “immediate family” as that term is defined in Rule 16a-1(e) of the Exchange Act. 
  
 5. Options shall become exercisable at the rate of at least 20% per year over five years from the date the Option is granted, subject to reasonable
conditions such as continued employment. However, in the case of an Option granted to officers, directors or consultants of the Company or any of its Related Corporations, the Option may become fully exercisable, subject to reasonable conditions
such as continued employment, at any time or during any period established by the Company or any of its Related Corporations. 
  

 A-1 

 6. Unless employment is terminated for Cause, the right to exercise an Option in the event of termination
of employment, to the extent that the Participant is otherwise entitled to exercise an Option on the date employment terminates, shall be 
  
 a. at least six months from the date of termination of employment if termination was caused by death or Disability; and 
  
 b. at least 30 days from the date of termination if
termination of employment was caused by other than death or Disability; 
  
 c. but in no event later than the remaining term of the Option. 
  
 7. No Award may be granted to a resident of California more than ten years after the earlier of the date of adoption of the Plan and the date the Plan is
approved by the shareholders. 
  
 8. Any Award exercised before
shareholder approval is obtained shall be rescinded if shareholder approval is not obtained within 12 months before or after the Plan is adopted. Such shares shall not be counted in determining whether such approval is obtained. 
  
 9. The Company shall provide annual financial statements of the Company to
each California resident holding an outstanding Award under the Plan. Such financial statements need not be audited and need not be issued to key employees whose duties at the Company assure them access to equivalent information. 
  
 10. Any right of repurchase on behalf of the Company in the event of a
Participant’s termination of employment shall be at a purchase price that is (a) not less than the Fair Market Value of the securities upon termination of employment, and the right to repurchase shall be exercised for cash or cancellation of
purchase money indebtedness for the shares within 90 days of termination of employment (or in the case of securities issued upon exercise of Options after the date of termination, within 90 days after the date of the exercise), and the right shall
terminate when the Company’s securities become publicly traded; or (b) at the original purchase price, provided that the right to repurchase at the original purchase price lapses at the rate of at least 20% of the shares per year over five
years from the date the Option or Stock Purchase Right is granted (without respect to the date the Option or Stock Purchase Right was exercised or became exercisable) and the right to repurchase shall be exercised for cash or cancellation of
purchase money indebtedness for the shares within 90 days of termination of employment (or in the case of securities issued upon exercise of Options after the date of termination, within 90 days after the date of the exercise). In addition to the
restrictions set forth in clauses (a) and (b), the securities held by an officer, director or consultant of the Company or an affiliate of the Company may be subject to additional or greater restrictions. 
  

 A-2 

 PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS 
 SUMMARY PAGE 
  

							
	 Date of Board Action

	  	Action

	  	 Section/Effect of Amendment

	  	Date of Shareholder Approval

	November 23, 1999	  	Initial Plan Adoption	  	 	  	November 23, 1999
	December 12, 2001	  	Amendment	  	Sections 6.2, 7.5(d), 10 and 13 in response to FIN 44	  	N/A
	December 12, 2001	  	Increase allocated shares to
3,653,644	  	Section 4.1	  	December 12, 2001
	June 25, 2003	  	Increase allocated shares to
4,403,644	  	Section 4.1	  	July 14, 2003
	April 12, 2004	  	Increase allocated shares to
4,953,644	  	Section 4.1	  	April 12, 2004
	July 21, 2004	  	Increase allocated shares to
5,453,644	  	Section 4.1	  	August 3, 2004

  

 -1-2004 Equity Incentive Plan

 Exhibit 10.2 
  
 HOUSEVALUES, INC. 
  
 2004 EQUITY INCENTIVE PLAN 
  
 SECTION 1. PURPOSE 
  
 The purpose of the HouseValues, Inc. 2004 Equity Incentive Plan is to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and
independent contractors of the Company and its Related Companies by providing them the opportunity to acquire a proprietary interest in the Company and to align their interests and efforts to the long-term interests of the Company’s
shareholders. 
  
 SECTION 2. DEFINITIONS 
  
 Certain capitalized terms used in the Plan have the meanings set forth in Appendix A.

  
 SECTION 3. ADMINISTRATION 
  
 3.1 Administration of the Plan 
  
 The Plan shall be administered by the Board or the Compensation Committee, which shall be
composed of two or more directors, each of whom is a “non-employee director” within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission.
Notwithstanding the foregoing, the Board may delegate responsibility for administering the Plan with respect to designated classes of Eligible Persons to different committees consisting of two or more members of the Board, subject to such
limitations as the Board deems appropriate, except with respect to Awards to Participants who are subject to Section 16 of the Exchange Act. Members of any committee shall serve for such term as the Board may determine, subject to removal by the
Board at any time. To the extent consistent with applicable law, the Board may authorize one or more senior executive officers of the Company to grant Awards to designated classes of Eligible Persons, within limits specifically prescribed by the
Board; provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to any person subject to Section 16 of the Exchange Act. All references in the Plan to the “Committee” shall be, as
applicable, to the Compensation Committee or any other committee or any officer to whom the Board or the Compensation Committee has delegated authority to administer the Plan. 
  
 3.2 Administration and Interpretation by Committee 
  
 (a) Except for the terms and conditions explicitly set forth in the Plan and to the extent permitted by applicable law, the Committee shall
have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board or a Committee composed of members of the 

 Board, to (i) select the Eligible Persons to whom Awards may from time to time be granted under the Plan; (ii) determine
the type or types of Award to be granted to each Participant under the Plan; (iii) determine the number of shares of Common Stock to be covered by each Award granted under the Plan; (iv) determine the terms and conditions of any Award granted under
the Plan; (v) approve the forms of notice or agreement for use under the Plan; (vi) determine whether, to what extent and under what circumstances Awards may be settled in cash, shares of Common Stock or other property or canceled or suspended;
(vii) determine whether, to what extent and under what circumstances cash, shares of Common Stock, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant; (viii)
interpret and administer the Plan and any instrument evidencing an Award, notice or agreement executed or entered into under the Plan; (ix) establish such rules and regulations as it shall deem appropriate for the proper administration of the Plan;
(x) delegate ministerial duties to such of the Company’s employees as it so determines; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. 

 
 (b) The Committee shall not have the right, without shareholder approval, to (i) cancel or
amend outstanding Options or SARs for the purpose of repricing, replacing or regranting such Options or SARs with Options or SARs that have a purchase or grant price that is less than the purchase or grant price for the original Options or SARs
except in connection with adjustments provided in Section 15, or (ii) issue an Option or amend an outstanding Option to provide for the grant or issuance of a new Option on exercise of the original Option. 
  
 (c) The effect on the vesting of an Award of a Company-approved leave of absence or a
Participant’s working less than full-time shall be determined by the Company’s chief human resources officer or other person performing that function, unless the Board or the Committee designates another officer of the Company to perform
such function, or, with respect to directors or executive officers, by the Compensation Committee, whose determination shall be final. 
  
 (d) Decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, any Participant, any shareholder and any Eligible Person. A
majority of the members of the Committee may determine its actions. 
  
 SECTION 4. SHARES SUBJECT TO THE PLAN 
  
 4.1 Authorized Number
of Shares 
  
 Subject to adjustment from time to time as provided in Section
15.1, the number of shares of Common Stock available for issuance under the Plan shall be: 
  
 (a) 1,500,000 shares; plus 
  
 (b) an annual
increase to be added as of the first day of the Company’s fiscal year beginning in 2005 equal to the least of (i) 700,000 shares and (ii) 3% of the outstanding Common Stock as of the end of the Company’s immediately preceding fiscal year,
and (iii) a 
  

 -2- 

 lesser amount determined by the Board; provided that any shares from any such increases in previous years that are not
actually issued shall continue to be available for issuance under the Plan; plus 
  
 (c) (i) any authorized shares not issued or subject to outstanding awards under the Company’s 1999 Stock Incentive Plan (the “Prior Plan”) on the Effective Date and (ii) any shares subject to outstanding awards under
the Prior Plan on the Effective Date that cease to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled), up to an aggregate maximum of 4,366,616 shares, which shares
shall cease, as of such date, to be available for grant and issuance under the Prior Plan, but shall be available for issuance under the Plan. 
  
 Shares issued under the Plan shall be drawn from authorized and unissued shares. 
  

4.2 Share Usage 
  
 (a) Shares of Common Stock covered by an Award shall not be counted as used unless and until they are actually issued and delivered to a Participant. If any Award lapses, expires, terminates or is canceled prior to
the issuance of shares thereunder or if shares of Common Stock are issued under the Plan to a Participant and thereafter are forfeited to or otherwise reacquired by the Company, the shares subject to such Awards and the forfeited or reacquired
shares shall again be available for issuance under the Plan. Any shares of Common Stock (i) tendered by a Participant or retained by the Company as full or partial payment to the Company for the purchase price of an Award or to satisfy tax
withholding obligations in connection with an Award, or (ii) covered by an Award that is settled in cash, or in a manner such that some or all of the shares of Common Stock covered by the Award are not issued, shall be available for Awards under the
Plan. The number of shares of Common Stock available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares of Common Stock or credited as additional shares of
Common Stock subject or paid with respect to an Award. 
  
 (b) The Committee shall
also, without limitation, have the authority to grant Awards as an alternative to or as the form of payment for grants or rights earned or due under other compensation plans or arrangements of the Company. 
  
 (c) Notwithstanding anything in the Plan to the contrary, the Committee may grant Substitute
Awards under the Plan. Substitute Awards shall not reduce the number of shares authorized for issuance under the Plan. In the event that an Acquired Entity has shares available for awards or grants under one or more preexisting plans not adopted in
contemplation of such acquisition or combination, then, to the extent determined by the Board or the Compensation Committee, the shares available for grant pursuant to the terms of such preexisting plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to holders of common stock of the entities that are parties to such acquisition or combination) may
be used for Awards under the Plan and shall not reduce the number of shares of Common Stock authorized for issuance under the Plan; 
  

 -3- 

 provided, however, that Awards using such available shares shall not be made after the date awards or grants could have
been made under the terms of such preexisting plans, absent the acquisition or combination, and shall only be made to individuals who were not employees or directors of the Company or a Related Company prior to such acquisition or combination. In
the event that a written agreement between the Company and an Acquired Entity pursuant to which a merger, consolidation or statutory share exchange is completed is approved by the Board and said agreement sets forth the terms and conditions of the
substitution for or assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be deemed to be the action of the Committee without any further action by the Committee, except as may be required for compliance with Rule
16b-3 under the Exchange Act, and the persons holding such awards shall be deemed to be Participants. 
  
 (d) Notwithstanding the other provisions in this Section 4.2, the maximum number of shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate share number stated in Section 4.1,
subject to adjustment as provided in Section 15.1. 
  
 SECTION
5. ELIGIBILITY 
  
 An Award may be granted to any employee, officer or
director of the Company or a Related Company whom the Committee from time to time selects. An Award may also be granted to any consultant, agent, advisor or independent contractor for bona fide services rendered to the Company or any Related Company
that (a) are not in connection with the offer and sale of the Company’s securities in a capital-raising transaction and (b) do not directly or indirectly promote or maintain a market for the Company’s securities. 
  
 SECTION 6. AWARDS 
  
 6.1 Form, Grant and Settlement of Awards 
  
 The Committee shall have the authority, in its sole discretion, to determine the type or
types of Awards to be granted under the Plan. Such Awards may be granted either alone or in addition to or in tandem with any other type of Award. Any Award settlement may be subject to such conditions, restrictions and contingencies as the
Committee shall determine. 
  
 6.2 Evidence of Awards 
  
 Awards granted under the Plan shall be evidenced by a written, including an electronic,
notice or agreement that shall contain such terms, conditions, limitations and restrictions as the Committee shall deem advisable and that are not inconsistent with the Plan. 
  
 6.3 Deferrals 
  
 The Committee may permit or require a Participant to defer receipt of the payment of any Award. If any such deferral election is permitted or required, the Committee, in
its sole discretion, shall establish rules and procedures for such payment deferrals, which may include the grant of additional Awards or provisions for the payment or crediting of interest or dividend equivalents, including converting such credits
to deferred stock unit equivalents. 
  

 -4- 

 6.4 Dividends and Distributions 
  
 Participants may, if the Committee so determines, be credited with dividends paid with respect to shares of Common Stock underlying an Award
in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of
payment of dividends or dividend equivalents, including cash, shares of Common Stock, Restricted Stock or Stock Units. 
  
 SECTION 7. OPTIONS 
  
 7.1 Grant of Options 
  
 The Committee may grant Options designated as Incentive Stock Options or Nonqualified Stock Options. 
  
 7.2 Option Exercise Price 
  
 The exercise price for shares purchased under an Option shall be as determined by the Committee, but shall not be less than the minimum exercise price required by Section
8.3 with respect to Incentive Stock Options, except in the case of Substitute Awards. Notwithstanding the foregoing, the Committee, in its sole discretion, may establish an exercise price that is equal to the average of 100% of the Fair Market Value
over a period of trading days not to exceed 30 days from the Grant Date. 
  
 7.3 Term of Options 
  
 Subject to earlier termination in
accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of a Nonqualified Stock Option shall be as established for that Option by the Committee or, if not so established, shall be ten years from the Grant
Date. 
  

 -5- 

 7.4 Exercise of Options 
  

The Committee shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option shall vest and
become exercisable, any of which provisions may be waived or modified by the Committee at any time. If not so established in the instrument evidencing the Option, the Option shall vest and become exercisable according to the following
schedule, which may be waived or modified by the Committee at any time: 
  

			
	 Period of Participant’s Continuous
 Employment or Service With the Company
 or Its Related Companies From the Vesting
 Commencement Date

	 	 Portion of Total Option
 That Is Vested and
Exercisable

	After 1 year	 	25%
	Each additional three-month period of continuous service completed thereafter	 	An additional 6.25%
	After 4 years	 	100%

  
 To the extent an Option has vested and
become exercisable, the Option may be exercised in whole or from time to time in part by delivery to or as directed or approved by the Company of a properly executed stock option exercise agreement or notice, in a form and in accordance with
procedures established by the Committee, setting forth the number of shares with respect to which the Option is being exercised, the restrictions imposed on the shares purchased under such exercise agreement, if any, and such representations and
agreements as may be required by the Committee, accompanied by payment in full as described in Sections 7.5 and 13. An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any one
time, as determined by the Committee. 
  
 7.5 Payment of Exercise Price

  
 The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid before the Company will issue the shares being purchased and must be in a form or
a combination of forms acceptable to the Committee for that purchase, which forms may include: 
  
 (a) cash, check or wire transfer; 
  
 (b)
tendering (either actually or, so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of Common Stock that on the day prior to the exercise date have an aggregate Fair Market Value equal to
the aggregate exercise price of the shares being purchased under the Option owned by the Participant for at least six months (or any shorter period necessary to avoid a charge to the Company’s earnings for financial reporting purposes);

  
 (c) so long as the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, and to the extent permitted by law, delivery of a properly executed exercise notice, together with irrevocable instructions to a brokerage firm designated or approved by the Company to deliver promptly to the Company the aggregate
amount of proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board; or 
  

 -6- 

 (d) such other consideration as the Committee may permit. 
  
 In addition, to assist a Participant (other than, to the extent prohibited by law, a Participant who is an executive officer or a director
of the Company) in acquiring shares of Common Stock pursuant to an Award granted under the Plan, the Committee, in its sole discretion, may authorize, either at the Grant Date or at any time before the acquisition of Common Stock pursuant to the
Award, (i) the payment by a Participant of the purchase price of the Common Stock by a promissory note or (ii) the guarantee by the Company of a loan obtained by the Participant from a third party. Such notes or loans must be full recourse to the
extent necessary to avoid charges to the Company’s earnings for financial reporting purposes. Subject to the foregoing, the Committee shall in its sole discretion specify the terms of any loans or loan guarantees, including the interest rate
and terms of and security for repayment. 
  
 7.6 Effect of Termination of
Service 
  
 The Committee shall establish and set forth in each instrument
that evidences an Option whether the Option shall continue to be exercisable, and the terms and conditions of such exercise, after a Termination of Service, any of which provisions may be waived or modified by the Committee at any time. If not so
established in the instrument evidencing the Option, the Option shall be exercisable according to the following terms and conditions, which may be waived or modified by the Committee at any time: 
  
 (a) Any portion of an Option that is not vested and exercisable on the date of a
Participant’s Termination of Service shall expire on such date. 
  
 (b) Any
portion of an Option that is vested and exercisable on the date of a Participant’s Termination of Service shall expire on the earliest to occur of: 
  
 (i) if the Participant’s Termination of Service occurs for reasons other than Cause, Retirement, Disability or death, the date that is three months after such
Termination of Service; 
  
 (ii) if the Participant’s Termination of Service
occurs by reason of Retirement, Disability or death, the one-year anniversary of such Termination of Service; and 
  
 (iii) the last day of the maximum term of the Option (the “Option Expiration Date”). 
  
 Notwithstanding the foregoing, if a Participant dies after his or her Termination of Service but while an Option is otherwise exercisable,
the portion of the Option that is vested and exercisable on the date of such Termination of Service shall expire upon the earlier to occur of (y) the Option Expiration Date and (z) the one-year anniversary of the date of death, unless the Committee
determines otherwise. 
  
 Also notwithstanding the foregoing, in case a
Participant’s Termination of Service occurs for Cause, all Options granted to the Participant shall automatically expire upon first notification to the Participant of such termination, unless the Committee determines otherwise. If a 

 

 -7- 

 Participant’s employment or service relationship with the Company is suspended pending an investigation of whether
the Participant shall be terminated for Cause, all the Participant’s rights under any Option shall likewise be suspended during the period of investigation. If any facts that would constitute termination for Cause are discovered after a
Participant’s Termination of Service, any Option then held by the Participant may be immediately terminated by the Committee, in its sole discretion. 
  
 (c) A Participant’s change in status from an employee to a consultant, advisor or independent contractor, or a change in status from a consultant, advisor or
independent contractor to an employee, shall not be considered a Termination of Service for purposes of this Section 7.6. 
  
 SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS 
  
 Notwithstanding any other provisions of the Plan, the terms and conditions of any Incentive Stock Options shall in addition comply in all respects with Section 422 of the
Code, or any successor provision, and any applicable regulations thereunder, including, to the extent required thereunder, the following: 
  
 8.1 Dollar Limitation 
  
 To the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which a Participant’s Incentive Stock Options become exercisable for the first time during any
calendar year (under the Plan and all other stock option plans of the Company and its parent and subsidiary corporations) exceeds $100,000, such portion in excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event the
Participant holds two or more such Options that become exercisable for the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are granted. 
  
 8.2 Eligible Employees 
  
 Individuals who are not employees of the Company or one of its parent or subsidiary corporations may not be granted Incentive Stock Options.

  
 8.3 Exercise Price 
  
 The exercise price of an Incentive Stock Option shall be at least 100% of the Fair Market
Value of the Common Stock on the Grant Date, and in the case of an Incentive Stock Option granted to a Participant who owns more than 10% of the total combined voting power of all classes of the stock of the Company or of its parent or subsidiary
corporations (a “Ten Percent Shareholder”), shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date. The determination of more than 10% ownership shall be made in accordance with Section 422 of the
Code. 
  

 -8- 

 8.4 Option Term 
  
 Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of an Incentive Stock Option shall not
exceed ten years, and in the case of an Incentive Stock Option granted to a Ten Percent Shareholder, shall not exceed five years. 
  
 8.5 Exercisability 
  
 An Option designated as an Incentive Stock Option shall cease to qualify for favorable tax treatment as an Incentive Stock Option to the extent it is exercised (if permitted by the terms of the Option) (a) more than
three months after the date of a Participant’s Termination of Service if termination was for reasons other than death or disability, (b) more than one year after the date of a Participant’s Termination of Service if termination was by
reason of disability, or (c) after the Participant has been on leave of absence for more than 90 days, unless the Participant’s reemployment rights are guaranteed by statute or contract. 
  
 8.6 Taxation of Incentive Stock Options 
  
 In order to obtain certain tax benefits afforded to Incentive Stock Options under Section
422 of the Code, the Participant must hold the shares acquired upon the exercise of an Incentive Stock Option for two years after the Grant Date and one year after the date of exercise. 
  
 A Participant may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option. The Participant shall give
the Company prompt notice of any disposition of shares acquired on the exercise of an Incentive Stock Option prior to the expiration of such holding periods. 
  
 8.7 Code Definitions 
  
 For the purposes of this Section 8 “disability,” “parent corporation” and “subsidiary corporation” shall have the meanings attributed to those terms for purposes of Section 422 of the
Code. 
  
 8.8 Promissory Notes 
  
 The amount of any promissory note delivered pursuant to Section 7.5 in connection with an
Incentive Stock Option shall bear interest at a rate specified by the Committee, but in no case less than the rate required to avoid imputation of interest (taking into account any exceptions to the imputed interest rules) for federal income tax
purposes. 
  
 SECTION 9. STOCK APPRECIATION RIGHTS

  
 9.1 Grant of Stock Appreciation Rights 
  
 The Committee may grant Stock Appreciation Rights to Participants at any time on such terms
and conditions as the Committee shall determine in its sole discretion. An SAR may 
  

 -9- 

 be granted in tandem with an Option or alone (“freestanding”). The grant price of a tandem SAR shall be equal
to the exercise price of the related Option. The grant price of a freestanding SAR shall be established in accordance with procedures for Options set forth in Section 7.2. An SAR may be exercised upon such terms and conditions and for the term as
the Committee determines in its sole discretion; provided, however, that, subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the SAR, the term of a freestanding SAR shall be as established for that
SAR by the Committee or, if not so established, shall be ten years, and in the case of a tandem SAR, (a) the term shall not exceed the term of the related Option and (b) the tandem SAR may be exercised for all or part of the shares subject to the
related Option upon the surrender of the right to exercise the equivalent portion of the related Option, except that the tandem SAR may be exercised only with respect to the shares for which its related Option is then exercisable. 
  
 9.2 Payment of SAR Amount 
  
 Upon the exercise of an SAR, a Participant shall be entitled to receive payment in an amount
determined by multiplying: (a) the difference between the Fair Market Value of the Common Stock on the date of exercise over the grant price of the SAR by (b) the number of shares with respect to which the SAR is exercised. At the discretion of the
Committee as set forth in the instrument evidencing the Award, the payment upon exercise of an SAR may be in cash, in shares, in some combination thereof or in any other manner approved by the Committee in its sole discretion. 
  
 SECTION 10. STOCK AWARDS, RESTRICTED STOCK AND STOCK UNITS 

 
 10.1 Grant of Stock Awards, Restricted Stock and Stock Units 
  
 The Committee may grant Stock Awards, Restricted Stock and Stock Units on such terms and
conditions and subject to such repurchase or forfeiture restrictions, if any, which may be based on continuous service with the Company or a Related Company or the achievement of any performance goals, as the Committee shall determine in its sole
discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award. 
  
 10.2 Vesting of Restricted Stock and Stock Units 
  
 Upon the satisfaction of any terms, conditions and restrictions prescribed with respect to Restricted Stock or Stock Units, or upon a Participant’s release from any
terms, conditions and restrictions of Restricted Stock or Stock Units, as determined by the Committee, and subject to the provisions of Section 13, (a) the shares of Restricted Stock covered by each Award of Restricted Stock shall become freely
transferable by the Participant, and (b) Stock Units shall be paid in shares of Common Stock or, if set forth in the instrument evidencing the Awards, in cash or a combination of cash and shares of Common Stock. Any fractional shares subject to such
Awards shall be paid to the Participant in cash. 
  

 -10- 

 10.3 Waiver of Restrictions 
  
 Notwithstanding any other provisions of the Plan, the Committee, in its sole discretion, may waive the repurchase or forfeiture period and
any other terms, conditions or restrictions on any Restricted Stock or Stock Unit under such circumstances and subject to such terms and conditions as the Committee shall deem appropriate. 
  
 SECTION 11. PERFORMANCE AWARDS 
  
 11.1 Performance Shares 
  
 The Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and determine
the number of Performance Shares and the terms and conditions of each such Award. Performance Shares shall consist of a unit valued by reference to a designated number of shares of Common Stock, the value of which may be paid to the Participant by
delivery of shares of Common Stock or, if set forth in the instrument evidencing the Award, of such property as the Committee shall determine, including, without limitation, cash, shares of Common Stock, other property, or any combination thereof,
upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. Notwithstanding the foregoing, the amount to be paid under an Award of Performance Shares may be adjusted on the
basis of such further consideration as the Committee shall determine in its sole discretion. 
  
 11.2 Performance Units 
  
 The Committee
may grant Awards of Performance Units, designate the Participants to whom Performance Units are to be awarded and determine the number of Performance Units and the terms and conditions of each such Award. Performance Units shall consist of a unit
valued by reference to a designated amount of property other than shares of Common Stock, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, shares of Common
Stock, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. Notwithstanding the foregoing, the amount to be paid under an
Award of Performance Units may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion. 
  
 SECTION 12. OTHER STOCK OR CASH-BASED AWARDS 
  
 Subject to the terms of the Plan and such other terms and conditions as the Committee deems appropriate, the Committee may grant other incentives payable in cash or in
shares of Common Stock under the Plan. 
  
 SECTION 13.
WITHHOLDING 
  
 The Company may require the Participant to pay to the Company
the amount of (a) any taxes that the Company is required by applicable federal, state, local or foreign law to withhold 
  

 -11- 

 with respect to the grant, vesting or exercise of an Award (“tax withholding obligations”) and (b) any amounts
due from the Participant to the Company or to any Related Company (“other obligations”). The Company shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan until such tax withholding
obligations and other obligations are satisfied. 
  
 The Committee may permit or
require a Participant to satisfy all or part of the Participant’s tax withholding obligations and other obligations by (a) paying cash to the Company, (b) having the Company withhold an amount from any cash amounts otherwise due or to become
due from the Company to the Participant, (c) having the Company withhold a number of shares of Common Stock that would otherwise be issued to the Participant (or become vested, in the case of Restricted Stock) having a Fair Market Value equal to the
tax withholding obligations and other obligations, or (d) surrendering a number of shares of Common Stock the Participant already owns having a value equal to the tax withholding obligations and other obligations. The value of the shares so withheld
may not exceed the employer’s minimum required tax withholding rate, and the value of the shares so tendered may not exceed such rate to the extent the Participant has owned the tendered shares for less than six months if such limitations are
necessary to avoid a charge to the Company for financial reporting purposes. 
  
 SECTION 14. ASSIGNABILITY 
  
 No Award or
interest in an Award may be sold, assigned, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose) or transferred by a Participant or made subject to attachment or similar proceedings
otherwise than by will or by the applicable laws of descent and distribution, except to the extent the Participant designates one or more beneficiaries on a Company-approved form who may exercise the Award or receive payment under the Award after
the Participant’s death. During a Participant’s lifetime, an Award may be exercised only by the Participant. Notwithstanding the foregoing and to the extent permitted by Section 422 of the Code, the Committee, in its sole discretion, may
permit a Participant to assign or transfer an Award subject to such terms and conditions as the Committee shall specify. 
  
 SECTION 15. ADJUSTMENTS 
  
 15.1 Adjustment of Shares 
  
 In the event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation,
distribution to shareholders other than a normal cash dividend, or other change in the Company’s corporate or capital structure results in (a) the outstanding shares of Common Stock, or any securities exchanged therefor or received in their
place, being exchanged for a different number or kind of securities of the Company or (b) new, different or additional securities of the Company or any other company being received by the holders of shares of Common Stock, then the Committee shall
make proportional adjustments in (i) the maximum number and kind of securities available for issuance under the Plan; (ii) the maximum number and kind of 
  

 -12- 

 securities issuable as Incentive Stock Options as set forth in Section 4.2; and (iii) the number and kind of securities
that are subject to any outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Committee, as to the terms of any of the foregoing adjustments shall be
conclusive and binding. 
  
 Notwithstanding the foregoing, the issuance by the
Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services rendered, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, outstanding Awards. Also notwithstanding the foregoing,
a dissolution or liquidation of the Company or a Company Transaction shall not be governed by this Section 15.1 but shall be governed by Sections 15.2 and 15.3, respectively. 
  
 15.2 Dissolution or Liquidation 
  
 To the extent not previously exercised or settled, and unless otherwise determined by the Committee in its sole discretion, Awards shall terminate immediately prior to
the dissolution or liquidation of the Company. To the extent a vesting condition, forfeiture provision or repurchase right applicable to an Award has not been waived by the Committee, the Award shall be forfeited immediately prior to the
consummation of the dissolution or liquidation. 
  
 15.3 Company Transaction

  
 Notwithstanding any other provision of the Plan to the contrary, unless
the Committee shall determine otherwise at the time of grant with respect to a particular Award, in the event of a Company Transaction that is not a Related Party Transaction: 
  
 (i) All outstanding Awards, other than Performance Shares and Performance Units, shall become fully and immediately exercisable, and all
applicable deferral and restriction limitations or forfeiture provisions shall lapse, immediately prior to the Company Transaction and shall terminate effective at the effective time of the Company Transaction, unless such Awards are converted,
assumed or replaced by the Successor Company. 
  
 For the purposes of this Section
15.3, an Award shall be considered assumed or substituted for if following the Company Transaction the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Company
Transaction, the consideration (whether stock, cash or other securities or property) received in the Company Transaction by holders of Common Stock for each share held on the effective date 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 Company Transaction is not solely common stock of the Successor Company, the
Committee may, with the consent of the Successor Company, provide for the consideration to be received upon the exercise of the Option, for each share of Common Stock subject thereto, to be solely common stock of the 
  

 -13- 

 Successor Company substantially equal in fair market value to the per share consideration received by holders of Common
Stock in the Company Transaction. The determination of such substantial equality of value of consideration shall be made by the Committee, and its determination shall be conclusive and binding. 
  
 (ii) All Performance Shares or Performance Units earned and outstanding as of the date the
Company Transaction is determined to have occurred shall be payable in full at the target level in accordance with the payout schedule pursuant to the Award agreement. Any remaining Performance Shares or Performance Units (including any applicable
performance period) for which the payout level has not been determined shall be prorated at the target payout level up to and including the date of such Company Transaction and shall be payable in full at the target level in accordance with the
payout schedule pursuant to the Award agreement. Any existing deferrals or other restrictions not waived by the Committee in its sole discretion shall remain in effect. 
  
 (iii) Notwithstanding the foregoing, the Committee, in its sole discretion, may instead provide that a Participant’s outstanding Awards
shall terminate upon or immediately prior to such Company Transaction and that such Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (x) the value of the per share consideration received by
holders of Common Stock in the Company Transaction, or, in the event the Company Transaction is one of the transactions listed under subsection (c) in the definition of Company Transaction or otherwise does not result in direct receipt of
consideration by holders of Common Stock, the value of the deemed per share consideration received, in each case as determined by the Committee in its sole discretion, multiplied by the number of shares of Common Stock subject to such outstanding
Awards (to the extent then vested and exercisable or whether or not then vested and exercisable, as determined by the Committee in its sole discretion) exceeds (y) if applicable, the respective aggregate exercise price or grant price for such Award.

  
 15.4 Further Adjustment of Awards 
  
 Subject to Sections 15.2 and 15.3, the Committee shall have the discretion, exercisable at
any time before a sale, merger, consolidation, reorganization, liquidation, dissolution or change in control of the Company, as defined by the Committee, to take such further action as it determines to be necessary or advisable with respect to
Awards. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Awards so as to provide for earlier, later, extended or additional time for
exercise, lifting restrictions and other modifications, and the Committee may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants. The Committee may take such action before or
after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation, dissolution or change in control that is the reason for such action.

  

 -14- 

 15.5 No Limitations 
  
 The grant of Awards shall in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
  
 15.6 Fractional Shares 
  
 In the event of
any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full shares resulting from such adjustment. 
  
 SECTION 17. MARKET STANDOFF 
  
 In the event of an underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, no
person may sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose of or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any shares
issued pursuant to an Award granted under the Plan without the prior written consent of the Company or its underwriters. Such limitations shall be in effect for such period of time as may be requested by the Company or such underwriters; provided,
however, that in no event shall such period exceed 180 days after the effective date of the registration statement. The limitations of this Section 17 shall in all events terminate two years after the effective date of the Company’s initial
public offering. 
  
 In the event of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the Company’s outstanding Common Stock effected as a class without the Company’s receipt of consideration, any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject to the provisions of this Section 17, to the same extent the purchased shares are at such time covered by such provisions. 
  
 In order to enforce the limitations of this Section 17, the Company may impose stop-transfer
instructions with respect to the purchased shares until the end of the applicable standoff period. 
  
 SECTION 18. AMENDMENT AND TERMINATION 
  
 18.1 Amendment, Suspension or Termination 
  
 The Board or the Compensation Committee may amend, suspend or terminate the Plan or any portion of the Plan at any time and in such respects as it shall deem advisable; provided, however, that, to the extent required by applicable law,
regulation or stock exchange rule, shareholder approval shall be required for any amendment to the Plan; and provided, further, that any amendment that requires shareholder approval may be made only by the Board. Subject to Section 18.3, the
Committee may amend the terms of any outstanding Award, prospectively or retroactively. 
  

 -15- 

 18.2 Term of the Plan 
  
 Unless sooner terminated as provided herein, the Plan shall terminate ten years from the Effective Date. After the Plan is terminated, no future Awards may be granted,
but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten years
after the later of (a) the date the Plan is approved by the Board and (b) the approval by the shareholders of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code. 
  
 18.3 Consent of Participant 
  
 The amendment, suspension or termination of the Plan or a portion thereof or the amendment
of an outstanding Award shall not, without the Participant’s consent, materially adversely affect any rights under any Award theretofore granted to the Participant under the Plan. Any change or adjustment to an outstanding Incentive Stock
Option shall not, without the consent of the Participant, be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding
the foregoing, any adjustments made pursuant to Section 15 shall not be subject to these restrictions. 
  
 SECTION 19. GENERAL 
  
 19.1 No Individual Rights 
  
 No individual or Participant shall
have any claim to be granted any Award under the Plan, and the Company has no obligation for uniformity of treatment of Participants under the Plan. 
  
 Furthermore, nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate a Participant’s employment or
other relationship at any time, with or without cause. 
  
 19.2 Issuance of
Shares 
  
 Notwithstanding any other provision of the Plan, the Company shall
have no obligation to issue or deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company’s counsel, such issuance, delivery or distribution would comply
with all applicable laws (including, without limitation, the requirements of the Securities Act or the laws of any state or foreign jurisdiction) and the applicable requirements of any securities exchange or similar entity. 
  

 -16- 

 The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for
exemption under the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect
any such registrations or qualifications if made. 
  
 As a condition to the
exercise of an Option or any other receipt of Common Stock pursuant to an Award under the Plan, the Company may require (a) the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or
received only for the Participant’s own account and without any present intention to sell or distribute such shares and (b) such other action or agreement by the Participant as may from time to time be necessary to comply with the federal,
state and foreign securities laws. At the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records of the Company, and a legend indicating that such shares may not be pledged, sold or
otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on stock certificates to ensure exemption
from registration. The Committee may also require the Participant to execute and deliver to the Company a purchase agreement or such other agreement as may be in use by the Company at such time that describes certain terms and conditions applicable
to the shares. 
  
 To the extent the Plan or any instrument evidencing an Award
provides for issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

  
 19.3 No Rights as a Shareholder 
  
 Unless otherwise provided by the Committee or in the instrument evidencing the Award or in a
written employment, services or other agreement, no Award, other than a Stock Award, shall entitle the Participant to any cash dividend, voting or other right of a shareholder unless and until the date of issuance under the Plan of the shares that
are the subject of such Award. 
  
 19.4 Compliance With Laws and Regulations

  
 In interpreting and applying the provisions of the Plan, any Option
granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422 of the Code. 
  
 19.5 Participants in Other Countries or Jurisdictions 
  
 Without amending the Plan, the Committee may grant Awards to Eligible Persons who are
foreign nationals on such terms and conditions different from those specified in this Plan as 
  

 -17- 

 may, in the judgement of the Committee, be necessary or desirable to foster and promote achievement of the purposes of
the Plan and shall have the authority to adopt such modifications, procedures, subplans and the like as may be necessary or desirable to comply with provisions of the laws or regulations of other countries or jurisdictions in which the Company or
any Related Company may operate or have employees to ensure the viability of the benefits from Awards granted to Participants employed in such countries or jurisdictions, meet the requirements that permit the Plan to operate in a qualified or
tax-efficient manner, comply with applicable foreign laws or regulations and meet the objectives of the Plan. 
  
 19.6 No Trust or Fund 
  
 The Plan is
intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate
or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company. 
  
 19.7 Successors 
  
 All obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all the business and/or assets of the Company. 
  
 19.8 Severability 
  
 If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Committee’s determination, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. 
  
 19.9 Choice of Law 
  
 The Plan, all Awards granted thereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United
States, shall be governed by the laws of the State of Washington without giving effect to principles of conflicts of law. 
  

 -18- 

 19.10 Legal Requirements 
  

The granting of Awards and the issuance of shares of Common Stock under the Plan are subject to all applicable laws, rules and regulations and to such approvals by any
governmental agencies or national securities exchanges as may be required. 
  
 SECTION 20. EFFECTIVE DATE 
  
 The
effective date (the “Effective Date”) is the date on which the Company’s initial public offering is effective. 
  

 -19- 

 APPENDIX A 
  
 DEFINITIONS 
  
 As used in the Plan, 
  
 “Acquired Entity” means any entity acquired by the Company or a Related Company or with which the Company or a Related Company merges or combines. 
  
 “Award” means any Option, Stock Appreciation Right, Stock Award, Restricted
Stock, Stock Unit, Performance Share, Performance Unit, cash-based award or other incentive payable in cash or in shares of Common Stock as may be designated by the Committee from time to time. 
  
 “Board” means the Board of Directors of the Company. 
  
 “Cause,” unless otherwise defined in the instrument evidencing an
Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means the commission of any of the following acts in a manner that has an adverse financial impact on the Company, in each
case as determined by the Company’s chief human resources officer or other person performing that function, unless the Board or the Committee designates another officer of the Company to perform such function, or, in the case of directors and
executive officers, the Compensation Committee, whose determination shall be conclusive and binding: dishonesty, fraud, serious or willful misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conduct prohibited
by law (except minor violations). 
  
 “Code” means the Internal
Revenue Code of 1986, as amended from time to time. 
  
 “Committee” has the meaning set forth in Section 3.1. 
  
 “Common Stock” means the common stock, par value $0.001 per share, of the Company. 
  
 “Company” means HouseValues, Inc., a Washington corporation. 
  
 “Company Transaction,” unless otherwise defined in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a
Related Company, means consummation of: 
  
 (a) a merger or consolidation of the
Company with or into any other company or other entity; 
  
 (b) a statutory share
exchange pursuant to which the Company’s outstanding shares are acquired or a sale in one transaction or a series of transactions undertaken with a common purpose of all or substantially all of the Company’s outstanding voting securities;
or 

 (c) a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a
common purpose of all or substantially all of the Company’s assets. 
  
 Where
a series of transactions undertaken with a common purpose is deemed to be a Company Transaction, the date of such Company Transaction shall be the date on which the last of such transactions is consummated. 
  
 “Compensation Committee” means the Compensation Committee of the Board.

  
 “Disability,” unless otherwise defined by the
Committee or in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means a mental or physical impairment of the Participant that is expected to
result in death or that has lasted or is expected to last for a continuous period of 12 months or more and that causes the Participant to be unable to perform his or her material duties for the Company or a Related Company and to be engaged in any
substantial gainful activity, in each case as determined by the Company’s chief human resources officer or other person performing that function, unless the Board or the Committee designates another officer of the Company to perform such
function, or, in the case of directors and executive officers, the Compensation Committee, whose determination shall be conclusive and binding. 
  
 “Effective Date” has the meaning set forth in Section 20. 
  
 “Eligible Person” means any person eligible to receive an Award as set forth in Section 5. 
  
 “Entity” means any individual, entity or group (within the meaning of Section 13(d)(3) of the Exchange Act). 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time. 
  
 “Fair Market Value” means the average of the
high and low trading prices for the Common Stock on any given date during regular trading, or if not trading on that date, such price on the last preceding date on which the Common Stock was traded, unless determined otherwise by the Committee using
such methods or procedures as it may establish. 
  
 “Grant Date”
means the later of (a) the date on which the Committee completes the corporate action authorizing the grant of an Award or such later date specified by the Committee or (b) the date on which all conditions precedent to an Award have been
satisfied, provided that conditions to the exercisability or vesting of Awards shall not defer the Grant Date. 
  
 “Incentive Stock Option” means an Option granted with the intention that it qualify as an “incentive stock option” as that term is defined for purposes of Section 422 of the Code or any
successor provision. 
  

 R-B2 

 “Nonqualified Stock Option” means an Option other than an Incentive Stock Option. 
  
 “Option” means a right to purchase Common Stock granted under Section 7.

  
 “Parent Company” means a company or other entity which as a
result of a Company Transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries. 
  

“Participant” means any Eligible Person to whom an Award is granted. 
  
 “Performance Award” means an Award of Performance Shares or Performance Units granted under Section 11. 
  
 “Performance Criteria” has the meaning set forth in Section 16.1.

  
 “Performance Share” means an Award of units denominated in
shares of Common Stock granted under Section 11.1. 
  
 “Performance
Unit” means an Award of units denominated in cash or property other than shares of Common Stock granted under Section 11.2. 
  
 “Plan” means the HouseValues, Inc. 2004 Equity Incentive Plan. 
  

“Related Company” means any entity that is directly or indirectly controlled by, in control of or under common control with the Company. 

 
 “Related Party Transaction” means (a) a merger, consolidation or
statutory share exchange in which the holders of shares of Common Stock immediately prior to the merger hold at least a majority of the shares of Common Stock of the Successor Company immediately after the merger, (b) a mere reincorporation of the
Company or (c) a transaction undertaken for the sole purpose of creating a holding company. 
  
 “Restricted Stock” means an Award of shares of Common Stock granted under Section 10, the rights of ownership of which are subject to restrictions prescribed by the Committee. 
  
 “Retirement,” unless otherwise defined in the instrument evidencing
the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means “Retirement” as defined for purposes of the Plan by the Committee or the Company’s chief human
resources officer or other person performing that function, unless the Board or the Committee designates another officer of the Company to perform such function, or, if not so defined, means Termination of Service on or after the date the
Participant reaches “normal retirement age,” as that term is defined in Section 411(a)(8) of the Code. 
  
 “Securities Act” means the Securities Act of 1933, as amended from time to time. 
  

 R-B3 

 “Stock Appreciation Right” or “SAR” means a right granted under Section 9.1 to receive
the excess of the Fair Market Value of a specified number of shares of Common Stock over the grant price. 
  
 “Stock Award” means an Award of shares of Common Stock granted under Section 10, the rights of ownership of which are not subject to restrictions prescribed by the Committee. 
  
 “Stock Unit” means an Award denominated in units of Common Stock granted
under Section 10. 
  
 “Substitute Awards” means Awards granted or
shares of Common Stock issued by the Company in substitution or exchange for awards previously granted by an Acquired Entity. 
  
 “Successor Company” means the surviving company, the successor company or Parent Company, as applicable, in connection with a Company Transaction.

  
 “Termination of Service” means a termination of employment or
service relationship with the Company or a Related Company for any reason, whether voluntary or involuntary, including by reason of death, Disability or Retirement. Any question as to whether and when there has been a Termination of Service for the
purposes of an Award and the cause of such Termination of Service shall be determined by the Company’s chief human resources officer or other person performing that function, unless the Board or the Committee designates another officer of the
Company to perform such function, or, with respect to directors and executive officers, by the Compensation Committee, whose determination shall be conclusive and binding. Transfer of a Participant’s employment or service relationship between
the Company and any Related Company shall not be considered a Termination of Service for purposes of an Award. Unless the Compensation Committee determines otherwise, a Termination of Service shall be deemed to occur if the Participant’s
employment or service relationship is with an entity that has ceased to be a Related Company. 
  
 “Vesting Commencement Date” means the Grant Date or such other date selected by the Committee as the date from which an Award begins to vest. 
  

 R-B4

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