Exhibit 10.1
KINDRED BIOSCIENCES, INC.
2018 EQUITY INCENTIVE PLAN, AS AMENDED
1.GENERAL.
(a)Eligible Award Recipients. The persons eligible to receive Awards are
Employees, Directors and Consultants.
(b)Available Awards. The Plan provides for the grant of the following Awards:
(i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) Stock
Appreciation Rights; (iv) Restricted Stock Awards; (v) Restricted Stock Unit
Awards; (vi) Performance Stock Awards; (vii) Performance Cash Awards; and (viii)
Other Stock Awards.
(c)Purpose. The Company, by means of the Plan, seeks to secure and retain the
services of the group of persons eligible to receive Awards as set forth in
Section 1(a), to provide incentives for such persons to exert maximum efforts
for the success of the Company and any Affiliate and to provide a means by which
such eligible recipients may be given an opportunity to benefit from increases
in the value of the Common Stock through the granting of Awards.
(d)Successor to the 2016 Equity Incentive Plan. The Plan is intended to be the
successor to the Company’s 2016 Equity Incentive Plan. From and after the date
that the Company’s stockholders approve the Plan, no awards shall be made under
the 2016 Equity Incentive Plan. All awards made under the 2016 Equity Incentive
Plan shall remain subject to the terms of that plan.
(e)Definitions. Section 13 sets forth the definitions of certain capitalized
terms used in the Plan.
2.ADMINISTRATION.
(a)Administration by the Board. The Board shall administer the Plan unless and
until the Board delegates administration of the Plan to a Committee or
Committees, as provided in Section 2(c).
(b)Powers of the Board. The Board shall have the power and authority, subject
to, and within the limitations of, the express provisions of the Plan:
(i)  To determine from time to time: (A) which of the persons eligible under the
Plan shall be granted Awards; (B) when and how each Award shall be granted; (C)
what type or combination of types of Awards shall be granted; (D) the provisions
of each Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive cash or Common Stock pursuant to a
Stock Award; (E) the number of shares of Common Stock with respect to which a
Stock Award shall be granted to each such person; and (F) the Fair Market Value
applicable to a Stock Award;
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(ii)  To construe and interpret the Plan and Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration; the
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement or in the written
terms of a Performance Cash Award, in a manner and to the extent it shall deem
necessary or expedient to make the Plan or Award fully effective;
(iii)  To settle all controversies regarding the Plan and Awards granted under
it;
(iv)  To accelerate the time at which an Award may first be exercised or the
time during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest;
(v)  To amend, suspend or terminate the Plan at any time; provided that
amendment, suspension or termination of the Plan shall not impair rights and
obligations under any Award granted while the Plan is in effect except with the
written consent of the affected Participant;
(vi)  To submit any amendment to the Plan for stockholder approval, including,
but not limited to, amendments to the Plan intended to satisfy the requirements
of (A) Section 422 of the Code regarding “incentive stock options” or (B) Rule
16b-3 under the Exchange Act;
(vii)  To approve forms of Award Agreements for use under the Plan and to amend
the terms of any one or more Awards, including, but not limited to, amendments
to provide terms more favorable to the Participant than previously provided in
the Award Agreement, subject to any specified limits in the Plan that are not
subject to Board discretion; provided, however, that a Participant’s rights
under any Award shall not be impaired by any such amendment unless (A) the
Company requests the consent of the affected Participant and (B) such
Participant consents in writing; notwithstanding the foregoing, subject to the
limitations of applicable law, if any, the Board may amend the terms of any one
or more Awards without the affected Participant’s consent if necessary to
maintain the qualified status of the Award as an Incentive Stock Option or to
bring the Award into compliance with Section 409A of the Code;
(viii)  To exercise such powers and to perform such acts as the Board deems
necessary or expedient to promote the best interests of the Company and that are
not in conflict with the provisions of the Plan or Awards; and
(ix)  To adopt such procedures and sub-plans as are necessary or appropriate to
permit participation in the Plan by Employees, Directors or Consultants who are
foreign nationals or employed outside the United States.
(c)Delegation to a Committee.
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(i)  General. The Board may delegate some or all of the administration of the
Plan to a Committee or Committees. If administration of the Plan is delegated to
a Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been delegated
to the Committee, including the power to delegate to a subcommittee of the
Committee any of the administrative powers the Committee is authorized to
exercise, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may retain the authority to concurrently administer the Plan with the
Committee and may, at any time, revest in the Board some or all of the powers
previously delegated. If administration of the Plan is delegated to a Committee,
references in the Plan to the Board shall, as applicable, refer to the Committee
or subcommittee to the extent consistent with the Board’s delegation of Plan
administration to the Committee.
(ii)  Members of the Committee. Unless otherwise determined by the Board, the
Committee shall be comprised of at least two Directors, each of whom shall be an
Outside Director. The failure of the Committee to be comprised solely of Outside
Directors shall not affect the validity of any action of the Committee
(including the grant of any Award) that otherwise complies with the terms of the
Plan.
(d)Delegation to an Officer. The Board may delegate to one or more Officers the
authority to do one or both of the following: (i) designate Employees who are
not Officers to be recipients of Options and Stock Appreciation Rights (and, to
the extent permitted by applicable law, other Stock Awards) and the terms
thereof, and (ii) determine the number of shares of Common Stock to be subject
to such Stock Awards granted to such Employees; provided, however, that the
Board resolutions regarding such delegation shall specify the total number of
shares of Common Stock that may be subject to the Stock Awards granted by such
Officer and that such Officer may not grant a Stock Award to himself or herself.
Notwithstanding the foregoing, the Board may not delegate authority to an
Officer to determine Fair Market Value pursuant to Section 13(v)(iii).
(e)Effect of the Board’s Determinations. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
(f)No Repricing of Stock Awards or Cancellation and Re-Grant of Stock Awards.
Except with respect to adjustments that are made in accordance with Section 9,
neither the Board nor any Committee shall have the authority to (i) reduce the
exercise price of any outstanding Option or SAR or take any other action that
would be treated, for accounting purposes, as a “repricing” of any outstanding
Stock Award under the Plan or (ii) cancel and re-grant any outstanding Stock
Award under the Plan, unless the stockholders of the Company approve such
reduction, cancellation, re-grant or other action within twelve months before or
after such reduction, cancellation, re-grant or other action.
(g)Dividends and Dividend Equivalents. Dividends or dividend equivalents may be
paid or credited, as applicable, with respect to any shares of Common Stock
subject to a Stock Award (other than an Option or SAR), as determined by the
Board and contained in the applicable Stock Award Agreement;
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provided, however, that (i) no dividends or dividend equivalents may be paid
with respect to any such shares before the date such shares have vested under
the terms of such Stock Award Agreement, (ii) any dividends or dividend
equivalents that are credited with respect to any such shares will be subject to
all of the terms and conditions applicable to such shares under the terms of
such Stock Award Agreement (including, without limitation, any vesting
conditions), and (iii) any dividends or dividend equivalents that are credited
with respect to any such shares will be forfeited to the Company on the date, if
any, such shares are forfeited to or repurchased by the Company due to a failure
to meet any vesting conditions under the terms of such Stock Award Agreement.
3.SHARES SUBJECT TO THE PLAN.
(a)Share Reserve. Subject to Section 9(a) relating to Capitalization
Adjustments, the aggregate number of shares of Common Stock that may be issued
pursuant to Stock Awards granted under the Plan from and after the Effective
Date shall not exceed 4,600,000 shares (the “Share Reserve”), of which up to
3,000,000 shares may be issued pursuant to Incentive Stock Options. Each Option,
SAR, Restricted Stock Award, Restricted Stock Unit Award and other form of Stock
Award granted under the Plan shall be counted against the Share Reserve as one
share of Common Stock for each share of Common Stock that is subject to the
Option, SAR, Restricted Stock Award, Restricted Stock Unit Award or other form
of Stock Award; provided, however, that each Restricted Stock Award or
Restricted Stock Unit Award that is granted under the Plan on or after April 21,
2020 shall be counted against the Share Reserve as two shares of Common Stock
for each share of Common Stock that is subject to the Restricted Stock Award or
Restricted Stock Unit Award granted on or after April 21, 2020. To the extent
permitted by NASDAQ Listing Rule 5635(c)(3) or other applicable national stock
exchange rule, shares of Common Stock may be issued by the Company in connection
with a merger or acquisition without reducing the number of shares available for
issuance under the Plan. Furthermore, if a Stock Award or any portion thereof
(i) expires or otherwise terminates without all of the shares covered by such
Stock Award having been issued or (ii) is settled in cash (i.e., the Participant
receives cash rather than stock), such expiration, termination or settlement
shall not reduce (or otherwise offset) the number of shares of Common Stock that
may be available for issuance under the Plan.
(b)Reversion of Shares to the Share Reserve. If any shares of Common Stock
issued pursuant to a Stock Award are forfeited back to or repurchased by the
Company because of the failure to meet a contingency or condition required to
vest such shares in the Participant, then the shares that are forfeited or
repurchased shall revert to and again become available for issuance under the
Plan. Any shares of Common Stock reacquired or withheld by the Company pursuant
to Section 8(g) or as consideration for the exercise of an Option shall also
revert to and again become available for issuance under the Plan. If any shares
of Common Stock subject to a Restricted Stock Award or Restricted Stock Unit
Award (whether either such award was granted on, before or after April 21, 2020)
again become available for issuance under the Plan pursuant to either of the
preceding two sentences or pursuant to the last sentence of Section 3(a), the
Share Reserve shall be increased by two shares of Common Stock for each share of
Common Stock that becomes available for issuance under the Plan pursuant to
either of the preceding two sentences or pursuant to the last sentence of
Section 3(a); with respect to all Options,
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SARs and other forms of Stock Awards, the Share Reserve shall be increased by
one share of Common Stock for each share of Common Stock that becomes available
for issuance under the Plan pursuant to either of the preceding two sentences or
pursuant to Section 3(a).
(c)Annual Compensation to Non-Employee Directors; Limitation on Annual Stock
Awards to Participants.
(i)  In no event shall the compensation payable by the Company to a Non-Employee
Director for services performed as a Non-Employee Director, including, without
limitation, the grant date value (determined under U.S. generally accepted
accounting principles) of Awards, cash retainers, Committee fees and other
compensation, exceed $500,000 in the aggregate during any calendar year, and in
no event shall the number of shares of Common Stock subject to Stock Awards
(including, without limitation, Options) granted to any Non-Employee Director,
subject to the provisions of Section 9(a) relating to Capitalization
Adjustments, exceed 100,000 shares during any calendar year.
(ii)  Subject to the provisions of Section 9(a) relating to Capitalization
Adjustments, a maximum of 500,000 shares of Common Stock subject to Stock Awards
(including, without limitation, Options) may be granted to any Participant other
than a Non-Employee Director during any calendar year.
(d)Source of Shares. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Company on the open market or otherwise.
4.ELIGIBILITY.
(a)Eligibility for Specific Stock Awards. Incentive Stock Options may be granted
only to employees of the Company or a “parent corporation” or “subsidiary
corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of
the Code). Stock Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants; provided, however, that Stock Awards may
not be granted to Employees, Directors and Consultants who are providing
Continuous Service only to any “parent” of the Company, as such term is defined
in Rule 405 of the Securities Act, unless the stock underlying such Stock Awards
is treated as “service recipient stock” under Section 409A of the Code because
the Stock Awards are granted pursuant to a corporate transaction (such as a
spin-off transaction) or unless such Stock Awards comply with the distribution
requirements of Section 409A of the Code.
(b)Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an
Incentive Stock Option unless the exercise price of such Option is at least 110%
of the Fair Market Value on the date of grant and the Option is not exercisable
after the expiration of five years from the date of grant.
5.PROVISIONS RELATING TO OPTIONS AND STOCK APPRECIATION RIGHTS.
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Each Option or SAR shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant and, if certificates are issued, a separate certificate or certificates
shall be issued for shares of Common Stock purchased on exercise of each type of
Option. If an Option is not specifically designated as an Incentive Stock
Option, then the Option shall be a Nonstatutory Stock Option. The provisions of
separate Options or SARs need not be identical; provided, however, that each
Option Agreement or Stock Appreciation Right Agreement shall conform to (through
incorporation of provisions hereof by reference in the applicable Award
Agreement or otherwise) the substance of each of the following provisions:
(a)Term. The term of each Option and SAR shall be set by the Board in its sole
discretion; provided, however, that the term shall not be more than ten years
from the date the Option or SAR is granted or five years from the date an
Incentive Stock Option is granted to a Ten Percent Stockholder. The Board shall
determine the time period, including the time period following any termination
of a Participant's Continuous Service, during which the Participant has the
right to exercise a vested Option or SAR, which time period may not extend
beyond the expiration date of the Option or SAR term. Except as limited by the
requirements of Section 409A or Section 422 of the Code and regulations and
rulings thereunder, the Board may extend the term of any outstanding Option or
SAR, and may extend the time period during which a vested Option or SAR may be
exercised, in connection with any termination of the Participant's Continuous
Service, and may amend any other term or condition of such Option or SAR
relating to such a termination of Continuous Service, provided, however, that
such term or time period shall not be extended beyond the date described in the
first sentence of this paragraph.
(b)Exercise Price. Subject to the provisions of Section 4(b) regarding Ten
Percent Stockholders, the exercise price (or strike price) of each Option or SAR
shall be not less than 100% of the Fair Market Value of the Common Stock subject
to the Option or SAR on the date the Option or SAR is granted. Notwithstanding
the foregoing, an Option or SAR may be issued with an exercise price (or strike
price) lower than 100% of the Fair Market Value of the Common Stock subject to
the Option or SAR if such Option or SAR is issued pursuant to an assumption of
or substitution for another option or stock appreciation right pursuant to a
Corporate Transaction and in a manner consistent with the provisions of Section
409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will
be denominated in shares of Common Stock equivalents.
(c)Purchase Price for Options. The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board shall have the
authority to grant Options that do not permit all of the following methods of
payment (or otherwise restrict the ability to use certain methods) and to grant
Options that require the consent of the Company to utilize a particular method
of payment. The permitted methods of payment are as follows:
(i)  By cash, check, bank draft or money order payable to the Company;
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(ii)  Pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board that, prior to the issuance of the stock subject to the
Option, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds;
(iii)  By delivery to the Company (either by actual delivery or attestation) of
shares of Common Stock;
(iv)  If the option is a Nonstatutory Stock Option, by a “net exercise”
arrangement pursuant to which the Company will reduce the number of shares of
Common Stock issuable upon exercise by the largest whole number of shares with a
Fair Market Value that does not exceed the aggregate exercise price; provided,
however, that the Company shall accept a cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise
price not satisfied by such reduction in the number of whole shares to be
issued; provided, further, that shares of Common Stock will no longer be subject
to an Option and will not be exercisable thereafter to the extent that (A)
shares issuable upon exercise are reduced to pay the exercise price pursuant to
the “net exercise,” (B) shares are delivered to the Participant as a result of
such exercise, and (C) shares are withheld to satisfy tax withholding
obligations; and
(v)  In any other form of legal consideration that may be acceptable to the
Board and specified in the applicable Award Agreement.
(d)Exercise and Payment of a SAR. To exercise any outstanding SAR, the
Participant must provide written notice of exercise to the Company in compliance
with the provisions of the Stock Appreciation Right Agreement evidencing such
SAR. The appreciation distribution payable on the exercise of a SAR will be not
greater than an amount equal to the excess of (i) the aggregate Fair Market
Value (on the date of the exercise of the SAR) of a number of shares of Common
Stock equal to the number of Common Stock equivalents in which the Participant
is vested under such SAR and with respect to which the Participant is exercising
the SAR on such date over (ii) the strike price that will be determined by the
Board at the time of grant of the SAR. The appreciation distribution in respect
to a SAR may be paid in Common Stock, in cash, in any combination of the two or
in any other form of consideration, as determined by the Board and contained in
the Stock Appreciation Right Agreement evidencing such SAR.
(e)Transferability of Options and SARs. The Board may, in its sole discretion,
impose such limitations on the transferability of Options and SARs as the Board
shall determine. In the absence of such a determination by the Board to the
contrary, the following restrictions on the transferability of Options and SARs
shall apply:
(i)  Restrictions on Transfer. An Option or SAR shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Participant only by the Participant; provided,
however, that the Board may, in its sole discretion, permit transfer of the
Option or SAR
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in a manner that is not prohibited by applicable tax and securities laws upon
the Participant’s request. Except as explicitly provided herein, neither an
Option nor a SAR may be transferred for consideration.
(ii)  Domestic Relations Orders. Notwithstanding the foregoing, an Option or SAR
may be transferred pursuant to a domestic relations order; provided, however,
that if an Option is an Incentive Stock Option, such Option may be deemed to be
a Nonstatutory Stock Option as a result of such transfer.
(iii)  Beneficiary Designation. Notwithstanding the foregoing, the Participant
may, by delivering written notice to the Company, in a form provided by or
otherwise satisfactory to the Company and any broker designated by the Company
to effect Option exercises, designate a third party who, in the event of the
death of the Participant, shall thereafter be entitled to exercise the Option or
SAR and receive the Common Stock or other consideration resulting from such
exercise. In the absence of such a designation, the executor or administrator of
the Participant’s estate shall be entitled to exercise the Option or SAR and
receive the Common Stock or other consideration resulting from such exercise.
(f)Vesting Generally. The total number of shares of Common Stock subject to an
Option or SAR may vest and therefore become exercisable in periodic installments
that may or may not be equal. The Option or SAR may be subject to such other
terms and conditions on the time or times when it may or may not be exercised
(which may be based on the satisfaction of Performance Goals or other criteria)
as the Board may deem appropriate. The vesting provisions of individual Options
or SARs may vary. The provisions of this Section 5(f) are subject to any Option
or SAR provisions governing the minimum number of shares of Common Stock as to
which an Option or SAR may be exercised.
(g)Termination of Continuous Service. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company or except as otherwise extended by the Board, if a Participant’s
Continuous Service terminates (other than for Cause or upon the Participant’s
death or Disability), the Participant may exercise his or her Option or SAR (to
the extent that the Participant was entitled to exercise such Award as of the
date of termination of Continuous Service) but only within such period of time
ending on the earlier of (i) the date three months following the termination of
the Participant’s Continuous Service (or such longer or shorter period specified
in the applicable Award Agreement) or (ii) the expiration of the term of the
Option or SAR as set forth in the Award Agreement. If, after termination of
Continuous Service, the Participant does not exercise his or her Option or SAR
within the time specified herein or in the Award Agreement (as applicable), the
Option or SAR shall terminate except as otherwise determined by the Board.
Notwithstanding any provision in the Plan to the contrary, the Board may, in its
discretion and subject to whatever terms and conditions it elects, accelerate
the vesting of an Option or SAR following a termination of Continuous Service or
provide in the Award Agreement for continued vesting of an Option or SAR
following a termination of Continuous Service.
(h)Extension of Termination Date. If the exercise of an Option or SAR following
the termination of the Participant’s Continuous Service (other than for Cause or
upon the Participant’s death or Disability)
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would be prohibited at any time solely because the issuance of shares of Common
Stock would violate the registration requirements under the Securities Act, then
the Option or SAR shall terminate on the earlier of (i) the expiration of a
total period of three months (that need not be consecutive) after the
termination of the Participant’s Continuous Service during which the exercise of
the Option or SAR would not be in violation of such registration requirements or
(ii) the expiration of the term of the Option or SAR as set forth in the
applicable Award Agreement or as otherwise determined by the Board. In addition,
unless otherwise provided in a Participant’s Award Agreement or as otherwise
determined by the Board, if the sale of any Common Stock received upon exercise
of an Option or SAR following the termination of the Participant’s Continuous
Service (other than for Cause) would violate the Company’s insider trading
policy, then the Option or SAR shall terminate on the earlier of (i) the
expiration of a period equal to the applicable post-termination exercise period
after the termination of the Participant’s Continuous Service during which the
sale of the Common Stock received upon exercise of the Option or SAR would not
be in violation of the Company’s insider trading policy or (ii) the expiration
of the term of the Option or SAR as set forth in the applicable Award Agreement.
(i)Disability of a Participant. Except as otherwise provided in the applicable
Award Agreement or other agreement between the Participant and the Company or
except as otherwise extended by the Board, if a Participant’s Continuous Service
terminates as a result of the Participant’s Disability, the Participant may
exercise his or her Option or SAR (to the extent that the Participant was
entitled to exercise such Option or SAR as of the date of termination of
Continuous Service), but only within such period of time ending on the earlier
of (i) the date eighteen months following such termination of Continuous Service
(or such longer or shorter period specified in the Award Agreement) or (ii) the
expiration of the term of the Option or SAR as set forth in the Award Agreement.
If, after termination of Continuous Service, the Participant does not exercise
his or her Option or SAR within the time specified herein or in the Award
Agreement (as applicable), the Option or SAR (as applicable) shall terminate
except as otherwise determined by the Board.
(j)Death of a Participant. Except as otherwise provided in the applicable Award
Agreement or other agreement between the Participant and the Company or except
as otherwise extended by the Board, if (i) a Participant’s Continuous Service
terminates as a result of the Participant’s death or (ii) the Participant dies
within the period (if any) specified in the Award Agreement after the
termination of the Participant’s Continuous Service for a reason other than
death, then the Option or SAR may be exercised (to the extent the Participant
was entitled to exercise such Option or SAR as of the date of death) by the
Participant’s estate, by a person who acquired the right to exercise the Option
or SAR by bequest or inheritance or by a person designated to exercise the
Option or SAR upon the Participant’s death, but only within the period ending on
the earlier of (i) the date eighteen months following the date of death (or such
longer or shorter period specified in the Award Agreement) or (ii) the
expiration of the term of such Option or SAR as set forth in the Award
Agreement. If, after the Participant’s death, the Option or SAR is not exercised
within the time specified herein or in the Award Agreement (as applicable), the
Option or SAR shall terminate except as otherwise determined by the Board.
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(k)Termination for Cause. Except as explicitly provided otherwise in a
Participant’s Award Agreement or except as otherwise extended by the Board, if a
Participant’s Continuous Service is terminated for Cause, the Option or SAR
shall terminate upon the date on which the Participant’s Continuous Service
terminated, and the Participant shall be prohibited from exercising his or her
Option or SAR from and after the date of such termination of Continuous Service.
6.PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS AND SARS.
(a)Restricted Stock Awards. Each Restricted Stock Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. To the extent consistent with the Company’s Bylaws, at the Board’s
election, shares of Common Stock may be (i) held in book entry form subject to
the Company’s instructions until any restrictions relating to the Restricted
Stock Award lapse or (ii) evidenced by a certificate, which certificate shall be
held in such form and manner as determined by the Board. The terms and
conditions of Restricted Stock Award Agreements may change from time to time,
and the terms and conditions of separate Restricted Stock Award Agreements need
not be identical; provided, however, that each Restricted Stock Award Agreement
shall conform to (through incorporation of the provisions hereof by reference in
the agreement or otherwise) the substance of each of the following provisions:
(i)  Consideration. A Restricted Stock Award may be awarded in consideration for
(A) cash, check, bank draft or money order payable to the Company, (B) past
services to the Company or an Affiliate, or (C) any other form of legal
consideration (including future services) that may be acceptable to the Board,
in its sole discretion, and permissible under applicable law.
(ii)  Vesting. Shares of Common Stock awarded under the Restricted Stock Award
Agreement may be subject to forfeiture to the Company in accordance with a
vesting schedule to be determined by the Board.
(iii)  Termination of a Participant’s Continuous Service. If a Participant’s
Continuous Service terminates, the Company may receive through a forfeiture
condition or a repurchase right any or all of the shares of Common Stock held by
the Participant that have not vested as of the date of termination of Continuous
Service under the terms of the Restricted Stock Award Agreement.
(iv)  Transferability. Rights to acquire shares of Common Stock under the
Restricted Stock Award Agreement shall be transferable by the Participant only
upon such terms and conditions as are set forth in the Restricted Stock Award
Agreement, as the Board shall determine in its sole discretion, so long as
Common Stock awarded under the Restricted Stock Award Agreement remains subject
to the terms of the Restricted Stock Award Agreement.
(b)Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of Restricted Stock Unit Award
Agreements may change from time to time, and the terms and conditions of
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separate Restricted Stock Unit Award Agreements need not be identical; provided,
however, that each Restricted Stock Unit Award Agreement shall conform to
(through incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:
(i)  Consideration. At the time of grant of a Restricted Stock Unit Award, the
Board will determine the consideration, if any, to be paid by the Participant
upon delivery of each share of Common Stock subject to the Restricted Stock Unit
Award. The consideration to be paid (if any) by the Participant for each share
of Common Stock subject to a Restricted Stock Unit Award may be paid in any form
of legal consideration that may be acceptable to the Board, in its sole
discretion, and permissible under applicable law.
(ii)  Vesting. At the time of the grant of a Restricted Stock Unit Award, the
Board may impose such restrictions on or conditions to the vesting of the
Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii)  Payment. A Restricted Stock Unit Award may be settled by the delivery of
shares of Common Stock, their cash equivalent, any combination thereof or in any
other form of consideration, as determined by the Board and contained in the
Restricted Stock Unit Award Agreement.
(iv)  Additional Restrictions. At the time of the grant of a Restricted Stock
Unit Award, the Board, as it deems appropriate, may impose such restrictions or
conditions that delay the delivery of the shares of Common Stock (or their cash
equivalent) subject to a Restricted Stock Unit Award to a time after the vesting
of such Restricted Stock Unit Award.
(v)  Termination of a Participant’s Continuous Service. Except as otherwise
provided in the applicable Restricted Stock Unit Award Agreement, such portion
of the Restricted Stock Unit Award that has not vested will be forfeited upon
the Participant’s termination of Continuous Service.
(c)Performance Awards.
(i)  Performance Stock Awards. A Performance Stock Award is a Stock Award that
may vest or may be exercised contingent upon the attainment during a Performance
Period of certain Performance Goals. A Performance Stock Award may, but need
not, require the completion of a specified period of Continuous Service. The
length of any Performance Period, the Performance Goals to be achieved during
the Performance Period, and the measure of whether and to what degree such
Performance Goals have been attained shall be conclusively determined by the
Board, in its sole discretion. The Board may provide for or, subject to such
terms and conditions as the Board may specify, may permit a Participant to elect
for, the payment of any Performance Stock Award to be deferred to a specified
date or event. In addition, to the extent permitted by applicable law and the
applicable Award Agreement, the Board may determine that cash may be used in
payment of Performance Stock Awards.
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(ii)  Performance Cash Awards. A Performance Cash Award is a cash award that may
be paid contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Cash Award may also require the completion of a
specified period of Continuous Service. The length of any Performance Period,
the Performance Goals to be achieved during the Performance Period, and the
measure of whether and to what degree such Performance Goals have been attained
shall be conclusively determined by the Board, in its sole discretion. The Board
may provide for or, subject to such terms and conditions as the Board may
specify, may permit a Participant to elect for, the payment of any Performance
Cash Award to be deferred to a specified date or event. The Board may specify
the form of payment of Performance Cash Awards, which may be cash or other
property, or may provide for a Participant to have the option for his or her
Performance Cash Award, or such portion thereof as the Board may specify, to be
paid in whole or in part in cash or other property.
(iii)  Discretion. The Board shall have the right to reduce, eliminate or
increase the amount that is payable under a Performance Stock Award or
Performance Cash Award by taking into account additional factors that the Board
may deem relevant, including the assessment of individual or corporate
performance for the Performance Period.
(d)Other Stock Awards. Other forms of Stock Awards valued in whole or in part by
reference to, or otherwise based on, Common Stock, including the appreciation in
value thereof may be granted either alone or in addition to Stock Awards
provided for under Section 5 and the preceding provisions of this Section 6.
Subject to the provisions of the Plan, the Board shall have sole and complete
authority to determine the persons to whom and the time or times at which such
Other Stock Awards will be granted, the number of shares of Common Stock (or the
cash equivalent thereof) to be granted pursuant to such Other Stock Awards and
all other terms and conditions of such Other Stock Awards.
7.COVENANTS OF THE COMPANY.
(a)Availability of Shares. During the terms of the Stock Awards, the Company
shall keep available at all times the number of shares of Common Stock
reasonably required to satisfy such Stock Awards.
(b)Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority that counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such Stock Awards unless and until such
authority is obtained. A Participant shall not be eligible for the grant of a
Stock
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Award or the subsequent issuance of Common Stock pursuant to the Stock Award if
such grant or issuance would be in violation of any applicable securities law.
(c)No Obligation to Notify or Minimize Taxes. The Company shall have no duty or
obligation to any Participant to advise such holder as to the time or manner of
exercising such Stock Award. Furthermore, the Company shall have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of a Stock Award or a possible period in which the Stock Award may
not be exercised. The Company has no duty or obligation to minimize the tax
consequences of a Stock Award to the holder of such Stock Award.
8.MISCELLANEOUS.
(a)Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares
of Common Stock pursuant to Stock Awards shall constitute general funds of the
Company.
(b)Corporate Action Constituting the Grant of Stock Awards. Corporate action
constituting a grant by the Company of a Stock Award to any Participant shall be
deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Stock Award is communicated to, or actually received or
accepted by, the Participant.
(c)Stockholder Rights. No Participant shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares of Common Stock
subject to a Stock Award unless and until (i) such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms, if
applicable, and (ii) the issuance of the Common Stock subject to such Stock
Award has been entered into the books and records of the Company.
(d)No Employment or Other Service Rights. Nothing in the Plan, any Award
Agreement or any other instrument executed thereunder or in connection with any
Award granted pursuant thereto shall confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in effect at the
time the Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without Cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an Affiliate, or (iii)
the service of a Director pursuant to the Bylaws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.
(e)Incentive Stock Option $100,000 Limitation. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by any
Optionholder during any calendar year (under all plans of the Company and any
Affiliates) exceeds $100,000, the Options or portions thereof that exceed such
limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options, notwithstanding any contrary provision of the
applicable Option Agreements.
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(f)Investment Assurances. The Company may require a Participant, as a condition
of exercising or acquiring Common Stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant’s knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award, and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring Common
Stock subject to the Stock Award for the Participant’s own account and not with
any present intention of selling or otherwise distributing the Common Stock. The
foregoing requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (A) the issuance of the shares upon the exercise or
acquisition of Common Stock under the Stock Award has been registered under a
then-currently effective registration statement under the Securities Act or (B)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then-applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the Common Stock.
(g)Withholding Obligations. Unless prohibited by the terms of an Award
Agreement, the Company may, in its sole discretion, satisfy any federal, state
or local tax withholding obligation relating to an Award by any of the following
means or by a combination of such means: (i) causing the Participant to tender a
cash payment; (ii) withholding shares of Common Stock from the shares of Common
Stock issued or otherwise issuable to the Participant in connection with the
Award; provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law (or
such lesser amount as may be necessary to avoid classification of the Stock
Award as a liability for financial accounting purposes); (iii) withholding cash
from an Award settled in cash; (iv) withholding payment from any amounts
otherwise payable to the Participant; or (v) by such other method as may be set
forth in the Award Agreement.
(h)Electronic Delivery. Any reference herein to a “written” agreement or
document shall include any agreement or document delivered electronically, filed
publicly at www.sec.gov (or any successor website thereto) or posted on the
Company’s intranet.
(i)Deferrals. To the extent permitted by applicable law, the Board, in its sole
discretion, may determine that the delivery of Common Stock or the payment of
cash, upon the exercise, vesting or settlement of all or a portion of any Award
may be deferred and may establish programs and procedures for deferral elections
to be made by Participants. Deferrals by Participants shall be made in
accordance with Section 409A of the Code. Consistent with Section 409A of the
Code, the Board may provide for distributions while a Participant is still an
Employee or otherwise providing services to the Company or an Affiliate. The
Board is authorized to make deferrals of Awards and determine when, and in what
annual percentages, a Participant may receive payments, including lump sum
payments, following the Participant’s termination of Continuous Service,
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and implement such other terms and conditions consistent with the provisions of
the Plan and in accordance with applicable law.
(j)Compliance with Section 409A of the Code. To the extent that the Board
determines that any Award granted hereunder is subject to Section 409A of the
Code, the Award Agreement evidencing such Award shall be deemed to incorporate
the terms and conditions necessary to avoid the consequences specified in
Section 409A(a)(1) of the Code. To the extent applicable, the Plan and Award
Agreements shall be interpreted in accordance with Section 409A of the Code.
Notwithstanding anything to the contrary in this Plan (and unless the Award
Agreement specifically provides otherwise), if a Participant holding an Award
that constitutes “deferred compensation” under Section 409A of the Code is a
“specified employee” for purposes of Section 409A of the Code, no distribution
or payment of any amount shall be made upon a “separation from service” before a
date that is six months following the date of such Participant’s “separation
from service” (as defined in Section 409A of the Code without regard to
alternative definitions thereunder) or, if earlier, the date of the
Participant’s death, unless such distribution or payment can be made in a manner
that complies with Section 409A of the Code.
(k)Clawback Provisions. All Awards granted under the Plan shall be subject to
recoupment in accordance with any clawback policy that the Company is required
to adopt pursuant to the listing standards of any national securities exchange
on which the Company’s securities are listed or as is otherwise required by the
Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable
law. In addition, the Board may impose such other clawback, recovery or
recoupment provisions in an Award Agreement as the Board determines necessary or
appropriate, including but not limited to a reacquisition right in respect of
previously acquired shares of Common Stock or other cash or property upon the
occurrence of an event constituting Cause. No recovery of compensation under
such a clawback policy shall be an event giving rise to a right to resign for
“good reason” or “constructive termination” (or similar term) under the Plan or
any agreement with the Company.
9.ADJUSTMENTS UPON CHANGES IN THE COMMON STOCK; OTHER CORPORATE EVENTS.
(a)Capitalization Adjustments. In the event of a Capitalization Adjustment, the
Board shall appropriately and proportionately adjust (i) the class(es) and
maximum number of securities subject to the Plan pursuant to Section 3(a), (ii)
the class(es) and maximum number of securities that may be awarded to any person
pursuant to Section 3(c)(ii), and (iii) the class(es) and number of securities
and price per share of stock subject to outstanding Stock Awards. The Board
shall make such adjustments, and its determination shall be final, binding and
conclusive.
(b)Dissolution or Liquidation. Except as otherwise provided in the Stock Award
Agreement, in the event of a dissolution or liquidation of the Company, all
outstanding Stock Awards (other than Stock Awards consisting of vested and
outstanding shares of Common Stock not subject to a forfeiture condition or the
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Company’s right of repurchase) shall terminate immediately prior to the
completion of such dissolution or liquidation, and the shares of Common Stock
subject to the Company’s repurchase rights or subject to a forfeiture condition
may be repurchased or reacquired by the Company notwithstanding the fact that
the holder of such Stock Award is providing Continuous Service; provided,
however, that the Board may, in its sole discretion, cause some or all Stock
Awards to become fully vested, exercisable and/or no longer subject to
repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but
contingent on its completion.
(c)Corporate Transaction. The following provisions shall apply to Stock Awards
in the event of a Corporate Transaction unless otherwise provided in the
instrument evidencing the Stock Award or any other written agreement between the
Company or any Affiliate and the holder of the Stock Award or unless otherwise
expressly provided by the Board at the time of grant of a Stock Award. In the
event of a Corporate Transaction, then, notwithstanding any other provision of
the Plan, the Board shall take one or more of the following actions with respect
to Stock Awards, contingent upon the closing or completion of the Corporate
Transaction:
(i)  Arrange for the surviving corporation or acquiring corporation (or the
surviving or acquiring corporation’s parent company) to assume or continue the
Stock Award or to substitute a similar stock award for the Stock Award
(including, but not limited to, an award to acquire the same consideration paid
to the stockholders of the Company pursuant to the Corporate Transaction);
(ii)  Arrange for the assignment of any reacquisition or repurchase rights held
by the Company in respect of Common Stock issued pursuant to the Stock Award to
the surviving corporation or acquiring corporation (or the surviving or
acquiring corporation’s parent company);
(iii)  Accelerate the vesting of the Stock Award (and, if applicable, the time
at which the Stock Award may be exercised) to a date prior to the effective time
of such Corporate Transaction as the Board shall determine (or, if the Board
shall not determine such a date, to the date that is five days prior to the
effective date of the Corporate Transaction), with such Stock Award terminating
if not exercised (if applicable) at or prior to the effective time of the
Corporate Transaction;
(iv)  Arrange for the lapse of any reacquisition or repurchase rights held by
the Company with respect to the Stock Award; and
(v)  Make a payment, in such form as may be determined by the Board equal to the
excess, if any, of (A) the value of the property the Participant would have
received upon the exercise of the Stock Award immediately prior to the effective
time of the Corporate Transaction over (B) any exercise price payable by such
holder in connection with such exercise.
        The Board need not take the same action or actions with respect to all
Stock Awards or portions thereof or with respect to all Participants.
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(d)Change in Control. A Stock Award may be subject to additional acceleration of
vesting and exercisability upon or after a Change in Control as may be provided
in the Stock Award Agreement for such Stock Award or as may be provided in any
other written agreement between the Company or any Affiliate and the
Participant.
10.AMENDMENT, TERMINATION OR SUSPENSION OF THE PLAN.
(a)Amendment of the Plan. The Board has the power and authority to amend any
provision of the Plan at any time; provided, however, that without the approval
of the Company’s stockholders given within twelve months before or after any
such Plan amendment, the Board shall not have the right or authority (i) to
increase the aggregate number of shares of Common Stock (including upon the
exercise of Incentive Stock Options) that may be issued under the Plan pursuant
to Section 3(a), provided that an increase that is made pursuant to Section 9(a)
in connection with a Capitalization Adjustment shall not require stockholder
approval and may be made by the Board, (ii) to amend Section 2(f) relating to
the repricing, cancellation and re-grant of Stock Awards, (iii) to amend the
Plan in any respect that requires stockholder approval under the rules of The
NASDAQ Stock Market LLC (or under the rules of any other national securities
exchange on which the Common Stock may subsequently be traded), or (iv) to amend
the Plan in any respect that requires stockholder approval under the Code or any
other applicable law.
(b)Termination or Suspension of the Plan. The Board may suspend or terminate the
Plan at any time. Unless terminated sooner by the Board, the Plan shall
automatically terminate on the day before the tenth anniversary of the date that
the Plan was adopted by the Board. No Awards may be granted under the Plan while
the Plan is suspended or after it is terminated.
(c)No Impairment of Rights. Unless otherwise provided in the applicable Award
Agreement, the amendment, suspension or termination of the Plan shall not impair
rights and obligations under any Award that is granted prior to such amendment,
suspension or termination, except with the written consent of the affected
Participant.
11.EFFECTIVE DATE OF THE PLAN.
The Plan shall become effective on the Effective Date. The Plan shall be
submitted for the approval of the Company’s stockholders at the 2018 annual
meeting of stockholders. Awards may be granted prior to such stockholder
approval; provided that such Awards shall not be exercisable, shall not vest,
the restrictions thereon shall not lapse and no shares of Common Stock shall be
issued pursuant to such Awards prior to the date that the Plan is approved by
the Company’s stockholders. If such stockholder approval is not obtained at the
2018 annual meeting of stockholders, all Awards previously granted under the
Plan shall be cancelled and become null and void.
12.CHOICE OF LAW.
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The law of the State of Delaware shall govern all questions concerning the
construction, validity and interpretation of the Plan, without regard to that
state’s conflict of laws rules.
13.DEFINITIONS.
As used in the Plan, the following definitions shall apply to the capitalized
terms indicated below:
(a)“Affiliate” means, at the time of determination, any “parent” or “subsidiary”
of the Company as such terms are defined in Rule 405 of the Securities Act. The
Board shall have the authority to determine the time or times at which “parent”
or “subsidiary” status is determined within the foregoing definition.
(b)“Award” means a Stock Award or a Performance Cash Award.
(c)“Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of an Award.
(d)“Board” means the Board of Directors of the Company.
(e)“Capitalization Adjustment” means any change that is made in, or other events
that occur with respect to, the Common Stock subject to the Plan or subject to
any Stock Award after the Effective Date without the receipt of consideration by
the Company through reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, large nonrecurring cash
dividend, stock split, reverse stock split, spin-off, split-off, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or any similar equity restructuring transaction, as that term is used
in Statement of Financial Accounting Standards Board Accounting Standards
Codification Topic 718 (or any successor thereto). Notwithstanding the
foregoing, the conversion of any convertible securities of the Company shall not
be treated as a Capitalization Adjustment.
(f)“Cause” shall have the meaning ascribed to such term in any written agreement
between the Participant and the Company or an Affiliate defining such term and,
in the absence of such agreement, such term shall mean, with respect to a
Participant, the occurrence of any of the following events: (i) the
Participant’s commission of an act of fraud, embezzlement or dishonesty that has
a material adverse impact on the Company or an Affiliate; (ii) the Participant’s
conviction of, or plea of “guilty” or “no contest” to, a felony; (iii) the
Participant’s unauthorized use or disclosure of confidential information or
trade secrets of the Company or an Affiliate that has a material adverse impact
on such entity; or (iv) the Participant’s intentional misconduct that has a
material adverse impact on the Company or an Affiliate. Any determination by the
Company that the Continuous Service of a Participant was terminated with or
without Cause for the purposes of outstanding Awards held by such Participant
shall have no effect upon any determination of the rights or obligations of the
Company or such Participant for any other purpose.
(g)“Change in Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:
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(i)  Any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than 50% of the combined voting
power of the Company’s then-outstanding securities other than by virtue of a
merger, consolidation or similar transaction; notwithstanding the foregoing, a
Change in Control shall not be deemed to occur (A) on account of the acquisition
of securities of the Company directly from the Company, (B) on account of the
acquisition of securities of the Company by an investor, any affiliate thereof
or any other Exchange Act Person that acquires the Company’s securities in a
transaction or series of related transactions the primary purpose of which is to
obtain financing for the Company through the issuance of equity securities, or
(C) solely because the level of Ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this clause)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then-outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;
(ii)  There is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than 50%
of the combined outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than 50% of the combined
outstanding voting power of the parent of the surviving Entity in such merger,
consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;
(iii)  There is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than 50% of the combined voting
power of the voting securities of which are Owned by stockholders of the Company
in substantially the same proportions as their Ownership of the outstanding
voting securities of the Company immediately prior to such sale, lease, license
or other disposition; or
(iv)  Individuals who, on the date the Plan is adopted by the Board, are members
of the Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the members of the Board; provided, however, that if the
appointment or election (or nomination for election) of any new Board member was
approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member shall, for purposes of this Plan, be
considered as a member of the Incumbent Board.
Notwithstanding the foregoing or any other provision of this Plan, (i) the term
Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the
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domicile of the Company, and (ii) the definition of Change in Control (or any
analogous term) in an individual written agreement between the Company or any
Affiliate and the Participant shall supersede the foregoing definition with
respect to Awards subject to such agreement; provided, however, that if no
definition of Change in Control or any analogous term is set forth in such an
individual written agreement, the foregoing definition shall apply.
(h)“Code” means the Internal Revenue Code of 1986, as amended, including any
applicable regulations and guidance thereunder.
(i)“Committee” means a committee of two or more Directors to whom authority has
been delegated by the Board in accordance with Section 2(c).
(j)“Common Stock” means the common stock of the Company.
(k)“Company” means Kindred Biosciences, Inc., a Delaware corporation.
(l)“Consultant” means any individual, including an advisor, who is engaged by
the Company or an Affiliate to render bona fide consulting or advisory services
to the Company or an Affiliate, provided that such services are not in
connection with the offer or sale of the Company’s securities in a
capital-raising transaction and that such services do not directly or indirectly
promote or maintain a market for the Company’s securities. Service solely as a
Director, or payment of a fee for such service, shall not cause a Director to be
considered a “Consultant” for purposes of the Plan.
(m)“Continuous Service” means that the Participant’s service with the Company or
an Affiliate, whether as an Employee, Director or Consultant, is not interrupted
or terminated. A change in the capacity in which the Participant renders service
to the Company or an Affiliate as an Employee, Consultant or Director or a
change in the entity for which the Participant renders such service, provided
that there is no interruption or termination of the Participant’s service with
the Company or an Affiliate, shall not terminate a Participant’s Continuous
Service; provided, however, if the Entity for which a Participant is rendering
services ceases to qualify as an Affiliate, as determined by the Board, in its
sole discretion, such Participant’s Continuous Service shall be considered to
have terminated on the date such Entity ceases to qualify as an Affiliate. To
the extent permitted by law, the Board or the Chief Executive Officer of the
Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of (i) any leave of absence
approved by the Board or Chief Executive Officer, including sick leave, military
leave or any other personal leave or (ii) transfers between the Company, an
Affiliate, or their successors. Notwithstanding the foregoing, a leave of
absence shall be treated as Continuous Service for purposes of vesting in an
Award only to such extent as may be provided in the Company’s leave of absence
policy, in the written terms of any leave of absence agreement or policy
applicable to the Participant, or as otherwise required by law.
(n)“Corporate Transaction” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:
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(i)  The consummation of a sale or other disposition of all or substantially
all, as determined by the Board, in its sole discretion, of the consolidated
assets of the Company and its Subsidiaries;
(ii)  The consummation of a sale or other disposition of at least 90% of the
outstanding securities of the Company;
(iii)  The consummation of a merger, consolidation or similar transaction
following which the Company is not the surviving corporation; or
(iv)  The consummation of a merger, consolidation or similar transaction
following which the Company is the surviving corporation but the shares of
Common Stock outstanding immediately preceding the merger, consolidation or
similar transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise.
Notwithstanding the foregoing or any other provision of the Plan, the term
Corporate Transaction shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company.
(o)“Director” means a member of the Board.
(p)“Disability” means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve months, as provided in Sections 22(e)(3) and
409A(a)(2)(C)(i) of the Code, and shall be determined by the Board on the basis
of such medical evidence as the Board deems warranted under the circumstances.
(q)“Effective Date” means the effective date of the Plan, which is the date set
forth on the first page of the Plan on which the Board approved and adopted the
Plan; provided, however, that the Plan is subject to approval by the Company’s
stockholders at the 2018 annual meeting of stockholders.
(r)“Employee” means any person employed by the Company or an Affiliate. However,
service solely as a Director, or payment of a fee for such services, shall not
cause a Director to be considered an “Employee” for purposes of the Plan.
(s)“Entity” means a corporation, partnership, limited liability company or other
entity.
(t)“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
(u)“Exchange Act Person” means any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange
Act Person” shall not include (i) the
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Company or any Subsidiary of the Company, (ii) any employee benefit plan of the
Company or any Subsidiary of the Company or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
Subsidiary of the Company, (iii) an underwriter temporarily holding securities
pursuant to a registered public offering of such securities, (iv) an Entity
Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company;
or (v) any natural person, Entity or “group” (within the meaning of Section
13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the
Owner, directly or indirectly, of securities of the Company representing more
than 50% of the combined voting power of the Company’s then-outstanding
securities.
(v)“Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:
(i)  If the Common Stock is listed on any established stock exchange or traded
on any established market, the Fair Market Value of a share of Common Stock
shall be, unless otherwise determined by the Board, the closing sales price for
such stock as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the date of
determination, as reported in a source the Board deems reliable;
(ii)  Unless otherwise provided by the Board, if there is no closing sales price
for the Common Stock on the date of determination, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists; and
(iii)  In the absence of such markets for the Common Stock, the Fair Market
Value shall be determined by the Board in good faith and in a manner that
complies with Sections 409A and 422 of the Code.
(w)“Incentive Stock Option” means an option granted pursuant to Section 5 of the
Plan that is intended to be, and qualifies as, an “incentive stock option”
within the meaning of Section 422 of the Code.
(x)“Non-Employee Director” means a Director who not an Employee.
(y)“Nonstatutory Stock Option” means any option granted pursuant to Section 5 of
the Plan that does not qualify as an Incentive Stock Option.
(z)“Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act.
(aa)“Option” means an Incentive Stock Option or a Nonstatutory Stock Option to
purchase shares of Common Stock granted pursuant to the Plan.
(ab)“Option Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an Option grant. Each Option
Agreement shall be subject to the terms and conditions of the Plan.
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(ac)“Optionholder” means a person to whom an Option is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Option.
(ad)“Other Stock Award” means an award based in whole or in part by reference to
the Common Stock which is granted pursuant to the terms and conditions of
Section 6(d).
(ae)“Other Stock Award Agreement” means a written agreement between the Company
and a holder of an Other Stock Award evidencing the terms and conditions of an
Other Stock Award grant. Each Other Stock Award Agreement shall be subject to
the terms and conditions of the Plan.
(af)“Outside Director” means a Director who is (i) a “non-employee director”
within the meaning of Rule 16b-3 under the Exchange Act and (ii) an “independent
director” under applicable rules of The NASDAQ Stock Market LLC (or under the
rules of any other national securities exchange on which the Common Stock may
subsequently be traded), including the independence rules of such stock exchange
relating to compensation committee members.
(ag)“Own,” “Owned,” “Owner,” “Ownership” means that a person or Entity owns,
owned, is the owner of or has acquired ownership of securities, directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise and has or shares voting power, which includes the power to vote or to
direct the voting, with respect to such securities.
(ah)“Participant” means a person to whom an Award is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Stock Award.
(ai)“Performance Cash Award” means an award of cash granted pursuant to the
terms and conditions of Section (6)(c)(ii).
(aj)“Performance Criteria” means the one or more criteria that the Board shall
select for purposes of establishing the Performance Goals for a Performance
Period. The Performance Criteria that shall be used to establish such
Performance Goals may be based on any one of, or combination of, the following
as determined by the Board: (i) earnings (including earnings per share and net
earnings); (ii) earnings before interest, taxes and depreciation; (iii) earnings
before interest, taxes, depreciation and amortization; (iv) total stockholder
return; (v) return on equity or average stockholders’ equity; (vi) return on
assets, investment or capital employed; (vii) stock price; (viii) margin
(including gross margin); (ix) income (before or after taxes); (x) operating
income; (xi) operating income after taxes; (xii) pre-tax profit, operating
profit or net operating profit; (xiii) operating cash flow; (xiv) sales or
revenue targets; (xv) increases in revenue or product revenue; (xvi) expenses
and cost reduction goals; (xvii) improvement in or attainment of working capital
levels; (xviii) economic value added (or an equivalent metric); (xix) market
share; (xx) cash flow; (xxi) cash flow per share; (xxii) share price
performance; (xxiii) debt levels or debt reduction; (xxiv) regulatory body
approval for commercialization of a product; (xxv) implementation, completion or
attainment of objectives relating to product research, product studies, product
study results, product commercialization, regulatory approval and commercial or
strategic
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milestones; (xxvi) acquisition and development of manufacturing facilities for
products; (xxvii) measures of customer satisfaction or retention; (xxviii)
success in compliance with applicable laws and regulations and applicable
accounting requirements; (xxix) investor relations activities and success; (xxx)
stockholders’ equity; (xxxi) capital expenditures; (xxxii) measures of workforce
diversity or retention; (xxxiii) growth of net income or operating income; and
(xxxiv) any other measures of performance selected by the Board.
(ak)“Performance Goals” means, for a Performance Period, the one or more goals
established by the Board for the Performance Period based upon the Performance
Criteria. Performance Goals may be based on a Company-wide basis, with respect
to one or more business units, divisions, Affiliates, or business segments, and
in either absolute terms or relative to the performance of one or more
comparable companies or the performance of one or more relevant indices. Unless
specified otherwise by the Board (i) in the Award Agreement at the time the
Award is granted or (ii) in such other document setting forth the Performance
Goals at the time the Performance Goals are established, the Board may, in its
sole discretion, make appropriate adjustments in the method of calculating the
attainment of Performance Goals for a Performance Period as follows: (1) to
exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange
rate effects, as applicable, for non-U.S. dollar denominated Performance Goals;
(3) to exclude the effects of changes to generally accepted accounting
principles; (4) to exclude the effects of any statutory adjustments to corporate
tax rates; (5) to exclude the effects of any “extraordinary items” as determined
under generally accepted accounting principles; (6) to exclude the dilutive
effects of acquisitions or joint ventures; (7) to assume that any business
divested by the Company achieved performance objectives at targeted levels
during the balance of a Performance Period following such divestiture; (8) to
exclude the effect of any change in the outstanding shares of Common Stock of
the Company by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of shares or other similar corporate change, or any distributions to
stockholders other than regular cash dividends; (9) to exclude the effects of
stock-based compensation and/or the award of bonuses under the Company’s bonus
plans; (10) to exclude expenses incurred in the acquisition or disposition of
businesses; and (11) to exclude the effect of any other unusual, non-recurring
gain or loss or other extraordinary item. In addition, the Board retains the
sole discretion to define the manner of calculating the Performance Criteria it
selects to use for such Performance Period. Partial achievement of the specified
criteria may result in the payment or vesting corresponding to the degree of
achievement as specified in the Stock Award Agreement or the written terms of a
Performance Cash Award.
(al)“Performance Period” means the period of time selected by the Board over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant’s right to and the payment of a Performance
Stock Award or a Performance Cash Award. Performance Periods may be of varying
and overlapping duration, at the sole discretion of the Board.
(am)“Performance Stock Award” means a Stock Award granted under the terms and
conditions of Section 6(c)(i).
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(an)“Plan” means this Kindred Biosciences, Inc. 2018 Equity Incentive Plan, as
it may be amended from time to time.
(ao)“Restricted Stock Award” means an award of shares of Common Stock which is
granted pursuant to the terms and conditions of Section 6(a).
(ap)“Restricted Stock Award Agreement” means a written agreement between the
Company and a holder of a Restricted Stock Award evidencing the terms and
conditions of a Restricted Stock Award grant. Each Restricted Stock Award
Agreement shall be subject to the terms and conditions of the Plan.
(aq)“Restricted Stock Unit Award” means a right to receive shares of Common
Stock which is granted pursuant to the terms and conditions of Section 6(b).
(ar)“Restricted Stock Unit Award Agreement” means a written agreement between
the Company and a holder of a Restricted Stock Unit Award evidencing the terms
and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock
Unit Award Agreement shall be subject to the terms and conditions of the Plan.
(as)“Securities Act” means the Securities Act of 1933, as amended.
(at)“Share Reserve” has the meaning set forth in Section 3(a).
(au)“Stock Appreciation Right” or “SAR” means a right to receive the
appreciation on Common Stock that is granted pursuant to the terms and
conditions of Section 5.
(av)“Stock Appreciation Right Agreement” means a written agreement between the
Company and a holder of a Stock Appreciation Right evidencing the terms and
conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right
Agreement shall be subject to the terms and conditions of the Plan.
(aw)“Stock Award” means any right to receive Common Stock granted under the
Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a
Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation
Right, a Performance Stock Award or any Other Stock Award.
(ax)“Stock Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of a Stock Award grant. Each
Stock Award Agreement shall be subject to the terms and conditions of the Plan.
(ay)“Subsidiary” means, with respect to the Company, (i) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, Owned by
the Company, and (ii) any partnership, limited liability company or other entity
in which
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the Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than 50%.
(az)“Ten Percent Stockholder” means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Company or any
Affiliate.
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