Third Amended and Restated 1996 to Stock Option Plans and Purchase Plans



 Exhibit 10.31 
 MASIMO CORPORATION 
 THIRD AMENDED AND RESTATED 
 1996 INCENTIVE STOCK OPTION, 
 NONQUALIFIED STOCK OPTION 
 AND RESTRICTED STOCK PURCHASE PLAN 
 This 1996
INCENTIVE STOCK OPTION, NONQUALIFIED STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN (the “Plan”) is hereby established by Masimo Corporation, a California corporation (the “Company”) and adopted by its Board of Directors as of
May 4, 1996 (the “Effective Date”). The Plan, as set forth below, was first amended by the Board of Directors and the stockholders of the Company in December 1997. 
 1. PURPOSES OF THE PLAN 
 1.1 PURPOSES. The purposes of the Plan are (a) to
enhance the Company’s ability to attract and retain the services of qualified employees, officers and directors (including non-employee directors), and consultants and other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company’s business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by
providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company. 
 2. DEFINITIONS 
 For purposes of this Plan, the following terms shall have the meanings indicated:

 2.1 ADMINISTRATOR. “Administrator” means the Board or, if the Board delegates responsibility for any matter to the Committee, the
term Administrator shall mean the Committee. 
 2.2 AFFILIATED COMPANY. “Affiliated Company” means any “parent
corporation” or “subsidiary corporation” of the Company, whether now existing or hereafter created or acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code, respectively. 
 2.3 BOARD. “Board” means the Board of Directors of the Company. 
 2.4 CHANGE IN CONTROL. “Change in Control” shall mean (i) the acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) of the beneficial ownership of securities of the Company possessing more 







 than fifty percent (50%) of the combined voting power of all outstanding securities of the Company; (ii) a
merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold, in aggregate,
securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity immediately after such merger or consolidation; (iii) the sale, transfer or other
disposition (in one or more transactions or series of related transactions) of all or substantially all of the assets of the Company; (iv) a complete liquidation or dissolution of the Company; or (v) any reverse merger in which the Company
is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding voting securities are transferred to or acquired by a person or persons different from
the persons holding those securities immediately prior to such merger. 
 2.5 CODE. “Code” means the Internal Revenue Code of 1986,
as amended from time to time. 
 2.6 COMMITTEE. “Committee” means a committee of two or more members of the Board appointed to
administer the Plan, as set forth in Section 7.1 hereof. 
 2.7 COMMON STOCK. “Common Stock” means the Common Stock, no par
value, of the Company, subject to adjustment pursuant to Section 4.2 hereof. 
 2.8 DISABILITY. “Disability” means permanent
and total disability as defined in Section 22(e)(3) of the Code. The Administrator’s determination of a Disability or the absence thereof shall be conclusive and binding on all interested parties. 
 2.9 EFFECTIVE DATE. “Effective Date” means the date on which the Plan is adopted by the Board, as set forth on the first page hereof.

 2.10 EXERCISE PRICE. “Exercise Price” means the purchase price per share of Common Stock payable upon exercise of an Option.

 2.11 FAIR MARKET VALUE. “Fair Market Value” on any given date means the value of one share of Common Stock, determined as
follows: 
 (a) If the Common Stock is then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing
sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on such Nasdaq market system or principal stock exchange on which the Common Stock is then listed or admitted to trading, or, if no closing sale price is
quoted on such day, then the Fair Market Value shall be the closing sale price of the Common Stock on such Nasdaq market system or such exchange on the next preceding day on which a closing sale price is quoted. 
 (b) If the Common Stock is not then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the
Fair Market Value shall be the average of the closing bid and asked prices of the Common Stock in the over-the-counter market on the date of valuation. 
  

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 (c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market
Value shall be determined by the Administrator in good faith using any reasonable method of evaluation, which determination shall be conclusive and binding on all interested parties. 
 2.12 INCENTIVE OPTION. “Incentive Option” means any Option designated and qualified as an “incentive stock option” as defined in
Section 422 of the Code. 
 2.13 INCENTIVE OPTION AGREEMENT. “Incentive Option Agreement” means an Option Agreement with
respect to an Incentive Option. 
 2.14 NASD DEALER. “NASD Dealer” means a broker-dealer that is a member of the National
Association of Securities Dealers, Inc. 
 2.15 NONQUALIFIED OPTION. “Nonqualified Option” means any Option that is not an
Incentive Option. To the extent that any Option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a 10% Stockholder or
because it exceeds the annual limit provided for in Section 5.6 below, it shall to that extent constitute a Nonqualified Option. 
 2.16
NONQUALIFIED OPTION AGREEMENT. “Nonqualified Option Agreement” means an Option Agreement with respect to a Nonqualified Option. 
 2.17 OFFEREE. “Offeree” means a Participant to whom a Right to Purchase has been offered or who has acquired Restricted Stock under the Plan. 
 2.18 OPTION. “Option” means any option to purchase Common Stock granted pursuant to the Plan. 
 2.19 OPTION AGREEMENT. “Option Agreement” means the written agreement entered into between the Company and the Optionee with respect to an Option granted under the Plan. 
 2.20 OPTIONEE. “Optionee” means a Participant who holds an Option. 
 2.21 PARTICIPANT. “Participant” means an individual or entity who holds an Option, a Right to Purchase or Restricted Stock under the Plan.

 2.22 PURCHASE PRICE. “Purchase Price” means the purchase price per share of Restricted Stock payable upon acceptance of a Right
to Purchase. 
 2.23 RESTRICTED STOCK. “Restricted Stock” means shares of Common Stock issued pursuant to Article 6 hereof, subject
to any restrictions and conditions as are established pursuant to such Article 6. 
 2.24 RIGHT TO PURCHASE. “Right to Purchase”
means a right to purchase Restricted Stock granted to an Offeree pursuant to Article 6 hereof. 
  

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 2.25 SERVICE PROVIDER. “Service Provider” means a consultant or other person or entity who
provides services to, or has an important business relationship with, the Company or an Affiliated Company and who the Administrator authorizes to become a Participant in the Plan. 
 2.26 STOCK PURCHASE AGREEMENT. “Stock Purchase Agreement” means the written agreement entered into between the Company and the Offeree with
respect to a Right to Purchase offered under the Plan. 
 2.27 10% STOCKHOLDER. “10% Stockholder” means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of an
Affiliated Company. 
 3. ELIGIBILITY 
 3.1 INCENTIVE OPTIONS. Officers and other key employees of the Company or of an Affiliated Company (including members of the Board if they are employees of the Company or of an Affiliated Company) are eligible to receive Incentive Options
under the Plan. 
 3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Officers and other key employees of the Company or of an Affiliated
Company, members of the Board (whether or not employed by the Company or an Affiliated Company), and Service Providers are eligible to receive Nonqualified Options or Rights to Purchase under the Plan. 
 3.3 LIMITATION ON SHARES. In no event shall any Participant be granted Rights to Purchase or Options in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder exceeds 500,000 shares. 
 4. PLAN SHARES 
 4.1 SHARES SUBJECT TO THE PLAN. The total number of shares of Common Stock of the Company which may be issued under the Plan at any given time shall not
exceed, in the aggregate, the sum of (i) one million four hundred seventy thousand and six hundred (1,470,600) shares and (ii) any shares of the four hundred fifty-five thousand two hundred and fifty (455,250) shares of Common
Stock subject to outstanding options under that certain 1989 Incentive Stock Option, Nonqualified Stock Option and Restricted Stock Purchase Plan of the Company that from time to time becomes unexercisable by the holders thereof under any
circumstances; resulting, therefore, in a maximum of one million nine hundred twenty-five thousand eight hundred and fifty (1,925,850) shares which may be issued under the Plan under any circumstances, subject to adjustment as to the number and
kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation, in the event that (a) all or any portion of any Option or Right to Purchase granted or offered under the Plan can no longer under any circumstances be
exercised, or (b) any shares of Common Stock are reacquired by the Company pursuant to an Incentive Option Agreement, Nonqualified Option 
  

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 Agreement or Stock Purchase Agreement, the shares of Common Stock allocable to the unexercised portion of such Option or
such Right to Purchase, or the shares so reacquired, shall again be available for grant or issuance under the Plan. 
 4.2 CHANGES IN CAPITAL
STRUCTURE. In the event that the outstanding shares of Common Stock are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock
split, reverse stock split, combination of shares, reclassification, stock dividend, or other change in the capital structure of the Company, then appropriate adjustments shall be made by the Administrator to the aggregate number and kind of shares
subject to this Plan, and the number and kind of shares and the price per share subject to outstanding Option Agreements, Rights to Purchase and Stock Purchase Agreements in order to preserve, as nearly as practical, but not to increase, the
benefits to Participants. 
 5. OPTIONS 
 5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall be evidenced by an Option Agreement which shall specify the number of shares subject thereto, the Exercise Price per share, and whether the Option is an Incentive Option
or Nonqualified Option. As soon as is practical following the grant of an Option, an Option Agreement shall be duly executed and delivered by or on behalf of the Company to the Optionee to whom such Option was granted. Each Option Agreement shall be
in such form and contain such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable, including, without limitation, the imposition of any rights of first
refusal and resale obligations upon any shares of Common Stock acquired pursuant to an Option Agreement. Each Option Agreement may be different from each other Option Agreement. 
 5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock covered by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than 100% of Fair Market Value on the date the Incentive Option is granted, (b) the Exercise Price of a Nonqualified Option shall not be less than 85% of Fair
Market Value on the date the Nonqualified Option is granted, and (c) if the person to whom an Option is granted is a 10% Stockholder on the date of grant, the Exercise Price shall not be less than 110% of Fair Market Value on the date the
Option is granted. 
 5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be made upon exercise of an Option and may be made,
in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Optionee that have been held by the Optionee for at least six
(6) months, which surrendered shares shall be valued at Fair Market Value as of the date of such exercise; (d) the Optionee’s promissory note in a form and on terms acceptable to the Administrator; (e) the cancellation of
indebtedness of the Company to the Optionee; (f) the waiver of compensation due or accrued to the Optionee for services rendered; (g) provided that a public market for the Common Stock exists, a “same day sale” commitment from
the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares so purchased to pay for the Exercise Price and 
  

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 whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the
Company; (h) provided that a public market for the Common Stock exists, a “margin” commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the shares so purchased to
the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company;
or (i) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable corporate law. 
 5.4 TERM AND TERMINATION OF OPTIONS. The term and termination of each Option shall be as fixed by the Administrator, but no Option may be exercisable more than ten (10) years after the date it is granted. An
Incentive Option granted to a person who is a 10% Stockholder on the date of grant shall not be exercisable more than five (5) years after the date it is granted. 
 5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and be exercisable in one or more installments at such time or times and subject to such conditions, including without limitation the achievement of
specified performance goals or objectives, as shall be determined by the Administrator. 
 5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the
extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock shall not, with respect to which Incentive Options granted
under this Plan and any other plan of the Company or any Affiliated Company become exercisable for the first time by an Optionee during any calendar year, exceed $100,000. 
 5.7 NONTRANSFERABILITY OF OPTIONS. No Option shall be assignable or transferable except by will or the laws of descent and distribution, and during the
life of the Optionee shall be exercisable only by such Optionee; provided, however, that, in the discretion of the Administrator, any Option may be assigned or transferred in any manner which an “incentive stock option” is permitted to be
assigned or transferred under the Code. 
 5.8 RIGHTS AS STOCKHOLDER. An Optionee or permitted transferee of an Option shall have no rights
or privileges as a Stockholder with respect to any shares covered by an Option until such Option has been duly exercised and certificates representing shares purchased upon such exercise have been issued to such person. 
 6. RIGHTS TO PURCHASE 
 6.1 NATURE OF RIGHT
TO PURCHASE. A Right to Purchase granted to an Offeree entitles the Offeree to purchase, for a Purchase Price determined by the Administrator, shares of Common Stock subject to such terms, restrictions and conditions as the Administrator may
determine at the time of grant (“Restricted Stock”). Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives. 
 6.2 ACCEPTANCE OF RIGHT TO PURCHASE. An Offeree shall have no rights with respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to 
  

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 Purchase within ten (10) days (or such longer or shorter period as the Administrator may specify) following the
grant of the Right to Purchase by making payment of the full Purchase Price to the Company in the manner set forth in Section 6.3 hereof and by executing and delivering to the Company a Stock Purchase Agreement. Each Stock Purchase Agreement
shall be in such form, and shall set forth the Purchase Price and such other terms, conditions and restrictions of the Restricted Stock, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem
desirable. Each Stock Purchase Agreement may be different from each other Stock Purchase Agreement. 
 6.3 PURCHASE PRICE; PAYMENT OF
PURCHASE PRICE. The Purchase Price per share of Restricted Stock covered by each Right to Purchase shall be determined by the Administrator, subject to the following: (a) the Purchase Price shall be not less than 85% of Fair Market Value on the
date the Right to Purchase is granted; and (b) if the person to whom the Right to Purchase is a 10% Stockholder on the date of grant, the Purchase Price shall not be less than 100% of Fair Market Value on the date the Right to Purchase is
granted. Subject to any legal restrictions, payment of the Purchase Price upon acceptance of a Right to Purchase Restricted Stock may be made, in the discretion of the Administrator, by: (a) cash; (b) check; (c) the surrender of
shares of Common Stock owned by the Offeree that have been held by the Offeree for at least six (6) months, which surrendered shares shall be valued at Fair Market Value as of the date of such exercise; (d) the Offeree’s promissory
note in a form and on terms, including security arrangements, acceptable to the Administrator; (e) the cancellation of indebtedness of the Company to the Offeree; (f) the waiver of compensation due or accrued to the Offeree for services
rendered; or (g) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable corporate law. 
 6.4 RIGHTS AS A STOCKHOLDER. Upon complying with the provisions of Section 6.2 hereof, an Offeree shall have the rights of a Stockholder with
respect to the Restricted Stock purchased pursuant to the Right to Purchase, including voting and dividend rights, subject to the terms, restrictions and conditions as are set forth in the Stock Purchase Agreement. Unless the Administrator shall
determine otherwise, certificates evidencing shares of Restricted Stock shall remain in the possession of the Company in accordance with the terms of the Stock Purchase Agreement. 
 6.5 RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement or by the Administrator. In the event of termination of a Participant’s employment, service as a director of the Company or Service Provider status for any reason whatsoever (including death
or disability), the Stock Purchase Agreement may provide, in the discretion of the Administrator, that the Company shall have the right, exercisable at the discretion of the Administrator, to repurchase (i) at the original Purchase Price, any
shares of Restricted Stock which have not vested as of the date of termination, and (ii) at Fair Market Value, any shares of Restricted Stock which have vested as of such date, on such terms as may be provided in the Stock Purchase Agreement.

 6.6 VESTING OF RESTRICTED STOCK. The Stock Purchase Agreement shall specify the date or dates, the performance goals or objectives which
must be achieved, and any other conditions on which the Restricted Stock may vest. 
  

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 6.7 DIVIDENDS. If payment for shares of Restricted Stock is made by promissory note, any cash dividends
paid with respect to the Restricted Stock may be applied, in the discretion of the Administrator, to repayment of such note. 
 6.8
NONASSIGNABILITY OF RIGHTS. No Right to Purchase shall be assignable or transferable except by will or the laws of descent and distribution or as otherwise provided by the Administrator. 
 7. ADMINISTRATION OF THE PLAN 
 7.1 ADMINISTRATOR. Authority to control and manage the
operation and administration of the Plan shall be vested in the Board, which may delegate such responsibilities in whole or in part to a committee consisting of two (2) or more members of the Board (the “Committee”). Members of the
Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. As used herein, the term “Administrator” means the Board or, with respect to any matter as to which responsibility has been delegated to the
Committee, the term Administrator shall mean the Committee. 
 7.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or authority
conferred upon the Administrator elsewhere in the Plan or by law, the Administrator shall have full power and authority: (a) to determine the persons to whom, and the time or times at which, Incentive Options or Nonqualified Options shall be
granted and Rights to Purchase shall be offered, the number of shares to be represented by each Option and Right to Purchase and the consideration to be received by the Company upon the exercise thereof; (b) to interpret the Plan; (c) to
create, amend or rescind rules and regulations relating to the Plan; (d) to determine the terms, conditions and restrictions contained in, and the form of, Option Agreements and Stock Purchase Agreements; (e) to determine the identity or
capacity of any persons who may be entitled to exercise a Participant’s rights under any Option or Right to Purchase under the Plan; (f) to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any
Option Agreement or Stock Purchase Agreement; (g) to accelerate the vesting of any Option or release or waive any repurchase rights of the Company with respect to Restricted Stock; (h) to extend the exercise date of any Option or
acceptance date of any Right to Purchase; (i) to provide for rights of first refusal and/or repurchase rights; (j) to amend outstanding Option Agreements and Stock Purchase Agreements to provide for, among other things, any change or
modification which the Administrator could have provided for upon the grant of an Option or Right to Purchase or in furtherance of the powers provided for herein; and (k) to make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it
under the Plan shall be final and binding on the Company and all Participants. 
 7.3 LIMITATION ON LIABILITY. No employee of the Company or
member of the Board or Committee shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith. To the extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by
reason of such person’s conduct in the performance of duties under the Plan. 
  

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 8. CHANGE IN CONTROL 
 8.1 CHANGE IN CONTROL. In order to preserve a Participant’s rights in the event of a Change in Control of the Company, (i) the time period relating to vesting, or the exercise or realization of all
outstanding Options, Rights to Purchase and Restricted Stock shall automatically accelerate immediately prior to the consummation of such Change in Control, such that all outstanding Options shall be vested and all repurchase rights with respect to
unvested Restricted Stock shall lapse as of such time, and (ii) with respect to Options and Rights to Purchase, the Administrator in its discretion may, at any time an Option or Right to Purchase is granted, or at any time thereafter, take one
or more of the following actions: (A) provide for the purchase of each Option or Right to Purchase for an amount of cash or other property that could have been received upon the exercise of the Option or Right to Purchase had the Option been
currently exercisable, (B) adjust the terms of the Options and Rights to Purchase in a manner determined by the Administrator to reflect the Change in Control, (C) cause the Options and Rights to Purchase to be assumed, or new rights
substituted therefor, by another entity, through the continuance of the Plan and the assumption of outstanding Options and Rights to Purchase, or the substitution for such Options and Rights to Purchase of new options and new rights to purchase of
comparable value covering shares of a successor corporation, with appropriate adjustments as to the number and kind of shares and Exercise Prices, in which event the Plan and such Options and Rights to Purchase, or the new options and rights to
purchase substituted therefor, shall continue in the manner and under the terms so provided or (D) make such other provision as the Administrator may consider equitable. If the Administrator does not take any of the forgoing actions, all
Options and Rights to Purchase shall terminate upon the consummation of the Change in Control and the Administrator shall cause written notice of the proposed transaction to be given to all Participants not less than fifteen (15) days prior to
the anticipated effective date of the proposed transaction. 
 9. AMENDMENT AND TERMINATION OF THE PLAN 
 9.1 AMENDMENTS. The Board may from time to time alter, amend, suspend or terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made which shall substantially affect or impair the rights of any Participant under an outstanding Option Agreement or Stock Purchase Agreement without such Participant’s consent. The
Board may alter or amend the Plan to comply with requirements under the Code relating to Incentive Options or other types of options which give Optionee more favorable tax treatment than that applicable to Options granted under this Plan as of the
date of its adoption, or to comply with provisions under applicable securities laws, including without limitation, Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Upon any such alteration or amendment, any outstanding Option
granted hereunder may, if the Administrator so determines and if permitted by applicable law, be subject to the more favorable tax treatment afforded to an Optionee pursuant to such terms and conditions. 
 9.2 PLAN TERMINATION. Unless the Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to 
  

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 Purchase may be granted under the Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights to
Purchase then outstanding shall continue in effect in accordance with their respective terms. 
 9.3 STOCKHOLDER APPROVAL. The Company shall
submit this Plan for approval by its Stockholders within 12 months after the Effective Date. Any Option exercised or any issuance of Restricted Stock before Stockholder approval is obtained must be rescinded if Stockholder approval is not obtained
within 12 months after the Effective Date. No shares of Common Stock issued upon such exercise shall be counted in determining whether such Stockholder approval is obtained. 
 10. TAX WITHHOLDING 
 10.1 WITHHOLDING. The Company shall have the power to withhold,
or require a Participant to remit to the Company, an amount sufficient to satisfy any applicable Federal, state, and local tax withholding requirements with respect to any Options exercised or Restricted Stock issued under the Plan. To the extent
permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon such terms and conditions as it may deem appropriate, permit a Participant to satisfy his or her obligation to pay any such tax, in
whole or in part, up to an amount determined on the basis of the highest marginal tax rate applicable to such Participant, by (a) directing the Company to apply shares of Common Stock to which the Participant is entitled as a result of the
exercise of an Option or as a result of the purchase of or lapse of restrictions on Restricted Stock or (b) delivering to the Company shares of Common Stock owned by the Participant. The shares of Common Stock so applied or delivered in
satisfaction of the Participant’s tax withholding obligation shall be valued at their Fair Market Value as of the date of measurement of the amount of income subject to withholding. 
 11. MISCELLANEOUS 
 11.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits
under the Plan may not be assigned or alienated, whether voluntarily or involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other disposition shall be without effect. 
 11.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an inducement to, or a condition of, the employment of any Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as
an employee of the Company or any Affiliated Company or to interfere with the right of the Company or any Affiliated Company to discharge any Participant at any time. 
 11.3 APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to Option Agreements and Stock Purchase Agreements, except as otherwise provided herein, will be used for general
corporate purposes. 
  

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 11.4 INFORMATION TO PARTICIPANTS. The Company shall furnish to all Participants copies of all annual or
other periodic reports that the Company distributes generally to its Stockholders, including annual financial statements of the Company. 
  

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 AMENDMENT NUMBER ONE TO 
 MASIMO CORPORATION 
 THIRD AMENDED AND RESTATED 1996 INCENTIVE STOCK OPTION, 
 NONQUALIFIED STOCK OPTION AND 
 RESTRICTED STOCK
PURCHASE PLAN 
 This Amendment Number One to the Third Amended and Restated 1996 Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan (the “1996 Plan”) of MASIMO CORPORATION, a California corporation (the “Company”), is hereby adopted by the Board of Directors of the Company effective March 22, 2000. The 1996 Plan is hereby
amended as follows: 
 1. Section 4.1 of the 1996 Plan is amended and restated in its entirety as follows: 
 4.1 SHARES SUBJECT TO THE PLAN. A total of 2,400,000 shares of Common Stock may be issued under the Plan, subject to adjustment as to the number and kind
of shares pursuant to Section 4.2 hereof. For purposes of this limitation, in the event that (a) all or any portion of any Option or Right to Purchase granted or offered under the Plan can no longer under any circumstances be exercised, or
(b) any shares of Common Stock are reacquired by the Company pursuant to an Incentive Option Agreement, Nonqualified Option Agreement or Stock Purchase Agreement, the shares of Common Stock allocable to the unexercised portion of such Option or
such Right to Purchase, or the shares so reacquired, shall again be available for grant or issuance under the Plan. 
 2. Except otherwise
herein stated, all other terms and conditions of the 1996 Plan will remain in full force and effect. 
 ATTEST: 
  

	
	 /s/ Bradley Langdale

	Secretary









 INCENTIVE COMMON STOCK OPTION AGREEMENT 
 THIS INCENTIVE COMMON STOCK OPTION AGREEMENT (the “Agreement”), made as of this 20th day of October, 2003 between MASIMO CORPORATION, a Delaware corporation (hereinafter referred to as the
“Company”), and «Name», an employee of the Company, its parent or one or more of its subsidiaries (the “Optionee”), is made with reference to the following fact: 
 R E C I T A L S: 
 A. Optionee is presently «Position», and in such position is a valued and key employee of the Company. 
 B. The Company desires, by affording the Optionee an opportunity to purchase shares of Common Stock of the Company (hereinafter called “Shares”), as hereinafter provided, to carry out the purpose of the “Incentive Stock
Option, Nonqualified Stock Option and Restricted Stock Purchase Plan - 1996” (the “Plan”). 
 NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants hereinafter set forth, and for good and valuable consideration, the parties hereto have agreed, and do hereby agree, as follows: 
 1. Grant of Option. 
 The Company hereby grants to the Optionee the right and option (hereinafter
called the “Option”) to purchase all or any part of an aggregate of «Shares_to_be_Granted» Shares (such number being subject to adjustment as provided in Paragraph 7 hereof) on the terms and conditions herein set forth. The
Option granted herein is an “incentive option” within the meaning of the Plan and Section 422A of the Internal Revenue Code of 1986, as amended. 
 2. Purchase Price. 
 The purchase price of the Shares covered by the Option shall be $8.25 per share,
representing one hundred percent (100%) of the fair market value of the shares as determined pursuant to Section 5 of the Plan as of the date hereof. 
 3. Term of Option. 
 The term of the Option shall commence on the date hereof and all rights to
purchase shares hereunder shall cease at 11:59 p.m. on the day before October 20, 2013, subject to earlier termination as provided herein. Except as may otherwise be provided in this Agreement, options granted hereunder may be exercised as follows:

  

			
	 On or After
	 	 This Option shall be
 Exercisable as to:

	 «Vesting», 2004
	 	«Share5» shares
	 «Vesting», 2005; an additional
	 	«Share5» shares
	 «Vesting», 2006; an additional
	 	«Share5» shares
	 «Vesting», 2007; an additional
	 	«Share5» shares
	 «Vesting», 2008; an additional
	 	«Share5» shares








 The purchase price of the Shares as to which the Option shall be exercised shall be paid in full at the
time of exercise (i) in cash or by certified check or by bank draft; (ii) subject to any legal restrictions on the acquisition or purchase of such shares by the Company and with the prior written consent and approval of the Company, by the
delivery of shares of Common Stock of the Company which shall be deemed to have a value to the Company equal to the aggregate fair market value of such shares determined in accordance with Section 5 of the Plan; (iii) by the issuance of a
Promissory Note in a form acceptable to the Administrator, or with such consent and approval, any combination of (i), (ii) or (iii) above. Except as provided in Paragraph 5 hereof, the Option may not be exercised at any time unless the
Optionee shall have been continuously, from the date hereof to the date of the exercise of the Option, an employee of the Company, its parent, if any, or of one or more of its subsidiaries or a corporation or a parent or subsidiary of a corporation
issuing or assuming an option to which Section 425(a) of the Internal Revenue Code of 1986, as amended, applies (collectively the “Affiliates”). The holder of the Option shall not have any of the rights of a shareholder with respect
to the shares covered by the Option as to any shares of Common Stock not actually issued and delivered to Optionee. 
 4.
Nontransferability. 
 The Option shall not be transferable otherwise than by will or the laws of descent and distribution, and the
Option may be exercised, during the lifetime of the Optionee, only by Optionee. More particularly (but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided in Paragraph 6 hereof), pledged
or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment or similar process upon the Option, shall be null and void and without effect. 
 5. Termination of Employment. 
 In the event that the Optionee shall cease to be employed by the Company, or a parent or
subsidiary of the Company, or a corporation or a parent or subsidiary of a corporation issuing or assuming an option to which Section 425(a) of the Internal Revenue Code of 1986, as amended, applies, for any reason whatsoever, other than by
reason of death or disability, this Option shall terminate immediately; provided, however, that the Optionee shall have the right to exercise this Option at any time within three (3) months after such cessation, but in no event later than the
date of expiration of the option period, but the number of Shares purchasable upon such exercise of the Option shall not in any case exceed the number which would have been purchasable if the Optionee had exercised the Option on the date of such
cessation. If the Optionee shall become disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended) and shall not have fully exercised his options granted pursuant to the Plan, all of such options, whether
or not otherwise exercisable, may be exercised at any time within one (1) year after the Optionee’s cessation of employment as a result of such disability but in any event no later than the date of expiration of the option period, by the
Optionee. If the Optionee shall die while an employee of the Company, or a parent or subsidiary of the Company, Optionee’s estate, personal representative or beneficiary shall have the right to exercise all of the shares subject to this Option,
whether or not they would otherwise have been purchasable if the Optionee’s death had not occurred, at any time within one (1) year from the date of Optionee’s death, but in no event later than the date of expiration of the option
period. 







 6. Other Expirations. 
 In addition to any other event causing an expiration or termination of this Option, this Option shall expire and all rights to purchase Shares shall cease
(to the extent not theretofore terminated or expired as herein provided) upon the effective date of the dissolution or liquidation of the Company or upon a merger, consolidation, acquisition of property or shares, separation or reorganization of the
Company with one or more entities, corporate or otherwise, as a result of which the Company is not the surviving entity, or if the Company is the surviving entity and the ownership of the outstanding capital stock of the Company following the
transaction changes by 80% or more as a result of such transaction, or of a sale of substantially all of the property or shares of the Company to another entity, corporate or otherwise (other than (a) a merger which is effected solely to change
the jurisdiction of incorporation of the Company or (b) any consolidation or merger of the Company into a wholly owned subsidiary or of a wholly owned subsidiary into the Company, or any sale or transfer by the Company of all or substantially
all of its assets to one or more of its wholly owned subsidiaries in any one transaction or a series of transactions) (collectively, a “Change of Control”); provided, however, that notwithstanding the provisions of Section 8 of the
Plan, in the event of a Change of Control of the Company, the time period related to vesting, or the exercise or realization of outstanding and unvested Options, shall automatically accelerate prior to the consummation of such Change of Control such
that fifty percent (50%) of all outstanding and unvested Options shall be vested, whether or not they are assumed; provided, further, that the Company may, in its discretion, and immediately prior to any such transaction, cause a new option to
be substituted for this Option or cause this Option to be assumed by an employer entity or a parent or subsidiary of such entity; and such new option shall apply to all shares issued in addition to or substitution, replacement or modification of the
shares theretofore covered by such option; provided that, 
 (a) the excess of the aggregate fair market value of the shares
subject to the option immediately after the substitution or assumption over the aggregate option price of such shares shall not be more than the excess of the aggregate fair market value of all shares subject to the option immediately before such
substitution or assumption over the aggregate option price of such shares; and 
 (b) the new option or the assumption of the
existing option shall not give the Optionee additional benefits which he did not have under the old option or prior to such assumption except for the acceleration provided for above, with any remaining unvested options to be vested on an equal and
pro rata basis, with vesting to occur on the remaining vesting dates listed in the table set forth in Section 3 above, without regard to the fact that the period from the Change in Control to the next vesting date may be less than the periods
between other vesting dates; and 
 (c) an appropriate adjustment of the original option price shall be made among original
shares subject to the option and any additional shares or shares issued in substitution, replacement or modification thereof. 
 If no
provision is made for the continuance of the option plan and the assumption of this Option, or the substitution for this Option of new options as hereinabove provided, then the Company shall cause written notice to be given to the Optionee of the
proposed transaction not less than thirty (30) days prior to the anticipated effective date thereof, and this Option, if not already exercisable, shall thereupon become immediately exercisable and the Optionee shall have the right to exercise
this Option at any time prior to the effective date of the termination of the option plan or the proposed transaction. 
  

 - 2 - 








 7. Adjustments. 
 The number and class of shares subject to this Option, and the purchase price per share (but not the total purchase price), and the minimum number of shares as to which this Option may be exercised at any one time,
shall all be proportionately adjusted in the event of any change or increase or decrease in the number of issued shares of Common Stock in the Company, without receipt of consideration by the Company, which result from a split-up or consolidation of
shares, payment of a share dividend (in excess of two percent (2%), a recapitalization, combination of shares or other like capital adjustment, so that, upon exercise of this Option, the Optionee shall receive the number and class of shares Optionee
would have received had Optionee been the holder of the number of shares of Common Stock in the Company, for which this Option is being exercised, on the date of such change or increase or decrease in the number of issued shares of Common Stock in
the Company. Subject to any required action by its shareholders, if the Company shall be a surviving entity in any reorganization, merger or consolidation, this Option shall be proportionately adjusted so as to apply to the securities to which the
holder of the number of shares of Common Stock in the Company subject to this Option would have been entitled. Adjustments under this paragraph shall be made by the Board of Directors whose determination with respect thereto shall be final and
conclusive. No fractional share shall be issued under this Option or upon any such adjustment. 
 8. Method of Exercising Option.

 Subject to the terms and conditions of this Option Agreement, this Option may be exercised by written notice to the Company, at its
principal office in the State of California, which presently is located at 2852 Kelvin Avenue, Irvine, CA 92614. Such notice shall state the election to exercise the Option and the number of shares in respect of which it is being exercised and shall
be signed by the person or persons so exercising the Option. Such notice shall be accompanied by payment in cash, certified check, bank draft, or, subject to the limitations and with the prior approval required under Section 3 above, by
Promissory Note or certificates for shares of the Common Stock of the Company equal to at the time of exercise, in the aggregate, the full purchase price of such shares, and the Company shall deliver a certificate or certificates representing the
shares subject to such exercise as soon as practicable after the notice shall be received. The certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so
exercising the Option and shall be delivered as provided above to or upon the written order of the person or persons exercising the Option. In the event the Option shall be exercised by any person or persons other than the Optionee in accordance
with the terms hereof, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and
nonassessable. The holder of this Option shall not be entitled to the privileges of share ownership as to any shares of Common Stock not actually issued and delivered to Optionee. The Optionee hereby certifies that all shares of Common Stock in the
Company purchased or to be purchased by Optionee pursuant to the exercise of this Option are being or are to be acquired by Optionee for investment and not with a view to the distribution thereof. In addition, the person exercising the Option shall
execute and deliver to the Company with the notice provided for above an investment letter in the form attached hereto as Exhibit A. 
 9.
Repurchase Option. 
 In the event this Option is terminated pursuant to Section 5 above (the “Termination”), any shares
acquired or which may thereafter be acquired pursuant to the exercise of this Option (the “Purchased Shares”) (whether held by Optionee or one or more of Optionee’s transferees) will be subject to repurchase by the Company (or its
nominee(s)) pursuant to the terms and conditions set forth in this Section 9 (the “Repurchase Option”). 
  

 - 3 - 








 The purchase price for each Purchased Share will be the “Fair Market Value” (as defined in the
Plan) for such share as determined on the date of Termination (the “Repurchase Price”). 
 The Company’s board of directors
(the “Board”) (or its nominee(s)) may elect to purchase all or any portion of the Purchased Shares by delivering written notice (the “Repurchase Notice”) to the holder or holders of the Purchased Shares within 120 days after the
Termination. The Repurchase Notice will set forth the number of Purchased Shares to be acquired from Optionee, the aggregate consideration to be paid for such shares and the time and place for the closing of the transaction. The number of Purchased
Shares to be repurchased shall first be satisfied to the extent possible from the Purchased Shares held by Optionee at the time of delivery of the Repurchase Notice. If the number of Purchased Shares then held by Optionee is less than the total
number of Purchased Shares which the Company (or its nominee(s)) has elected to purchase, the Company (or its nominee(s)) shall purchase the remaining Purchased Shares elected to be purchased from the other holder(s) of Purchased Shares under this
Agreement, pro rata according to the number of Purchased Shares held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). 
 The closing of the purchase of the Purchased Shares pursuant to the Repurchase Option shall take place on the date designated by the Company (or its
nominee(s)) in the Repurchase Notice, which date shall not be more than one (1) month nor less than five (5) days after the delivery of such notice (the “Repurchase Date”). The Company may, at its option, pay for the Purchased
Shares to be purchased pursuant to the Repurchase Option either (i) in one lump sum payment by delivery of a check or wire transfer on the Repurchase Date in an amount equal to the Repurchase Price, or (ii) by delivery on the Repurchase
Date of (A) a check or wire transfer in an amount equal to the sum of the aggregate original cost of the Purchased Shares to be repurchased, in any event not exceeding in the aggregate the Repurchase Price (the “Cash Repurchase
Payment”), and (B) a promissory note of the Company in a principal amount equal to the Repurchase Price minus the Cash Repurchase Payment, bearing interest at the rate of nine percent (9%) per annum non-compounded commencing on the
Repurchase Date and providing for payment of the principal amount, plus accrued interest, in twelve (12) installments on the last day of each calendar month for the next twelve (12) months following the Repurchase Date. In addition, the
Company may pay the Repurchase Price for such shares by offsetting amounts outstanding under any bona fide debts owed by Optionee to the Company. The Company (or its nominee(s)) will be entitled to receive customary representations and warranties
from the sellers regarding such sale and to require all sellers’ signatures be guaranteed. 
 Notwithstanding anything to the contrary
contained in this Agreement, all repurchases of Purchased Shares by the Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and in the Company’s and its subsidiaries’ debt and equity
financing agreements. If any such restrictions prohibit the repurchase of Purchased Shares hereunder which the Company has otherwise elected to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions;
provided, however, that, notwithstanding such restrictions, the Company shall deliver the Repurchase Notice as provided in paragraph 10(c) above, and shall remain bound by the terms of such Repurchase Notice until such time as the Purchased Shares
are actually purchased by the Company pursuant to such notice. 
 The rights provided the Company and its nominee(s) under this
Section 9 shall terminate upon the closing of the initial public offering of shares of the Company’s Common Stock pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the
Securities Act. 
  

 - 4 - 








 10. No Agreement to Employ. 
 Nothing in this Agreement shall be construed to constitute or be evidence of any agreement or understanding, express or implied, on the part of the
Company to employ or retain Optionee for any specific period of time. 
 11. General. 
 The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to
satisfy the requirements of this Option Agreement, shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection
therewith, and will from time to time use its best efforts to comply with all laws and regulations, which, in the opinion of counsel for the Company, shall be applicable thereto. 
 IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly executed by its officers thereunto duly authorized, and the Optionee has
hereunto set his hand, all as of the day and year first above written. 
  

					
	 “Company”
	 	MASIMO CORPORATION, a Delaware
		 	corporation
			
		 	By:	 	 /s/ Joe E. Kiani

		 		 	Joe E. Kiani, CEO
		
	 “Optionee”
	 	  

		 	 «Name»


  

 - 5 - 








 EXHIBIT A 
 TO INCENTIVE OPTION AGREEMENT 
 Masimo Corporation 
 2852 Kelvin Avenue 
 Irvine, CA 92614 
 Gentlemen: 
 1. (a) In connection with the acquisition of «Shares_to_be_Granted» shares of the common stock of MASIMO CORPORATION, a Delaware corporation (the “Company”), by the undersigned, the
undersigned represents that the shares which the undersigned is acquiring are being acquired for investment and not with a view to the sale or distribution of any part thereof, and that the undersigned has no present intent of selling or otherwise
distributing the same. 
 You have advised the undersigned that the shares have not been registered under the Securities Act of 1933, as
amended (the “Act”), as the offering of the shares is to be effected pursuant to an exemption from the registration provisions of such Act, and, in this connection, you are relying in part on the representations of the undersigned set
forth herein. 
 Without in any way limiting the representations set forth above, the undersigned further agrees in no event to make any
dispositions of all or any part of said shares unless and until (i) the undersigned shall have notified you of the proposed disposition; (ii) the undersigned shall have furnished you with an opinion of counsel to the effect that such
disposition will not require registration of such shares under the Act, and (iii) such opinion of counsel shall have been concurred in by the Company’s counsel and the Company shall have advised you of such concurrence. 
 (b) The undersigned acknowledges receipt of all information as the undersigned deems necessary and appropriate to enable the undersigned to evaluate the
financial risk inherent in acquiring said shares and acknowledges receipt of satisfactory and complete information covering the business and financial condition of the Company, including the opportunity to obtain information regarding the
Company’s financial status, in response to all inquiries in respect thereof. 
 2. The undersigned understands and agrees that the
certificate evidencing said shares will bear the following legend: 
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. 
 3. (a) The undersigned recognizes that said shares are unregistered and must by held indefinitely
unless they are subsequently registered under the Act or an exemption from such registration is available, and further recognizes that you are under no obligation to register said shares or to comply with any exemption from such registration.








 (b) The undersigned understands that Rule 144 under the Act does not presently apply and may never apply
to the Company’s securities because the Company does not now, and may never, file reports required by the Securities Exchange Act of 1934, as amended (“Exchange Act”), and has not made, and may never make, publicly available the
information required by Rule 15c2-11 of the Exchange Act. Furthermore, if Rule 144 were available, the undersigned understands that sales of securities made in reliance thereof could be made only in certain limited amounts, after certain holding
periods and only when there was available specified current public information, all in accordance with the terms and conditions of said Rule. The undersigned understands that, in the case of securities to which said Rule is not applicable;
compliance with some other exemption under the Act will be required. 
  

					
	Dated:                     	 	By:	 	  

		 		 	    «Name»








 NQSO-«NQSOs» 
 NONQUALIFIED COMMON STOCK OPTION AGREEMENT 
 THIS NONQUALIFIED COMMON STOCK OPTION AGREEMENT (the
“Agreement”), made this 14th day of July 2003, between MASIMO CORPORATION, a Delaware corporation (hereinafter referred to as the “Company”), and «Name», «Position» for the Company (hereinafter referred to
as the “Optionee”), is made with reference to the following fact: 
 R E C I T A L

 The Company desires, by affording the Optionee an opportunity to purchase shares of Common Stock in the Company (hereinafter called
“Shares”), as hereinafter provided, to carry out the purpose of the “Incentive Stock Option, Nonqualified Stock Option and Restricted Stock Purchase Plan- 1996” (the “Plan”). 
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter set forth, and for good and valuable consideration, the parties hereto have agreed,
and do hereby agree, as follows: 
 1. Grant of Option. 
 The Company hereby irrevocably grants to the Optionee the right and option (hereinafter called the “Option”) to purchase all or any part of an aggregate of «Shares_to_be_Granted» Shares (such
number being subject to adjustment as provided in Paragraph 7 hereof) on the terms and conditions herein set forth. The Option granted herein is a “nonqualified option” within the meaning of the Plan. 
 2. Purchase Price. 
 The purchase
price of the Shares covered by the Option shall be $8.25 per share, representing one hundred percent (100%) of the fair market value of the shares as determined pursuant to Section 5 of the Plan as of the date hereof. 
 3. Term of Option. 
 The term of the
Option shall commence on the date hereof and all rights to purchase shares hereunder shall cease at 11:59 p.m. on the day before July 14, 2013, subject to earlier termination as provided herein. Except as may otherwise be provided in this
Agreement, options granted hereunder may be exercised as follows: 
  

			
	 On or After
	 	 This Option shall be
 Exercisable as to:

		
	 «Vesting», 2004
	 	«Share5» shares
		
	 «Vesting», 2005; an additional
	 	«Share5» shares
		
	 «Vesting», 2006; an additional
	 	«Share5» shares
		
	 «Vesting», 2007; an additional
	 	«Share5» shares
		
	 «Vesting», 2008; an additional
	 	«Share5» shares








 The purchase price of the Shares as to which the Option shall be exercised shall be paid in full at the
time of exercise (i) in cash, or by certified check or by bank draft; (ii) subject to any legal restrictions on the acquisition or purchase of its shares by the Company and with the prior written consent and approval of the Company, by the
delivery of shares of Common Stock of the Company which shall be deemed to have a value to the Company equal to the aggregate fair market value of such shares determined in accordance with Section 5 of the Plan; or (iii) any combination of
(i) or (ii) above. Except as provided in Paragraph 5 hereof, the Option may not be exercised at any time unless (i) if the Optionee is an employee of the Company, the Optionee shall have been continuously, from the date hereof to the
date of the exercise of the Option, an employee of the Company, its parent, if any, or of one or more of its subsidiaries or a corporation or a parent or subsidiary of a corporation issuing or assuming an option to which Section 425(a) of the
Internal Revenue Code of 1986, as amended, applies (collectively the “Affiliates”); or (ii) if the Optionee is a director of the Company, the Optionee shall have been continuously, from the date hereof to the date of the exercise of
the Option, a director of the Company, or its Affiliates. The holder of the Option shall not have any of the rights of a shareholder with respect to the shares covered by the Option as to any shares of Common Stock not actually issued and delivered
to Optionee. 
 4. Nontransferability. 
 The Option shall not be transferable otherwise than by will or the laws of descent and distribution, and the Option may be exercised, during the lifetime of the Optionee, only by Optionee. More particularly (but
without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided in Paragraph 5 hereof), pledged or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option,
shall be null and void and without effect. 
 5. Termination of Employment or Status as a Director or Advisor. 
 In the event that the Optionee is an employee or consultant of the Company and the Optionee shall cease to be employed by or consult with the Company, or
its Affiliates, or in the event the Optionee is a director or advisor of the Company and ceases to be a director or advisor of the Company or its Affiliates, for any reason whatsoever, other than by reason of death or disability, this Option shall
terminate immediately; provided, however, that the Optionee shall have the right to exercise this Option at any time within three (3) months after such cessation of employment or consultancy or status as a director or advisor, but in no event
later than the date of expiration of the option period, but the number of Shares purchasable upon such exercise of the Option shall not in any case exceed the number which would have been purchasable if the Optionee had exercised the Option on the
date of such cessation. If the Optionee shall become disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended) and shall not have fully exercised his options granted pursuant to the Plan, all of such
options, whether or not otherwise exercisable, may be exercised at any time within one (1) year after the Optionee’s cessation of employment or status as a death, but in no event later than the date of expiration of the option period.








 6. Other Expirations. 
 In addition to any other event causing an expiration or termination of this Option, this Option shall expire and all rights to purchase Shares shall cease
(to the extent not theretofore terminated or expired as herein provided) upon the effective date of the dissolution or liquidation of the Company or upon a merger, consolidation, acquisition of property or shares, separation or reorganization of the
Company with one or more entities, corporate or otherwise, as a result of which the Company is not the surviving entity, or if the Company is the surviving entity and the ownership of the outstanding capital stock of the Company following the
transaction changes by 80% or more as a result of such transaction, or of a sale of substantially all of the property or shares of the Company to another entity, corporate or otherwise (other than (a) a merger which is effected solely to change
the jurisdiction of incorporation of the Company or (b) any consolidation or merger of the Company into a wholly owned subsidiary or of a wholly owned subsidiary into the Company, or any sale or transfer by the Company of all or substantially
all of its assets to one or more of its wholly owned subsidiaries in any one transaction or a series of transactions) (collectively, a “Change of Control”); provided, however, that notwithstanding the provisions of Section 8 of the
Plan, in the event of a Change of Control of the Company, the time period related to vesting, or the exercise or realization of outstanding and unvested Options, shall automatically accelerate prior to the consummation of such Change of Control such
that fifty percent (50%) of all outstanding and unvested Options shall be vested, whether or not they are assumed; provided, further, that the Company may, in its discretion, and immediately prior to any such transaction, cause a new option to
be substituted for this Option or cause this Option to be assumed by an employer entity or a parent or subsidiary of such entity; and such new option shall apply to all shares issued in addition to or substitution, replacement or modification of the
shares theretofore covered by such option; provided that, 
 (a) the excess of the aggregate fair market value of the shares
subject to the option immediately after the substitution or assumption over the aggregate option price of such shares shall not be more than the excess of the aggregate fair market value of all shares subject to the option immediately before such
substitution or assumption over the aggregate option price of such shares; and 
 (b) the new option or the assumption of the
existing option shall not give the Optionee additional benefits which he did not have under the old option or prior to such assumption except for the acceleration provided for above, with any remaining unvested options to be vested on an equal and
pro rata basis, with vesting to occur on the remaining vesting dates listed in the table set forth in Section 3 above, without regard to the fact that the period from the Change in Control to the next vesting date may be less than the periods
between other vesting dates; and 
 (c) an appropriate adjustment of the original option price shall be made among original
shares subject to the option and any additional shares or shares issued in substitution, replacement or modification thereof. 
 If no
provision is made for the continuance of the option plan and the assumption of this Option, or the substitution for this Option of new options as hereinabove provided, then the Company shall cause written notice to be given to the Optionee of the
proposed transaction not less than thirty (30) days prior to the anticipated effective date thereof, and this Option, if not already exercisable, shall thereupon become immediately exercisable and the Optionee shall have the right to exercise
this Option at any time prior to the effective date of the termination of the option plan or the proposed transaction. 







 7. Adjustments. 
 The number and class of shares subject to this Option, and the purchase price per share (but not the total purchase price), and the minimum number of shares as to which this Option may be exercised at any one time,
shall all be proportionately adjusted in the event of any change or increase or decrease in the number of issued shares of Common Stock in the Company, without receipt of consideration by the Company, which result from a split-up or consolidation of
shares, payment of a share dividend (in excess of two percent (2%)), a recapitalization, combination of shares or other like capital adjustment, so that, upon exercise of this Option, the Optionee shall receive the number and class of shares
Optionee would have received had Optionee been the holder of the number of shares of Common Stock in the Company, for which this Option is being exercised, on the date of such change or increase or decrease in the number of issued shares of Common
Stock in the Company. Subject to any required action by its shareholders, if the Company shall be a surviving entity in any reorganization, merger or consolidation, this Option shall be proportionately adjusted so as to apply to the securities to
which the holder of the number of shares of Common Stock in the Company subject to this Option would have been entitled. Adjustments under this paragraph shall be made by the Board of Directors whose determination with respect thereto shall be final
and conclusive. No fractional share shall be issued under this Option or upon any such adjustment. 
 8. Method of Exercising Option.

 Subject to the terms and conditions of this Nonqualified Common Stock Option Agreement, this Option may be exercised by written notice to
the Company, at its principal office in the State of California, which presently is located at 2852 Kelvin Avenue, Irvine, CA 92614. Such notice shall state the election to exercise the Option and the number of shares in respect of which it is being
exercised and shall be signed by the person or persons so exercising the Option. Such notice shall be accompanied by (i) payment in cash, certified check, bank draft or certificates for shares of the Common Stock of the Company equal to, in the
aggregate, the full purchase price of such shares, and (ii) payment in cash, certified check or bank draft of any payroll withholding taxes resulting from the exercise, as determined by the Company. The Company shall deliver a certificate or
certificates representing the shares subject to such exercise as soon as practicable after the notice shall be received. The certificate or certificates for the shares as to which the Option shall have been so exercised shall be registered in the
name of the person or persons so exercising the Option and shall be delivered as provided above to or upon the written order of the person or persons exercising the Option. In the event the Option shall be exercised by any person or persons other
than the Optionee in accordance with the terms hereof, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All shares that shall be purchased upon the exercise of the Option as
provided herein shall be fully paid and nonassessable. The holder of this Option shall not be entitled to the privileges of share ownership as to any shares of Common Stock not actually issued and delivered to Optionee. The Optionee hereby certifies
that all shares of Common Stock in the Company purchased or to be purchased by Optionee pursuant to the exercise of this Option are being or are to be acquired by Optionee for investment and not with a view to the distribution thereof. In addition,
the person exercising the Option shall execute and deliver to the Company with the notice provided for above an investment letter in the form attached hereto as Exhibit A. 
 9. Repurchase Option. 
 In the event
this Option is terminated pursuant to Section 5 above (the “Termination”), any shares acquired or which may thereafter be acquired pursuant to the exercise 







 of this Option (the “Purchased Shares”) (whether held by Optionee or one or more of Optionee’s
transferees) will be subject to repurchase by the Company (or its nominee(s)) pursuant to the terms and conditions set forth in this Section 9 (the “Repurchase Option”). 
 The purchase price for each Purchased Share will be the “Fair Market Value” (as defined in the Plan) for such share as determined on the date
of Termination (the “Repurchase Price”). 
 The Company’s board of directors (the “Board”) (or its nominee(s)) may
elect to purchase all or any portion of the Purchased Shares by delivering written notice (the “Repurchase Notice”) to the holder or holders of the Purchased Shares within 120 days after the Termination. The Repurchase Notice will set
forth the number of Purchased Shares to be acquired from Optionee, the aggregate consideration to be paid for such shares and the time and place for the closing of the transaction. The number of Purchased Shares to be repurchased shall first be
satisfied to the extent possible from the Purchased Shares held by Optionee at the time of delivery of the Repurchase Notice. If the number of Purchased Shares then held by Optionee is less than the total number of Purchased Shares which the Company
(or its nominee(s)) has elected to purchase, the Company (or its nominee(s)) shall purchase the remaining Purchased Shares elected to be purchased from the other holder(s) of Purchased Shares under this Agreement, pro rata according to the number of
Purchased Shares held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). 
 The closing of the purchase of the Purchased Shares pursuant to the Repurchase Option shall take place on the date designated by the Company (or its nominee(s)) in the Repurchase Notice, which date shall not be more
than one (1) month nor less than five (5) days after the delivery of such notice (the “Repurchase Date”). The Company may, at its option, pay for the Purchased Shares to be purchased pursuant to the Repurchase Option either
(i) in one lump sum payment by delivery of a check or wire transfer on the Repurchase Date in an amount equal to the Repurchase Price, or (ii) by delivery on the Repurchase Date of (A) a check or wire transfer in an amount equal to
the sum of the aggregate original cost of the Purchased Shares to be repurchased, in any event not exceeding in the aggregate the Repurchase Price (the “Cash Repurchase Payment”), and (B) a promissory note of the Company in a
principal amount equal to the Repurchase Price minus the Cash Repurchase Payment, bearing interest at the rate of nine percent (9%) per annum non-compounded commencing on the Repurchase Date and providing for payment of the principal amount,
plus accrued interest, in twelve (12) installments on the last day of each calendar month for the next twelve (12) months following the Repurchase Date. In addition, the Company may pay the Repurchase Price for such shares by offsetting
amounts outstanding under any bona fide debts owed by Optionee to the Company. The Company (or its nominee(s)) will be entitled to receive customary representations and warranties from the sellers regarding such sale and to require all sellers’
signatures be guaranteed. 
 Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Purchased Shares by the
Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and in the Company’s and its subsidiaries’ debt and equity financing agreements. If any such restrictions prohibit the repurchase of
Purchased Shares hereunder which the Company has otherwise elected to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions; provided, however, that, notwithstanding such restrictions, the Company
shall deliver the Repurchase Notice as provided in paragraph 10(c) above, and shall remain bound by the terms of such Repurchase Notice until such time as the Purchased Shares are actually purchased by the Company pursuant to such notice.








 The rights provided the Company and its nominee(s) under this Section 9 shall terminate upon the
closing of the initial public offering of shares of the Company’s Common Stock pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act. 
 10. No Agreement to Employ. 
 Nothing
in this Agreement shall be construed to constitute or be evidence of any agreement or understanding, express or implied, on the part of the Company to employ or retain Optionee for any specific period of time. 
 11. General. 
 The Company shall at
all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Nonqualified Common Stock Option Agreement, shall pay all original issue and transfer
taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will from time to time use its best efforts to comply with all laws and
regulations, which, in the opinion of counsel for the Company, shall be applicable thereto. 
 IN WITNESS WHEREOF, the Company has caused
this Nonqualified Common Stock Option Agreement to be duly executed by its officers thereunto duly authorized, and the Optionee has hereunto set his hand, all as of the day and year first above written. 
  

					
	 “Company”
	 	MASIMO CORPORATION,
		 	a Delaware corporation
			
		 	By:	 	 /s/ Joe E. Kiani

		 		 	Joe E. Kiani, CEO
		
	 “Optionee”
	 	  

		 	«Name»








 EXHIBIT A 
 TO NONQUALIFIED OPTION AGREEMENT 
 Masimo Corporation 
 2852 Kelvin Avenue 
 Irvine, CA 92614 
 Gentlemen: 
 1. (a) In connection with the acquisition of «Shares_to_be_Granted» shares of the common stock of MASIMO CORPORATION, a Delaware corporation (the “Company”), by the undersigned, the
undersigned represents that the shares which the undersigned is acquiring are being acquired for investment and not with a view to the sale or distribution of any part thereof, and that the undersigned has no present intent of selling or otherwise
distributing the same. 
 You have advised the undersigned that the shares have not been registered under the Securities Act of 1933, as
amended (the “Act”), as the offering of the shares is to be effected pursuant to an exemption from the registration provisions of such Act, and, in this connection, you are relying in part on the representations of the undersigned set
forth herein. 
 Without in any way limiting the representations set forth above, the undersigned further agrees in no event to make any
dispositions of all or any part of said shares unless and until (i) the undersigned shall have notified you of the proposed disposition; (ii) the undersigned shall have furnished you with an opinion of counsel to the effect that such
disposition will not require registration of such shares under the Act, and (iii) such opinion of counsel shall have been concurred in by the Company’s counsel and the Company shall have advised you of such concurrence. 
 (b) The undersigned acknowledges receipt of all information as the undersigned deems necessary and appropriate to enable the undersigned to evaluate the
financial risk inherent in acquiring said shares and acknowledges receipt of satisfactory and complete information covering the business and financial condition of the Company, including the opportunity to obtain information regarding the
Company’s financial status, in response to all inquiries in respect thereof. 
 2. The undersigned understands and agrees that the
certificate evidencing said shares will bear the following legend: 
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. 
 3. (a) The undersigned recognizes that said shares are unregistered and must by held indefinitely
unless they are subsequently registered under the Act or an exemption from such registration is available, and further recognizes that you are under no obligation to register said shares or to comply with any exemption from such registration.








 (b) The undersigned understands that Rule 144 under the Act does not presently apply and may never apply
to the Company’s securities because the Company does not now, and may never, file reports required by the Securities Exchange Act of 1934, as amended (“Exchange Act”), and has not made, and may never make, publicly available the
information required by Rule 15c2-11 of the Exchange Act. Furthermore, if Rule 144 were available, the undersigned understands that sales of securities made in reliance thereof could be made only in certain limited amounts, after certain holding
periods and only when there was available specified current public information, all in accordance with the terms and conditions of said Rule. The undersigned understands that, in the case of securities to which said Rule is not applicable;
compliance with some other exemption under the Act will be required. 
  

					
	Dated:                     	 	By:	 	  

		 		 	    «Name»