Document:

Exhibit

INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT is made and entered into as of __________________ by and between PICO HOLDINGS, INC., a Delaware corporation (the “Corporation”), and _____________ (the “Indemnitee”).
RECITALS
WHEREAS, the Corporation recognizes that competent and experienced persons are increasingly reluctant to serve or to continue to serve as directors or officers of corporations unless they are provided adequate protection through insurance or indemnification, or both, against inordinate risks of claims and actions against them resulting from their service to such corporations;
WHEREAS, the Corporation and the Indemnitee recognize that plaintiffs often seek damages in such large amounts and the costs of litigation may be so great (whether or not the case is meritorious), that the defense and/or settlement of such litigation is often beyond the personal resources of directors and officers;
WHEREAS, the Corporation desires to attract and retain talented and experienced individuals, such as the Indemnitee, to serve as directors, officers, employees and agents of the Corporation and its subsidiaries and wishes to indemnify its directors, officers, employees and other agents to the maximum extent permitted by law;
WHEREAS, the Corporation has adopted bylaws (the “Bylaws”) which empower the Corporation to indemnify its directors, officers, employees and other agents of the Corporation, including persons serving at the request of the Corporation in such capacities with other corporations or enterprises, as authorized by the Delaware General Corporation Law (the “DGCL”);
WHEREAS, the Bylaws and the DGCL, by their non‐exclusive nature, permit contracts between the Corporation and its directors, officers, employees and other agents with respect to indemnification of such persons; and
WHEREAS, in order to induce the Indemnitee to serve or continue to serve as a director, officer, employee or agent of the Corporation and/or one or more subsidiaries of the Corporation, free from undue concern for claims for damages arising out of or related to such services to the Corporation and/or one or more subsidiaries of the Corporation, the Corporation has determined and agreed to enter into this Agreement with the Indemnitee.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and the Indemnitee’s agreement to continue to provide services to the Corporation, the parties hereto agree as follows:

AGREEMENT
1.DEFINITIONS. As used in this Agreement:
(a)    “Agent” means any person who is or was a director, officer, manager, employee or other agent of the Corporation or a Subsidiary of the Corporation; or is or was serving at the request of, for the convenience of, or to represent the interests of the Corporation or a Subsidiary of the Corporation as a director, officer, manager, employee or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust or other enterprise; or was a director, officer, manager, employee or agent of a foreign or domestic corporation or other entity which was a predecessor of the Corporation or a Subsidiary of the Corporation, or was serving as a director, officer, manager, employee or agent of another enterprise at the request of, for the convenience of, or to represent the interests of such predecessor entity.
(b)    A “Change in Control” shall be deemed to have occurred if (i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or a corporation or limited liability company owned directly or indirectly by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation, is or becomes the “beneficial owner” (as defined in Rule 13d‐3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing a majority or more of the total voting power represented by the Corporation’s then outstanding voting securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board, together with any new directors whose election by the Board or nomination for election by the Corporation’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination was previously so approved, cease for any reason to constitute a majority of the Board, (iii) the consummation of a reorganization, merger or consolidation with another entity, other than a reorganization, merger or consolidation that would result in the holders of the Corporation’s outstanding voting securities immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a majority of the total voting power represented by the voting securities of the Corporation or such surviving or successor entity outstanding immediately thereafter, or (iv) the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or a sale of all or substantially all of the Corporation’s assets.
(c)    “Expenses” shall include all out-of-pocket costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements), actually and reasonably incurred by the Indemnitee in connection with either the investigation, defense or appeal of a Proceeding or establishing or enforcing a right to indemnification under this Agreement, or otherwise; provided, however, that “Expenses” shall not include any judgments, fines, ERISA excise taxes or penalties, or amounts paid in settlement of a Proceeding.

(d)    “Independent Counsel” means a law firm, or a partner (or, if applicable member) of a law firm, that is experienced in matters of corporation law and neither currently is, nor in the past five years has been, retained to represent: (i) the Corporation or the Indemnitee or (ii) any other party to or witness in the matter giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.
(e)    “Proceeding” means any threatened, pending, or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether formal or informal, civil, criminal, administrative, or investigative, including any such investigation or proceeding instituted by or on behalf of the Corporation or its Board of Directors, in which Indemnitee is or reasonably may be involved as a party or target, that is associated with Indemnitee’s being an Agent of the Corporation.
(f)    “Subsidiary” means (i) any corporation of which more than 50% of the outstanding voting securities are owned directly or indirectly by the Corporation, by the Corporation and one or more other subsidiaries, or by one or more other subsidiaries and (ii) any limited liability company which the Corporation directly or indirectly has the power to direct or cause the direction of management and policies of, whether through the ownership of voting securities, the limited liability company's operating agreement or otherwise.
2.    SERVICE TO THE CORPORATION. The Indemnitee agrees to serve and/or continue to serve as an Agent of the Corporation, at its will (or under separate agreement, if such agreement exists), so long as the Indemnitee is duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws or other charter documents of the Corporation or any Subsidiary or affiliate of the Corporation or until such time as the Indemnitee tenders his or her resignation in writing; provided, however, that nothing contained in this Agreement is intended to create any right to continued employment or service by the Indemnitee.
3.    MAINTENANCE OF LIABILITY INSURANCE.
(a)    Maintenance of D&O Insurance. The Corporation hereby covenants and agrees that, so long as the Indemnitee shall continue to serve as an Agent of the Corporation and thereafter so long as the Indemnitee shall be subject to any possible Proceeding by reason of the fact that the Indemnitee was an Agent of the Corporation, the Corporation, subject to Section 3(d), shall promptly obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established and reputable insurers, as more fully described below.
(b)    Rights and Benefits. In all policies of D&O Insurance, the Indemnitee shall qualify as an insured in such a manner as to provide the Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Corporation’s independent directors (as defined 

by the insurer) if the Indemnitee is such an independent director; of the Corporation’s non-independent directors if the Indemnitee is not an independent director; of the Corporation’s officers if the Indemnitee is an officer of the Corporation; or of the Corporation’s key employees, if the Indemnitee is not an officer or director but is a key employee.
(c)    Continuation. In the event of a Change in Control or the Corporation’s becoming insolvent, including being placed into receivership or entering the federal bankruptcy process and the like, the Corporation shall maintain in force any and all insurance policies then maintained by the Corporation in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) in respect of Indemnitee, for a period of six years thereafter (a “Tail Policy”). Such coverage shall be with the incumbent insurance carriers using the policies that were in place at the time of the Change in Control event (unless the incumbent carriers will not offer such policies, in which case the Tail Policy shall be substantially comparable in scope and amount as the expiring policies, and the insurance carriers for the Tail Policy shall have an AM Best rating that is the same or better than the AM Best ratings of the expiring policies). Such Tail policy shall be placed by the Corporation’s incumbent insurance broker.
(d)    Limitation on Required Maintenance of D&O Insurance. Notwithstanding the foregoing, the Corporation shall have no obligation to obtain or maintain D&O Insurance if the Corporation determines in good faith that: such insurance is not reasonably available; the premium costs for such insurance are disproportionate to the amount of coverage provided; the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit; the Indemnitee is covered by similar insurance maintained by a subsidiary of the Corporation; the Corporation is to be acquired and a tail policy of reasonable terms and duration is purchased for pre-closing acts or omissions by the Indemnitee; or the Corporation is to be acquired and D&O Insurance will be maintained by the acquirer that covers pre-closing acts and omissions by the Indemnitee.
4.    INDEMNIFICATION OF INDEMNITEE. The Corporation hereby agrees to hold harmless and indemnify the Indemnitee to the fullest extent authorized or permitted by the provisions of the Bylaws and the DGCL. In the event of any change, after the date of this Agreement, in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify any of its Agents, such changes shall be, ipso facto, within the purview of Indemnitee's rights and the Corporation's obligations, under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify any of its Agents, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder.
5.    ADDITIONAL INDEMNITY AND CONTRIBUTION. In addition to and not in limitation of the indemnification otherwise provided for herein, and subject only to the exclusions set forth in Section 6 hereof, the Corporation hereby further agrees to hold harmless and indemnify the Indemnitee:

(a)    against any and all Expenses and liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes, penalties and amounts paid in settlement) that the Indemnitee becomes legally obligated to pay because of any claim or claims made against or by the Indemnitee in connection with any Proceeding (including an action by or in the right of the Corporation) to which the Indemnitee is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that the Indemnitee is, was or at any time becomes an Agent of the Corporation; and
(b)    otherwise to the fullest extent as may be provided to the Indemnitee by the Corporation under the non‐exclusivity provisions of Article X of the Bylaws and the DGCL.
If the indemnification provided in this Agreement is unavailable and may not be paid to Indemnitee for any reason other than statutory limitations, then in respect of any threatened, pending or completed action, suit or proceeding in which the Corporation is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Corporation shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Corporation on the one hand and Indemnitee on the other hand from the transaction or matter from which such action, suit or proceeding arose, and (ii) the relative fault of Corporation on the one hand and of Indemnitee on the other in connection with the events which resulted in such expenses, judgments, fines or settlement amounts, as well as any other relevant equitable considerations. The relative fault of the Corporation on the one hand and of Indemnitee on the other shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts. The Corporation agrees that it would not be just and equitable if contribution pursuant to this section were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.
6.    LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity or contribution pursuant to Section 5 hereof shall be paid by the Corporation in connection with any Proceeding (or any part of any Proceeding):
(a)    for an accounting or disgorgement of profits pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of federal, state or local statutory law or common law, if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);
(b)    for which payment has actually been made to or on behalf of Indemnitee under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;
(c)    if prohibited by applicable law, as established in a final adjudication not subject to further appeal;

(d)    initiated by the Indemnitee against the Corporation or its directors, officers, employees, agents or other indemnitees, unless (a) the Board of Directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b) the Corporation provides the indemnification, in its sole discretion, pursuant to the powers vested in the Corporation under applicable law, (c) otherwise made under Article X, Section 5 of the Bylaws or (d) otherwise required by applicable law;
(e)    on account of the Indemnitee’s acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, as established in a final adjudication not subject to further appeal;
(f)    on account of the Indemnitee’s acts or omissions that the Indemnitee believes to be contrary to the best interests of the Corporation or its stockholders or that involve the absence of good faith on the part of the Indemnitee, as established in a final adjudication not subject to further appeal;
(g)    in respect of any action brought by or in the right of the Corporation for breach of the Indemnitee’s duties to the Corporation and its stockholders, as established in a final adjudication not subject to further appeal:
(i)    on account of any transaction from which the Indemnitee derived an improper personal benefit;
(ii)    on account of the Indemnitee’s acts or omissions that show a reckless disregard for the Indemnitee’s duty to the Corporation or its stockholders in circumstances in which the Indemnitee was aware, or should have been aware, in the ordinary course of performing the Indemnitee’s duties, of a risk of serious injury to the Corporation or its stockholders;
(iii)    on account of the Indemnitee’s acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the Indemnitee’s duty to the Corporation or its stockholders;
(h)    in respect of any action by or in the right of the Corporation to procure a judgment in its favor, as established in a final adjudication not subject to further appeal: 
(i)    in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Corporation in the performance of the Indemnitee’s duty to the Corporation and its stockholders, unless and only to the extent that the court in which such Proceeding is or was pending shall determine upon application that, in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for expenses and then only to the extent the court shall determine;
(ii)    of amounts paid in settling or otherwise disposing of a pending action without court approval;

(iii)    of expenses incurred in defending a pending action which is settled or otherwise disposed of without court approval;
(i)    for any reimbursement of the Corporation by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Corporation, as required in each case under the Securities Exchange Act of 1934, as amended, including any such reimbursements that arise from an accounting restatement of the Corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 or the rules of any national securities exchange upon which the Corporation’s securities are listed, if Indemnitee is held liable therefor (including pursuant to any settlement arrangements); or
(j)    for any reimbursement of the Corporation by Indemnitee of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act of 2002, if Indemnitee is held liable therefor (including pursuant to any settlement arrangements).
7.    CONTINUATION OF INDEMNITY. All agreements and obligations of the Corporation contained herein shall continue during the period the Indemnitee is an Agent of the Corporation (or is or was serving at the request of the Corporation as an Agent of an employee benefit plan or other enterprise) and shall continue thereafter so long as the Indemnitee shall be subject to any possible claim or Proceeding by reason of the fact that the Indemnitee was serving in the capacity referred to herein.
8.    INDEMNIFICATION FOR EXPENSES IN A PROCEEDING IN WHICH THE INDEMNITEE IS WHOLLY OR PARTLY SUCCESSFUL. 
(a)    Successful Defense. Notwithstanding any other provisions of this Agreement, to the extent that the Indemnitee has been successful, on the merits or otherwise, in defense of any Proceeding (including, without limitation, an action by or in the right of the Corporation) in which the Indemnitee was a party by reason of the fact that the Indemnitee is or was an Agent of the Corporation at any time, the Corporation shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by or on behalf of the Indemnitee in connection with the investigation, defense or appeal of such Proceeding.
(b)    Partially Successful Defense. Notwithstanding any other provisions of this Agreement, to the extent that the Indemnitee is a party to or a participant in any Proceeding (including, without limitation, an action by or in the right of the Corporation) in which the Indemnitee was a party by reason of the fact that the Indemnitee is or was an Agent of the Corporation at any time and is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Corporation shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by or on behalf of the Indemnitee in connection with each successfully resolved claim, issue or matter.

(c)    Dismissal. For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
9.    NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
(a)    Notice by Indemnitee. Promptly after receipt by the Indemnitee of notice of the commencement of or the threat of commencement of any Proceeding, the Indemnitee shall, if the Indemnitee believes that indemnification with respect thereto may be sought from the Corporation under this Agreement, notify the Corporation in writing of the commencement or threat of commencement thereof, including a brief description of the nature of, and the facts underlying, the Proceeding; provided, however, that failure of the Indemnitee to provide such notice will not relieve the Corporation of its liability hereunder if the Corporation receives notice of such Proceeding from any other source.
(b)    Insurance. If the Corporation receives notice pursuant to Section 9(a) hereof of the commencement of a Proceeding that may be covered under D&O Insurance then in effect, the Corporation shall give prompt notice of the Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Corporation shall thereafter take all reasonably necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
(c)    Defense. In the event the Corporation shall be obligated to pay the Indemnitee’s reasonable Expenses related to any Proceeding against the Indemnitee, the Corporation, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel selected by the Corporation and approved by the Indemnitee (which approval shall not be unreasonably withheld), upon the delivery to the Indemnitee of written notice of its election so to do. After delivery of such notice, and the retention of such counsel by the Corporation, the Corporation will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same Proceeding, provided that (i) the Indemnitee shall have the right to employ his or her own separate counsel in any such Proceeding at the Indemnitee’s expense; and (ii) the Indemnitee shall have the right to employ his or her own separate counsel in any such Proceeding at the Corporation’s expense if (A) the Corporation has authorized the employment of counsel by the Indemnitee at the expense of the Corporation, (B) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Corporation and the Indemnitee in the conduct of any such defense, (C) after a Change in Control not approved by a majority of the members of the Board who were directors immediately prior to such Change in Control, the employment of counsel by Indemnitee has been approved by Independent Counsel, or (D) the Corporation shall not, in fact, have employed counsel to assume the defense of such Proceeding.
(d)    Unauthorized Settlements. The Corporation shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent, which shall not be unreasonably withheld. The Corporation 

shall be permitted to settle any action except that it shall not settle any action or claim in any manner which would impose any penalty or limitation on the Indemnitee without the Indemnitee’s written consent, which may be given or withheld in the Indemnitee’s sole discretion.
10.    RIGHT TO INDEMNIFICATION.
(a)    Right to Indemnification. In the event that Section 8(a) or 8(b) are inapplicable, the Corporation shall indemnify the Indemnitee pursuant to this Agreement unless, and except to the extent that, it shall have been determined by one of the methods listed in Section 10(b) that the Indemnitee has not met the applicable standard of conduct required to entitle the Indemnitee to such indemnification.
(b)    Determination of Right to Indemnification. A determination of the Indemnitee’s right to indemnification hereunder shall be made (i) by the Board of Directors by majority vote of a quorum consisting of directors who are not parties to the Proceeding for which indemnification is being sought; (ii) if such a quorum of directors who are not parties to the Proceeding for which indemnification is being sought cannot be obtained, by majority vote of a committee duly designated by the Board of Directors (all directors, whether or not parties to such Proceeding, may participate in such designation) consisting solely of two or more directors who are not parties to such Proceeding; (iii) if such a committee cannot be designated, by any Independent Counsel selected by the Board of Directors, as prescribed in (i) above or by the committee of the Board of Directors prescribed in (ii) above, in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee; or if a quorum of the Board of Directors cannot be obtained for (i) above and the committee cannot be designated under (ii) above, selected by majority vote of the full Board of Directors (in which directors who are parties to the Proceeding for which indemnification is being sought may participate); or (iv) if such Independent Counsel determination cannot be obtained, by majority vote of a quorum of stockholders consisting of stockholders who are not parties to the Proceeding for which indemnification is being sought, or if no such quorum is obtainable, by a majority vote of stockholders who are not parties to such Proceeding.
(c)    Submission for Decision. As promptly as is reasonably practicable under the circumstances, the Board of Directors shall select the method for determining the Indemnitee’s right to indemnification. The Indemnitee shall cooperate with the person or persons or entity making such determination with respect to the Indemnitee’s right to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board of Directors or stockholder of the Corporation shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.
(d)    Application to Court. If (i) the Indemnitee’s claim for indemnification or advancement of Expenses is denied, in whole or in part, (ii) no disposition of such claim is made by the Corporation within thirty (30) days after the request therefor, (iii) the advancement of 

Expenses is not timely made pursuant to Section 11 of this Agreement or (iv) payment of indemnification is not made pursuant to Section 8 of this Agreement, the Indemnitee shall have the right to apply to the Court of Chancery of the State of Delaware, the court in which the Proceeding is or was pending or any other court of competent jurisdiction, for the purpose of enforcing the Indemnitee’s right to indemnification (including the advancement of Expenses) pursuant to this Agreement.
(e)    Expenses Related to the Enforcement or Interpretation of this Agreement. The Corporation shall indemnify the Indemnitee against all reasonable Expenses incurred by the Indemnitee in connection with any hearing or proceeding under this Section 10 involving the Indemnitee and against all reasonable Expenses incurred by the Indemnitee in connection with any other proceeding between the Corporation and the Indemnitee involving the interpretation or enforcement of the rights of the Indemnitee under this Agreement, unless a court of competent jurisdiction finds that each of the claims and/or defenses of the Indemnitee in any such proceeding was frivolous or made in bad faith. In applying the provisions of this Section 10(e):
(i)    In no event shall Indemnitee’s right to indemnification (apart from advancement of Expenses) be determined prior to a final adjudication in the Proceeding at issue, if the Proceeding is both ongoing and of the nature to have a final adjudication. 
(ii)    In any proceeding to determine Indemnitee’s right to indemnification or advancement, Indemnitee shall be presumed to be entitled to indemnification or advancement, with the burden of proof on the Corporation to prove, by a preponderance of the evidence (or higher standard if required by relevant law) that Indemnitee is not so entitled. 
(iii)    Indemnitee shall be fully indemnified for those matters where, in the performance of his duties for the Corporation, he relied in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the board of directors, or by any other person as to matters Indemnitee reasonably believed were within such other person’s professional or expert competence and who was selected with reasonable care by or on behalf of the Corporation; and 
(iv)    The knowledge or actions, or failure to act, or any director, officer, agent, or employee of the Corporation, or the Corporation itself, shall not be imputed to Indemnitee for purposes of determining any rights hereunder.
11.    ADVANCEMENT OF EXPENSES; SPECIFIC PERFORMANCE. Subject to the terms of this Agreement and following notice pursuant to Section 9(a) above, prior to the final disposition of any Proceeding to which the Indemnitee is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an Agent of the Corporation (unless there has been a final determination that the Indemnitee is not entitled to indemnification for such Expenses), the Corporation shall advance to the Indemnitee funds in an amount sufficient to pay all Expenses, 

or reimburse the Indemnitee for all Expenses, reasonably paid or incurred by the Indemnitee in connection with such Proceeding upon receipt of satisfactory documentation supporting such Expenses; provided, however, that no advance shall be paid by the Corporation in circumstances in which no indemnity shall be payable by the Corporation under Section 6 hereof. The Indemnitee shall qualify for advances upon the execution and delivery to the Corporation of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to the fullest extent permitted by law to repay the advance (without interest) if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Corporation. No other form of undertaking shall be required other than the execution of this Agreement. Such advances are intended to be an obligation of the Corporation to the Indemnitee hereunder and shall in no event be deemed to be a personal loan. The advances to be made hereunder shall be paid by the Corporation to the Indemnitee within ten (10) days following delivery of a written request therefor by the Indemnitee to the Corporation. In the event that the Corporation fails to pay Expenses as incurred by the Indemnitee as required by this paragraph, Indemnitee may seek mandatory injunctive relief (including without limitation specific performance) from any court having jurisdiction to require the Corporation to pay Expenses as set forth in this paragraph. If Indemnitee seeks mandatory injunctive relief pursuant to this paragraph, it shall not be a defense to enforcement of the Corporation’s obligations set forth in this paragraph that Indemnitee has an adequate remedy at law for damages.
12.    PERMITTED DEFENSES. It shall be a defense to any action for which a claim for indemnification is made under this Agreement (other than an action brought to enforce a claim for Expenses pursuant to Section 10(e) hereof, provided that the required undertaking has been tendered to the Corporation) that the Indemnitee is not entitled to indemnification because of the limitations set forth in Section 6 hereof. Neither the failure of the Corporation (including its Board of Directors or its stockholders) or an Independent Counsel to have made a determination prior to the commencement of such enforcement action that indemnification of the Indemnitee is proper in the circumstances, nor an actual determination by the Corporation (including its Board of Directors or its stockholders) or an Independent Counsel that such indemnification is improper, shall be a defense to the action or create a presumption that the Indemnitee is not entitled to indemnification under this Agreement or otherwise.
13.    SUBROGATION. In the event the Corporation is obligated to make a payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery under an insurance policy or any other indemnity agreement covering the Indemnitee, who shall execute all documents required and take all action that may be necessary to secure such rights and to enable the Corporation effectively to bring suit to enforce such rights (provided that the Corporation pays the Indemnitee’s costs and expenses of doing so), including without limitation by assigning all such rights to the extent of such indemnification or advancement of Expenses.

14.    NON‐EXCLUSIVITY OF RIGHTS. The rights conferred on the Indemnitee by this Agreement shall not be exclusive of any other right which the Indemnitee may have or hereafter acquire under any statute, provision of the Corporation’s Certificate of Incorporation or Bylaws, other agreement, vote of stockholders or directors, or otherwise, both as to action in the Indemnitee’s official capacity and as to action in another capacity while occupying the Indemnitee’s position as an Agent of the Corporation.
15.    INFORMATION SHARING. If the Indemnitee is the subject of or is implicated in any investigation, whether formal or informal, by a government or regulatory entity or agency, the Corporation shall provide to Indemnitee any information provided to the investigating entity concerning the investigation; provided, that by executing this Agreement, Indemnitee agrees to use such information solely in connection with the defense of such investigation and if Indemnitee is no longer serving as a Director or employed by the Corporation, Indemnitee shall at the Corporation’s request execute a confidentiality agreement substantially in the form of the confidentiality agreement in effect while such Indemnitee was a Director or employed by the Corporation.
16.    SURVIVAL OF RIGHTS.
(a)    The Indemnitee’s rights under this Agreement shall continue after the Indemnitee has ceased to be an Agent of the Corporation and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.
(b)    The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.
17.    INTERPRETATION OF AGREEMENT. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to the Indemnitee to the fullest extent permitted by law, including those circumstances in which indemnification would otherwise be discretionary.
18.    SEVERABILITY. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and enforceability of the remaining provisions of the Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to Section 17 hereof.

19.    SUCCESSORS AND ASSIGNS. The terms of this Agreement shall bind, and shall inure to the benefit of, the successors and assigns of the parties hereto. 
20.    GOVERNING LAW. This Agreement shall be governed exclusively by and construed and enforced in accordance with the laws of the State of Delaware as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.
21.    AMENDMENT AND TERMINATION; WAIVER. No supplement, amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall any such waiver constitute a continuing waiver.
22.    COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforcement is sought needs to be produced to evidence the existence of this Agreement. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
23.    HEADINGS. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.
24.    NOTICES. All notices, requests, demands and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed to have been duly given (a) upon delivery if delivered by hand to the party to whom such notice or other communication shall have been directed, (b) if mailed by certified or registered mail with postage prepaid, return receipt requested, on the third business day after the date on which it is so mailed, (c) one business day after the business day of deposit with a nationally recognized overnight delivery service, specifying next day delivery, with written verification of receipt, or (d) on the same day as delivered by confirmed facsimile transmission if delivered during business hours or on the next successive business day if delivered by confirmed facsimile transmission after business hours. Addresses for notice to either party shall be as shown on the signature page of this Agreement, or to such other address as may have been furnished by either party in the manner set forth above.

25.    
The parties hereto have entered into this Indemnity Agreement effective as of the date first above written.
INDEMNITEE: 
 
 
___________________________________
[NAME OF INDEMNITEE]
		
	Address:
	     
     
    

CORPORATION: 
 
PICO HOLDINGS, INC.
By:      
Name:      
Title:     
		
	Address:
	7979 Ivanhoe Avenue, Suite 300 

La Jolla, CA  92037EX-10.1

 Exhibit 10.1 

EXECUTIVE EMPLOYMENT AGREEMENT 

This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of
April 24, 2017 (the “Effective Date”), by and between HERON THERAPEUTICS, INC. (the “Company”), and Robert E. Hoffman (the
“Executive”). The Company and the Executive are hereinafter collectively referred to as the “Parties”, and individually referred to as a
“Party”. 
 AGREEMENT 

In consideration of the foregoing and the mutual promises and covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows: 
 1. EMPLOYMENT. 

1.1 Title. The Executive shall initially have the title of Chief Financial Officer and Senior Vice President, Finance of the Company and
shall serve in such other capacity or capacities as the Company may from time to time prescribe and to which the Executive agrees. The Executive shall initially report to the Company President, Rob Rosen. 

1.2 Duties. The Executive shall do and perform all services, acts or things necessary or advisable to manage and conduct the business
of the Company and which are normally associated with the position of Chief Financial Officer and Senior Vice President, Finance, consistent with the Bylaws of the Company and as required by the Board of Directors of the Company (the
“Board”). 
 1.3 Policies and Practices. The employment relationship between the Parties shall be governed by
the policies and practices established by the Company and the Board. The Executive acknowledges that he has read the Company’s employee handbook and other governing policies, which will govern the terms and conditions of his employment with the
Company, collectively with this Agreement. In the event that the terms of this Agreement differ from or are in conflict with the Company’s policies or practices or the Company’s employee handbook, this Agreement shall control. 

2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION. 

2.1 Loyalty. During the Executive’s employment by the Company, the Executive shall devote the Executive’s full business
energies, interest, abilities and productive time to the proper and efficient performance of the Executive’s duties under this Agreement. 

2.2 Covenant Not to Compete. Except with the prior written consent of the Board, which shall not be unreasonably withheld, the
Executive will not, during his employment by the Company, engage in competition with the Company and/or any of its Affiliates, either directly or indirectly, in any manner or capacity, as adviser, principal, agent, affiliate, promoter, partner,
officer, director, employee, stockholder, owner, co-owner, consultant, or member of any association or otherwise, in any phase of the business of developing, manufacturing and marketing of products or services
which are in the same field of use or which otherwise compete with the products or services or proposed products or services of the Company and/or any of its Affiliates. For purposes of this Agreement,
“Affiliate” means, with respect to any specific entity, 

 
any other entity that, now or in the future, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified entity. 

2.3 Agreement Not to Participate in Company’s Competitors. During the term of this Agreement, the Executive agrees not to acquire,
assume or participate in, directly or indirectly, any position, investment or interest known by the Executive to be adverse or antagonistic to the Company, its business or prospects, financial or otherwise or in any company, person or entity that
is, directly or indirectly, in competition with the business of the Company or any of its Affiliates. Ownership by the Executive, as a passive investment, of less than two percent (2%) of the outstanding shares of capital stock of any
corporation with one or more classes of its capital stock listed on a national securities exchange or in the over-the-counter market shall not constitute a breach of
this paragraph. 
 3. COMPENSATION OF THE EXECUTIVE. 

3.1 Base Salary. The Company shall pay the Executive a base salary of at least $350,000 per year, less payroll deductions and all
required withholdings payable in regular periodic payments in accordance with Company policy. Such base salary shall be prorated for any partial year of employment on the basis of a 365-day fiscal year. 

3.2 Performance Bonus. In addition to the Executive’s base salary, the Executive shall be eligible for a performance bonus based
upon the Executive’s and the Company’s achievement of specified objectives established by the Board during the first quarter of each year after consultation with the Executive, as evaluated by the Board in its discretion. The target bonus
for full achievement of all objectives shall be 40% of the Executive’s Base Salary. 
 3.3 Equity Incentives. Subject to
approval by the Board (or the compensation committee thereof), as soon as practicable following the Effective Date, Executive will be granted an option to purchase up to 130,000 shares of the Company’s common stock (the
“Option”). Subject to the Executive continuing to serve as Chief Financial Officer and Senior Vice President, Finance of the Company (except as set forth below), vesting of the Option will be as follows: (i)
130,000 shares (the “Time-Based Shares”) vesting over a four-year period, with 32,500 shares vesting on the first anniversary of the date of grant, and then the remainder of the Time-Based Shares vesting pro rata monthly
thereafter over the next three years. The Option will have a ten-year term and will be treated as an incentive stock option to the maximum extent possible under applicable regulations, with the remainder being
non-statutory stock options. The portion of the Option that is vested as of the date of termination of the Executive’s service with the Company shall remain exercisable for a period of 90 days following
termination. Any portion of the Option that vests as a result of a Post-Termination Vesting Event shall remain exercisable for a period of 90 days following the occurrence of such event. 

3.4 Changes to Compensation. The Executive’s compensation will be reviewed on a regular basis by the Company and may be changed
from time to time as deemed appropriate. For clarity, the provisions of this Section 3.4 are not meant to supersede the right of the Executive to terminate for Good Reason in the event of a material reduction of Executive’s Base Salary as
provided in Section 4.5.3. 

  
 2 

 3.5 Employment Taxes. All of the Executive’s compensation shall be subject to
customary withholding taxes and any other employment taxes as are commonly required to be collected or withheld by the Company. 
 4.
TERMINATION. 
 4.1 Termination by the Company. The Executive’s employment by the Company shall be at will. The
Executive’s employment with the Company may be terminated by the Company at any time and for any reason or no reason, with or without “Cause” (as defined below), subject to the provisions of this
Article 4. 
 4.2 Termination by Mutual Agreement of the Parties. The Executive’s employment pursuant to this Agreement may
be terminated at any time upon a mutual agreement in writing of the Parties. Any such termination of employment shall have the consequences specified in such agreement. 

4.3 Termination by the Executive. The Executive’s employment by the Company shall be at will. The Executive shall have the right
to resign or terminate the Executive’s employment at any time and for any reason, or no reason, with or without “Good Reason” (as defined below), subject to the provisions of this Article 4. 

4.4 Compensation Upon Termination. 

4.4.1 With Cause or Without Good Reason. If the Executive’s employment is terminated by the Company for Cause, or if the Executive
terminates employment hereunder for other than Good Reason, the Company shall pay the Executive’s base salary and accrued and unused vacation benefits earned through the date of termination at the rate in effect at the time of termination, less
standard deductions and withholdings, and the Company shall thereafter have no further obligations to the Executive under this Agreement. 

4.4.2 Without Cause or With Good Reason. If the Executive’s employment is terminated by the Company without Cause, or by the
Executive for Good Reason, the Executive shall receive the payments specified in Section 4.4.1, and, in addition, within ten days of the Executive’s delivery to the Company of a fully effective and irrevocable Release and Waiver in the
form attached hereto as Exhibit A, within the applicable time period set forth therein, but in no event later than 21 days following termination of the Executive’s employment, the Executive shall receive the following: (i) a
lump sum payment equal to the sum of (A) the Executive’s annual base salary then in effect and (B) the Executive’s target performance bonus then in effect, less required deductions and withholdings; (ii) accelerated
time-based vesting of shares subject to all stock awards issued by the Company, for the number of shares which would have vested accordingly had the Executive continued employment with the Company for a period of 12 months after termination (for the
avoidance of doubt, which shall include partial accelerated vesting of the Time-Based Shares, but not the Performance-Based Shares); and (iii) to the extent permitted under applicable law, reimbursement for or continuation of payment by the
Company of its portion of the health insurance benefits provided to Executive immediately prior to termination pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) or other
applicable law for a period of up to 12 months from the date of termination. 

  
 3 

 4.4.3 Change in Control. If the Executive’s employment is terminated by the Company
without Cause, or by the Executive for Good Reason within three months before or within 18 months following a Change in Control, the Executive shall not receive the payments described in Section 4.4.2, but instead shall receive the payments
specified in Section 4.4.1, and, in addition, within ten days of the Executive’s delivery to the Company of a fully effective and irrevocable Release and Waiver in the form attached hereto as Exhibit A, within the
applicable time period set forth therein, but in no event later than 45 days following termination of the Executive’s employment, the Executive shall receive the following: (i) a lump sum payment equal to the Executive’s annual base
salary then in effect, less required deductions and withholdings; (ii) the greater of the Executive’s target performance bonus then in effect, less required deductions and withholdings, or the Executive’s performance bonus paid in the
year preceding the year in which termination occurs, less required deductions and withholdings; (iii) accelerated vesting of 100% of any outstanding and unvested stock awards held by the Executive at such time (including both time-based and
performance-based stock awards) and (iv) to the extent permitted under applicable law, provided that the Executive timely elects continued coverage under COBRA, the COBRA benefit for a period of up to 12 months. 

4.4.4 Parachute Payment. If any payment or benefit Executive would receive pursuant to a Change in Control or otherwise
(“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion
of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state
and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greater amount of the
Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount,
reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. In the event that acceleration of vesting of stock award compensation is to be reduced,
such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive’s stock awards. 
 The
accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant
or auditor for the individual, entity or group effecting the Change in Control, then the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to
the determinations by such accounting firm required to be made hereunder. 
 The accounting firm engaged to make the determinations
hereunder shall provide its calculations, together with detailed supporting documentation, to the Executive and the Company within 15 calendar days after the date on which the Executive’s right to a Payment is triggered (if requested at that
time by the Executive or the Company) or such other time as requested by the Executive or the Company. Any good faith determinations of the accounting 

  
 4 

 
firm made hereunder shall be final, binding and conclusive upon the Executive and the Company. 

4.4.5 Application of Section 409A. Notwithstanding anything to the contrary set forth herein, any payments and
benefits provided under this Agreement (the “Severance Benefits”) that constitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) that are payable upon termination of
employment shall not commence in connection with Executive’s termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”)), unless the Company reasonably determines that such amounts may be provided to Executive without causing Executive to incur the
additional 20% tax under Section 409A. 
 It is intended that each installment of the Severance Benefits payments provided for in this
Agreement is a separate “payment” for purposes of Treasury Regulation Section 1.409A- 2(b)(2)(i). For the avoidance of doubt, it is intended that payments of the Severance Benefits set forth in this Agreement satisfy, to the greatest
extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the Company (or, if applicable, the successor entity thereto) determines that the Severance Benefits constitute “deferred compensation” under Section 409A and Executive is,
on the termination of Executive’s service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the
incurrence of the adverse personal tax consequences under Section 409A, the timing of the Severance Benefit payments shall be delayed until the earlier to occur of: (i) the date that is six months and one day after Executive’s
Separation From Service or (ii) the date of Executive’s death (such applicable date, the “Specified Employee Initial Payment Date”), and the Company (or the successor entity thereto, as applicable) shall
(A) pay to Executive a lump sum amount equal to the sum of the Severance Benefit payments that Executive would otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of the Severance
Benefits had not been so delayed pursuant to this Section and (B) commence paying the balance of the Severance Benefits in accordance with the applicable payment schedules set forth in this Agreement. 

Except to the extent that payments may be delayed until the Specified Employee Initial Payment Date pursuant to the preceding paragraph, on
the first regular payroll pay day following the effective date of the Release and Waiver, the Company will pay Executive the Severance Benefits Executive would otherwise have received under the Agreement on or prior to such date but for the delay in
payment related to the effectiveness of the Release and Waiver, with the balance of the Severance Benefits being paid as originally scheduled. All amounts payable under the Agreement will be subject to standard payroll taxes and deductions. 

4.5 Definitions. 

4.5.1 Cause. For purposes of this Agreement, “Cause” means that, in the reasonable determination of the
Company, the Executive has: 

  
 5 

 (i) been indicted for or convicted of or pleaded guilty or no contest to any felony or crime
involving dishonesty that is likely to inflict or has inflicted demonstrable and material injury on the business of the Company; 
 (ii)
participated in any fraud against the Company; 
 (iii) willfully and materially breached a Company policy; 

(iv) intentionally damaged any property of the Company thereby causing demonstrable and material injury to the business of the Company; or

 (v) engaged in conduct that, in the reasonable determination of the Company, demonstrates gross unfitness to serve. 

Notwithstanding the foregoing, Cause shall not exist based on conduct described in clause (iii) above unless the conduct described in
such clause has not been cured within 15 days following the Executive’s receipt of written notice from the Company specifying the particulars of the conduct constituting Cause. 

4.5.2 Change in Control. For purposes of this Agreement, “Change in Control” means the
occurrence of any of the following: 
 (i) the closing of an Ownership Change Event or a series of related Ownership Change Events
(collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares
of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the Company or such
surviving entity immediately outstanding after the Transaction, or, in the case of an Ownership Change Event the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or 

(ii) the liquidation or dissolution of the Company. 

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership
of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Board shall
have the right to determine whether multiple sales or exchanges of the voting securities in the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive. The Board may also, but need not,
specify that other transactions or events constitute a Change in Control. 
 4.5.3 Good Reason. “Good
Reason” for the Executive to terminate the Executive’s employment hereunder shall mean the occurrence of any of the following events without the Executive’s consent: 

 

	 	(i)	a material reduction (20% or more) by the Company of the Executive’s 

  
 6 

	 	
Base Salary as initially set forth herein or as the same may be increased from time to time; 

  

	 	(ii)	a material reduction by the Company of the Executive’s management responsibilities; or 

  

	 	(iii)	a material breach of this Agreement by the Company; 

 provided however, that any resignation by the Executive
due to any of the following conditions shall only be deemed for Good Reason if: (i) the Executive gives the Company written notice of the intent to terminate for Good Reason within 90 days following the first occurrence of the condition(s) that
the Executive believes constitutes Good Reason, which notice shall describe such condition(s); (ii) the Company fails to remedy, if remediable, such condition(s) within 15 days following receipt of the written notice (the “Cure
Period”) of such condition(s) from the Executive; and (iii) Executive actually resigns his employment within the first 15 days after expiration of the Cure Period. 

4.5.4 Ownership Change Event. For purposes of this Agreement, “Ownership Change Event” means the occurrence of
any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than 50% of the voting stock of the Company; (ii) a
merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company. 

5. ASSIGNMENT AND BINDING EFFECT. 

This Agreement shall be binding upon and inure to the benefit of the Executive and the Executive’s heirs, executors, personal
representatives, assigns, administrators and legal representatives. Because of the unique and personal nature of the Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement shall be
assignable or delegable by the Executive. This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives. 

6. CHOICE OF LAW. 
 This
Agreement is made in California. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware. 

7. INTEGRATION. 
 This
Agreement, including Exhibit A, contains the complete, final and exclusive agreement of the Parties relating to the terms and conditions of the Executive’s employment and the termination of Executive’s employment, and
supersedes all prior and contemporaneous oral and written employment agreements or arrangements between the Parties. To the extent this Agreement conflicts with the terms of the Company’s employee handbook, governing polices, or bylaws, this
Agreement controls. 
 8. AMENDMENT. 

  
 7 

 This Agreement cannot be amended or modified except by a written agreement signed by the
Executive and the Company. 
 9. WAIVER. 

No term, covenant or condition of this Agreement or any breach thereof shall be deemed waived, except with the written consent of the Party
against whom the wavier is claimed, and any waiver or any such term, covenant, condition or breach shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other term, covenant, condition or breach. 

10. SEVERABILITY. 
 The
finding by a court of competent jurisdiction of the unenforceability, invalidity or illegality of any provision of this Agreement shall not render any other provision of this Agreement unenforceable, invalid or illegal. Such court shall have the
authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision which most accurately represents the Parties’ intention with respect to the invalid or unenforceable term or provision.

 11. INTERPRETATION; CONSTRUCTION. 

The headings set forth in this Agreement are for convenience of reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but the Executive has been encouraged to consult with, and has consulted with, the Executive’s own independent counsel and tax advisors with respect to the terms of this
Agreement. The Parties acknowledge that each Party and its counsel has reviewed and revised, or had an opportunity to review and revise, this Agreement, and the normal rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this Agreement. 
 12. REPRESENTATIONS AND WARRANTIES. 

The Executive represents and warrants that the Executive is not restricted or prohibited, contractually or otherwise, from entering into and
performing each of the terms and covenants contained in this Agreement, and that the Executive’s execution and performance of this Agreement will not violate or breach any other agreements between the Executive and any other person or entity.

 13. COUNTERPARTS. 

This Agreement may be executed in two counterparts, each of which shall be deemed an original, all of which together shall contribute one and
the same instrument. 
 14. ARBITRATION. 

To ensure the rapid and economical resolution of disputes that may arise in connection with the Executive’s employment with the Company,
the Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to the Executive’s employment, or the termination of that employment, will be resolved pursuant to the

  
 8 

 
Federal Arbitration Act and to the fullest extent permitted by law, by final, binding and confidential arbitration conducted by the Judicial Arbitration and Mediation Services
(“JAMS”), or its successors, under the then current rules of JAMS for employment disputes; provided that the arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to
award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award. Both the Executive and the Company shall be
entitled to all rights and remedies that either the Executive or the Company would be entitled to pursue in a court of law. The Company shall pay all fees, including the arbitrator’s fee. Nothing in this Agreement is intended to prevent either
the Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. 

15. TRADE SECRETS OF OTHERS. 

It is the understanding of both the Company and the Executive that the Executive shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others, including the Executive’s former employers, nor shall the Company and/or its Affiliates seek to elicit from the Executive any such information. Consistent with the foregoing, the
Executive shall not provide to the Company and/or its Affiliates, and the Company and/or its Affiliates shall not request, any documents or copies of documents containing such information. 

16. ADVERTISING WAIVER. 

The Executive agrees to permit the Company and/or its Affiliates, and persons or other organizations authorized by the Company and/or its
Affiliates, to use, publish and distribute advertising or sales promotional literature concerning the products and/or services of the Company and/or its Affiliates, or the machinery and equipment used in the provision thereof, in which the
Executive’s name and/or pictures of the Executive taken in the course of the Executive’s provision of services to the Company and/or its Affiliates, appear. The Executive hereby waives and releases any claim or right the Executive may
otherwise have arising out of such use, publication or distribution during the term of this Agreement. 
 [Signature Page Follows.]

  
 9 

 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date. 

 

			
	HERON THERAPEUTICS, INC.
	
	 /s/ Barry Quart

	Barry Quart
	Chief Executive Officer
		
	Dated:	 	 04/24/2017

	
	EXECUTIVE:
	
	 /s/ Robert E. Hoffman

	Robert E. Hoffman
		
	Dated:	 	 04/24/2017

  
 10 

 EXHIBIT A 

RELEASE AND WAIVER OF CLAIMS 

TO BE SIGNED AT TIME OF TERMINATION WITHOUT CAUSE OR 

RESIGNATION FOR GOOD REASON 

In consideration of the applicable payments and other benefits set forth in Section 4.4 of the Executive Employment Agreement dated
April 24, 2017, by and between me and Heron Therapeutics, Inc. (the “Employment Agreement” and the “Company”, respectively), to which this form is attached, I, Robert E. Hoffman hereby furnish the
Company with the following release and waiver (the “Release and Waiver”). 
 In exchange for the consideration
provided to me by the Employment Agreement that I am not otherwise entitled to receive, I hereby generally and completely release the Company and its directors, officers, employees, stockholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, Affiliates, and assigns from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring
prior to my signing this Release and Waiver. This general release includes, but is not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (2) all claims
related to my compensation or benefits from the Company, including, but not limited to, salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the
Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including, but not limited to, claims for fraud, defamation, emotional distress,
and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including, but not limited to, claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment and
Housing Act (as amended). 
 I also acknowledge that I have read and understand Section 1542 of the California Civil Code which reads
as follows: 
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR” 

I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with
respect to any claims I may have against the Company. 
 I acknowledge that, among other rights, I am waiving and releasing any rights I may
have under ADEA, that this Release and Waiver is knowing and voluntary, and that the consideration given for this Release and Waiver is in addition to anything of value to which I was already entitled as an executive of the Company. If I am 40 years
of age or older upon execution of this Release and Waiver, I further acknowledge that I have been advised, as required by the Older 

 
Workers Benefit Protection Act, that: (a) the release and waiver granted herein does not relate to claims under the ADEA which may arise after this Release and Waiver is executed; (b) I
should consult with an attorney prior to executing this Release and Waiver; (c) I have twenty-one (21) days in which to consider this Release and Waiver (although I may choose voluntarily to execute
this Release and Waiver earlier); (d) I have seven (7) days following the execution of this Release and Waiver to revoke my consent to this Release and Waiver; and (e) this Release and Waiver shall not be effective until the eighth
day after I execute this Release and Waiver and the revocation period has expired (the “Effective Date”). 
 I
understand that among other things, I must not use or disclose any confidential or proprietary information of the Company and I must immediately return all Company property and documents (including all embodiments of proprietary information) and all
copies thereof in my possession or control. 
 This Release and Waiver constitutes the complete, final and exclusive embodiment of the
entire agreement between the Company and me with regard to the subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated herein. This Release and Waiver may only be modified by a writing
signed by both me and a duly authorized officer of the Company. 
  

							
	Date:                                     
                                        	 		 	By:	 	  

		 		 		 	Robert E. Hoffman

  
 2

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