Document:

EX-10.1

 Exhibit 10.1 
 FIRST AMENDMENT TO FORBEARANCE AND WAIVER AGREEMENT 
 This FIRST
AMENDMENT TO FORBEARANCE AND WAIVER AGREEMENT (this “Amendment”) is dated as of May 14, 2013 and is entered into by and among AFFIRMATIVE INSURANCE HOLDINGS, INC., a Delaware corporation (the “Borrower”),
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Administrative Agent (“Administrative Agent”), CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Collateral Agent (“Collateral Agent” and together
with the Administrative Agent, the “Agents”), the Lenders party hereto and the GUARANTORS listed on the signature pages hereto, and is made with reference to that certain CREDIT AGREEMENT, dated as of January 31,
2007 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Credit Agreement”) by and among the Borrower, the Lenders, Administrative Agent, Collateral Agent and the other Agents and Arrangers named
therein. Capitalized terms used herein and not defined shall have the meanings ascribed to such terms in the Credit Agreement. 

RECITALS 

WHEREAS, the Borrower, the Guarantors, certain Lenders (constituting the Required Lenders) and the Agents have entered into that
certain Forbearance and Waiver Agreement, dated as of March 29, 2013 (the “Forbearance Agreement”), pursuant to which the Agents and the Required Lenders agreed to temporarily forbear from exercising or enforcing any right,
power or remedy available to them under the Loan Documents and/or applicable law in equity or by statute on account of, or arising as a result of, Specified Defaults (as defined in the Forbearance Agreement) until the Forbearance Termination Date
(as defined in the Forbearance Agreement); 
 WHEREAS, the Borrower and the Guarantors have requested that the
Required Lenders amend the Forbearance Agreement to extend the term of their forbearance with respect to the Specified Defaults and deem additional Events of Default as Specified Defaults; and 

WHEREAS, the undersigned Lenders (which constitute the Required Lenders as defined in the Credit Agreement) are willing, subject
to the terms and express conditions set forth herein, to amend the Forbearance Agreement and temporarily forbear from exercising any of their rights and remedies with respect to the Specified Defaults on the terms and subject to the conditions set
forth herein and therein. 
 NOW, THEREFORE, in consideration of the premises and the agreements, provisions and
covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 
 SECTION I.        AMENDMENTS; DIRECTION 
 1.1        Amendment to Recitals. The second recital to the Forbearance Agreement is hereby amended by deleting such recital in its entirety
and replacing it with the following: 
 “WHEREAS the Borrower has failed (or may have failed) to undertake such
actions and be in compliance with such covenants, agreements, conditions, representations and warranties which has (or may have) resulted in Defaults and/or Events of Default occurring prior to, and continuing on or as of, the date hereof,
including, but not limited to, Defaults resulting from (i) the Borrower’s failure to maintain the Interest Coverage Ratio at or above 3.00:1.00 during the four fiscal quarter period ended on December 31, 2012 and the four fiscal
quarter period ended on March 31, 2013, in each case, as required by Section 6.11 of the Credit Agreement, (ii) the Borrower’s failure to maintain the Leverage Ratio at or below 2.25:1.00 during the four fiscal quarter period
ended on December 31, 2012 and the four fiscal quarter period ended on March 31, 2013, in each case, as required by Section 6.12 of the Credit Agreement, (iii)

 
(x) the failure of Affirmative Insurance Company to maintain a Risk-Based Capital Ratio of 250% as of December 31, 2012, as required by Section 6.13 of the Credit Agreement and
(y) any breach of applicable laws arising as a result of failure to satisfy minimum capital requirements imposed upon Regulated Insurance Subsidiaries, (iv) the failure to deliver an unqualified opinion (the “Auditor
Opinion”) from the Borrower’s independent public accountant, KPMG, with respect to the Borrower’s audited financial statements for fiscal year 2012 fairly presenting in all material respects the financial condition and results of
operation of the Borrower and its Subsidiaries on a consolidated basis, as required by Section 5.04(a) of the Credit Agreement solely to the extent that the opinion delivered by KPMG in respect of the fiscal year 2012 is qualified in any
material respect (the “Opinion Default”), (v) the Borrower’s failure to deliver to the Administrative Agent written notice of the Default and/or Event of Default related to the Defaults described in this recital, as
required by Section 5.05(a) of the Credit Agreement, (vi) the breach of any representations and warranties in connection with the events or conditions described in this recital and (vii) the continuance or conversion of Eurodollar
Borrowings after, and during the continuance of the events described in this recital (collectively, the “Specified Defaults”);” 
 1.2        Amendment to Section 1.2. Section 1.2 of the Forbearance Agreement is hereby amended by deleting the text thereof in its entirety
and replacing it with the following: 
 “1.2        Term. The
forbearance granted pursuant to Section 1.1 hereof shall remain in effect from the Effective Date until the earlier of (A) 6:00 p.m. New York time on June 30, 2013, and (B) the date on which there is an occurrence of any
Forbearance Termination Event (the “Forbearance Termination Date”), after which time such forbearance shall be void and of no further force and effect and shall automatically terminate without requirement for any notice, demand or
presentment of any kind.” 
 1.3        Direction. The Required
Lenders hereby request and direct that the Agents agree to the amendments to the Forbearance Agreement set forth above in Sections 1.1 and 1.2. Subject to Section 1.4 of the Forbearance Agreement and solely based on the direction of the
Required Lenders, the Agents agree to the amendments to the Forbearance Agreement set forth above in Sections 1.1 and 1.2. 
 SECTION
II.        ACKNOWLEDGMENTS AND COVENANTS OF THE LOAN PARTIES 

2.1        The Borrower and the other Loan Parties hereby irrevocably and unconditionally
acknowledge, affirm and covenant to each of the Agents and the Lenders that: 

(A)        Continued Validity of Loan Documents. Except as specifically modified
hereby, the Credit Agreement and the other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Security Documents and all
of the Pledged Collateral described therein do and shall continue to secure the payment of all Obligations under and as defined therein, in each case as modified hereby. 
 (B)        Notice of Forbearance Termination Event. The Borrower shall deliver to the Administrative Agent (who thereafter shall promptly deliver such
notice to the Required Lenders and Stroock & Stroock & Lavan LLP (“Stroock”)) written notice of the occurrence of any Forbearance Termination Event of which an authorized officer has knowledge promptly and in any
event within one (1) Business Day after such officer thereof shall have obtained knowledge of such Forbearance Termination Event. 

 SECTION III.        CONDITIONS TO EFFECTIVENESS 

This Amendment shall become effective as of the date hereof only upon the satisfaction or waiver of all of the following conditions
precedent (the date of satisfaction or waiver of such conditions being referred to herein as the “Effective Date”): 
 (A)        Execution. The Required Lenders and the Administrative Agent shall have received counterpart signature pages of this Amendment duly
executed by the Borrower, Lenders constituting the Required Lenders and the Agents. 

(B)        Necessary Consents. The Borrower shall have obtained all material
consents necessary in connection with this Amendment. 
 (C)        SEC
Filings. The Borrower shall have provided to the Required Lenders a draft of the filing on form 10-Q to be filed on or before May 15, 2013 with the Securities and Exchange Commission prior to the filing hereof. 

(D)        Payment of Professional Fees. Each of Stroock and Mackinac
Partners, LLC shall have received all invoiced, reasonable out-of-pocket fees and expenses for services rendered by each of them through and including April 30, 2013 in connection with their representation of certain of the Lenders. 

SECTION IV.        REPRESENTATIONS AND WARRANTIES 

In order to induce the Required Lenders to enter into this Amendment and to modify and amend the Forbearance Agreement in the manner
provided herein, each Loan Party which is a party hereto represents and warrants to each Lender that the following statements are true and correct in all material respects as of the Effective Date: 

(A)        Corporate Power and Authority. The Loan Parties have all requisite
corporate or limited liability company power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, this Amendment and the Forbearance Agreement. 

(B)        Authorization of Agreements. The execution, delivery and performance of
this Amendment have been duly authorized by all necessary corporate or limited liability company action on the part of the Loan Parties. 
 (C)        No Conflict. The execution and delivery of this Amendment and the performance of the obligations of each of the Loan Parties under or in
respect of this Amendment and the Forbearance Agreement does not and will not conflict with or violate (a) any provision of the certificate or articles of incorporation or other constitutive documents or by-laws of any Loan Party or any of its
Subsidiaries, (b) any provision of any law or any governmental rule or regulation applicable to any Loan Party or any of its Subsidiaries, (c) any order of any Governmental Authority or arbitrator binding on any Loan Party or any of its
Subsidiaries, or (d) any indenture, agreement or instrument to which any Loan Party or any of its Subsidiaries is a party or by which any Loan Party or any of its Subsidiaries, or any property of any of them, is bound (except where such
violation could not reasonably be expected to have a Material Adverse Effect), and do not and will not require any consent or approval of any Person (other than any approval or consent obtained and is in full force and effect or approvals or
consents the failure to obtain could not reasonably be expected to have a Material Adverse Effect or which are not material to the consummation of the transaction contemplated hereby). 

 (D)        Governmental Consents. No
action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the execution and delivery by each Loan Party of this Amendment and the performance by the
Borrower of this Amendment, except for such actions, consents and approvals the failure to obtain or make which could not reasonably be expected to result in a Material Adverse Effect or which have been obtained and are in full force and effect.

 (E)        Binding Obligation. This Amendment has been duly executed
and delivered by each of the Loan Parties party hereto and each constitutes a legal, valid and binding obligation of such Loan Party to the extent a party hereto, enforceable against such Loan Party in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law) (the “Bankruptcy Qualifications”). 

(F)        Absence of Default. No event has occurred and is continuing, or will
result from the consummation of this Amendment that would constitute an Event of Default or a Default, other than the Specified Defaults. 

SECTION V.        ACKNOWLEDGMENT AND CONSENT 

Each Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement, the Forbearance Agreement and
this Amendment and consents to the supplement of the Credit Agreement effected pursuant to this Amendment. Each Guarantor hereby confirms that each Loan Document to which it is a party or otherwise bound and all Pledged Collateral encumbered thereby
will continue to guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents the payment and performance of all “Obligations” under each of the Loan Documents to which it is a party (in
each case as such terms are defined in the applicable Loan Document). 
 Each Guarantor acknowledges and agrees that any of the
Loan Documents to which it is a party or otherwise bound shall continue in full force and effect and that all Liens and all of its Obligations thereunder shall be valid and enforceable (subject to the Bankruptcy Qualification) and shall not be
impaired or limited by the execution or effectiveness of this Amendment and the Forbearance Agreement. 
 Each Guarantor
acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement or any other Loan Document to consent to the supplements to the
Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Guarantor to any future modifications or amendments to any
Loan Document. 
 The Borrower and each Guarantor acknowledges and agrees that, except as expressly provided for herein, nothing
in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to constitute a waiver of any Default or Event of Default, or an indication of the Administrative Agent’s or any Lender’s willingness to waive, any
provisions of the Loan Documents. 

 SECTION VI.        MISCELLANEOUS 

(A)        Reference to and Effect on the Credit Agreement and the Other Loan
Documents. 
 (i)        On and after the Effective Date, each
reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the
“Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as supplemented by the Forbearance Agreement and this
Amendment. Accordingly, in accordance with (and subject to) Article VIII of the Credit Agreement, it shall be an Event of Default under the Credit Agreement if any Loan Party fails to perform, keep or observe any term, provision, condition, covenant
or agreement contained in the Forbearance Agreement and this Amendment or if any representation or warranty made by any Loan Party under or in connection with the Forbearance Agreement and this Amendment shall have been untrue, false or misleading
when made. 
 (ii)        Except as specifically amended or modified by
this Amendment and the Forbearance Agreement, the Credit Agreement and the other Loan Documents, including the Liens granted thereunder, shall remain in full force and effect and are hereby ratified and confirmed. This Amendment is a Loan Document.
Upon the effectiveness of this Amendment as set forth in Section IV of this Amendment, this Amendment shall be binding upon and inure to the benefit of, the Borrower, the Guarantors, the Lenders and the Agents and, subject to and in
accordance with the Credit Agreement, their respective permitted successors and assigns. 

(iii)        Except as set forth herein, the execution, delivery and performance
of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement, the Guarantee and Collateral Agreement or any of the other Loan Documents,
including, without limitation, the right to terminate this Amendment pursuant to the terms hereof and exercise all rights and remedies with respect to any then continuing Default or Event of Default. 

(iv)        Each party hereto understands and agrees that this Amendment is
binding only upon the parties hereto (their respective permitted successors and assigns) and not upon any other Person. 

(B)        Headings. Section and Subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. 
 (C)        Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY OTHER LAW. 
 (D)        Release. The Loan Parties hereby (i) release, acquit, and forever discharge the Agents and each of the Lenders, and each and every
past and present subsidiary, affiliate, stockholder, officer, director, agent, servant, employee, representative, and attorney of the Agents and the Lenders, from any and all claims, causes of action, suits, debts, liens, obligations, liabilities,
demands, losses, costs and expenses (including reasonable attorneys’ fees) of any kind, character, or nature whatsoever, known 

 
or unknown, fixed or contingent, which the Loan Parties may have or claim to have now or which may hereafter arise out of or connected with any act of commission or omission of the Agents or the
Lenders existing or occurring prior to the date of this Amendment in each case arising with respect to the Credit Agreement or the other Loan Documents and (ii) waive any and all claims, counterclaims, causes of action, offsets, rights of
recoupment, defenses and demands, whether known or unknown, arising on or before the date of this Amendment in each case under or with respect to any of the Loans or Obligations or under any of the Loan Documents; provided, that, such
releases and waivers described in (i) and (ii) above shall not be applicable with respect to any claims, counterclaims, causes of action, offsets, suits, debts, liens, obligations, liabilities, losses, costs, expenses, demands, defenses or
rights of recoupment resulting primarily from the gross negligence or willful misconduct of the Agents or the Lenders as determined by a court of competent jurisdiction by final and nonappealable judgment. The provisions of this Section
VII(D) shall be binding upon the Borrower and each of the other Loan Parties, if any, and shall inure to the benefit of Agents, the Lenders and their respective subsidiaries, affiliates, stockholders, officers, directors, agents, employees,
representatives, attorneys, executors, administrators, successors and assigns. 

(E)        Further Assurances. The Loan Parties shall execute and deliver to the
Administrative Agent and Lenders such documents and certificates as the Required Lenders may reasonably request to effect the agreements contemplated by this Amendment. 
 (F)        Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same document. Delivery of an executed signature of this Amendment in portable document format (.pdf) or by facsimile transmission shall be as effective as delivery of a manually
signed counterpart hereof. 
 (G)        Severability; Survival. In case
any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. Section II of this Amendment shall survive the termination of this Amendment (including any extensions thereof). 

[Remainder of this page intentionally left blank.] 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed
and delivered by their respective officers thereunto duly authorized as of the date first written above. 
  

							
	BORROWER:	 	AFFIRMATIVE INSURANCE HOLDINGS, INC, as Borrower
				
		 		 	            By:	 	 /s/ Joseph G. Fisher

		 		 		 	 Name: Joseph G. Fisher

Title: EVP

 GUARANTORS: 

AFFIRMATIVE INSURANCE HOLDINGS, INC. 

AFFIRMATIVE MANAGEMENT SERVICES, INC. 

AFFIRMATIVE PROPERTY HOLDINGS, INC. 

AFFIRMATIVE SERVICES, INC. 

AFFIRMATIVE INSURANCE GROUP, INC. 

AFFIRMATIVE UNDERWRITING SERVICES, INC. 

A-AFFORDABLE INSURANCE AGENCY, INC. 

AFFIRMATIVE INSURANCE SERVICES, INC. (f/k/a 

AFFIRMATIVE INSURANCE SERVICES OF TEXAS, INC.) 

DRIVER’S CHOICE INSURANCE SERVICES, LLC 

INSUREONE INDEPENDENT INSURANCE AGENCY, LLC 

USAGENCIES, L.L.C. 
 LIFCO, L.L.C. 
 USAGENCIES MANAGEMENT SERVICES, INC.

 AFFIRMATIVE RETAIL, INC. 

AFFIRMATIVE PREMIUM FINANCE HOLDINGS, INC. 

AFFIRMATIVE PREMIUM FINANCE, INC. 

 

			
	By:	 	 /s/ Joseph G. Fisher

		 	Name: Joseph G. Fisher
		 	Title: EVP

 
			
		 	CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
		 	as Administrative Agent and as Collateral Agent
		
	By:	 	 /s/ John Toronto

		 	Name: John Toronto
		 	Title: Authorized Signatory
		
	By:	 	 /s/ Christopher Day

		 	Name: Christopher Day
		 	Title: Authorized Signatory

 
			
	 [LENDER] as Required Lender

		
	 By:
	 	  

		 	Name:
		 	Title:EX-10.1

 Exhibit 10.1 
 MAST THERAPEUTICS, INC. 
 DIRECTOR COMPENSATION POLICY 

(adopted March 21, 2013) 
 Non-employee members of the board of directors (the “Board”) of Mast Therapeutics, Inc. (the “Company”) shall, beginning January 1, 2013, be eligible to receive cash and equity
compensation as set forth in this Director Compensation Policy. The cash compensation described in this Director Compensation Policy shall be paid or be made, as applicable, automatically and without further action of the Board or any committee of
the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company (each, a “Non-Employee Director”) who may be eligible to receive such cash compensation, unless such Non-Employee
Director declines the receipt of such cash compensation by written notice to the Company. The option grants described in this policy shall be approved by the Board at the time of grant in such amounts and otherwise on the terms and conditions as set
forth herein. This Director Compensation Policy shall remain in effect until it is revised or rescinded by further action of the Board. This Director Compensation Policy shall be administered and interpreted by the Board, in its sole and absolute
discretion, and the Board retains full discretion to modify its terms or cancel it at any time. 
 1. Cash Compensation. 

(a) Quarterly Retainers. 
 (i) Each Non-Employee Director shall be eligible to receive a quarterly retainer of $5,000, or $20,000 per year, for service on the Board. In addition, 

(A) a Non-Employee Director serving as Lead Independent Director or, if there is no Lead Independent Director, a Non-Employee Director
serving as Chair of the Board shall be eligible to receive an additional quarterly retainer of $5,000, or $20,000 per year, for service as Lead Independent Director or Chair of the Board, as applicable; 

(B) a Non-Employee Director serving as Chair of the Board’s Audit Committee, Compensation Committee or Nominating and Governance
Committee shall be eligible to receive an additional quarterly retainer of $1,875, or $7,500 per year, for service as Chair of such committee; 
 (C) a Non-Employee Director serving as Chair of any committee of the Board other than the Board’s Audit Committee, Compensation Committee or Nominating and Governance Committee, compensation for
which is addressed in Section 1(a)(i)(B) above, shall be eligible to receive an additional quarterly retainer of $875, or $3,500 per year, for service as Chair of such committee. 

(b) Meeting Stipends. Each Non-Employee Director shall be eligible to receive a $1,000 stipend for each Board meeting attended
(whether in person or by telephone, videoconference or other comparable communication device) and each Non-Employee Director who serves on a committee of the Board shall be eligible to receive a $1,000 stipend for each meeting of each such committee
that such Non-Employee Director attends (whether in person or by telephone, videoconference or other comparable communication device). 
 (c) New Directors; Departing Directors; Change in Status. A person (i) who is initially elected or appointed to the Board or as Lead Independent Director or as Chair of the Board or Chair of a
committee of the Board following March 21, 2013 and who is a Non-Employee Director at the time of such initial election or appointment or (ii) whose service on the Board as a Non-Employee Director or as Lead Independent Director or as
Chair of the Board or Chair of a committee of the Board begins or ends prior to the end of the applicable quarter, shall receive a pro-rated portion of the quarterly fees described above based on (x) the number of (full or partial) days for
which the person served on the Board as a Non-Employee Director or as Lead Independent Director or as Chair of the Board or Chair of a committee of the Board and (y) a 90-day quarter. For clarity, each such person shall be immediately eligible
for meeting stipends. 

  
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 (d) Payment. All quarterly retainers and meeting stipends shall be payable in arrears
following the end of each calendar quarter. 
 2. Equity Compensation. 

(a) Definitions. For purposes of this Section 2, the following terms shall have the following meanings: 

(i) “Current Allocation” shall mean the product of (A) 0.0396%, multiplied by (B) the number of shares of common
stock issued and outstanding as of the applicable date. For clarity, (X) the applicable date for each newly elected/appointed director shall be the Appointment Date and (Y) the applicable date for each Annual Option shall be the date of
the applicable annual meeting of stockholders. 
 (ii) “Make-Up Amount” shall mean the difference between (A) the
Current Allocation as of the date of the current-year annual meeting of stockholders, minus (B) the Current Allocation applicable to the prior year’s annual meeting of stockholders (or, for Non-Employee Directors who were not Non-Employee
Directors at the time of the prior year’s annual meeting of stockholders, the Current Allocation as of the date of such Non-Employee Director’s Appointment Date (as defined in Section 2(c))). 

(b) Omnibus Incentive Plan. Anything in this Director Compensation Policy to the contrary notwithstanding, the options described
in this Director Compensation Policy shall be granted under and shall be subject to the terms and provisions of the Company’s Amended and Restated 2008 Omnibus Incentive Plan, as amended and/or restated from time to time (the “Incentive
Plan”), and shall be granted subject to the execution and delivery of option agreements, including attached exhibits, if any, in substantially the same forms previously approved by the Board or a committee of the Board, setting forth the
vesting schedule applicable to such options and such other terms as may be required by the Incentive Plan. In addition, the approval and granting of the options described below shall be subject to and contingent upon the Company’s compliance
with, or the waiver thereof, of any contractual obligations applicable to the Company’s approval or granting of such options (all as determined by the Company in its sole and absolute discretion). 

(c) New Non-Employee Directors. Each newly elected or appointed Non-Employee Director or member of the Board who becomes a
Non-Employee Director(each, a “New Non-Employee Director”) shall be eligible to receive, in connection with such New Non-Employee Director’s election or appointment to the Board or change in status (the “Appointment Date”),
the following: 
 (i) a non-qualified stock option (each, an “Inducement Option”) to purchase such number of shares of
common stock as is equal to the Current Allocation (subject to adjustment as provided in the Incentive Plan); and 
 (ii)
provided the New Non-Employee Director was not initially elected at an annual meeting of stockholders and such New Non-Employee Director’s Appointment Date is more than 30 days before the date of the next annual meeting of stockholders, a
non-qualified stock option (each, a “Pro-Rated Annual Option”) to purchase that number of shares of common stock as is equal to (A) x (B), where: 
  

					
	(A)	  	=	  	the quotient of (I) the Current Allocation, divided by (II) 12; subject to adjustment as provided in the Incentive Plan; and
			
	(B)	  	=	  	The number of full 30-day periods between such New Non-Employee Director’s Appointment Date and the date of the next annual meeting of stockholders (or, if, on the
Appointment Date, the date of the next annual meeting of stockholders has not been set by the Board, the one-year anniversary of the prior year’s annual meeting of stockholders) (such number of 30-day periods, the “Number of Months Until
Meeting”).

  
 -2-

 (d) Annual Options. In connection with each annual meeting of stockholders, each
Non-Employee Director shall be eligible to receive a non-qualified stock option (each, an “Annual Option”) to purchase such number of shares of common stock as is equal to the Current Allocation (subject to adjustment as provided in the
Incentive Plan), plus, if applicable, the Make-Up Amount. 
 The “Make-Up Amount” shall be included in the Annual
Option for a Non-Employee Director only if: (i) the Make-Up Amount with respect to such Non-Employee Director exceeds 20% of the Current Allocation as of the date of the current-year annual meeting of stockholders; (ii) the Company’s
market capitalization (shares outstanding multiplied by stock price) has not exceeded $100 million for a sustained period (e.g., 20 trading days), as determined unanimously by the Board; and (iii) the Board unanimously determines to include the
Make-Up Amount in such Annual Option. 
 (e) Termination of Employment of Employee Directors. Members of the Board who
are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board will, to the extent that they are otherwise
eligible, be eligible to receive, after termination from employment with the Company and any parent or subsidiary of the Company, an Inducement Option, a Pro-Rated Annual Option and an Annual Option, all as described in this Section 2.

 (f) Terms of Options Granted to Non-Employee Directors. 

(i) Exercise Price. The per share exercise price of each option granted to a Non-Employee Director shall equal 100% of the Fair
Market Value (as defined in the Incentive Plan) of a share of common stock on the date the option is granted. 
 (ii)
Vesting. 
 (A) Each Inducement Option granted to a New Non-Employee Director shall become vested
and exercisable in thirty-six substantially equal monthly installments of 1/36th of the shares subject to such option at the end of each successive month following the Appointment Date of such New Non-Employee Director, subject to such director’s continuing service (as defined
in the Incentive Plan) through such dates. 
 (B) Each Pro-Rated Annual Option granted to a New Non-Employee Director shall
become vested and exercisable in such number of substantially equal monthly installments (which number shall be equal to the Number of Months Until Meeting) of such fraction of the shares subject to such option (which fraction shall be equal to
1/the Number of Months Until Meeting) at the end of each successive month following the Appointment Date of such New Non-Employee Director, subject to such director’s continuing service (as defined in the Incentive Plan) through such dates.

 (C) Each Make-Up Option granted to a Non-Employee Director shall become vested and exercisable in twelve substantially equal
monthly installments of 1/12 of the shares subject to such option at the end of each successive month following June 3, 2009, subject to such director’s continuing service (as defined in the Incentive Plan) through such dates. 

(D) Each Annual Option granted to a Non-Employee Director shall become vested and exercisable in twelve
substantially equal monthly installments of 1/12th of the
shares subject to such option at the end of each successive month following the date of applicable annual meeting of stockholders, subject to such director’s continuing service (as defined in the Incentive Plan) through such dates. 

  
 -3-

 (iii) Term. The term of each option granted to a Non-Employee Director shall be the
shorter or (x) ten years from the date the option is granted and (y) three years from the date such Non-Employee Director ceases to provide Services (as defined in the Incentive Plan) for any reason other than such Non-Employee
Director’s death or disability. 

  
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