Document:

1997 Outside Directors Stock Option Plan

 Exhibit 10.3 
 POWER INTEGRATIONS, INC. 
 1997 OUTSIDE DIRECTORS STOCK OPTION PLAN 
 1. ESTABLISHMENT, PURPOSE AND TERM OF
PLAN. 
 1.1 Establishment. The Power Integrations, Inc. 1997 Outside Directors Stock Option Plan
(the “Plan”) is hereby established effective as of the effective date of the initial registration by the Company of its Stock under Section 12 of the Exchange Act (the “Effective Date”).

 1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by
providing an incentive to attract and retain highly qualified persons to serve as Outside Directors of the Company and by creating additional incentive for Outside Directors to promote the growth and profitability of the Participating Company Group.

 1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of
the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. 
 2. DEFINITIONS AND CONSTRUCTION. 
 2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below: 
 (a) “Board” means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to
administer the Plan, “Board” also means such Committee(s). 
 (b) “Code” means the Internal Revenue
Code of 1986, as amended, and any applicable regulations promulgated thereunder. 
 (c) “Committee” means a
committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. 
 (d) “Company” means Power Integrations, Inc., a Delaware corporation, or any successor corporation thereto. 

(e) “Consultant” means any person, including an advisor, engaged by a Participating Company to render services other
than as an Employee or a Director. 
  

 1. 

 (f) “Director” means a member of the Board or the board of directors of
any other Participating Company. 
 (g) “Employee” means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records of a Participating Company; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes
of the Plan. 
 (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 (i) “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the
Board, in its sole discretion, or by the Company, in its sole discretion, if such determination is expressly allocated to the Company herein, subject to the following: 
 (i) If, on such date, there is a public market for the Stock, the Fair Market Value of a share of Stock shall be the closing sale price of a share of Stock (or the mean of the closing bid and asked prices of a
share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National Market, the Nasdaq Small-Cap Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported
in the Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be
established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its sole discretion. 
 (ii) If, on such date, there is no public market for the Stock, the Fair Market Value of a share of Stock shall be as determined by the Board
without regard to any restriction other than a restriction which, by its terms, will never lapse . 
 (j)
“Option” means a right to purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan. 
 (k) “Optionee” means a person who has been granted one or more Options. 
 (l) “Option Agreement” means a written agreement between the Company and an Optionee setting forth the terms, conditions
and restrictions of the Option granted to the Optionee. 
 (m) “Outside Director” means a Director of the
Company who is not an Employee. 
 (n) “Parent Corporation” means any present or future “parent
corporation” of the Company, as defined in Section 424(e) of the Code. 
  

 2. 

 (o) “Participating Company” means the Company or any Parent Corporation
or Subsidiary Corporation. 
 (p) “Participating Company Group” means, at any point in time, all corporations
collectively which are then Participating Companies. 
 (q) “Service” means the Optionee’s service with
the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant. The Optionee’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders Service
to the Participating Company Group or a change in the Participating Company for which the Optionee renders such Service, provided that there is no interruption or termination of the Optionee’s Service. The Optionee’s Service shall be
deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Optionee performs Service ceasing to be a Participating Company. 
 (r) “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2.

 (s) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code. 
 2.2 Construction. Captions and titles contained herein are for convenience
only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural, the plural shall include the singular, and use of the term “or”
shall include the conjunctive as well as the disjunctive. 
 3. ADMINISTRATION. The Plan shall be
administered by the Board. All questions of interpretation of the Plan or of any Option shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. Any officer
of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation, determination or election. 
 4. SHARES
SUBJECT TO PLAN. 
 4.1 Maximum Number of Shares Issuable. Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be eight hundred thousand (800,000) and shall consist of authorized but unissued shares or reacquired shares of
Stock or any combination thereof. If an outstanding Option for any reason expires or is terminated or canceled or shares of Stock acquired, subject to repurchase, upon the exercise of an Option are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Option, or such repurchased shares of Stock, shall again be available for issuance under the Plan. 
 4.2 Adjustments for Changes in Capital Structure. In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject to the Plan, to the “Initial Option” and “Annual Option” (as defined in Section 6.1), 

  

 3. 

 
and to any outstanding Options, and in the exercise price of any outstanding Options. If a majority of the shares which are of the same class as the shares
that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an “Ownership Change Event” as defined in Section 8.1) shares of another corporation (the “New
Shares”), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise price of, the
outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its sole discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be
rounded down to the nearest whole number, and in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to the Option. 
 4.3 Repricing and Repurchase of Options. Notwithstanding anything to the contrary set forth herein, except in connection with a corporate
transaction involving the Company (including, without limitation, any stock dividend, stock split, reverse stock split, extraordinary cash dividend, recapitalization, reorganization, Ownership Change Event, split-up, spin-off, combination,
reclassification or exchange of shares), outstanding Options may not be amended to reduce the exercise price of such outstanding Options or canceled in exchange for cash, other awards or Options with an exercise price that is less than the exercise
price of the original Options without stockholder approval. 
 5. ELIGIBILITY AND TYPE
OF OPTIONS. 
 5.1 Persons Eligible for Options. An Option shall be granted only to a person who, at
the time of grant, is an Outside Director. 
 5.2 Options Authorized. Options shall be nonstatutory stock options; that is, options
which are not treated as incentive stock options within the meaning of Section 422(b) of the Code. 
 6. TERMS
AND CONDITIONS OF OPTIONS. Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions: 
 6.1 Automatic Grant of Options. Subject to execution by an Outside Director of the appropriate Option Agreement, Options shall be granted
automatically and without further action of the Board, as follows: 
 (a) Initial Option. Each person who is (i) serving as an
Outside Director on the Effective Date, or (ii) first elected or appointed as an Outside Director after the Effective Date shall be granted an Option to purchase thirty thousand (30,000) shares of Stock on the Effective Date or the date of
such initial election or appointment, respectively (an “Initial Option”). Notwithstanding anything herein to the contrary, an Initial Option shall not be granted to a Director of the Company who previously did not qualify as
an Outside Director but subsequently becomes an Outside Director as a result of the termination of his or her status as an Employee. 
  

 4. 

 (b) Annual Option. Each Outside Director (including any Director who previously did not qualify
as an Outside Director but who subsequently becomes an Outside Director) shall be granted an Option to purchase ten thousand (10,000) shares of Stock on each of his or her “Anniversary Dates”, provided such person remains an Outside
Director on such Anniversary Date (an “Annual Option”) and provided that no Annual Option shall be granted from January 27, 2009 to December 31, 2009. The Anniversary Date for an Outside Director who was serving on the Board on
the Effective Date shall be the date which is twelve (12) months after the Effective Date and successive anniversaries thereof. The Anniversary Date for an Outside Director who is elected or appointed to the Board after the Effective Date shall
be the date which is twelve (12) months after such election or appointment and successive anniversaries thereof. 
 (c) Right to
Decline Option. Notwithstanding the foregoing, any person may elect not to receive an Option by delivering written notice of such election to the Board no later than the day prior to the date such Option would otherwise be granted. A person so
declining an Option shall receive no payment or other consideration in lieu of such declined Option. A person who has declined an Option may revoke such election by delivering written notice of such revocation to the Board no later than the day
prior to the date such Option would be granted pursuant to Section 6.1(a) or (b), as the case may be. 
 6.2 Exercise Price. The
exercise price per share of Stock subject to an Option shall be the Fair Market Value of a share of Stock on the date the Option is granted. 
 6.3 Exercise Period. Each Option shall terminate and cease to be exercisable on the date ten (10) years after the date of grant of the Option unless earlier terminated pursuant to the terms of the Plan or the Option Agreement.

 6.4 Right to Exercise Options. 
 (a) Initial Options. Except as otherwise provided in the Plan or in the Option Agreement, an Initial Option shall (i) first become exercisable on the date which is one (1) year after the date on which
the Initial Option was granted (the “Initial Option Vesting Date”); and (ii) be exercisable on and after the Initial Option Vesting Date and prior to the termination thereof in an amount equal to the number of shares of
Stock initially subject to the Initial Option multiplied by the Vested Ratio as set forth below, less the number of shares previously acquired upon exercise thereof. The Vested Ratio described in the preceding sentence shall be determined as
follows: 
  

			
	 	  	Vested Ratio
	 Prior to Initial Option Vesting Date
	  	0
	On Initial Option Vesting Date, provided the Optionee’s Service has not terminated prior to such date	  	 1/3
		
	Plus	  	
		
	For each full month of the Optionee’s continuous Service from the Initial Option Vesting Date until the Vested Ratio equals  1/1, an additional	  	 1/36

  

 5. 

 (b) Annual Options. Except as otherwise provided in the Plan or in the Option Agreement, an
Annual Option shall (i) first become exercisable on the date which is twenty-five (25) months after the date on which the Annual Option was granted (the “Annual Option Vesting Date”); and (ii) be exercisable on
and after the Annual Option Vesting Date and prior to the termination thereof in an amount equal to the number of shares of Stock initially subject to the Annual Option multiplied by the Vested Ratio as set forth below, less the number of shares
previously acquired upon exercise thereof. The Vested Ratio described in the preceding sentence shall be determined as follows: 
  

			
	 	  	Vested Ratio
	 Prior to Annual Option Vesting Date
	  	0
		
	 On Annual Option Vesting Date, provided the Optionee’s Service is continuous from the date of grant of the Annual Option until the Annual
Option Vesting Date
	  	 1/12
		
	 Plus
	  	
		
	 For each full month of the Optionee’s continuous Service from the Annual Option Vesting Date until the Vested Ratio equals 1/1, an
additional
	  	 1/12

 6.5 Payment of Exercise Price. 
 (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of shares of Stock owned by the Optionee having a Fair Market Value not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), or (iv) by any combination thereof. 
 (b) Tender of Stock. Notwithstanding the foregoing, an Option may not be exercised by tender to the Company of shares of Stock to the extent such tender of Stock would constitute a violation of the provisions
of any law, regulation or agreement restricting the redemption of the Company’s stock. Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company of shares of Stock unless such shares either have been owned
by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from the Company. 
  

 6. 

 (c) Cashless Exercise. The Company reserves, at any and all times, the right, in the
Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. 
 6.6 Tax Withholding. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares of Stock having a Fair Market Value equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to such Option or the shares acquired upon exercise thereof. Alternatively or in addition, in its sole discretion, the Company shall have the right to require the Optionee to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon exercise thereof. The Company shall have no obligation to deliver shares of Stock until the Participating Company
Group’s tax withholding obligations have been satisfied. 
 7. STANDARD FORM OF
OPTION AGREEMENT. 
 7.1 General. Each Option shall comply with and be subject to the
terms and conditions set forth in the appropriate form of Nonstatutory Stock Option Agreement adopted by the Board concurrently with its adoption of the Plan and as amended from time to time. 
 7.2 Authority to Vary Terms. The Board shall have the authority from time to time to vary the terms of any of the standard forms of Option
Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such
new, revised or amended standard form or forms of Option Agreement are not inconsistent with the terms of the Plan. 
 8.
CHANGE IN CONTROL. 
 8.1 Definitions. 
 (a) An “Ownership Change Event” shall be deemed to have occurred if any of the following occurs 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 fifty percent (50%) of the voting stock of the Company; 
 (ii) a merger or consolidation in which the
Company is a party; 
 (iii) the sale, exchange, or change in all or substantially all of the assets of the Company; or 

(iv) a liquidation or dissolution of the Company. 
  

 7. 

 (b) A “Change In Control” shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the “Transaction”) wherein 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 stock of the Company or the corporation or corporations to which the assets of the Company were transferred (the “Transferee Corporation(s)”), as the case may be. For purposes of the preceding sentence, indirect
beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be,
either directly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events are related, and its determination
shall be final, binding and conclusive. 
 8.2 Effect of Change In Control on Options. In the event of a Change in Control, any
unexercisable or unvested portion of the outstanding Options shall be immediately exercisable and vested in full as of the date ten (10) days prior to the date of the Change in Control. The exercise or vesting of any Option that was permissible
solely by reason of this Section 8.2 shall be conditioned upon the consummation of the Change in Control. In addition, the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the
“Acquiring Corporation”), may either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiring Corporation’s
stock. For purposes of this Section 8.2, an Option shall be deemed assumed if, following the Change in Control, the Option confers the right to purchase in accordance with its terms and conditions, for each share of Stock subject to the Option
immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) to which a holder of a share of Stock on the effective date of the Change in Control was entitled. Any Options which are neither
assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control.
Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable
provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement. Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options immediately
prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the outstanding Options shall not terminate. 
 9. NONTRANSFERABILITY OF
OPTIONS. During the lifetime of the Optionee, - an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution. 
  

 8. 

 10. INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board is
delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the
Company, in writing, the opportunity at its own expense to handle and defend the same. 
 11. TERMINATION
OR AMENDMENT OF PLAN. The Board may terminate or amend the Plan at any time. However, subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company’s stockholders, there shall be (a) no increase in the total number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), and
(b) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule. In any event, no termination or amendment of the Plan may adversely affect any then outstanding
Option, or any unexercised portion thereof, without the consent of the Optionee, unless such termination or amendment is necessary to comply with any applicable law, regulation or rule. 
  

 9.1998 Nonstatutory Stock Option Plan

 EXHIBIT 10.4 
 POWER INTEGRATIONS, INC. 
 1998 NONSTATUTORY STOCK OPTION PLAN 
  

	1.	ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 1.1 Establishment. The Power Integrations, Inc. 1998 Nonstatutory Stock Option Plan (the
“Plan”) is hereby established effective as of July 1, 1998. 
 1.2 Purpose. The purpose of the Plan is to
advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the
growth and profitability of the Participating Company Group. 
 1.3 Term of Plan. The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted
under the Plan have lapsed. 
  

	2.	DEFINITIONS AND CONSTRUCTION.  

 2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below: 
 (a) “Board” means the Board of Directors of the Company. If one or more Committees have been appointed by the
Board to administer the Plan, “Board” also means such Committee(s). 
 (b)
“Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. 
 (c) “Committee” means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the
powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law. 
 (d) “Company” means Power Integrations, Inc., a Delaware
corporation, or any successor corporation thereto. 
  

 1 

 (e) “Consultant” means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a Director. 
 (f)
“Director” means a member of the Board or of the board of directors of any other Participating Company. 
 (g) “Disability” means the inability of the Optionee, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Optionee’s position with the Participating Company
group because of the sickness or injury of the Optionee. 
 (h) “Employee” means any person treated as
an employee (including an officer or a Director who is also treated as an employee) in the records of a Participating Company; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to
constitute employment for purposes of the Plan. 
 (i) “Exchange Act” means the Securities Exchange
Act of 1934, as amended. 
 (j) “Fair Market Value” means, as of any date, the value of a share of
Stock or other property as determined by the Board, in its sole discretion, or by the Company, in its sole discretion, if such determination is expressly allocated to the Company herein, subject to the following: 
 (i) If, on such date, there is a public market for the Stock, the Fair Market Value of a share of Stock shall be the closing sale
price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National Market, the Nasdaq Small-Cap Market or such other national or regional securities
exchange or market system constituting the primary market for the Stock, as reported in the Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on
such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the
Board, in its sole discretion. 
 (ii) If, on such date, there is no public market for the Stock, the Fair Market Value of a
share of Stock shall be as determined by the Board without regard to any restriction other than a restriction which, by its terms, will never lapse. 
 (k) “Option” means a right to purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan. Options are intended to be nonstatutory
stock options and shall not be treated as incentive stock options within the meaning of Section 422(b) of the Code. 
 (l) “Option Agreement” means a written agreement between the Company and an Optionee setting forth the terms, conditions and restrictions of the Option granted to the Optionee and any shares acquired upon the
exercise thereof. 
  

 2 

 (m) “Optionee” means a person who has been granted one or more
Options. 
 (n) “Parent Corporation” means any present or future “parent corporation” of the
Company, as defined in Section 424(e) of the Code. 
 (o) “Participating Company” means the
Company or any Parent Corporation or Subsidiary Corporation. 
 (p) “Participating Company Group”
means, at any point in time, all corporations collectively which are then Participating Companies. 
 (q)
“Securities Act” means the Securities Act of 1933, as amended. 
 (r)
“Service” means an Optionee’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant. The Optionee’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee renders Service to the Participating Company Group or a change in the Participating Company for which the Optionee renders such Service, provided that there is no
interruption or termination of the Optionee’s Service. Furthermore, an Optionee’s Service with the Participating Company Group shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or other bona fide
leave of absence approved by the Company; provided, however, that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed to have terminated unless the
Optionee’s right to return to Service with the Participating Company Group is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be
treated as Service for purposes of determining vesting under the Optionee’s Option Agreement. The Optionee’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the
Optionee performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its sole discretion, shall determine whether the Optionee’s Service has terminated and the effective date of such termination.

 (s) “Stock” means the common stock of the Company, as adjusted from time to time in accordance with
Section 4.2. 
 (t) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code. 
 2.2 Construction. Captions and titles contained
herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of
the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 
  

 3 

	3.	ADMINISTRATION.  

 3.1 Administration by the Board. The Plan shall be administered by the Board. All questions of interpretation of the Plan or of any Option shall be determined by the Board, and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Option. Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, determination or election. 
 3.2 Powers of the Board. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion: 
 (a) to determine the persons to whom, and the time or
times at which, Options shall be granted and the number of shares of Stock to be subject to each Option; 
 (b) to
determine the Fair Market Value of shares of Stock or other property; 
 (c) to determine the terms, conditions and
restrictions applicable to each Option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for shares purchased
upon the exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms
and conditions of the exercisability of the Option or the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the Optionee’s termination of Service with the
Participating Company Group on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan; 
 (d) to approve one or more forms of Option Agreement; 
 (e) to amend, modify, extend, cancel, renew, reprice or otherwise adjust the exercise price of, or grant a new Option in substitution
for, any Option or to waive any restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof, subject to the limitations set forth in Section 3.3; 
 (f) to accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise
thereof, including with respect to the period following an Optionee’s termination of Service with the Participating Company Group; 
 (g) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options; and 
  

 4 

 (h) to correct any defect, supply any omission or reconcile any inconsistency in the Plan
or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent consistent with the Plan and applicable law. 
 3.3 Repricing and Repurchase of Options. Notwithstanding anything to the contrary set forth herein, except in connection with a corporate
transaction involving the Company (including, without limitation, any stock dividend, stock split, reverse stock split, extraordinary cash dividend, recapitalization, reorganization, Ownership Change Event, split-up, spin-off, combination,
reclassification, or exchange of shares), outstanding Options may not be amended to reduce the exercise price of such outstanding Options or canceled in exchange for cash, other awards or Options with an exercise price that is less than the exercise
price of the original Options without stockholder approval. 
  

	4.	SHARES SUBJECT TO PLAN.  

 4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be 1,000,000 and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof. If an outstanding Option for any reason expires or is terminated or canceled or shares of Stock
acquired, subject to repurchase, upon the exercise of an Option are repurchased by the Company, the shares of Stock allocable to the unexercised portion of such Option, or such repurchased shares of Stock, shall again be available for issuance under
the Plan. 
 4.2 Adjustments for Changes in Capital Structure. In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan, and to any outstanding Options and in the
exercise price per share of any outstanding Options. If a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section 8.1) shares of another corporation (the “New Shares”), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares.
In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its sole discretion. Notwithstanding
the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded up or down to the nearest whole number, as determined by the Board, and in no event may the exercise price of any Option be decreased
to an amount less than the par value, if any, of the stock subject to the Option. The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive. 
  

	5.	ELIGIBILITY.  

 Options may be granted only to Employees and Consultants; provided, however, that no Option shall be granted to any person whose eligibility to receive an Option under the Plan at the time of grant would require the approval of the
Company’s stockholders pursuant to any applicable law, regulation or rule, including, without limitation, the rules applicable to the listing of the Company’s securities on the Nasdaq National Market System. For purposes of the foregoing
sentence, “Employees” and “Consultants” shall include prospective Employees and prospective Consultants to whom Options are granted in connection with written offers of an employment or other service
relationship with the Participating Company Group. Eligible persons may be granted more than one (1) Option. 
  

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	6.	TERMS AND CONDITIONS OF OPTIONS.  

 Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to
time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement. Option Agreements may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions: 
 6.1 Exercise Price. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that the exercise price per share for an Option shall be not less than eighty-five percent (85%) of the Fair Market Value of a share of Stock on the effective date of grant of
the Option, Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner
qualifying under the provisions of Section 424(a) of the Code. 
 6.2 Exercise Period. Options shall be exercisable at such time
or times, or upon such event or events, and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that no Option
granted to a prospective Employee or prospective Consultant may become exercisable prior to the date on which such person commences Service with a Participating Company. 
 6.3 Payment of Exercise Price.  
 (a) Forms of Consideration Authorized.
Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of shares of
Stock owned by the Optionee having a Fair Market Value (as determined by the Company without regard to any restrictions on transferability applicable to such stock by reason of federal or state securities laws or agreements with an underwriter for
the Company) not less than the exercise price, (iii) by the assignment of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by the Optionee’s promissory note in a
form approved by the Company, (v) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (vi) by any combination thereof. The Board may at any time or from time to time,
by adoption of or by amendment to the standard form(s) of Option Agreement described in Section 7, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration. 
  

 6 

 (b) Tender of Stock. Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company of shares of Stock to the extent such tender of Stock would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. Unless otherwise
provided by the Board, an Option may not be exercised by tender to the Company of shares of Stock unless such shares either have been owned by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from the
Company. 
 (c) Cashless Exercise. The Company reserves, at any and all times, the right, in the Company’s
sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. 
 (d) Payment by Promissory Note. No promissory note shall be permitted if the exercise of an Option using a promissory note
would be a violation of any law. Any permitted promissory note shall be on such terms as the Board shall determine at the time the Option is granted. The Board shall have the authority to permit or require the Optionee to secure any promissory note
used to exercise an Option with the shares of Stock acquired upon the exercise of the Option or with other collateral acceptable to the Company. Unless otherwise provided by the Board, if the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity affecting the extension of credit in connection with the Company’s securities, any promissory note shall comply with such applicable
regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent necessary to comply with such applicable regulations. 
 6.4 Tax Withholding. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the tender of, a number
of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to
such Option or the shares acquired upon the exercise thereof. Alternatively or in addition, in its sole discretion, the Company shall have the right to require the Optionee, through payroll withholding, cash payment or otherwise, including by means
of a Cashless Exercise, to make adequate provision for any such tax withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon the exercise thereof. The Company shall have no
obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Option Agreement until the Participating Company Group’s tax withholding obligations have been satisfied by the Optionee. 

6.5 Repurchase Rights. Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other
conditions and restrictions as determined by the Board in its sole discretion at the time the Option is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable,
to one or more persons as may be selected by the Company. Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to
the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. 
  

 7 

 6.6 Effect of Termination of Service. 
 (a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided herein, an Option shall be
exercisable after an Optionee’s termination of Service as follows: 
 (i) Disability. If the Optionee’s
Service with the Participating Company Group is terminated because of the Disability of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee
(or the Optionee’s guardian or legal representative) at any time prior to the expiration of six (6) months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the
Optionee’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Option Agreement evidencing such Option (the “Option Expiration Date”). 
 (ii) Death. If the Optionee’s Service with the Participating Company Group is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legal representative or other person who acquired the right to exercise the Option by reason
of the Optionee’s death at any time prior to the expiration of six (6) months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but
in any event no later than the Option Expiration Date. The Optionee’s Service shall be deemed to have terminated on account of death if the Optionee dies within three (3) months after the Optionee’s termination of Service. 

(iii) Other Termination of Service. If the Optionee’s Service with the Participating Company Group terminates for any
reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee’s Service terminated, may be exercised by the Optionee within three (3) months (or such longer or
shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. 
 (b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of an Option within the
applicable time periods set forth in Section 6.6(a) is prevented by the provisions of Section 12 below, the Option shall remain exercisable until three (3) months after the date the Optionee is notified by the Company that the Option
is exercisable, but in any event no later than the Option Expiration Date. 
 (c) Extension if Optionee Subject to
Section 16(b). Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.6(a) of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b)
of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Optionee’s termination of Service, or (iii) the Option Expiration Date. 
  

 8 

	7.	STANDARD FORM OF OPTION AGREEMENT.  

 7.1 General. Unless otherwise provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and
conditions set forth in the form of Immediately Exercisable Nonstatutory Stock Option Agreement adopted by the Board concurrently with its adoption of the Plan and as amended from time to time. 
 7.2 Standard Term of Options. Except as otherwise provided by the Board in the grant of an Option, any Option granted hereunder shall have a term
of ten (10) years from the effective date of grant of the Option. 
 7.3 Authority to Vary Terms. The Board shall have the
authority from time to time to vary the terms of any standard form of Option Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new
standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement shall be in accordance with the terms of the Plan. 
  

	8.	CHANGE IN CONTROL.  

 8.1 Definitions.  
 (a)
An “ Ownership Change Event” shall be deemed to have occurred if any of the following occurs 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 fifty percent (50%) of the voting stock of the Company; 

(ii) a merger or consolidation in which the Company is a party; 
 (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or 
 (iv) a liquidation or dissolution of the Company. 
 (b) A “Change in Control” shall mean an Ownership Change Event or a series of related Ownership Change Events
(collectively, the “Transaction”) wherein 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 stock of the Company or the corporation
or corporations to which the assets of 

  

 9 

 
the Company were transferred (the “Transferee Corporation(s)”), as the case may be. For purposes of the preceding sentence, indirect
beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be,
either directly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events are related, and its determination
shall be final, binding and conclusive. 
 8.2 Effect of Change in Control on Options. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the “Acquiring Corporation”), may either assume the Company’s rights and obligations under outstanding
Options or substitute for outstanding Options substantially equivalent options for the Acquiring Corporation’s stock. For purposes of this Section 8.2, an Option shall be deemed assumed if, following the Change in Control, the Option
confers the right to purchase in accordance with its terms and conditions, for each share of Stock subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) to which a
holder of a share of Stock on the effective date of the Change in Control was entitled. Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of
the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration
received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options immediately prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a Change in Control is the surviving or
continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of the Code, the outstanding Options shall not terminate unless the Board otherwise provides in its sole discretion.

  

	9.	PROVISION OF INFORMATION.  

 Each Optionee shall be given access to information concerning the Company equivalent to that information generally made available to the Company’s
common stockholders. 
  

	10.	NONTRANSFERABILITY OF OPTIONS.  

 During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative. No
Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution. 
  

 10 

	11.	COMPLIANCE WITH SECURITIES LAW.  

 The grant of Options and the issuance of shares of Stock upon exercise of Options shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. Options may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Option may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise
of the Option be in effect with respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise
of any Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company. 
  

	12.	INDEMNIFICATION. 

 In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted
hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same. 
  

	13.	TERMINATION OR AMENDMENT OF PLAN.  

 The Board may terminate or amend the Plan at any time. However, no termination or amendment of the Plan may adversely affect any then outstanding Option
or any unexercised portion thereof, without the consent of the Optionee, unless such termination or amendment is necessary to comply with any applicable law, regulation or rule. 
  

 11

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