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  Exhibit 10.6    
    

 EPOCRATES, INC.  

 
  STOCK OPTION GRANT NOTICE
  (1999 Stock Option Plan)  
  

        EPOCRATES, INC. (the "Company"), pursuant to its 1999 Stock Option Plan (the
"Plan"), hereby grants to Optionholder an option to purchase the number of shares of the Company's Common Stock set forth below. This option is subject
to all of the terms and conditions as set forth herein and in the Stock Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their
entirety. 

 

 

					
	 
	 	 
	 	 

	Optionholder:	 	 	 	

  
	Date of Grant:	 	 	 	

  
	Vesting Commencement Date:	 	 	 	

  
	Number of Shares Subject to Option:	 	 	 	

  
	Exercise Price (Per Share):	 	$	 	

  
	Total Exercise Price:	 	$	 	

  
	Expiration Date:	 	 	 	

  

 

 

 

					
	 
	 	 
	 	 

	Type of Grant(1)	 	 	 	 
	
Exercise Schedule:	
 	
Same as Vesting Schedule.
	
Vesting Schedule:	
 	
Shares subject to the Option shall vest in accordance with the terms set forth on Schedule A.
	

Payment:	
 	
By one or a combination of the following items (described in the Stock Option Agreement):
	

 	
 	
ý	
 	
By cash or check
	 	 	ý	 	Pursuant to a Regulation T Program if the Shares are publicly traded
	 	 	ý	 	By delivery of already-owned shares if the Shares are publicly traded

	(1)
	The
first 10,576 shares subject to the option is an incentive stock option. The remaining 31,424 shares subject to the option is a nonstatutory stock
option. In the event shares subject to the option are not vested as part of the Initial Vesting (as such term is defined in Schedule A), the shares subject to the nonstatutory stock option
shall revert to and again become available for issuance under the Plan. 

 

        Additional Terms/Acknowledgements:    The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Grant
Notice, the Stock
Option Agreement and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth the entire understanding between
Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously
granted and delivered to Optionholder under the Plan, and (ii) the following agreements only: 

 

 

						
	 	 
	 	 
	 	 

	 	OTHER AGREEMENTS:	 	None

 	 	 
	
 	

 	
 	

 	
 	
 

 

 

 

							
	 
	 	 
	 	 
	 	 

	 EPOCRATES, INC.	 	 OPTIONHOLDER
	
 By:	
 	

 	
 	

 	
 	

 
	 	 	

  	 	

  
	 	 	Signature	 	Signature
	
 Title:	
 	
 	
 	
Date:	
 	
 
	 	 	

  	 	 	 	

  
	Date:	 	 	 	 	 	 
	 	 	

  	 	 	 	 

 

 Attachments:    Stock Option Agreement, 1999 Stock Option Plan and Notice of Exercise 

 
 

  SCHEDULE A
  [OPTIONHOLDER]
  PERFORMANCE-BASED STOCK OPTION GRANT NOTICE    
    

 

 

					
	Shares subject to Performance Based Option

 
	 	100% Payout 	 	120% Payout 
	 2008 Bookings
	 	[            ]	 	[            ]
	 2008 Revenue
	 	[            ]	 	[            ]
	 EBITDA
	 	[            ]	 	[            ]
	 	 	 	 	 
	 Total
	 	[            ]	 	[            ]

 

         The
Epocrates, Inc. (the "Company") 2008 bookings ("Bookings"), 2008 revenue
("Revenue") and earnings before interests, taxes, depreciation and amortization, as adjusted for certain non-cash items in accordance with
the Company's business plan and as determined by the Audit Committee of the Board ("Modified EBITDA") (together, the
"Metrics") goals are as set forth below on Table A below: 

 Table A  

 

 

																												
	 	BOOKINGS	 	REVENUE	 	EBITDA 	 
	 	% of Plan

 
	 	2008

Plan 	 	Payout % 	 	% of Plan 	 	2008

Plan 	 	Payout % 	 	% of Plan 	 	2008

Plan 	 	Payout % 	 
	 	 	92	%	 	 	 	 	0	%	 	92	%	 	 	 	 	0	%	 	50	%	 	 	 	 	0	%
	 	 	95	%	 	 	 	 	50	%	 	96	%	 	 	 	 	80	%	 	80	%	 	 	 	 	80	%
	 	 	100	%	 	 	 	 	100	%	 	100	%	 	 	 	 	100	%	 	100	%	 	 	 	 	100	%
	 	 	105	%	 	 	 	 	120	%	 	104	%	 	 	 	 	120	%	 	120	%	 	 	 	 	120	%

 

         On
the date the 2008 financial results for the Company are available and the Compensation Committee of the Board determines, in its sole discretion, the percentage of plan achieved by
the Company for each of the Metrics (the "Payout Determination Date"), the corresponding number of shares ("Milestone
Shares") in connection with each of the Metrics prorated in the event performance falls between points on Table A, and rounded to the nearest whole number, will commence
vesting. The Milestone Shares shall be subject to vesting at the rate of 1/36th of the Milestone Shares per month commencing on January 1, 2009 (the
"Vesting Commencement Date"); provided, however, that vesting will cease upon the termination of
Optionholder's Continuous Service. For the avoidance of doubt, any shares that would have vested in connection with this vesting schedule between the Vesting Commencement Date and the Payout
Determination Date will first vest on the Payout Determination Date. The balance of the shares granted by not included in the Milestone Shares shall revert to and again become available for issuance
under the 1999 Stock Option Plan. Further, no shares subject to the Option are exercisable until the Payout Determination Date. 

        For
example, in order for Optionholder to achieve vesting of the number of shares specified at the 100% Payout level in the table above, the Company must achieve 100% of plan for
Bookings, Revenue and Modified EBITDA, such that [            ], [            ] and
[            ] Milestone Shares
will commence vesting for Bookings, Revenue and Modified EBITDA, respectively, on the Payout Determination Date. The Milestone Shares shall be subject to continued vesting at the rate of
1/36th of the Milestone Shares per month commencing effective on the Vesting Commencement Date. The balance of the shares not included in the Milestone Shares shall revert to and
again become available for issuance under the 1999 Stock Option Plan. 

        In
the event, the Company achieves 92% of plan or less for either Bookings or Revenue, or 50% of plan or less for Modified EBITDA, the Optionholder will not vest any of the shares for
any of the Metrics, no shares will vest on the Payout Determination Date and all the Shares shall revert to and again become available for issuance under the 1999 Stock Option Plan. 

        Similarly,
in the event the Company achieves 105% of plan or greater for Bookings, 104% of plan or greater for Revenue and 120% of plan or greater for Modified EBITDA, the Optionholder
will commence vesting as to 120% of [            ], [            ] and
[            ] Milestone Shares for Bookings,
Revenue and Modified EBITDA, respectively, such that an aggregate of [            ] Milestone Shares will commence vesting on the Payout Determination Date. Such Milestone
Shares shall be subject to continued vesting at the rate of 1/36th of the Milestone Shares per month commencing effective on the Vesting Commencement Date. 

QuickLinks

Exhibit 10.6

STOCK OPTION GRANT NOTICE (1999 Stock Option Plan)

SCHEDULE A [OPTIONHOLDER] PERFORMANCE-BASED STOCK OPTION GRANT NOTICEQuickLinks
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  Exhibit 10.7    
    

 
  EPOCRATES, INC.
2008 EQUITY INCENTIVE PLAN

 
  ADOPTED BY THE BOARD OF DIRECTORS: MARCH 19, 2008
AMENDED BY THE COMPENSATION COMMITTEE ON BEHALF OF THE
BOARD OF DIRECTORS:
APRIL 17, 2009 (THE "EFFECTIVE DATE")
APPROVED BY THE STOCKHOLDERS: JUNE 22, 2009
TERMINATION DATE: APRIL 16, 2019    

1.    GENERAL.    

        (a)    Successor and Continuation.    The Plan is a continuation of
and successor to the Company's 1999 Stock Option Plan that was previously adopted on August 2, 1999 (as in effect immediately prior to the Effective Date, the "Original
Plan"). Following the Effective Date, no additional stock awards shall be granted under the Original Plan. Any shares remaining available for issuance pursuant to the exercise
or settlement of stock awards under the Original Plan as of the Effective Date (the "Original Plan's Available Reserve") shall become available for
issuance pursuant to Stock Awards granted hereunder. From and after the Effective Date, all outstanding stock awards granted under the Original Plan shall remain subject to the terms of the Original
Plan; provided, however, any shares subject to outstanding stock awards granted under the Original Plan that expire or terminate for any reason prior to
exercise or would otherwise return to the Original Plan's share reserve (the "Returning Shares") shall instead become available for issuance pursuant to
Awards granted hereunder. All Awards granted on or after the Effective Date of this Plan shall be subject to the terms of this Plan. 

        (b)    Eligible Stock Award Recipients.    The persons eligible to
receive Stock Awards are Employees, Directors and Consultants. 

        (c)    Available Stock Awards.    The Plan provides for the grant of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Bonus Awards, (iv) Stock Unit Awards, (v) Stock Appreciation
Rights, (vi) Performance Stock Awards, and (vii) Other Stock Awards. 

        (d)    Purpose.    The Company, by means of the Plan, seeks to secure
and retain the services of the group of persons eligible to receive Stock Awards as set forth in Section 1(b), to provide incentives for such persons to exert maximum efforts for the success of
the Company and any Affiliate and to provide a means by which such eligible recipients may be given an opportunity to benefit from increases in value of the Common Stock through the granting of Stock
Awards. 

2.    DEFINITIONS.    

        As
used in the Plan, the following definitions shall apply to the capitalized terms indicated below: 

        (a)   "Affiliate" means (i) any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, provided each corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain, and (ii) any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. The Board shall have the authority to determine (i) the time or
times at which the foregoing ownership tests are applied, and (ii) whether "Affiliate" includes entities other than corporations within the foregoing definition. 

1

 

        (b)   "Annual Meeting" means, following the IPO Date, the first meeting of the
Company's stockholders held each calendar year at which Directors of the Company are selected. 

        (c)   "Board" means the Board of Directors of the Company. 

        (d)   "Capitalization Adjustment" means any change that is made in, or other
events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other similar transaction). Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as a Capitalization
Adjustment. 

        (e)   "Cause" means, with respect to a Participant, the occurrence of any of
the following events: (i) such Participant's commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof;
(ii) such Participant's attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) such Participant's intentional, material violation of any
material contract or agreement between the Participant and the Company or of any statutory duty owed to the Company; (iv) such Participant's unauthorized use or disclosure of the Company's
confidential information or trade secrets; or (v) such Participant's gross misconduct. The determination that a termination is for Cause shall be made by the Company in its sole discretion. Any
determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Stock Awards held by such Participant shall have no
effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose. 

        (f)    "Change in Control" means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events: 

          (i)  any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person from the
Company in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (B) solely
because the level of Ownership held by any Exchange Act Person (the "Subject Person") exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated
percentage threshold, then a Change in Control shall be deemed to occur; 

         (ii)  there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and,
immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either
(A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar
transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or 

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similar
transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; 

       (iii)  the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company shall otherwise occur, except for a liquidation into a parent corporation; 

        (iv)  there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions
as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or 

         (v)  individuals who, on the date the Plan is adopted by the Board, are members of the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the members of the Board; provided,
however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of the Plan, be considered as a member of the Incumbent Board. 

        The
term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company. 

        Notwithstanding
the foregoing or any other provision of the Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or
any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however,
that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply. 

        (g)   "Code" means the Internal Revenue Code of 1986, as amended. 

        (h)   "Committee" means a committee of one (1) or more members of the Board to whom authority
has been delegated by the Board in accordance with Section 3(c). 

        (i)    "Common Stock" means the common stock of the Company. 

        (j)    "Company" means Epocrates, Inc., a Delaware corporation. 

        (k)   "Consultant" means any person, including an advisor, who is (i) engaged by the Company or
an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such
services. However, service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a "Consultant" for purposes of the Plan. 

        (l)    "Continuous Service" means that the Participant's service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's service with the Company or
an Affiliate, shall not terminate a Participant's Continuous Service; provided, however, if the Entity for which a Participant is rendering services
ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant's Continuous Service shall be considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. For example, a change in status from an employee of the Company to a consultant of an Affiliate or to a Director shall not constitute an interruption of 

3

 

Continuous
Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence
shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company's leave of absence policy or in the written terms of the
Participant's leave of absence. 

        (m)  "Corporate Transaction" means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events: 

          (i)  the consummation of a sale or other disposition of all or substantially all, as determined by the Board in its sole
discretion, of the consolidated assets of the Company and its Subsidiaries; 

         (ii)  the consummation of a sale or other disposition of at least ninety percent
(90%) of the outstanding securities of the Company; 

       (iii)  the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving
corporation; or 

        (iv)  the consummation of a merger, consolidation or similar transaction following which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of securities, cash or otherwise. 

        (n)   "Covered Employee" means the Company's principal executive officer and the three (3) other
highest compensated officers of the Company, excluding the Company's principal financial officer, for whom total compensation is required to be reported to stockholders under the Exchange Act, as
determined for purposes of Section 162(m) of the Code. 

        (o)   "Director" means a member of the Board. 

        (p)   "Disability" means, with respect to a Participant, the inability of such Participant to engage in
any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of
not less than 12 months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code. 

        (q)   "Effective Date" means the effective date of the Plan as set forth in Section 13. 

        (r)   "Employee" means any person employed by the Company or an Affiliate. However, service solely as a
Director, or payment of a fee for such services, shall not cause a Director to be considered an "Employee" for purposes of the Plan. 

        (s)   "Entity" means a corporation, partnership, limited liability company or other entity. 

        (t)    "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (u)   "Exchange Act Person" means any natural person, Entity or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that "Exchange Act Person" shall not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan
of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same
proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the
Effective Date, is the Owner, directly or indirectly, of 

4

 

securities
of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities. 

        (v)   "Fair Market Value" means, as of any date, the value of the Common Stock determined as follows: 

          (i)  If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market
Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the date in question, as reported in The Wall Street Journal or such other source as the Board
deems reliable. Unless otherwise provided by the Board, if there is no closing sales price (or closing bid if no sales were reported) for the Common Stock on the date in question, then the Fair Market
Value shall be the closing sales price (or closing bid if no sales were reported) on the last preceding date for which such quotation exists. 

         (ii)  In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good
faith and in a manner that complies with Sections 409A and, as applicable, 422 of the Code. 

        (w)  "Incentive Stock Option" means an Option that qualifies as an "incentive stock option" within the
meaning of Section 422 of the Code and the regulations promulgated thereunder. 

        (x)   "IPO Date" means the date of the underwriting agreement between the Company and the
underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering. 

        (y)   "Non-Employee Director" means a Director who either (i) is not a current
employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other transaction for which disclosure would be required
under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. 

        (z)   "Nonstatutory Stock Option" means an Option that does not qualify as an Incentive Stock Option. 

        (aa) "Officer" means any person designated by the Company as an officer. 

        (bb) "Option" means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of
Common Stock granted pursuant to the Plan. 

        (cc) "Option Agreement" means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. 

        (dd) "Optionholder" means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option. 

        (ee) "Original Plan" means the Company's 1999 Stock Option Plan in effect immediately prior to the
Effective Date. 

        (ff)  "Other Stock Award" means an award based in whole or in part by reference to the Common Stock
which is granted pursuant to the terms and conditions of Section 7(e). 

5

 

        (gg) "Other Stock Award Agreement" means a written agreement between the Company and a holder of an
Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award Agreement shall be subject to the terms and conditions of the Plan. 

        (hh) "Outside Director" means a Director who either (i) is not a current employee of the
Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated
corporation" who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an
"affiliated corporation," and does not receive remuneration from the Company or an "affiliated corporation," either directly or indirectly, in any capacity other than as a Director, or (ii) is
otherwise considered an "outside director" for purposes of Section 162(m) of the Code. 

        (ii)   "Own," "Owned,"
"Owner," "Ownership" A person or Entity shall be deemed to "Own," to have "Owned," to be the "Owner" of,
or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power,
which includes the power to vote or to direct the voting, with respect to such securities. 

        (jj)  "Participant" means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award. 

        (kk) "Performance Criteria" means the one or more criteria that the Board shall select for purposes
of establishing the Performance Goals for a Performance Period. The Performance Criteria that shall be used to establish such Performance Goals may be based on any one of, or combination of, the
following: (i) earnings per share; (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization (EBITDA);
(iv) net earnings; (v) return on equity; (vi) return on assets, investment, or capital employed; (vii) operating margin; (viii) gross margin; (ix) operating
income; (x) net income (before or after taxes); (xi) net operating income; (xii) net operating income after tax; (xiii) pre- and after-tax income;
(xiv) pre-tax profit; (xv) operating cash flow; (xvi) sales or revenue; (xvii) increases in revenue or product revenue; (xvii) expenses and cost
reductions; (xix) improvement in or attainment of expense levels; (xx) improvement in or attainment of working capital levels; (xxi) economic value added; (xxii) market
share; (xxiii) cash flow; (xxiv) cash flow per share; (xxv) share price performance; (xxvi) debt reduction; (xxvii) implementation or completion of projects or
processes; (xxviii) customer satisfaction; (xxix) total stockholder return; (xxx) stockholders' equity; and (xxxi) other measures of performance selected by the Board.
Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement. The Board shall, in its sole
discretion, define the manner of calculating the Performance Criteria it selects to use for such Performance Period. 

        (ll)   "Performance Goals" means, for a Performance Period, the one or more goals established by the
Board for the Performance Period based upon the satisfaction of the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business
units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices.
At the time of the grant of any Stock Award, the Board is authorized to determine whether, when calculating the attainment of Performance Goals for a Performance Period: (i) to exclude
restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated net sales and operating earnings;
(iii) to exclude the effects of changes to generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) to exclude the effects of any statutory
adjustments to corporate tax rates; and (v) to exclude the effects of any "extraordinary items" as determined under generally accepted accounting principles. In addition, the 

6

 

Board
retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals. 

        (mm)  "Performance Period" means the one or more periods of time, which may be of varying and
overlapping duration, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant's right to and the payment
of a Performance Stock Award. 

        (nn) "Performance Stock Award" means a Stock Award granted pursuant to the terms and conditions of
Section 7(d). 

        (oo) "Plan" means this Epocrates, Inc. 2008 Equity Incentive Plan. 

        (pp) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect from time to time. 

        (qq) "Rule 405" means Rule 405 promulgated under the Securities Act. 

        (rr)  "Rule 701" means Rule 701 promulgated under the Securities Act. 

        (ss) "Securities Act" means the Securities Act of 1933, as amended. 

        (tt)  "Stock Appreciation Right" means a right to receive the appreciation on Common Stock that is
granted pursuant to the terms and conditions of Section 7(c). 

        (uu) "Stock Appreciation Right Agreement" means a written agreement between the Company and a holder
of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions of the Plan. 

       (vv)  "Stock Award" means any right granted under the Plan, including an Option, a Stock Bonus Award,
a Stock Unit Award, a Stock Appreciation Right, a Performance Stock Award, or any Other Stock Award. 

        (ww)  "Stock Award Agreement" means a written agreement between the Company and a Participant
evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 

       (xx)  "Stock Bonus Award" means an award of shares of Common Stock which is granted pursuant to the
terms and conditions of Section 7(a). 

        (yy) "Stock Bonus Award Agreement" means a written agreement between the Company and a holder of a
Stock Bonus Award evidencing the terms and conditions of a Stock Bonus Award grant. Each Stock Bonus Award Agreement shall be subject to the terms and conditions of the Plan. 

        (zz) "Stock Unit Award" means a right to receive shares of Common Stock which is granted pursuant to
the terms and conditions of Section 7(b). 

        (aaa)  "Stock Unit Award Agreement" means a written agreement between the Company and a holder of a
Stock Unit Award evidencing the terms and conditions of a Stock Unit Award grant. Each Stock Unit Award Agreement shall be subject to the terms and conditions of the Plan. 

7

 

  
        (bbb)  "Subsidiary" means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any
other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and
(ii) any partnership, limited liability company, or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%). 

        (ccc)  "Ten Percent Stockholder" means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate. 

3.    ADMINISTRATION.    

        (a)    Administration by Board.    The Board shall administer the Plan
unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 3(c). 

        (b)    Powers of Board.    The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan: 

          (i)  To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective. 

         (ii)  To determine from time to time (1) which of the persons eligible under the Plan shall be granted Stock Awards;
(2) when and how each Stock Award shall be granted; (3) what type or combination of types of Stock Award shall be granted; (4) the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be permitted to receive cash or Common Stock pursuant to a Stock Award; (5) the number of shares of Common Stock with
respect to which a Stock Award shall be granted to each such person; and (6) the Fair Market Value applicable to a Stock Award. 

       (iii)  To settle all controversies regarding the Plan and Stock Awards granted under it. 

        (iv)  To accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part
thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest. 

         (v)  To effect, at any time and from time to time, with the consent of any adversely affected Participant, (1) the
reduction of the exercise price of any outstanding Option or the strike price of any outstanding Stock Appreciation Right under the Plan; (2) the cancellation of any outstanding Option or Stock
Appreciation Right under the Plan and the grant in substitution therefor of (a) a new Option or Stock Appreciation Right under the Plan or another equity plan of the Company covering the same
or a different number of shares of Common Stock, (b) a Stock Bonus Award, (c) a Stock Unit Award, (e) an Other Stock Award, (e) cash, and/or (f) other valuable
consideration (as determined by the Board, in its sole discretion); or (3) any other action that is treated as a repricing under generally accepted accounting principles. 

        (vi)  To amend the Plan or a Stock Award as provided in Section 11. 

       (vii)  To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to
Incentive Stock Options and certain nonqualified deferred 

8

 

compensation
under Section 409A of the Code and/or to bring the Plan or Stock Awards granted under the Plan into compliance therewith, subject to the limitations, if any, of applicable law.
However, except as provided in Section 10(a) relating to Capitalization Adjustments, stockholder approval shall be required for any amendment of the Plan that either (1) materially
increases the number of shares of Common Stock available for issuance under the Plan, (2) materially expands the class of individuals eligible to receive Stock Awards under the Plan,
(3) materially increases the benefits accruing to Participants under the Plan or materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan,
(4) materially extends the term of the Plan, or (5) expands the types of Stock Awards available for issuance under the Plan, but in each of (1) through (5) only to the
extent
required by applicable law or listing requirements. Except as provided above, rights under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. 

      (viii)  To terminate or suspend the Plan as provided in Section 12. Suspension or termination of the Plan shall not
impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant. 

        (ix)  To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of (i) Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to Covered Employees, (ii) Section 422 of the Code regarding Incentive Stock Options, or (iii) Rule 16b-3. 

         (x)  To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards,
including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to
Board discretion; provided however, that except with respect to amendments that disqualify or impair the status of an Incentive Stock Option, a
Participant's rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant
consents in writing. Notwithstanding the foregoing, subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Stock Awards without the affected
Participant's consent if necessary to maintain the qualified status of the Stock Award as an Incentive Stock Option or to bring the Stock Award into compliance with Section 409A of the Code and
the related guidance thereunder. 

        (xi)  Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the
best interests of the Company which are not in conflict with the provisions of the Plan. 

       (xii)  To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan
by individuals who are foreign nationals or employed outside the United States. 

        (c)    Delegation to Committee.    

        (i)    General.    The Board may delegate some or all of the
administration of the Plan to a Committee or Committees. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is
authorized to exercise (and references in the Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of
the 

9

 

Plan,
as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all
of the powers previously delegated. 

        (ii)    Section 162(m) and Rule 16b-3
Compliance.    In the sole discretion of the Board, the Committee may consist solely of two (2) or more Outside Directors, in accordance with
Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. In addition, the Board or the Committee, in its
sole discretion, may (1) delegate to a Committee who need not be Outside Directors the authority to grant Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of income resulting from such Stock Award, or (b) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code, and/or (2) delegate to a Committee who need not be Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then
subject to Section 16 of the Exchange Act. 

        (d)    Delegation to Officers.    The Board may delegate to one or
more Officers of the Company the authority to do one or both of the following (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Options (and, to
the extent permitted by Delaware law, other Stock Awards) and the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such
Officers and Employees; provided, however, that the Board resolutions regarding such delegation shall specify the total number of shares of Common Stock
that may be subject to the Stock Awards granted by such Officers and that such Officers may not grant a Stock Award to themselves. Notwithstanding anything to the contrary in this Section 3(d),
the Board may not delegate to an Officer authority to determine the Fair Market Value of the Common Stock pursuant to Section 2(v)(ii) above. 

        (e)    Effect of Board's Decision.    All determinations,
interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons. 

4.    SHARES SUBJECT TO THE PLAN.    

        (a)    Share Reserve.    Subject to the provisions of
Section 10(a) relating to Capitalization Adjustments, the number of shares of Common Stock that may be issued pursuant to Stock Awards from and after the Effective Date shall not exceed, in the
aggregate Eight Million Three Hundred Ninety-One Thousand Two Hundred Ninety (8,391,290) shares of Common Stock, which number includes (i) the number of shares subject to the
Original Plan's Available Reserve plus (ii) an additional number of shares in an amount not to exceed Six Million Four Hundred Twenty-Nine
Thousand Four Hundred Thirty (6,429,430) shares (which number consists of the Returning Shares, if any, as such shares become available from time to time). Shares may be issued in connection with a
merger or acquisition as permitted by NYSE Listed Company Manual Section 303A.08 or, if applicable, NASD Rule 4350(i)(1)(A)(iii), and such issuance shall not reduce the number of shares
available for issuance under the Plan. 

        (b)    Reversion of Shares to the Share Reserve.    If any
(i) Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, (ii) shares of Common Stock issued to a Participant
pursuant to a Stock Award are forfeited to or repurchased by the Company pursuant to the Company's reacquisition or repurchase rights under the Plan, including any forfeiture or repurchase caused by
the failure to meet a contingency or condition required for the vesting of such shares, (iii) Stock Award is settled in cash, or (iv) shares of Common Stock are cancelled in accordance
with the cancellation and regrant provisions of Section 3(b)(v), then the shares of Common Stock not issued under such Stock Award, or forfeited to or repurchased by the Company, shall revert
to and again become available for issuance under the Plan. If any shares subject to a Stock 

10

 

Award
are not delivered to a Participant because such shares are withheld for the payment of taxes or the Stock Award is exercised through a reduction of shares subject to the Stock Award
(i.e., "net exercised") or an appreciation distribution in respect of a Stock Appreciation Right is paid in shares of Common Stock, the number of shares
subject to the Stock Award that are not delivered to the Participant shall remain available for subsequent issuance under the Plan. If the exercise price of any Stock Award is satisfied by tendering
shares of Common Stock held by the Participant (either by actual delivery or attestation), then the number of shares so tendered shall remain available for subsequent issuance under the Plan. 

        (c)    Incentive Stock Option Limit.    Notwithstanding anything to
the contrary in Section 4(b), subject to the provisions of Section 10(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued
pursuant to the exercise of Incentive Stock Options shall be Eight Million Three Hundred Ninety-One Thousand Two Hundred Ninety (8,391,290) shares of Common Stock. 

        (d)    Source of Shares.    The stock issuable under the Plan shall be
shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market. 

5.    ELIGIBILITY.    

        (a)    Eligibility for Specific Stock Awards.    Incentive Stock
Options may be granted only to employees of the Company or a "parent corporation" or "subsidiary corporation" thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code).
Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, Nonstatutory Stock Options
and Stock Appreciation Rights may not be granted to Employees, Directors, and Consultants who are providing Continuous Service to any "parent" of the Company, as such term is defined in
Rule 405, unless such Stock Awards comply with the distribution requirements of Section 409A of the Code. 

        (b)    Ten Percent Stockholders.    A Ten Percent Stockholder shall
not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the
Option is not exercisable after the expiration of five (5) years from the date of grant. 

        (c)    Section 162(m) Limitation.    Subject to the provisions
of Section 10(a) relating to Capitalization Adjustments, following the IPO Date, no Employee shall be eligible to be granted during any calendar year Options or Stock Appreciation Rights
covering more than one million five hundred thousand (1,500,000) shares of Common Stock. 

        (d)    Consultants.    A Consultant shall not be eligible for the
grant of a Stock Award if, at the time of grant, either the offer or the sale of the Company's securities to such Consultant is not exempt under Rule 701 because of the nature of the services
that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other provision of Rule 701, unless the Company determines that such grant
need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions. 

6.    OPTION PROVISIONS.    

        Each
Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased on exercise of each type
of Option. The provisions of separate Options need not be identical; provided, however, that each Option Agreement 

11

 

shall
include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions: 

        (a)    Term.    No Option shall be exercisable after the expiration of
ten (10) years from the date of grant, or such shorter period specified in the Option Agreement; provided, however, that an Incentive Stock
Option granted to a Ten Percent Stockholder shall be subject to the provisions of Section 5(b). 

        (b)    Exercise Price.    Subject to the provisions of
Section 5(b) regarding Ten Percent Stockholders, the exercise price of each Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than one hundred percent (100%) of the Fair Market Value of the Common
Stock subject to the Option if such Option is granted pursuant to an assumption or substitution for another option in a manner consistent with the provisions of Sections 409A and 424(a) of the
Code (whether or not such options are Incentive Stock Options). 

        (c)    Consideration.    The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set
forth below. The Board shall have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant
Options that require the consent of the Company to utilize a particular method of payment. The methods of payment permitted by this Section 6(c) are: 

          (i)  by cash, check, bank draft or money order payable to the Company; 

         (ii)  pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales
proceeds; provided, however, that such program is not in violation of the prohibition on the extension of credit to the Company's executive officers and
Directors under Section 402 of the Sarbanes-Oxley Act of 2002, in the opinion of counsel acceptable to the Company; 

       (iii)  by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock; 

        (iv)  if the Option is a Nonstatutory Stock Option, by a "net exercise" arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price;  provided, however, the
Company shall accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate
exercise price not satisfied by such reduction in the number of whole shares to be issued; provided, however, shares of Common Stock will no longer be
subject to an Option and will not be exercisable thereafter to the extent that (i) shares issuable upon exercise are reduced to pay the exercise price pursuant to the "net exercise,"
(ii) shares are delivered to the Participant as a result of such exercise, and (iii) shares are withheld to satisfy tax withholding obligations; or 

         (v)  in any other form of legal consideration that may be acceptable to the Board in its sole discretion and permissible under
applicable law. 

12

 

        (d)    Transferability of Options.    The Board may, in its sole
discretion, impose such limitations on the transferability of Options as the Board shall determine. In the absence of such a determination by the Board to the contrary, the following restrictions on
the transferability of Options shall apply: 

        (i)    Restrictions on Transfer.    An Option shall not be
transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder; provided,
however, that the Board may, in its sole discretion, permit transfer of the Option in a manner that is not prohibited by applicable tax and securities laws upon the
Optionholder's request. 

        (ii)    Domestic Relations Orders.    Notwithstanding the foregoing,
an Option may be transferred pursuant to a domestic relations order, provided, however, that an Incentive Stock Option may be deemed to be a
Nonstatutory Stock Option as a result of such transfer. 

        (iii)    Beneficiary Designation.    Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company and any broker designated by the Company to effect Option exercises,
designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. In the absence of such a
designation, the executor or administrator of the Optionholder's estate shall be entitled to exercise the Option. 

        (e)    Vesting of Options Generally.    The total number of shares of
Common Stock subject to an Option may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option may be subject to such other terms and conditions on the
time or times when it may or may not be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this Section 6(e) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised. 

        (f)    Termination of Continuous Service.    In the event that an
Optionholder's Continuous Service terminates (other than for Cause or upon the Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination of Continuous Service) but only within such period of time ending on the earlier of (i) the date three (3) months
following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than thirty (30) days
unless such termination is for Cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder does
not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

        (g)    Extension of Termination Date.    Except as otherwise provided
in the applicable Option Agreement or other agreement between the Participant and the Company, in the event that exercise of an Option following the termination of the Optionholder's Continuous
Service would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option shall terminate on
the earlier of (i) the expiration of a period of three (3) months after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in
violation of such registration requirements, or (ii) the expiration of the term of the Option as set forth in the Option Agreement. 

        (h)    Disability of Optionholder.    In the event that an
Optionholder's Continuous Service terminates as a result of the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise
such Option as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination
of Continuous Service (or such longer or shorter period 

13

 

specified
in the Option Agreement, which period shall not be less than six (6) months), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after
termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

        (i)    Death of Optionholder.    In the event that (i) an
Optionholder's Continuous Service terminates as a result of the Optionholder's death, or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the
termination of the Optionholder's Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date
of death) by the Optionholder's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's
death, but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option
Agreement, which period shall not be less than six (6) months), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, after the Optionholder's
death, the Option is not exercised within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

        (j)    Termination for Cause.    In the event that an Optionholder's
Continuous Service is terminated for Cause, the Option shall terminate immediately and cease to remain outstanding. 

        (k)    Non-Exempt Employees.    No Option or Stock
Appreciation Right granted to an Employee that is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for any shares of
Common Stock until at least six months following the date of grant of the Option or Stock Appreciation Right. Notwithstanding the foregoing, consistent with the provisions of the Worker Economic
Opportunity Act, in the event of the Participant's death or Disability, upon a Corporate Transaction or a Change in Control in which the vesting of such Options or Stock Appreciation Rights
accelerates, or upon the Participant's retirement (as such term may be defined in the Participant's Option Agreement or Stock Appreciation Right Agreement or in another applicable agreement) any such
vested Options and Stock Appreciation Rights may be exercised earlier than six months following grant. The foregoing provision is intended to operate so that any income derived by a
non-exempt employee in connection with the exercise or vesting of an Option or Stock Appreciation Right will be exempt from his or her regular rate of pay. 

        (l)    Early Exercise of Options.    An Option may, but need not,
include a provision whereby the Optionholder may elect at any time before the Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock
subject to the Option prior to the full vesting of the Option. Subject to the "Repurchase Limitation" in Section 9(l), any unvested shares of Common Stock so purchased may be subject to a
repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the "Repurchase Limitation" in Section 9(l) is not violated, the
Company shall not be required to exercise its repurchase right until at least six (6) months (or such longer or shorter period of time required to avoid classification of the Option as a
liability for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option Agreement. 

        (m)    Right of Repurchase.    Subject to the "Repurchase Limitation"
in Section 9(l), an Option or Stock Appreciation Right may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the
Participant pursuant to the exercise of the Option or Stock Appreciation Right. 

        (n)    Right of First Refusal.    The Option or Stock Appreciation
Right may include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part of the
shares of Common Stock received upon the exercise of the Option or Stock Appreciation Right. Such right of first refusal shall be subject to the 

14

 

"Repurchase
Limitation" in Section 9(l). Except as expressly provided in this paragraph or in the Option Agreement or Stock Appreciation Right Agreement, such right of first refusal shall
otherwise comply with any applicable provisions of the Bylaws of the Company. 

7.    PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.    

        (a)    Stock Bonus Awards.    Each Stock Bonus Award Agreement shall
be in such form and shall contain such terms and conditions as the Board shall deem appropriate. To the extent consistent with the Company's Bylaws, at the Board's election, shares of Common Stock may
be (i) held in book entry form subject to the Company's instructions until any restrictions relating to the Stock Bonus Award lapse; or (ii) evidenced by a certificate, which certificate
shall be held in such form and manner as determined by the Board. The terms and conditions of Stock Bonus Award Agreements may change from time to time, and the terms and conditions of separate Stock
Bonus Award Agreements need not be identical; provided, however, that each Stock Bonus Award Agreement shall include (through incorporation of the
provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions: 

        (i)    Consideration.    A Stock Bonus Award may be awarded in
consideration for (i) past or future services actually or to be rendered to the Company or an Affiliate, (ii) cash or cash equivalents, or (iii) any other form of legal
consideration that may be acceptable to the Board in its sole discretion and permissible under applicable law. 

        (ii)    Vesting.    Subject to the "Repurchase Limitation" in
Section 9(l), shares of Common Stock awarded under a Stock Bonus Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board. 

        (iii)    Termination of Participant's Continuous Service.    In the
event a Participant's Continuous Service terminates, the Company may receive via a forfeiture condition or repurchase right, any or all of the shares of Common Stock held by the Participant which have
not vested as of the date of termination of Continuous Service under the terms of the Stock Bonus Award Agreement. 

        (iv)    Transferability.    Rights to acquire shares of Common Stock
under the Stock Bonus Award Agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the Stock Bonus Award Agreement, as the Board shall determine in
its sole discretion, so long as Common Stock awarded under the Stock Bonus Award Agreement remains subject to the terms of the Stock Bonus Award Agreement. 

        (b)    Stock Unit Awards.    Each Stock Unit Award Agreement shall be
in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of Stock Unit Award Agreements may change from time to time, and the terms and
conditions of separate Stock Unit Award Agreements need not be identical; provided, however, that each Stock Unit Award Agreement shall include (through
incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions: 

        (i)    Consideration.    At the time of grant of a Stock Unit Award,
the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Stock Unit Award. The consideration to be paid (if any) by
the Participant for each share of Common Stock subject to a Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board in its sole discretion and permissible
under applicable law. 

        (ii)    Vesting.    At the time of the grant of a Stock Unit Award,
the Board may impose such restrictions or conditions to the vesting of the Stock Unit Award as it, in its sole discretion, deems appropriate. 

15

 

        (iii)    Payment.    A Stock Unit Award may be settled by the delivery
of shares of Common Stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Stock Unit Award Agreement. 

        (iv)    Additional Restrictions.    At the time of the grant of a
Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Stock
Unit Award after the vesting of such Stock Unit Award. 

        (v)    Dividend Equivalents.    Dividend equivalents may be credited
in respect of shares of Common Stock covered by a Stock Unit Award, as determined by the Board and contained in the Stock Unit Award Agreement. At the sole discretion of the Board, such dividend
equivalents may be converted into additional shares of Common Stock covered by the Stock Unit Award in such manner as determined by
the Board. Any additional shares covered by the Stock Unit Award credited by reason of such dividend equivalents will be subject to all the terms and conditions of the underlying Stock Unit Award
Agreement to which they relate. 

        (vi)    Termination of Participant's Continuous Service.    Except as
otherwise provided in the applicable Stock Unit Award Agreement, such portion of the Stock Unit Award that has not vested will be forfeited upon the Participant's termination of Continuous Service. 

        (vii)    Compliance with Section 409A of the
Code.    Notwithstanding anything to the contrary set forth herein, any Stock Unit Award granted under the Plan that is not exempt from the requirements of
Section 409A of the Code shall incorporate terms and conditions necessary to avoid the consequences of Section 409A(a)(1) of the Code. Such restrictions, if any, shall be determined by
the Board and contained in the Stock Unit Award Agreement evidencing such Stock Unit Award. 

        (c)    Stock Appreciation Rights.    Each Stock Appreciation Right
Agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. Stock Appreciation Rights may be granted as stand-alone Stock Awards or in tandem with
other Stock Awards. The terms and conditions of Stock Appreciation Right Agreements may change from time to time, and the terms and conditions of separate Stock Appreciation Right Agreements need not
be identical; provided, however, that each Stock Appreciation Right Agreement shall include (through incorporation of the provisions hereof by reference
in the agreement or otherwise) the substance of each of the following provisions as well as the provisions set forth in Section 6(l) and (n) above: 

        (i)    Term.    No Stock Appreciation Right shall be exercisable after
the expiration of ten (10) years from the date of grant, or such shorter period specified in the Stock Appreciation Right Agreement. 

        (ii)    Strike Price.    Each Stock Appreciation Right will be
denominated in shares of Common Stock equivalents. The strike price of each Stock Appreciation Right granted as a stand-alone or tandem Stock Award shall not be less than one hundred percent (100%) of
the Fair Market Value of the Common Stock equivalents subject to the Stock Appreciation Right on the date of grant. 

        (iii)    Calculation of Appreciation.    The appreciation distribution
payable on the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of (i) the aggregate Fair Market Value (on the date of the exercise of the Stock
Appreciation Right) of a number of shares of Common Stock equal to the number of share of Common Stock equivalents in which the Participant is vested under such Stock Appreciation Right, and with
respect to which the Participant is exercising the Stock Appreciation Right on such date, over (ii) an amount (the strike price) that is determined by the Board on the date of grant of the
Stock Appreciation Right. 

16

 

 

        (iv)    Vesting.    At the time of the grant of a Stock Appreciation
Right, the Board may impose such restrictions or conditions to the vesting of such Stock Appreciation Right as it, in its sole discretion, deems appropriate. 

        (v)    Exercise.    To exercise any outstanding Stock Appreciation
Right, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. 

        (vi)    Payment.    The appreciation distribution in respect to a
Stock Appreciation Right may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Stock Appreciation
Right Agreement evidencing such Stock Appreciation Right. 

        (vii)    Termination of Continuous Service.    Except as otherwise
provided in the applicable Stock Award Agreement or other agreement between the Participant and the Company, the event that a Participant's Continuous Service terminates, the Participant may exercise
his or her Stock Appreciation Right (to the extent that the Participant was entitled to exercise such Stock Appreciation Right as of the date of termination of Continuous Service) but only within such
period of time ending on the earlier of (i) the date three (3) months following the termination of the Participant's Continuous Service (or such longer or shorter period specified in the
Stock Appreciation Right Agreement, which period shall not be less than thirty (30) days unless the termination is for Cause), or (ii) the expiration of the term of the Stock
Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Stock Appreciation Right within the
time specified herein or in the Stock Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall terminate. 

        (viii)    Compliance with Section 409A of the
Code.    Notwithstanding anything to the contrary set forth herein, any Stock Appreciation Rights granted under the Plan that are not exempt from the
requirements of Section 409A of the Code shall incorporate terms and conditions necessary to avoid the consequences described in Section 409A(a)(1) of the Code. Such restrictions, if
any, shall be determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. 

        (d)    Performance Stock Awards.    A Performance Stock Award is
either a Stock Bonus Award or Stock Unit Award that may be granted or may vest based upon the attainment during a Performance Period of certain Performance Goals. A Performance Stock Award may, but
need not, require the completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure
of whether and to what degree such Performance Goals have been attained shall be conclusively determined by the Committee in its sole discretion. Following the IPO Date, the maximum benefit to be
received by any Participant in a calendar year attributable to Performance Stock Awards described in this Section 7(d) shall not exceed the value of one million five hundred thousand
(1,500,000) shares of Common Stock. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance
Stock Awards. 

        (e)    Other Stock Awards.    Other forms of Stock Awards valued in
whole or in part by reference to, or otherwise based on, Common Stock may be granted either alone or in addition to Stock Awards provided for under Section 6 and the preceding provisions of
this Section 7. Subject to the provisions of the Plan, the Board shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock Awards
will be granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock Awards. 

17

 

8.    COVENANTS OF THE COMPANY.    

        (a)    Availability of Shares.    During the terms of the Stock
Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Stock Awards. 

        (b)    Securities Law Compliance.    The Company shall seek to obtain
from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the
Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or
any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that
counsel for the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained. A
Participant shall not be eligible for the grant of a Stock Award or the subsequent issuance of Common Stock pursuant to the Stock Award if such grant or issuance would be in violation of any
applicable securities laws. 

        (c)    No Obligation to Notify.    The Company shall have no duty or
obligation to any holder of a Stock Award to advise such holder as to the time or manner of exercising such Stock Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise
advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised. The Company has no duty or obligation to minimize the tax
consequences of a Stock Award to the holder of such Stock Award. 

9.    MISCELLANEOUS.    

        (a)    Use of Proceeds.    Proceeds from the sale of shares of Common
Stock pursuant to Stock Awards shall constitute general funds of the Company. 

        (b)    Corporate Action Constituting Grant of Stock
Awards.    Corporate action constituting a grant by the Company of a Stock Award to any Participant shall be deemed completed as of the date of such corporate action,
unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant. 

        (c)    Stockholder Rights.    No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until (i) such Participant has satisfied all requirements
for exercise of the Stock Award pursuant to its terms, and (ii) the issuance of the Common Stock pursuant to such exercise has been entered into the books and records of the Company. 

        (d)    No Employment or Other Service Rights.    Nothing in the Plan,
any Stock Award Agreement or other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee
with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant's agreement with the Company or an Affiliate, or (iii) the
service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as
the case may be. 

        (e)    Incentive Stock Option $100,000 Limitation.    To the extent
that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any
calendar year (under all plans 

18

 

of
the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s). 

        (f)    Investment Assurances.    The Company may require a
Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and
experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant's own account and not with any present intention of selling or
otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of
counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not
limited to, legends restricting the transfer of the Common Stock. 

        (g)    Withholding Obligations.    Unless prohibited by the terms of a
Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means (in addition to
the Company's right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment;
(ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided,
however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary
to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from a Stock Award settled in cash; (iv) withholding payment from any
amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Stock Award Agreement. 

        (h)    Electronic Delivery.    Any reference herein to a "written"
agreement or document shall include any agreement or document delivered electronically or posted on the Company's intranet. 

        (i)    Deferrals.    To the extent permitted by applicable law, the
Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred
and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with
Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee. The Board is authorized to make deferrals of Stock Awards and determine when, and in
what annual percentages, Participants may receive payments, including lump sum payments, following the Participant's termination of employment or retirement, and implement such other terms and
conditions consistent with the provisions of the Plan and in accordance with applicable law. 

        (j)    Compliance with Section 409A.    To the extent that the
Board determines that any Stock Award granted under the Plan is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award shall incorporate the terms and
conditions necessary to avoid the consequences described in Section 409A(a)(1) of the Code. To the extent applicable, the Plan and 

19

 

Stock
Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued or amended after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following
the Effective Date the Board determines that any Stock Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury
guidance as may be issued after the Effective Date), the Board may adopt such amendments to the Plan and the applicable Stock Award Agreement or adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessary or appropriate to (1) exempt the Stock Award from
Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Stock Award, or (2) comply with the requirements of Section 409A
of the Code and related Department of Treasury guidance. 

        (k)    Compliance with Exemption Provided by
Rule 12h-1(f).    If: (i) the aggregate of the number of Optionholders and the number of holders of all other outstanding compensatory
employee stock options to purchase shares of Common Stock equals or exceeds five hundred (500), and (ii) the assets of the Company at the end of the Company's most recently completed fiscal
year exceed $10 million, then the following restrictions shall apply during any period during which the Company does not have a class of its securities registered under Section 12 of the
Exchange Act and is not required to file reports under Section 15(d) of the Exchange Act: (A) the Options and, prior to exercise, the shares of Common Stock acquired upon exercise of the
Options may not be transferred until the Company is no longer relying on the exemption provided by Rule 12h-1(f) promulgated under the Exchange Act
("Rule 12h-1(f)"), except: (1) as permitted by Rule 701(c) promulgated under the Securities Act, (2) to a
guardian upon the disability of the Optionholder, or (3) to an executor upon the death of the Optionholder (collectively, the "Permitted
Transferees"); provided, however, the following transfers are permitted: (i) transfers by the Optionholder to the
Company, and (ii) transfers in connection with a change of control or other acquisition involving the Company, if following such transaction, the Options no longer remain outstanding and the
Company is no longer relying on the exemption provided by Rule 12h-1(f); provided further, that any
Permitted Transferees may not further transfer the Options; (B) except as otherwise provided in (A) above, the Options and shares of Common Stock acquired upon exercise of the Options
are restricted as to any pledge, hypothecation, or other transfer, including any short position, any "put equivalent position" as defined by Rule 16a-1(h) promulgated under the
Exchange Act, or any "call equivalent position" as defined by Rule 16a-1(b) promulgated under the Exchange Act by the Optionholder prior to exercise of an Option until the Company
is no longer relying on the exemption provided by Rule 12h-1(f); and (C) at any time that the Company is relying on the exemption provided by
Rule 12h-1(f), the Company shall deliver to Optionholders (whether by physical or electronic delivery or written notice of the availability of the information on an internet site)
the information required by Rule 701(e)(3), (4), and (5) promulgated under the Securities Act every six (6) months, including financial statements that are not more than one
hundred eighty (180) days old; provided, however, that the Company may condition the delivery of such information upon the Optionholder's
agreement to maintain its confidentiality. 

        (l)    Repurchase Limitation.    The terms of any repurchase right
shall be specified in the Stock Award Agreement. The repurchase price for vested shares of Common Stock shall be the Fair Market Value of the shares of Common Stock on the date of repurchase. The
repurchase price for unvested shares of Common Stock shall be the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original
purchase price. However, the Company shall not exercise its repurchase right until at least six (6) months (or such longer or shorter period of time necessary to avoid classification of the
Stock Award as a liability for financial accounting purposes) have elapsed following delivery of shares of Common Stock subject to the Stock Award, unless otherwise specifically provided by the Board. 

20

 

10.    ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE
TRANSACTIONS.    

        (a)    Capitalization Adjustments.    In the event of a Capitalization
Adjustment, the Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 4(a), (ii) the
class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 4(c), (iii) the class(es) and maximum number of
securities that may be awarded to any person pursuant to Sections 5(c) and 7(d), and (iv) the class(es) and number of securities and price per share of stock subject to outstanding Stock
Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. 

        (b)    Dissolution or Liquidation.    In the event of a dissolution or
liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the Company's right of repurchase) shall
terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the
Company's repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided,
however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to
the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion. 

        (c)    Corporate Transaction.    The following provisions shall apply
to Stock Awards in the event of a Corporate Transaction unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of the Stock Award: 

        (i)    Stock Awards May Be Assumed.    In the event of a Corporate
Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company) may assume or continue any or all Stock Awards outstanding under the Plan
or may substitute similar stock awards for Stock Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company
pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the
successor of the Company (or the successor's parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation may choose to assume or continue
only a portion of a Stock Award or substitute a similar stock award for only a portion of a Stock Award. The terms of any assumption, continuation or substitution shall be set by the Board in
accordance with the provisions of Section 3. 

        (ii)    Stock Awards Held by Current Participants.    In the event of
a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Stock Awards or substitute similar stock
awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not
terminated prior to the effective time of the Corporate Transaction (referred to as the "Current Participants"), the vesting of such Stock Awards (and,
if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time
of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate
Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by
the Company with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction). No vested Stock Unit Award shall terminate pursuant to this
Section 10(c)(ii) without being settled by 

21

 

delivery
of shares of Common Stock, their cash equivalent, any combination thereof, or in any other form of consideration, as determined by the Board, prior to the effective time of the Corporate
Transaction. 

        (iii)    Stock Awards Held by Former Participants.    In the event of
a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Stock Awards or substitute similar stock
awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, the
vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall not be accelerated and such Stock Awards (other than a Stock Award consisting of vested and
outstanding shares of Common Stock not subject to the Company's right of repurchase) shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction;  provided, however, that any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall not terminate and may
continue to be exercised notwithstanding the Corporate Transaction. No vested Stock Unit Award shall terminate pursuant to this Section 10(c)(iii) without being settled by delivery of shares of
Common Stock, their cash equivalent, any combination thereof, or in any other form of consideration, as determined by the Board, prior to the effective time of the Corporate Transaction. 

        (iv)    Payment for Stock Awards in Lieu of
Exercise.    Notwithstanding the foregoing, in the event a Stock Award will terminate if not exercised prior to the effective time of a Corporate Transaction, the
Board may provide, in its sole discretion, that the holder of such Stock Award may not exercise such Stock Award but will receive a payment, in such form as may be determined by the Board, equal in
value to the excess, if any, of (i) the value of the property the holder of the Stock Award would have received upon the exercise of the Stock Award, over (ii) any exercise price payable
by such holder in connection with such exercise. 

        (d)    Change in Control.    A Stock Award may be subject to
additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written
agreement between the Company or any Affiliate and the Participant. A Stock Award may vest as to all or any portion of the shares subject to the Stock Award (i) immediately upon the occurrence
of a Change in Control, whether or not such Stock Award is assumed, continued, or substituted by a surviving or acquiring entity in the Change in Control, or (ii) in the event a Participant's
Continuous Service is terminated, actually or constructively, within a designated period following the occurrence of a Change in Control. In the absence of such provisions, no such acceleration shall
occur. 

11.    AMENDMENT OF THE PLAN AND STOCK AWARDS.    

        (a)    Amendment of Plan.    Subject to the limitations, if any, of
applicable law, the Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 10(a) relating to Capitalization Adjustments, no amendment shall be
effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy applicable law. 

        (b)    Stockholder Approval.    The Board, in its sole discretion, may
submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations thereunder regarding the exclusion
of performance-based compensation from the limit on corporate deductibility of compensation paid to Covered Employees. 

        (c)    Contemplated Amendments.    It is expressly contemplated that
the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code
and the regulations 

22

 

promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 

        (d)    No Impairment of Rights.    Rights under any Stock Award
granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant
consents in writing. 

        (e)    Amendment of Stock Awards.    The Board, at any time and from
time to time, may amend the terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement,
subject to any specified limits in the Plan that are not subject to Board discretion; provided, however, that the rights under any Stock Award shall not
be impaired by any such amendment unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. 

12.    TERMINATION OR SUSPENSION OF THE PLAN.    

        (a)    Plan Term.    The Board may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the
date the Plan is approved by the stockholders of the Company. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated. 

        (b)    No Impairment of Rights.    Suspension or termination of the
Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant. 

13.    EFFECTIVE DATE OF PLAN.    

        The
Plan shall become effective on the date the Plan is adopted by the Board (the "Effective Date"), but no Stock Award shall be exercised
(or, in the case of a Stock Bonus Award, Stock Unit Award, or Other Stock Award shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is adopted by the Board. 

14.    CHOICE OF LAW.    

        The
law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of the Plan, without regard to that state's conflict of laws rules. 

23

QuickLinks

Exhibit 10.7

EPOCRATES, INC. 2008 EQUITY INCENTIVE PLAN

ADOPTED BY THE BOARD OF DIRECTORS: MARCH 19, 2008 AMENDED BY THE COMPENSATION COMMITTEE ON BEHALF OF THE BOARD OF DIRECTORS: APRIL 17, 2009 (THE "EFFECTIVE DATE") APPROVED BY THE STOCKHOLDERS: JUNE 22, 2009
TERMINATION DATE: APRIL 16, 2019

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