Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.15    
    

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACTS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY. 

 
 

DIGIRAD
  STOCK OPTION AGREEMENT
  (Non-Qualified)    
    

        AGREEMENT made as of                         ,
19     by and between Digirad, a California corporation
(hereinafter called "Company"), and                          (hereinafter
called
"Optionee"). 

WITNESSETH:

RECITALS 

        A.    The
Board of Directors of the Company has determined it is in the best interests of the Company to grant non-qualified options to Optionee pursuant to the
terms of this Agreement. 

        B.    The
granted option is intended to be a non-qualified stock option which does not satisfy the requirements of
Section 422 of the Internal Revenue Code. 

        NOW,
THEREFORE, it is hereby agreed as follows: 

        1.     Grant of Option.    Subject to and upon the terms and conditions set forth in this Agreement, there is hereby
granted to Optionee, as of                          (the "Grant Date"), a
stock option to purchase up to
                         shares of the Company's Common Stock, subject to reduction pursuant to Section 7 hereof (the
"Optioned
Shares") from time to time during the option term at the option price of $             per share (the "Option
Price"). 

        2.     Option Term.    This option shall expire at the earlier of (i) ten years from the Grant Date or
(ii) sixty days after the termination of Optionee's continuous status as an employee of the Company for any reason other than death or permanent disability, or (iii) one year after the
termination of Optionee's continuous status as an employee of the Company by reason of death or permanent disability. 

        3.     Investment Representations of Optionee.    The Optionee shall represent and warrant to the Company as follows: 

        (a)   Optionee
is acquiring the option and will acquire the Optioned Shares for Optionee's own account, not as nominee or agent, for investment and not with a view to, or for
resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the "1933 Act"),
and Optionee has no present intention of selling, granting any participation in, or otherwise distributing the same. 

        (b)   Optionee
understands that (i) the Option and the Optioned Shares have not been registered under the 1933 Act by reason of a specific exemption therefrom, that
they must be held by Optionee indefinitely, and that Optionee must, therefore, bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the
1933 Act or is exempt from such registration. In this connection, the Optionee represents that Optionee is familiar with SEC Rule 144, as now in effect, and understands the resale limitations
imposed thereby and by the 1933 Act; (ii) each certificate representing the Option and the Optioned Shares will be endorsed with the following legend: 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES 

 

HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT. 

and
(iii) the Company will instruct any transfer agent not to register the transfer of any of the Optioned Shares unless the conditions specified in the foregoing legend are satisfied. 

        (c)   Optionee
has been furnished with such materials and has been given access to such information relating to the Company as Optionee or Optionee's qualified representative
has requested and Optionee has been afforded the opportunity to ask questions regarding the Company and the Option and the Optioned Shares, all as Optionee has found necessary to make an informed
investment decision. 

        (d)   Optionee
is either an accredited investor within the meaning of Regulation D under the 1933 Act, or by reason of his or her business or financial experience, or
the business or financial experience of his or her professional advisor, Optionee has the capacity to protect his or her own interests in connection with this transaction. 

        (e)   If
Optionee is a corporation, partnership or other entity, it was not formed for the specific purpose of acquiring the Option and the Optioned Shares offered hereunder. 

        4.     Option Nontransferable.    This Option shall be neither transferable nor assignable by Optionee other than by
will or the laws of descent and distribution. 

        5.     Date Exercisable.    This Option may be exercised at any time for all or any portion of the Optioned Shares,
whether or not vested. 

        6.     Vesting Schedule.    The Optioned Shares shall vest in accordance with the following vesting schedule: 

        (a)   No
Optioned Shares shall vest unless and until the Optionee has completed twelve (12) months of Service (as defined below) measured from
                        (the "Vesting Commencement Date"). 

        (b)   Upon
the completion of the twelve (12) month service period specified in subparagraph (i) above, 20% of the Optioned Shares shall become vested. 

        (c)   The
Remaining Optioned Shares shall vest in a series of successive equal              installments over each of the next
                         (            ) months of
Service completed by the Optionee after the initial twelve (12) month service period
specified in subparagraph (a) above. 

        (i)    "Service" shall mean the provision of services to the Company or any Parent (as defined below) or Subsidiary (as defined
below) by an individual in the capacity of an Employee (as defined below), a non-employee member of the Board of Directors or a consultant or independent contractor. 

        (ii)   "Parent" shall mean 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. 

        (iii)  "Subsidiary" shall mean each corporation (other than the Company) in an unbroken chain of corporations beginning with
the Company, provided each such corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock 

2

 

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. 

        (iv)  "Employee" shall mean an individual who is in the employ of the Company or any Parent or Subsidiary, subject to the
control and direction of the employer entity as to both the work to be performed and the manner and method of performance. 

        7.     Adjustment in Option Shares. 

        (a)   In
the event any change is made to the Common Stock issuable pursuant to this Agreement by reason of any stock split, stock dividend, combination of shares, or other
change affecting the outstanding Common Stock as a class without receipt of consideration, then appropriate adjustments will be made to (i) the total number of Optioned Shares subject to this
option and (ii) the Option Price payable per share in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder. 

        (b)   This
Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

        8.     Privilege of Stock Ownership.    The holder of this option shall not have any of the rights of a shareholder
with respect to the Optioned Shares until such individual shall have exercised the option and paid the Option Price. 

        9.     Manner of Exercising Option. 

        (a)   In
order to exercise this option with respect to all or any part of the Optioned Shares for which this option is at the time exercisable, Optionee (or in the case of
exercise after Optionee's death, the Optionee's executor, administrator, heir or legatee, as the case may be) must take the following actions: 

        (i)    Execute
and deliver to the Secretary of the Company a stock purchase agreement in substantially the form of  Exhibit A to this Agreement (the "Purchase Agreement"); 

        (ii)   Pay
the aggregate option price for the purchased shares in cash or cash equivalents; and 

        (iii)  Furnish
to the Company appropriate documentation that the person or persons exercising the option, if other than Optionee, have the right to exercise this option. 

        (b)   This
option shall be deemed to have been exercised with respect to the number of Optioned Shares specified in the Purchase Agreement at such time as the executed
Purchase Agreement for such shares shall have been delivered to the Company. Payment of the option price shall immediately become due and shall accompany the Purchase Agreement. As soon thereafter as
practical, the Company shall mail or deliver to Optionee or to the other person or persons exercising this option a certificate or certificates representing the shares so purchased and paid for, with
the appropriate legends affixed thereto. 

        (c)   In
no event may this option be exercised for any fractional shares. 

        10.   MARKET STAND OFF AGREEMENT.    THE OPTIONEE HEREBY AGREES THAT ALL OPTIONED SHARES ACQUIRED UPON THE EXERCISE
OF THIS OPTION SHALL BE SUBJECT TO CERTAIN LIMITATIONS ON DISPOSITION AND THE LIKE IN THE EVENT OF AN UNDERWRITTEN PUBLIC OFFERING OR OTHERWISE, IN ACCORDANCE WITH THE TERMS AND CONDITIONS SPECIFIED
IN THE PURCHASE AGREEMENT AND THIS STOCK OPTION AGREEMENT. 

        11.   Compliance with Laws and Regulations. 

3

 

        (a)   The
exercise of this option and the issuance of Optioned Shares upon such exercise shall be subject to compliance by the Company and the Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of any stock exchange on which shares of the Company's Common Stock may be listed at the time of such exercise and issuance. 

        (b)   In
connection with the exercise of this option, Optionee shall execute and deliver to the Company such representations in writing as may be requested by the Company in
order for it to comply with the applicable requirements of federal and state securities laws. 

        12.   Successors and Assigns.    Except to the extent otherwise provided in Paragraph 3, the provisions of
this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of Optionee and the successors and assigns of the Company. 

        13.   Notices.    Any notice required to be given or delivered to the Company under the terms of this Agreement shall
be in writing and addressed to the Company in care of its Secretary at its corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on this Agreement. All notices shall be deemed to have been given or delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified. 

        14.   Construction.    All decisions of the Board of Directors with respect to any question or issue arising under
this Agreement shall be conclusive and binding on all persons having an interest in this option. 

        15.   Governing Law.    The interpretation, performance, and enforcement of this Agreement shall be governed by the
laws of the State of California. 

        16.   Counterparts.    This Agreement may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. 

        17.   Integration.    This Agreement supersedes and replaces for all purposes all previous agreements and
understandings regarding the stock options or Optioned Shares or rights to the Optioned Shares. By signing below the Optionee acknowledges that this Agreement replaces any and all prior option
agreements Optionee had with the Company. 

        18.   Counsel.    Each party expressly acknowledges and agrees that Brobeck, Phleger & Harrison has
represented the interests of the Company only and that the other parties to the Agreement are not relying on any representation or advice from the Company or their counsel or from any other party to
this Agreement. Each party acknowledges that it has had the opportunity to have independent counsel review this Agreement on behalf of such party. 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK] 

4

 

        IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate on its behalf by its duly authorized officer and Optionee has also executed this Agreement in
duplicate, all as of the day and year indicated above. 

	 	 	COMPANY:
	

 	
 	

DIGIRAD, a California corporation
	

 	

 	

By:	

    

	

 	
 	

Address:	

    
    

	

 	
 	

OPTIONEE:
	

 	

 	

	

 	
 	

Address:	

    
    

[SIGNATURE
PAGE TO STOCK OPTION AGREEMENT] 

5

 
 

EXHIBIT A
  
  STOCK PURCHASE AGREEMENT
  (Exercise of Option)    
    

Exhibit
A 

 
REPURCHASE RIGHT

RIGHT OF FIRST REFUSAL  

 
 

DIGIRAD
  STOCK PURCHASE AGREEMENT    
    

        AGREEMENT made as of this      day of
            , 199    , by and among Digirad (the "Corporation"),
                        , the holder of a stock option (the "Optionee") and
                        , the
Optionee's spouse. 

 I.    EXERCISE OF OPTION  

        1.1    Exercise.    Optionee hereby purchases
                         shares ("Purchased Shares") of the Corporation's
common stock ("Common
Stock") pursuant to that certain option ("Option") granted Optionee on
                        
("Grant Date") to purchase up to                          shares of the
Common Stock ("Total Purchasable
Shares") at an option price of $             per share ("Option Price"). 

        1.2    Payment.    Concurrently with the delivery of this Agreement to
the Corporate Secretary of the Corporation, Optionee shall pay the Option Price for the Purchased Shares in accordance with the provisions of the agreement between the Corporation and Optionee
evidencing the Option (the "Option Agreement") and shall deliver whatever additional documents may be required by the Option Agreement as a condition
for exercise, together with a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares. 

        1.3    Delivery of Certificates.    The certificates representing the
Purchased Shares hereunder shall be held in escrow by the Corporate Secretary of the Corporation in accordance with the provisions of Article VII. 

        1.4    Shareholder Rights.    Until such time as the Corporation
actually exercises its repurchase right, rights of first refusal or special purchase right under this Agreement, Optionee (or any successor in interest) shall have all the rights of a shareholder
(including voting and dividend rights) with respect to the Purchased Shares, including the Purchased Shares held in escrow under Article VII, subject, however, to the transfer restrictions of
Article IV. 

 II.    SECURITIES LAW COMPLIANCE  

        2.1    Purchase Entirely for Own Account.    This Agreement is made
with Participant in reliance upon Participant's representation to the Company, which by Participant's execution of this Agreement Participant hereby confirms, that the Shares are being acquired for
investment for Participant's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that Participant has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Participant further represents that
Participant does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of
the Shares. Participant represents that he has full power and authority to enter into this Agreement. 

        2.2    Exemption from Registration.    The Purchased Shares have not
been registered under the Securities Act of 1933, as amended (the "1933 Act"), and are accordingly being issued to Optionee in reliance upon a specific
exemption therefrom. 

        2.3    Restricted Securities.    

        A.    Optionee
hereby confirms that Optionee has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred
unless the Purchased 

A-1

 

Shares
are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Optionee hereby acknowledges that Optionee is prepared to hold
the Purchased Shares for an indefinite period and that Optionee is aware that Rule 144 of the Securities and Exchange Commission issued under the 1933 Act is not presently available to exempt
the sale of the Purchased Shares from the registration requirements of the 1933 Act. 

        B.    Upon
the expiration of the ninety (90)-day period immediately following the date on which the Corporation first becomes subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Purchased Shares, to the extent vested under Article V, may be sold
(without registration) pursuant to the applicable requirements of Rule 144. If Optionee is at the time of such sale an affiliate of the Corporation for purposes of Rule 144 or was such
an affiliate during the preceding three (3) months, then the sale must comply with all the requirements of Rule 144 (including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities and Exchange Commission); however, the two (2)-year holding period requirement of the Rule will not be
applicable. If Optionee is not at the time of the sale an affiliate of the Corporation nor was such an affiliate during the preceding three (3) months, then none of the requirements of
Rule 144 (other than the broker/market-maker sale requirement for Purchased Shares held for less than three (3) years following payment in cash of the Option Price therefor) will be
applicable to the sale. 

        C.    Should
the Corporation not become subject to the reporting requirements of the Exchange Act, then Optionee may, provided he/she is not at the time an affiliate of the
Corporation (nor was such an affiliate during the preceding three (3) months), sell the Purchased Shares (without registration) pursuant to paragraph (k) of Rule 144 after the
Purchased Shares have been held for a period of three (3) years following the payment in cash of the Option Price for such shares. 

        2.4    Disposition of Shares.    Optionee hereby agrees that Optionee
shall make no disposition of the Purchased Shares (other than a permitted transfer under paragraph 4.1) unless and until there is compliance with all of the following requirements: 

        (a)   Optionee
shall have notified the Corporation of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition. 

        (b)   Optionee
shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares. 

        (c)   Optionee
shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (i) the proposed disposition
does not require registration of the Purchased Shares under the 1933 Act or (ii) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or of any
exemption from registration available under the 1933 Act (including Rule 144) has been taken. 

        The
Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in
violation of the provisions of this Article II nor (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting or
dividend rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement. 

        2.5    Restrictive Legends.    In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased Shares will be endorsed with restrictive legends, including one or more of the following legends: 

        (i)    "The
shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of
(a) an effective registration statement for the shares under such Act, (b) a 'no action' letter of the Securities and Exchange Commission with respect to such sale or offer, or
(c) satisfactory 

A-2

 

assurances
to the Corporation that registration under such Act is not required with respect to such sale or offer." 

        (ii)   "The
shares represented by this certificate are unvested and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in
conformity with the terms of a written agreement dated                         , 19     between
the Corporation and the registered holder of
the shares (or the predecessor in interest to the shares). Such agreement grants certain repurchase rights and rights of first refusal to the Corporation (or its assignees) upon the sale, assignment,
transfer, encumbrance or other disposition of the Corporation's shares or upon termination of service with the Corporation. The Corporation will upon written request furnish a copy of such agreement
to the holder hereof without charge." 

 III.    SPECIAL TAX ELECTION  

        3.1    Section 83(b) Election Applicable to the Exercise of a Non-Statutory Stock
Option.    If the Purchased Shares are unvested, then the Optionee understands that under Section 83 of the Internal Revenue Code of
1986, as amended (the "Code"), the excess of the fair market value of the Purchased Shares on the date any forfeiture restrictions applicable to such
shares lapse over the Option Price paid for such shares will be reportable as ordinary income on such lapse date. For this purpose, the term "forfeiture restrictions" includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right provided under Article V of this Agreement. Optionee understands that he/she may elect under Section 83(b)
of the Code to be taxed at the time the Purchased Shares are acquired hereunder, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions. Such election must
be filed with the Internal Revenue Service within thirty (30) days after the date of this Agreement. Even if the fair market value of the Purchased Shares at the date of this Agreement equals
the Option Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS
EXHIBIT II HERETO. OPTIONEE UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY THE OPTIONEE AS THE
FORFEITURE RESTRICTIONS LAPSE.

        3.2    OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN
IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS/HER BEHALF. This filing should be made by registered or certified mail, return receipt
requested, and Optionee must retain two (2) copies of the completed form for filing with his or her State and Federal tax returns for the current tax year and an additional copy for his or her
records. 

 IV.    TRANSFER RESTRICTIONS  

        4.1    Restriction on Transfer.    Optionee shall not transfer,
assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Corporation's Repurchase Right under Article V. In addition, Purchased Shares which are released
from the Repurchase Right shall not be transferred, assigned, encumbered or otherwise made the subject of disposition in contravention of the Corporation's First Refusal Right under Article VI.
Such restrictions on transfer, however, shall not be applicable to (i) a gratuitous transfer of the Purchased Shares made to the Optionee's
spouse or issue, including adopted children, or to a trust for the exclusive benefit of the Optionee or the Optionee's spouse or issue, provided and only
if the Optionee obtains the Corporation's prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to the Optionee's
will or the laws of intestate succession or (iii) a transfer to the Corporation in pledge as security for any 

A-3

 

purchase-money
indebtedness incurred by the Optionee in connection with the acquisition of the Purchased Shares. 

        4.2    Transferee Obligations.    Each person (other than the
Corporation) to whom the Purchased Shares are transferred by means of one of the permitted transfers specified in paragraph 4.1 must, as a condition precedent to the validity of such transfer,
acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) both the Corporation's Repurchase
Right and the Corporation's First Refusal Right granted hereunder and (ii) the market stand-off provisions of paragraph 4.4, to the same extent such shares would be so
subject if retained by the Optionee. 

        4.3    Definition of Owner.    For purposes of Articles IV, V, VI and
VII of this Agreement, the term "Owner" shall include the Optionee and all subsequent holders of the Purchased Shares who derive their chain of ownership through a permitted transfer from the Optionee
in accordance with paragraph 4.1. 

        4.4    Market Stand-Off Provisions.    

        A.    In
connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act,
including the Corporation's initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for
value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such limitations
shall be in effect for such period of time from and after the effective date of such registration statement as may be requested by the Corporation or such underwriters;  provided, however, that in no
event shall such period exceed one hundred-eighty (180) days. The limitations of this paragraph 4.4 shall
remain in effect for the two-year period immediately following the effective date of the Corporation's initial public offering and shall thereafter terminate and cease to have any force or
effect. 

        B.    Owner
shall be subject to the market stand-off provisions of this paragraph 4.4 provided and only if
the officers and directors of the Corporation are also subject to similar arrangements. 

        C.    In
the event of any stock dividend, stock split, recapitalization or other change affecting the Corporation's outstanding Common Stock effected as a class without receipt
of consideration, then any new, substituted or additional securities distributed with respect to the Purchased Shares shall be immediately subject to the provisions of this paragraph 4.4, to
the same extent the Purchased Shares are at such time covered by such provisions. 

        D.    In
order to enforce the limitations of this paragraph 4.4, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares
until the end of the applicable stand-off period. 

 V.    REPURCHASE RIGHT  

        5.1    Grant.    The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period following the date the Optionee ceases for any reason to
remain in Service or (if later) during the sixty (60)-day period following the execution date of this Agreement, to repurchase at the Option Price all or (at the discretion of the
Corporation and with the consent of the Optionee) any portion of the Purchased Shares in which the Optionee was not vested under the Option as of the date hereof (such shares to be hereinafter called
the "Unvested Shares"). For purposes of this Agreement, the Optionee shall be deemed to remain in Service for so long as the Optionee continues to
render periodic services to the Corporation or any parent or subsidiary 

A-4

 

corporation,
whether as an employee, a non-employee member of the board of directors, or an independent contractor or consultant. 

        5.2    Exercise of the Repurchase Right.    The Repurchase Right shall
be exercisable by written notice delivered to the Owner of the Unvested Shares prior to the expiration of the applicable sixty (60)-day period specified in paragraph 5.1. The notice
shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than thirty (30) days after the date of notice.
To the extent one or more certificates representing Unvested Shares may have been previously delivered out of escrow to the Owner, then Owner shall, prior to the close of business on the date
specified for the repurchase, deliver to the Secretary of the Corporation the certificates representing the Unvested Shares to be repurchased, each certificate to be properly endorsed for transfer.
The Corporation shall, concurrently with the receipt of such stock certificates (either from escrow in accordance with paragraph 7.3 or from Owner as herein provided), pay to Owner in cash or
cash equivalents (including the cancellation of any purchase-money indebtedness), an amount equal to the Option Price previously paid for the Unvested Shares which are to be repurchased. 

        5.3    Termination of the Repurchase Right.    The Repurchase Right
shall terminate with respect to any Unvested Shares for which it is not timely exercised under paragraph 5.2. In addition, the Repurchase Right shall terminate, and cease to be exercisable,
with respect to any and all Purchased Shares in accordance with the vesting schedule specified in the Option Agreement. All Purchased Shares as to which the Repurchase Right lapses shall, however,
continue to be subject to (i) the First Refusal Right of the Corporation and its assignees under Article VI, (ii) the market stand-off provisions of
paragraph 4.4 and (iii) the Special Purchase Right under Article VIII. 

        5.4    Aggregate Vesting Limitation.    If the Option is exercised in
more than one increment so that the Optionee is a party to one or more other Stock Purchase Agreements ("Prior Purchase Agreements") which are executed
prior to the date of this Agreement, then the total number of Purchased Shares as to which the Optionee shall be deemed to have a fully-vested interest under this Agreement and all Prior Purchase
Agreements shall not exceed in the aggregate the number of Purchased Shares in which the Optionee would otherwise at the time be vested, in accordance with the vesting provisions of
paragraph 5.3, had all the Purchased Shares been acquired exclusively under this Agreement. 

        5.5    Fractional Shares.    No fractional shares shall be repurchased
by the Corporation. Accordingly, should the Repurchase Right extend to a fractional share (in accordance with the vesting provisions of paragraph 5.3) at the time the Optionee ceases Service,
then such fractional share shall be added to any fractional share in which the Optionee is at such time vested in order to make one whole vested share no longer subject to the Repurchase Right. 

        5.6    Additional Shares or Substituted Securities.    In the event of
any stock dividend, stock split, recapitalization or other change affecting the Corporation's outstanding Common Stock as a class effected without receipt of consideration, then any new, substituted
or additional securities or other property (including money paid other than as a regular cash dividend) which is by reason of any such transaction distributed with respect to the Purchased Shares
shall be immediately subject to the Repurchase Right, but only to the extent the Purchased Shares are at the time covered by such right. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number of Purchased Shares and Total Purchasable Shares hereunder and to the price per share to be paid upon the exercise of the Repurchase Right in order
to reflect the effect of any such transaction upon the Corporation's capital structure; provided, however, that the aggregate purchase price shall
remain the same. 

A-5

 

 5.7    Corporate Transaction.  

        A.    Immediately
prior to the consummation of any of the following shareholder-approved transactions (a "Corporate
Transaction"): 

        (i)    a
merger or consolidation in which the Corporation is not the surviving entity, 

        (ii)   the
sale, transfer or other disposition of all or substantially all of the Corporation's assets, or 

        (iii)  any
transaction (other than an issuance of shares by the Corporation for cash) in or by means of which one or more persons acting in concert acquire, in the aggregate,
more than 50% of the outstanding shares of the stock of the Corporation, 

                the
Repurchase Right shall automatically lapse in its entirety except to the extent the Repurchase Right is to be assigned to the successor corporation (or its parent
company) in connection with such Corporate Transaction. 

        B.    To
the extent the Repurchase Right remains in effect following such Corporate Transaction, such right shall apply to the new capital stock or other property (including
cash) received in exchange for the Purchased Shares in consummation of the Corporate Transaction, but only to the extent the Purchased Shares are at the time covered by such right. Appropriate
adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect of the Corporate Transaction upon the Corporation's capital structure;  provided,
however, that the aggregate purchase price shall remain the same. 

        C.    Any
Repurchase Rights which remain in effect following such Corporate Transaction, shall automatically cease to be exercisable immediately prior to Optionee's termination
of Service should Optionee's Service subsequently terminate by reason of an Involuntary Termination within twelve (12) months following the effective date of such Corporate Transaction.
Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of such individual's involuntary dismissal or discharge by the Corporation for reasons other
than Misconduct, or such individual's voluntary resignation following a reduction in his or her level of compensation (including base salary, fringe benefits) by more than fifteen percent (15%) or a
relocation of such individual's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without the
individual's consent. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or
Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary). 

        D.    This
Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

 VI.    RIGHT OF FIRST REFUSAL  

        6.1    Grant.    The Corporation is hereby granted rights of first
refusal (the "First Refusal Right"), exercisable in connection with any proposed transfer of the Purchased Shares in which the Optionee has vested in
accordance with the vesting provisions of Article V. For purposes of this Article VI, the 

A-6

 

term
"transfer" shall include any sale, assignment, pledge, encumbrance or other disposition for value of the Purchased Shares intended to be made by the Owner, but shall not include any of the
permitted transfers under paragraph 4.1. 

        6.2    Notice of Intended Disposition.    In the event the Owner
desires to accept a bona fide third-party offer for the transfer of any or all of the Purchased Shares (the shares subject to such offer to be hereinafter called the "Target
Shares"), Owner shall promptly (i) deliver to the Corporate Secretary of the Corporation written notice (the "Disposition
Notice") of the terms and conditions of the offer, including the purchase price and the identity of the third-party offeror, and (ii) provide satisfactory proof that the
disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in Articles II and IV of this Agreement. 

        6.3    Exercise of Right.    The Corporation shall, for a period of
forty-five (45) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares specified in the Disposition Notice upon the same
terms and conditions specified therein or upon terms and conditions which do not materially vary from those specified therein. Such right shall be exercisable by delivery of written notice (the
"Exercise Notice") to Owner prior to the expiration of the forty-five (45)-day exercise period. If such right is exercised with
respect to all the Target Shares specified in the Disposition Notice, then the Corporation (or its assignees) shall effect the repurchase of the Target Shares, including payment of the purchase price,
not more than ten (10) business days after delivery of the Exercise Notice; and at such time Owner shall deliver to the Corporation the certificates representing the Target Shares to be
repurchased, each certificate to be properly endorsed for transfer. To the extent any of the Target Shares are at the time held in escrow under Article VII, the certificates for such shares
shall automatically be released from escrow and delivered to the Corporation for purchase. Should the purchase price specified in the Disposition Notice be payable in property other than cash or
evidences of indebtedness, the Corporation (or its assignees) shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If the Owner and the
Corporation (or its assignees) cannot agree on such cash value within ten (10) days after the Corporation's receipt of the Disposition Notice, the valuation shall be made by an appraiser of
recognized standing selected by the Owner and the Corporation (or its assignees) or, if they cannot agree on an appraiser within twenty (20) days after the Corporation's receipt of the
Disposition Notice, each shall select an appraiser of recognized standing and the two appraisers shall designate a third appraiser of recognized standing, whose appraisal shall be determinative of
such value. The cost of such appraisal shall be shared equally by the Owner and the Corporation. The closing shall then be held on the later of
(i) the tenth business day following delivery of the Exercise Notice or (ii) the tenth business day after such cash valuation shall have been made. 

        6.4    Non-Exercise of Right.    In the event the Exercise
Notice is not given to Owner within forty-five (45) days following the date of the Corporation's receipt of the Disposition Notice, Owner shall have a period of thirty
(30) days thereafter in which to sell or otherwise dispose of the Target Shares to the third-party offeror identified in the Disposition Notice upon terms and conditions (including the purchase
price) no more favorable to such third-party offeror than those specified in the Disposition Notice; provided, however, that any such sale or
disposition must not be effected in contravention of the provisions of Article II of this Agreement. To the extent any of the Target Shares are at the time held in escrow under
Article VII, the certificates for such shares shall automatically be released from escrow and surrendered to the Owner. The third-party offeror shall acquire the Target Shares free and clear of
the Corporation's Repurchase Right under Article V and the Corporation's First Refusal Right hereunder, but the acquired shares shall remain subject to (i) the securities law
restrictions of Article II and (ii) the market stand-off provisions of paragraph 4.4. In the event Owner does not effect such sale or disposition of the Target Shares
within the specified thirty (30)-day period, the Corporation's First Refusal Right shall continue to be applicable to any subsequent disposition of the Target Shares by Owner until such
right lapses in accordance with paragraph 6.7. 

A-7

 

        6.5    Partial Exercise of Right.    In the event the Corporation (or
its assignees) makes a timely exercise of the First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option,
exercisable by written notice to the Corporation delivered within thirty (30) days after the date of the Disposition Notice, to effect the sale of the Target Shares pursuant to one of the
following alternatives: 

        (i)    sale
or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of
paragraph 6.4, as if the Corporation did not exercise the First Refusal Right hereunder; or 

        (ii)   sale
to the Corporation (or its assignees) of the portion of the Target Shares which the Corporation (or its assignees) has elected to purchase, such sale to be
effected in substantial conformity with the provisions of paragraph 6.3. 

        Failure
of Owner to deliver timely notification to the Corporation under this paragraph 6.5 shall be deemed to be an election by Owner to sell the Target Shares pursuant to
alternative (i) above. 

        6.6    Recapitalization/Merger.    

        A.    In
the event of any stock dividend, stock split, recapitalization or other transaction affecting the Corporation's outstanding Common Stock as a class effected without
receipt of consideration, then any new, substituted or additional securities or other property which is by reason of such transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Corporation's First Refusal Right hereunder, but only to the extent the Purchased Shares are at the time covered by such right. 

        B.    In
the event of any of the following transactions: 

        (i)    a
merger or consolidation in which the Corporation is not the surviving entity, 

        (ii)   a
sale, transfer or other disposition of all or substantially all of the Corporation's assets, 

        (iii)  a
reverse merger in which the Corporation is the surviving entity but in which the Corporation's outstanding voting securities are transferred in whole or in part to
person or persons other than those who held such securities immediately prior to the merger, or 

        (iv)  any
transaction effected primarily to change the State in which the Corporation is incorporated, or to create a holding company structure, 

                the
Corporation's First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in exchange for the
Purchased Shares in consummation of the transaction but only to the extent the Purchased Shares are at the time covered by such right. 

        6.7    Lapse.    The First Refusal Right under this Article VI
shall lapse and cease to have effect upon the earliest to occur of (i) the first date on which shares of the Corporation's Common Stock are held
of record by more than five hundred (500) persons, (ii) a determination is made by the Corporation's Board of Directors that a public market exists for the outstanding shares of the
Corporation's Common Stock, or (iii) a firm commitment underwritten public offering pursuant to an effective registration statement under the 1933 Act, covering the offer and sale of the
Corporation's Common Stock in the aggregate amount of at least $5,000,000. However, the market stand-off provisions of paragraph 4.4 shall continue to remain in full force and
effect following the lapse of the First Refusal Right hereunder. 

A-8

 

 VII.    ESCROW  

        7.1    Deposit.    Upon issuance, the certificates for any Unvested
Shares purchased hereunder shall be deposited in escrow with the Corporate Secretary of the Corporation to be held in accordance with the provisions of this Article VII. Each deposited
certificate shall be accompanied by a duly-executed Assignment Separate from Certificate in the form of Exhibit I. The deposited certificates, together with any other assets or
securities from time to time deposited with the Corporate Secretary pursuant to the requirements of this Agreement, shall remain in escrow until such time or times as the certificates (or other assets
and securities) are to be released or otherwise surrendered for cancellation in accordance with paragraph 7.3. Upon delivery of the certificates (or other assets and securities) to the
Corporate Secretary of the Corporation, the Owner shall be issued an instrument of deposit acknowledging the number of Unvested Shares (or other assets and securities) delivered in escrow. 

        7.2    Recapitalization.    All regular cash dividends on the Unvested
Shares (or other securities at the time held in escrow) shall be paid directly to the Owner and shall not be held in escrow. However, in the event of any stock dividend, stock split, recapitalization
or other change affecting the Corporation's outstanding Common Stock as a class effected without receipt of consideration or in the event of a Corporate Transaction, any new, substituted or additional
securities or other property which is by reason of such transaction distributed with respect to the Unvested Shares shall be immediately delivered to the Corporate Secretary to be held in escrow under
this Article VII, but only to the extent the Unvested Shares are at the time subject to the escrow requirements of paragraph 7.1. 

        7.3    Release/Surrender.    The Unvested Shares, together with any
other assets or securities held in escrow hereunder, shall be subject to the following terms and conditions relating to their release from escrow or their surrender to the Corporation for repurchase
and cancellation: 

        (i)    Should
the Corporation (or its assignees) elect to exercise the Repurchase Right under Article V with respect to any Unvested Shares, then the escrowed
certificates for such Unvested Shares (together with any other assets or securities issued with respect thereto) shall be delivered to the Corporation concurrently with the payment to the Owner, in
cash or cash equivalent (including the cancellation of any purchase-money indebtedness), of an amount equal to the aggregate Option Price for such Unvested Shares, and the Owner shall cease to have
any further rights or claims with respect to such Unvested Shares (or other assets or securities attributable to such Unvested Shares). 

        (ii)   Should
the Corporation (or its assignees) elect to exercise its First Refusal Right under Article VI with respect to any vested Target Shares held at the time in
escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other assets or securities attributable thereto) shall, concurrently with the payment of the paragraph 6.3 purchase price for such Target
Shares to the Owner, be surrendered to the Corporation, and the Owner shall cease to have any further rights or claims with respect to such Target Shares (or other assets or securities). 

        (iii)  Should
the Corporation (or its assignees) elect not to exercise its First Refusal Right under Article VI with
respect to any Target Shares held at the time in escrow hereunder, then the escrowed certificates for such Target Shares (together with any other assets or securities attributable thereto) shall be
surrendered to the Owner for disposition in accordance with provisions of paragraph 6.4. 

        (iv)  As
the interest of the Optionee in the Unvested Shares (or any other assets or securities attributable thereto) vests in accordance with the provisions of
Article V, the certificates for such 

A-9

 

vested
shares (as well as all other vested assets and securities) shall be released from escrow and delivered to the Owner in accordance with the following schedule: 

        a.     The
initial release of vested shares (or other vested assets and securities) from escrow shall be effected within thirty (30) days following the expiration of the
initial twelve (12)-month period measured from the Grant Date. 

        b.     Subsequent
releases of vested shares (or other vested assets and securities) from escrow shall be effected at semi-annual intervals thereafter, with the first
such semi-annual release to occur eighteen (18) months after the Grant Date. 

        c.     Upon
the Optionee's cessation of Service, any escrowed Purchased Shares (or other assets or securities) in which the Op6tionee is at the time vested shall be promptly
released from escrow. 

        d.     Upon
any earlier termination of the Corporation's Repurchase Right in accordance with the applicable provisions of Article V, any Purchased Shares (or other assets
or securities) at the time held in escrow hereunder shall promptly be released to the Owner as fully-vested shares or other property. 

        (v)   All
Purchased Shares (or other assets or securities) released from escrow in accordance with the provisions of subparagraph (iv) above shall nevertheless remain
subject to (I) the Corporation's First Refusal Right under Article VI until such right lapses pursuant to paragraph 6.7, (II) the market stand-off provisions of
paragraph 4.4 until such provisions terminate in accordance therewith and (III) the Special Purchase Right under Article VIII. 

 VIII.    MARITAL DISSOLUTION OR LEGAL SEPARATION  

        8.1    Grant.    In connection with the dissolution of the Optionee's
marriage or the legal separation of the Optionee and the Optionee's spouse, the Corporation shall have the right (the "Special Purchase Right"),
exercisable at any time during the thirty (30)-day period following the Corporation's receipt of the required Dissolution Notice under paragraph 8.2, to purchase from the Optionee's
spouse, in accordance with the provisions of paragraph 8.3, all or any portion of the Purchased Shares which would otherwise be awarded to such spouse in settlement of any community property or
other marital property rights such spouse may have in such shares. 

        8.2    Notice of Decree or Agreement.    The Optionee shall promptly
provide the Secretary of the Corporation with written notice (the "Dissolution Notice") of (i) the entry of any judicial decree or order
resolving the property rights of the Optionee and the Optionee's spouse in connection with their marital dissolution or legal separation or (ii) the execution of any contract or agreement
relating to the distribution or division of such property rights. The Dissolution Notice shall be accompanied by a copy of the actual decree of dissolution or settlement agreement between the Optionee
and the Optionee's spouse which provides for the award to the spouse of one or more Purchased Shares in settlement of any community property or other marital property rights such spouse may have in
such shares. 

        8.3    Exercise of Special Purchase Right.    The Special Purchase
Right shall be exercisable by delivery of written notice (the "Purchase Notice") to the Optionee and the Optionee's spouse within thirty
(30) days after the Corporation's receipt of the Dissolution Notice. The Purchase Notice shall indicate the number of shares to be purchased by the Corporation, the date such purchase is to be
effected (such date to be not less than five (5) business days, nor more than ten (10) business days, after the date of the Purchase Notice), and the fair market value to be paid for
such Purchased Shares. The Optionee (or the Optionee's spouse, to the extent such spouse has physical possession of the Purchased Shares) shall, prior to the close of business on the date specified
for the purchase, deliver to the Corporate Secretary of the Corporation the certificates representing the shares to be purchased, 

A-10

 

each
certificate to be properly endorsed for transfer. To the extent any of the shares to be purchased by the Corporation are at the time held in escrow under Article VII, the certificates for
such shares shall be promptly delivered out of escrow to the Corporation. The Corporation shall, concurrently with the receipt of the stock certificates, pay to the Optionee's spouse (in cash or cash
equivalents) an amount equal to the fair market value specified for such shares in the Purchase Notice. 

        If
the Optionee's spouse does not agree with the fair market value specified for the shares in the Purchase Notice, then the spouse shall promptly notify the Corporation in writing of
such disagreement and the fair market value of such shares shall thereupon be determined by an appraiser of recognized standing selected by the Corporation and the spouse. If they cannot agree on an
appraiser within twenty (20) days after the date of the Purchase Notice, each shall select an appraiser of recognized standing, and the two appraisers shall designate a third appraiser of
recognized standing whose appraisal shall be determinative of such value. The cost of the appraisal shall be shared equally by the Corporation and the Optionee's spouse. The closing shall then be held
on the fifth business day following the completion of such appraisal; provided, however, that if the appraised value is more than fifteen percent (15%)
greater than the fair market value specified for the shares in the Purchase Notice, the Corporation shall have the right, exercisable prior to the expiration of such five
(5)-business-day period, to rescind the exercise of the Special Purchase Right and thereby revoke its election to purchase the shares awarded to the spouse. 

        8.4    Lapse.    The Special Purchase Right under this
Article VIII shall lapse and cease to have effect upon the earlier to occur of (i) the first date on which the First Refusal Right under
Article VI lapses or (ii) the expiration of the thirty (30)-day exercise period specified in paragraph 8.3, to the extent the Special Purchase Right is not timely
exercised in accordance with such paragraph. 

 IX.    GENERAL PROVISIONS  

        9.1    Assignment.    The Corporation may assign its Repurchase Right
under Article V, its First Refusal Right under Article VI and/or its Special Purchase Right under Article VIII to any person or entity selected by the Corporation's Board of
Directors, including (without limitation) one or more shareholders of the Corporation. 

        If
the assignee of the Repurchase Right is other than a one hundred percent (100%) owned subsidiary corporation of the Corporation or the parent corporation owning one hundred percent
(100%) of the Corporation, then such assignee must make a cash payment to the Corporation, upon the assignment of the Repurchase Right, in an amount equal to the excess (if any) of (i) the fair
market value of the Unvested Shares at the time subject to the assigned Repurchase Right over (ii) the aggregate repurchase price payable for the Unvested Shares thereunder. 

        9.2    Definitions.    For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary corporations of the Corporation: 

        (i)    Any
corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation shall be considered to be a parent corporation of the
Corporation, provided each such corporation in the unbroken chain (other than the Corporation) 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. 

        (ii)   Each
corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation shall be considered to be a subsidiary of the
Corporation, provided each such 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. 

A-11

 

        9.3    No Employment or Service Contract.    Nothing in this Agreement
shall confer upon the Optionee any right to continue in the Service of the Corporation (or any parent or subsidiary corporation of the Corporation employing or retaining Optionee) for any period of
specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any parent or subsidiary corporation of the Corporation employing or retaining Optionee) or the
Optionee, which rights are hereby expressly reserved by each, to terminate the Optionee's Service at any time for any reason whatsoever, with or without cause. 

        9.4    Notices.    Any notice required in connection with
(i) the Repurchase Right, the Special Purchase Right or the First Refusal Right or (ii) the disposition of any Purchased Shares covered thereby shall be given in writing and shall be
deemed effective upon personal delivery or upon deposit in the United States mail, registered or certified, postage prepaid and addressed to the party entitled to such notice at the address indicated
below such party's signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph 9.4 to all other
parties to this Agreement. 

        9.5    No Waiver.    The failure of the Corporation (or its assignees)
in any instance to exercise the Repurchase Right granted under Article V, or the failure of the Corporation (or its assignees) in any instance to exercise the First Refusal Right granted under
Article VI, or the failure of the Corporation (or its assignees) in any instance to exercise the Special Purchase Right granted under Article VIII shall not constitute a waiver of any
other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and the Optionee or the
Optionee's spouse. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature. 

        9.6    Cancellation of Shares.    If the Corporation (or its
assignees) shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to
receive payment of such consideration in accordance with this Agreement), and such shares shall be deemed purchased in accordance with the applicable provisions hereof and the Corporation (or its
assignees) shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement. 

 X.    MISCELLANEOUS PROVISIONS  

        10.1    Optionee Undertaking.    Optionee hereby agrees to take
whatever additional action and execute whatever additional documents the Corporation may in its judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on either the Optionee or the Purchased Shares pursuant to the express provisions of this Agreement. 

        10.2    Agreement is Entire Contract.    This Agreement constitutes
the entire contract between the parties hereto with regard to the subject matter hereof. 

        10.3    Governing Law.    This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such laws are applied to contracts entered into and performed in such State without resort to that State's
conflict-of-laws rules. 

        10.4    Counterparts.    This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 

        10.5    Successors and Assigns.    The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and the Optionee and the Optionee's 

A-12

 

legal
representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person shall have become a party to this Agreement and have agreed in writing
to join herein and be bound by the terms and conditions hereof. 

        10.6    Power of Attorney.    Optionee's spouse hereby appoints
Optionee his or her true and lawful attorney in fact, for him or her and in his or her name, place and stead, and for his or her use and benefit, to agree to any amendment or modification of this
Agreement and to execute such further instruments and take such further actions as may reasonably be necessary to carry out the intent of this Agreement. Optionee's spouse further gives and grants
unto Optionee as his or her attorney in fact full power and authority to do and perform every act necessary and proper to be done in the exercise of any of the foregoing powers as fully as he or she
might or could do if personally present, with full power of substitution and revocation, hereby ratifying and confirming all that Optionee shall lawfully do and cause to be done by virtue of this
power of attorney. 

[Remainder
of This Page Intentionally Left Blank] 

A-13

 

        IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. 

	

 	
 	

 	

DIGIRAD
	

 	
 	

 	

By:	

	

 	
 	

Address:	

	

 	

 	

 	

	

 	
 	

 	

 */
	

 	
 	

Address:	

	

 	

 	

 	

        The
undersigned spouse of Optionee has read and hereby approves the foregoing Stock Purchase Agreement. In consideration of the Corporation's granting the Optionee the right to acquire
the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms and provisions of such Agreement, including (specifically)
the right of the Corporation (or its assignees) to purchase any and all interest or right the undersigned may otherwise have in such shares pursuant to community property laws or other marital
property rights. 

	

 	
 	

 	

 Optionee's Spouse
	

 	
 	

Address:	

	

 	
 	

 	

*/I
have executed the Section 83(b) election that was attached hereto as an Exhibit. As set forth in Article III, I understand that I, and  not the Corporation, will be responsible for completing
the form and filing the election with the appropriate office of the Federal and State tax
authorities and that if such filing is not completed within thirty (30) days after the date of this Agreement, I will not be entitled to the tax benefits provided by Section 83(b). 

 
 

EXHIBIT I
  
  ASSIGNMENT SEPARATE FROM CERTIFICATE    
    

        FOR VALUE RECEIVED                          hereby sell(s),
assign(s) and transfer(s) unto Digirad (the "Corporation"),
                         (            ) shares of the
Common Stock of the Corporation standing in his\her name on the books of the Corporation
represented by Certificate No.                          and do hereby irrevocably constitute and appoint
                         as Attorney to transfer the
said stock on the books of the Corporation with full power of substitution in the premises. 

Dated:

Signature

 

Instruction:    Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Corporation to
exercise its Repurchase Right set forth in the Agreement without requiring additional signatures on the part of the Optionee. 

Exhibit
I 

  

 
 

EXHIBIT II
  SECTION 83(b) TAX ELECTION    
    

This
statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2. 

	(1)
	The
taxpayer who performed the services is: 

	

 	
 	

Name:	

    
	

 
	 	 	Address:	    
	 

	 	 	Taxpayer Ident. No.:	    
	 

	(2)
	The
property with respect to which the election is being made is              shares of the common stock of Digirad.

	(3)
	The
property was issued on                         , 19    .

	(4)
	The
taxable year in which the election is being made is the calendar year 19    .

	(5)
	The
property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer's employment
with the issuer is terminated. The issuer's repurchase right lapses in a series of annual and monthly installments over a four (4) year period ending on
                        .

	(6)
	The
fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is
$             per share.

	(7)
	The
amount paid for such property is $             per share.

	(8)
	A
copy of this statement was furnished to Digirad for whom taxpayer rendered the service underlying the transfer of property.

	(9)
	This
statement is executed as of:                         , 19    . 

	

 Spouse (if any)	
 	

 Taxpayer

This
form must be filed with the Internal Revenue Service Center with which taxpayer files his/her Federal income tax returns. The filing must be made within 30 days after the execution date of
the Restricted Stock Issuance Agreement. 

Exhibit II-1

 

SPECIAL
PROTECTIVE ELECTION PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE WITH RESPECT TO PROPERTY ACQUIRED UPON EXERCISE OF AN INCENTIVE STOCK OPTION 

The
property described in the above Section 83(b) election is comprised of shares of common stock acquired pursuant to the exercise of an incentive stock option under Section 422 of the
Code. Accordingly, it is the intent of the Taxpayer to utilize this election to achieve the following tax results: 

        1.     The
purpose of this election is to have the alternative minimum taxable income attributable to the purchased shares measured by the amount by which the fair market value
of such shares at the time of their transfer to the Taxpayer exceeds the purchase price paid for the shares. In the absence of this election, such alternative minimum taxable income would be measured
by the spread between the fair market value of the purchased shares and the purchase price which exists on the various lapse dates in effect for the forfeiture restrictions applicable to such shares.
The election is to be effective to the full extent permitted under the Internal Revenue Code. 

        2.     Section 421(a)(1)
of the Code expressly excludes from income any excess of the fair market value of the purchased shares over the amount paid for such shares.
Accordingly, this election is also intended to be effective in the event there is a "disqualifying disposition" of the shares, within the meaning of Section 421(b) of the Code, which would
otherwise render the provisions of Section 83(a) of the Code applicable at that time. Consequently, the Taxpayer hereby elects to have the amount of disqualifying disposition income measured by
the excess of the fair market value of the purchased shares on the date of transfer to the Taxpayer over the amount paid for such shares. Since Section 421(a) presently applies to the shares
which are the subject of this Section 83(b) election, no taxable income is actually recognized for regular tax purposes at this time, and no income taxes are payable, by the Taxpayer as a
result of this election. 

This
form should be filed with the Internal Revenue Service Center with which taxpayer files his/her Federal income tax returns. The filing must be made within 30 days after the execution date
of the Stock Purchase Agreement. 

Note: Page 2 should be attached only if you are exercising an incentive stock option.

Exhibit II-2

QuickLinks

EXHIBIT 10.15

DIGIRAD STOCK OPTION AGREEMENT (Non-Qualified)

EXHIBIT A STOCK PURCHASE AGREEMENT (Exercise of Option)

DIGIRAD STOCK PURCHASE AGREEMENT

EXHIBIT I ASSIGNMENT SEPARATE FROM CERTIFICATE

EXHIBIT II SECTION 83(b) TAX ELECTIONQuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.16    
    

 
 

DIGIRAD CORPORATION
  
  1997 STOCK OPTION/STOCK ISSUANCE PLAN
  (Amended and Restated as of October 23, 2002)    
    

 
 

ARTICLE ONE
  
  GENERAL PROVISIONS    
    

 I.    PURPOSE OF THE PLAN  

        This 1997 Stock Option/Stock Issuance Plan is intended to promote the interests of Digirad Corporation by providing eligible persons with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation. 

        Capitalized
terms shall have the meanings assigned to such terms in the attached Appendix. 

 II.    STRUCTURE OF THE PLAN  

                 A.    The Plan shall be divided into two separate equity programs: 

        -       the
Discretionary Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common
Stock, and 

        -       the
Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the
immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary). 

                 B.    The provisions of Articles One and Four shall apply to all equity programs under the
Plan and shall govern the interests of all persons under the
Plan. 

 III.    ADMINISTRATION OF THE PLAN  

                 A.    Except as provided in Paragraph B of this Section III, the Plan shall be
administered by the Board or one or more committees
appointed by the Board, provided that (1) beginning with the Section 12 Registration Date, the Primary Committee shall have sole and exclusive authority to administer the Plan with
respect to Section 16 Insiders, and (2) administration of the Plan may otherwise, at the Board's discretion, be vested in the Primary Committee or a Secondary Committee. 

                 B.    Members of the Primary Committee or any Secondary Committee shall serve for such
period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee. 

                C.    Each Plan Administrator shall, within the scope of its administrative functions under
the Plan, have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Option Grant and Stock Issuance Programs and to make such
determinations under, and issue such interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of
the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant and Stock
Issuance Programs under its jurisdiction or any option or stock issuance thereunder. 

 

                 D.    Service on the Primary Committee or the Secondary Committee shall constitute service
as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable
for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the Plan. 

 IV.    ELIGIBILITY  

                A.    The persons eligible to participate in the Discretionary Option Grant and Stock
Issuance Programs are as follows: 

        1.     Employees,

        2.     non-employee
members of the Board or the board of directors of any Parent or Subsidiary, and 

        3.     consultants
and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary). 

                B.    Each Plan Administrator shall, within the scope of its administrative jurisdiction
under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive option grants, the time or times when such option grants are to be
made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is
to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding and (ii) with respect to stock issuances
under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when such issuances are to be made, the number of shares to be issued to each Participant,
the vesting schedule (if any) applicable to the issued shares and the consideration for such shares. 

                 C.    The Plan Administrator shall have the absolute discretion either to grant options in
accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program. 

 V.    STOCK SUBJECT TO THE PLAN  

                 A.    The stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock initially reserved for issuance over the term of the Plan shall not exceed 13,671 shares. Such share reserve includes
(i) 3,454,860 shares that were initially reserved by the Board on September 11, 1997 and approved by the stockholders on October 28, 1997, (ii) a reduction of 720,659
shares approved by the Board on December 17, 1998 and (iii) the consummation of a 1-for-200 reverse split of the Company's capital stock effected on
October 18, 2002. Such authorized share reserve shall be reduced by the number of shares subject to options reserved for issuance prior to adoption of the Plan. 

                 B.    Shares of Common Stock subject to outstanding options shall be available for
subsequent issuance under the Plan to the extent those options
expire or terminate for any reason prior to exercise in full. Unvested shares issued under the Plan and subsequently cancelled or repurchased by the Corporation, at the original issue price paid per
share, pursuant to the Corporation's repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan. 

2

 

                 C.    If any change is made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number
and/or class of securities issuable under the Plan, (ii) the number and/or class of securities for which any one person may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances under this Plan per calendar year, and (iii) the number and/or class of securities and the exercise price per share in effect under each outstanding option
under the Plan. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive. 

 
 

ARTICLE TWO
  
  DISCRETIONARY OPTION GRANT PROGRAM    
    

 I.    OPTION TERMS  

        Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to
such options. 

                 A.    Exercise Price.

        1.     The
exercise price per share shall be fixed by the Plan Administrator but shall not be less than eighty-five percent (85%) of the Fair Market Value per share
of Common Stock on the option grant date, provided that the Plan Administrator may fix the exercise price at less than 85% if the optionee, at the time of the option grant, shall have made a payment
to the Company (including payment made by means of a salary reduction) equal to the excess of the Fair Market Value of the Common Stock on the option grant date over such exercise price. 

        2.     The
exercise price shall become immediately due upon exercise of the option and may, subject to the provisions of Section I of Article Four and the documents
evidencing the option, be payable in one or more of the forms specified below: 

        a.     cash
or check made payable to the Corporation, 

        b.     with
respect to the exercise of options after the Section 12 Registration Date, shares of Common Stock held for the requisite period necessary to avoid a charge to
the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or 

        c.     with
respect to the exercise of options for vested shares after the Section 12 Registration Date and to the extent the sale complies with all applicable laws
relating to the regulation and sale of securities, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions to
(a) a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise, and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. 

        Except
to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. 

3

 

                 B.    Exercise and Term of Options.    Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. However, no option shall have a term in excess of ten (10) years measured from the
option grant date. 

                C.    Effect of Termination of Service.

        1.     The
following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death: 

        a.     Any
option outstanding at the time of the Optionee's cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be
determined by the Plan Administrator and set forth in the documents evidencing the option (which shall in no event be less than six (6) months in the case of death or disability nor less than
thirty (30) days in the case of any other cessation of Service), provided no such option shall be exercisable after the expiration of the option term. 

        b.     Any
option exercisable in whole or in part by the Optionee at the time of death may be subsequently exercised by the personal representative of the Optionee's estate or
by the person or persons to whom the option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. 

        c.     Subject
to clause C.2.(ii) below of this Section I, during the applicable post-Service exercise period, the option may not be exercised
in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee's cessation of Service. Upon the expiration of the applicable exercise period
or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. 

        2.     The
Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to: 

          (i)  extend
the period of time for which the option is to remain exercisable following the Optionee's cessation of Service from the limited exercise period otherwise in
effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or 

         (ii)  permit
the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock
for which such option is exercisable at the time of the Optionee's cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the
Optionee continued in Service. 

                 D.    Stockholder Rights.    The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares. 

                E.    Repurchase Rights.    The Plan Administrator shall have the discretion to grant options
which are exercisable for unvested shares of Common Stock and to reserve the right to repurchase any or all of those unvested shares should the Optionee thereafter cease to be in Service to the
Corporation. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing such repurchase right. 

4

 

                 F.     Limited Transferability of Options.    During the lifetime
of the Optionee, options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent and distribution following the Optionee's death. 

 II.    INCENTIVE OPTIONS  

        The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Four shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to
the terms of this Section II. 

                A.    Eligibility.    Incentive Options may only be granted to
Employees. 

                 B.    Exercise Price.    The exercise price per share shall not be
less than one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the option grant date. 

                C.    Dollar Limitation.    The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of
grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as
Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, the foregoing limitation
on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. 

                D.    10% Stockholder.    If any Employee to whom an Incentive Option
is granted is a 10% Stockholder, then the exercise price per share
shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured
from the option grant date. 

 III.    CANCELLATION AND REGRANT OF OPTIONS  

        The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of
any or all outstanding options under the Discretionary Option Grant Program and to grant in substitution new options covering the same or different number of shares of Common Stock but with an
exercise price per share based on the Fair Market Value per share of Common Stock on the new grant date. 

 
 

ARTICLE THREE
  
  STOCK ISSUANCE PROGRAM    
    

 I.    STOCK ISSUANCES  

        Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. 

 II.    STOCK ISSUANCE TERMS  

                 A.    Purchase Price.

        1.     The
purchase price per share shall be fixed by the Plan Administrator, but shall not be less than eighty-five percent (85%) of the Fair Market Value per share
of Common Stock on the issuance date. 

5

 

        2.     Subject
to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of
consideration which the Plan Administrator may deem appropriate in each individual instance: 

        a.     cash
or check made payable to the Corporation, or 

        b.     past
services rendered to the Corporation (or any Parent or Subsidiary). 

                 B.    Vesting Provisions.

        1.     Shares
of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest
in one or more installments over the Participant's period of Service or upon attainment of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of
Common Stock issued under the Stock Issuance Program, namely: 

        a.     the
Service period to be completed by the Participant or the performance objectives to be attained, 

        b.     the
number of installments in which the shares are to vest, 

        c.     the
interval or intervals (if any) which are to lapse between installments, and 

        d.     the
effect which death, Permanent Disability or other event designated by the Plan Administrator is to have upon the vesting schedule, 

                shall
be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement. 

        2.     Any
new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to
receive with respect to the Participant's unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant's
unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. 

        3.     The
Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not
the Participant's interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. 

        4.     Should
the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the
performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash
equivalent (including the Participant's purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant attributable to the surrendered shares. 

        5.     The
Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the
cessation of the Participant's Service or the non-attainment of the performance objectives 

6

 

applicable
to those shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares as to which the waiver applies. Such waiver may be effected at any time,
whether before or after the Participant's cessation of Service or the attainment or non-attainment of the applicable performance objectives. 

 
 

ARTICLE FOUR
  
  MISCELLANEOUS    
    

 I.    FINANCING  

        The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Discretionary Option Grant Program or the purchase price
of shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments. The terms of any such promissory note
(including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. In no event may the maximum credit available to the Optionee or
Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase. 

 II.    SHARE ESCROW/LEGENDS  

        Unvested shares issued under the Plan may, in the Plan Administrator's discretion, be held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares. 

 III.    CORPORATE TRANSACTION  

                 A.    Except as otherwise provided in the agreements evidencing an option, each
outstanding option under the Discretionary Option Grant Program shall
automatically accelerate in the event of a Corporate Transaction so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable with
respect to the total number of shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock, provided that an outstanding option shall not so accelerate if and to the extent: (i) such option is, in connection with the Corporate Transaction, either to be assumed
by the successor corporation (or parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof), (ii) such
option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same vesting schedule applicable to those option shares or (iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. The determination of option comparability under clause (i) above shall be made by the Plan Administrator, and its determination shall be
final, binding and conclusive. 

                 B.    Except as otherwise provided in the agreements creating the repurchase rights,
outstanding repurchase rights, if any, shall terminate
automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, provided that such repurchase right shall
not lapse to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the option is issued or the repurchase right is created. 

7

 

                 C.    Immediately following the consummation of the Corporate Transaction, all outstanding
options shall terminate and cease to be outstanding, except
to the extent assumed by the successor corporation (or parent thereof). 

                D.    Each option which is assumed in connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior
to such Corporate Transaction. Appropriate adjustments to reflect such Corporate Transaction shall also be made to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the
Plan and (iii) the maximum number and/or class of securities for which any one person may be granted stock options, separately exercisable stock appreciation rights and direct stock issuances
under the Plan per calendar year. 

                 E.    Repurchase rights which are assigned in connection with a Corporate Transaction
shall be exercisable with respect to the property issued to the
Optionee of Participant upon consummation of such Corporate Transaction in exchange for the Common Stock held by the Optionee or Participant subject to the repurchase rights immediately prior to the
Corporate Transaction. 

                F.     Except as otherwise limited by the Plan Administrator at the time an Option is
granted, vesting under outstanding options will automatically
accelerate in the event the Optionee's Service subsequently terminates by reason of an Involuntary Termination within twenty-four (24) months following the effective date of any
Corporate Transaction in which those options are assumed or replaced and do not otherwise accelerate. Any options so accelerated shall remain exercisable for fully-vested shares until the  earlier of
(i) the expiration of the option term or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination. The portion of any Incentive Option accelerated in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded and the provisions governing the exercise and holding period are met. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws. 

                 G.    Except as otherwise limited by the Plan Administrator at the time the option is
granted under the Discretionary Option Program or the repurchase
rights are created, the outstanding repurchase rights with respect to shares held by an Optionee or Participant will automatically lapse and cease to be exercisable in the event the Optionee's or the
Participant's Service subsequently terminates by means of an Involuntary Termination within twenty-four (24) months following the effective date of any Corporate Transaction in
which those repurchase rights are assigned or otherwise continue. 

                 H.    The outstanding options or repurchase rights shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

 IV.    CHANGE IN CONTROL  

                 A.    In the event of any Change in Control, each outstanding option under the
Discretionary Option Grant Program shall automatically accelerate so
that each such option shall, immediately prior to the effective date of the Change in Control, become fully exercisable with respect to the total number of shares of Common Stock at the time subject
to such option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. 

8

 

                 B.    Outstanding repurchase rights, if any, shall terminate automatically, and the shares
of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control. 

 V.    VESTING  

        Notwithstanding any other provision of this agreement, the vesting schedule imposed with respect to any option grant or share issuance shall not result in the
Optionee or Participant vesting in fewer than 20% per year for five years from the date of the option grant or share issuance. 

 VI.    TAX WITHHOLDING  

                 A.    The Corporation's obligation to deliver shares of Common Stock upon the exercise of
options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements. 

                B.    The Plan Administrator may, in its discretion, provide any or all holders of
Non-Statutory Options or unvested shares of Common Stock
under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their options or the vesting of
their shares. Such right may be provided to any such holder in either or both of the following formats: 

        Stock Withholding:    The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option or the vesting of such shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the Taxes (not to exceed one
hundred percent (100%)) designated by the holder. 

        Stock Delivery:    The election to deliver to the Corporation, at the time the Non-Statutory Option is exercised or
the shares vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the option exercise or share vesting triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes (not to exceed one hundred percent (100%)) designated by the holder. 

 VII.    EFFECTIVE DATE AND TERM OF THE PLAN  

                 A.    The Plan shall become effective immediately upon the Plan Effective Date. Options
may be granted under the Discretionary Option Grant at any time
on or after the Plan Effective Date. However, no options granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation's
stockholders. If such stockholder approval is not obtained within twelve (12) months after the Plan Effective Date, then all options previously granted under this Plan shall terminate and cease
to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan. 

                 B.    All options outstanding as of the Plan Effective Date shall be incorporated into the
Plan at that time and shall be treated as outstanding
options under the Plan. However, each outstanding option so incorporated shall continue to be governed solely by the terms of the documents evidencing such option, and no provision of the Plan shall
be deemed to affect or otherwise modify the rights or obligations of the holders of such incorporated options with respect to their acquisition of shares of Common Stock. 

                 C.    The Plan shall terminate upon the earliest of (i) the tenth anniversary of the Plan
Effective Date, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares or (iii) the termination of all outstanding options
in connection with a Corporate Transaction. Upon such plan termination, all outstanding option grants and unvested stock 

9

 

issuances
shall thereafter continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances. 

 VIII.    AMENDMENT OF THE PLAN  

                A.    The Board shall have complete and exclusive power and authority to amend or modify
the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to stock options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval if so determined by the Board or pursuant to
applicable laws or regulations. 

                B.    Options to purchase shares of Common Stock may be granted under the Discretionary
Option Grant and shares of Common Stock may be issued under the
Stock Issuance Program that are in each instance in excess of the number of shares then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be
held in escrow until there is obtained any required approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such approval is not
obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan
and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and
cease to be outstanding. 

 IX.    USE OF PROCEEDS  

        Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes. 

 X.    REGULATORY APPROVALS  

                 A.    The implementation of the Plan, the granting of any stock option under the Plan and
the issuance of any shares of Common Stock (i) upon
the exercise of any granted option or (ii) under the Stock Issuance Program shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the stock options granted under it and the shares of Common Stock issued pursuant to it. 

                 B.    No shares of Common Stock or other assets shall be issued or delivered under the
Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable
under the Plan, and all applicable listing requirements of any stock
exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading. 

 XI.    NO EMPLOYMENT/SERVICE RIGHTS  

        Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly
reserved by each, to terminate such person's Service at any time for any reason, with or without cause. 

10

 

 XII.    FINANCIAL REPORTS  

        The Corporation shall deliver a balance sheet and an income statement at least annually to each individual holding an outstanding option under the Plan, unless
such individual is a key Employee whose duties in connection with the Corporation (or any Parent or Subsidiary) assure such individual access to equivalent information. 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK] 

11

  

 
 

APPENDIX    
    

        The following definitions shall be in effect under the Plan: 

        A.    Board shall mean the Corporation's Board of Directors. 

        B.    Change in Control shall mean a change in ownership or control of the Corporation effected through either of the following
transactions: 

          (i)  the
acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does
not recommend such stockholders to accept, or 

         (ii)  a
change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period
or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the
time the Board approved such election or nomination. 

        C.    Code shall mean the Internal Revenue Code of 1986, as amended. 

        D.    Common Stock shall mean the Corporation's common stock. 

        E.    Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a
party: 

          (i)  a
merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities
are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or 

         (ii)  the
sale, transfer or other disposition of all or substantially all of the Corporation's assets. 

        F.     Corporation shall mean Digirad Corporation, a Delaware corporation, and its successors. 

        G.    Discretionary Option Grant Program shall mean the discretionary option grant program in effect under the Plan. 

        H.    Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the
control and direction of the employer entity as to both the work to be performed and the manner and method of performance. 

        I.     Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise. 

        J.     Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following
provisions: 

          (i)  If
the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be deemed equal to the closing selling price per share of
Common Stock on the date in question, as such price is reported on the Nasdaq National Market or any successor system. If there is no closing selling price for the Common Stock on the date in
question, then the 

A-1

 

Fair
Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 

         (ii)  If
the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock
on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists. 

        (iii)  For
purposes of any option grants made on the Underwriting Date, the Fair Market Value shall be deemed to be equal to the price per share at which the Common Stock is
to be sold in the initial public offering pursuant to the Underwriting Agreement. 

        (iv)  For
purposes of any option grants made prior to the Underwriting Date, the Fair Market Value shall be determined by the Plan Administrator, after taking into account
such factors as it deems appropriate. 

        K.    Incentive Option shall mean an option which satisfies the requirements of Code Section 422. 

        L.    Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of: 

          (i)  such
individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or 

         (ii)  such
individual's voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and participation in any corporate-performance based bonus or incentive programs) by
more than fifteen percent (15%) or (C) a relocation of such individual's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is
effected by the Corporation without the individual's consent. 

        M.   Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any
unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or
any Parent or Subsidiary). 

        N.    1934 Act shall mean the Securities Exchange Act of 1934, as amended. 

        O.    Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. 

        P.     Optionee shall mean any person to whom an option is granted under the Discretionary Option Grant Program. 

        Q.    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain (other than the Corporation) 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. 

A-2

 

        R.    Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program. 

        S.     Permanent Disability or Permanently Disabled shall mean the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. 

        T.     Plan shall mean the Corporation's 1997 Stock Option/Stock Issuance Plan, as set forth in this document. 

        U.    Plan Administrator shall mean the particular entity, whether the Primary Committee, the Board or the Secondary Committee,
which is authorized to administer the Discretionary Option Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its
administrative functions under those programs with respect to the persons under its jurisdiction. 

        V.     Plan Effective Date shall mean the date on which the Plan was adopted by the Board. 

        W.    Primary Committee shall mean the committee of two (2) or more non-employee Board members appointed by
the Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders following the Section 12 Registration Date. 

        X.    Secondary Committee shall mean a committee of two (2) or more Board members appointed by the Board to administer
any aspect of Plan not required hereunder to be administered by the Primary Committee. The members of the Secondary Committee may be Board members who are Employees eligible to receive discretionary
option grants or direct stock issuances under the Plan or any other stock option, stock appreciation, stock bonus or other stock plan of the Corporation (or any Parent or Subsidiary). 

        Y.    Section 12 Registration Date shall mean the date on which the Common Stock is first registered under
Section 12(g) or Section 15 of the 1934 Act. 

        Z.    Section 16 Insider shall mean an officer or director of the Corporation subject to the short-swing profit
liabilities of Section 16 of the 1934 Act. 

        AA.     Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary) by a
person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant or stock issuance. 

        BB.      Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange. 

        CC.     Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at
the time of issuance of shares of Common Stock under the Stock Issuance Program. 

        DD.     Stock Issuance Program shall mean the stock issuance program in effect under the Plan. 

        EE.     Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, 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. 

        FF.   Taxes shall mean the Federal, state and local income and employment tax liabilities incurred by the holder of
Non-Statutory Options or unvested shares of Common Stock in connection with the exercise of those options or the vesting of those shares. 

A-3

 

        GG.     10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary). 

        HH.     Underwriting Agreement shall mean the agreement between the Corporation and the underwriter or underwriters
managing the initial public offering of the Common Stock. 

        II.    Underwriting Date shall mean the date on which the Underwriting Agreement is executed and priced in connection with an
initial public offering of the Common Stock. 

A-4

QuickLinks

EXHIBIT 10.16

DIGIRAD CORPORATION 1997 STOCK OPTION/STOCK ISSUANCE PLAN (Amended and Restated as of October 23, 2002)

ARTICLE ONE GENERAL PROVISIONS

ARTICLE TWO DISCRETIONARY OPTION GRANT PROGRAM

ARTICLE THREE STOCK ISSUANCE PROGRAM

ARTICLE FOUR MISCELLANEOUS

APPENDIX

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}]]