Document:

dxcm03312013ex1027

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

Exhibit  10.27

Amendment Number Two to Non-Exclusive Distribution Agreement

This Amendment Number Two to the Non-Exclusive Distribution Agreement (“Amendment Number Two”) is made as of this 28th day of March, 2013, by and between DexCom, Inc., a Delaware corporation, with a principal place of business at 6340 Sequence Drive, San Diego, California 92121 (the "Company") and RGH Enterprises, Inc. d/b/a Edgepark Medical Supplies, an Ohio corporation with offices at 1810 Summit Commerce Park, Twinsburg, Ohio 44087 (the “Distributor”). 

WITNESSETH

WHEREAS, Company and Distributor previously entered into a Non-Exclusive Distribution Agreement, effective April 30, 2008, as amended on March 29, 2011 (the “Agreement”). 

WHEREAS, Company and Distributor wish to amend the Agreement as set forth herein in accordance with Section 2.2 and 17.10 of the Agreement. 

THEREFORE, Company and Distributor agree as follows:  

   1.  SECTION 4.  Section 4.1.31 is amended and restated in its entirety as follows:

4.1.31  to provide, within five (5) business days of the end of each calendar month, a report detailing Distributor’s month-end inventory balance of Products (which report Company shall retain the right to audit on a periodic basis with advance notice to Distributor).

  2.  SECTION 4.  A new section 4.1.37 shall be added as follows: 

4.1.37  to maintain a valid and current prescription on file for ongoing product orders.

        3.  SECTION 6.  Section 6.4 shall be amended and restated as follows: 

6.4      All invoices for Product submitted by DexCom, Inc. to the Distributor shall be payable within 30 (thirty) days after the date of such invoice unless disputed by Distributor to Company.  If the Distributor fails to pay or procure payment of the full undisputed amount when due, and without in any manner excusing such violation, the Distributor agrees to pay the Company interest at the greater of:  (i) a rate of 1.5% per month; or (ii) the highest rate legally 

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

permissible on the amount (including interest) due and owing to the Company, from the date the payment is due.  The Distributor also agrees to pay all collection costs, expenses and reasonable attorney fees for collection of any amount due and unpaid.  Without prejudice to any of its other rights, the Company may, upon seven (7) days prior written notice, withhold shipments of the Products if the Distributor has not paid an invoice that is not otherwise in dispute when due. 

 4.     SCHEDULE 1.  Schedule 1 is amended and restated in its entirety as follows:  

Products – 

Dexcom SEVEN PLUS
 
	
			
	Product
	Description
	Transfer Price*

	STS-7K-041
	SEVEN Sensors (package of four (4))
	$[*****]

Dexcom G4 Platinum
 
	
			
	Product
	Description
	Transfer Price*

	   STS-GL-041
	Dexcom G4 Platinum Sensor Kit (package of four (4))
	$[*****]

	STK-GL-001
	Dexcom G4 Platinum Receiver Kit – BLK
	$[*****]

	STK-GL-PNK
	Dexcom G4 Platinum Receiver Kit – PNK
	$[*****]

	STK-GL-BLU
	Dexcom G4 Platinum Receiver Kit – BLU
	$[*****]

	STS-GL-003
	Dexcom G4 Transmitter Kit
	$[*****]

 
 
The Products will be supplied FOB Shipping Point freight prepaid by Distributor and sales taxes to be paid by Distributor.  [*****]

		
	5.
	 SCHEDULE 3.  Schedule 3 is amended and restated in its entirety as follows:  

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

SCHEDULE 3

Sales Tracing Report Format

		
	Required Reporting Frequency:  
	Weekly

Format:                 .csv (comma-delimited file)
		
	Delivery method:  
	Dexcom controlled secure file transfer protocol site specific to the distributor

Sales tracings will include the following fields:
	
			
	 
	 
	 

	Field
	Format
	Comments

	Customer ID Number
	Text
	A unique identifying number for each customer

	Physician First Name
	Text
	 

	Physician Last Name
	Text
	 

	Physician ZIP Code
	Text
	53-character; text so leading zeros are included; no Zip + 4 numbers

	Physician NPI
	Text
	 

	Insurance Name
	Text
	 

	Dexcom Item Number
	Text
	 

	Item Quantity
	Text
	Unit quantity - e.g. 1 box of sensors is '1', and not the number of individual sensors included

	Date of Shipment
	Text
	MM/DD/YYYY

	 
	 
	 

	Shipper
	Text
	Dexcom or Distributor, where distributor provides tracings including shipments from both locations

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

6.      SCHEDULE 5.  Schedule 5 is amended and restated in its entirety as follows:  

SCHEDULE 5

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

Quality Agreement
		
	1.0
	SCOPE

		
	1.1
	This Quality Agreement (the “Quality Agreement”) is incorporated within the Distribution Agreement dated April 30, 2008, as amended on March 29, 2011, between Distributor and Company pertaining to the distribution and sale of Products.  Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Agreement.

		
	1.2
	This Quality Agreement shall be effective on the Effective Date and shall remain in effect until the Agreement expires, is terminated or the Quality Agreement is modified.

		
	1.3
	The obligations of Distributor under this Quality Agreement shall be equivalent to those imposed on distributors of disposable Class III medical devices.

		
	2.0
	DEFINITIONS / ACRONYMS

		
	2.1
	“Applicable Documents”:  Documents used to develop a specific document (i.e. standards, regulations) and documents referenced in the text of the specific document.

		
	2.2
	"Government Agency" means any body which has the authority to act on behalf of the government of the Union or State to ensure that the requirements of all laws applicable to the Products and Distributor are carried out and adhered to in the State.

		
	2.3
	"Customer Complaint" means any written, electronic or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety or performance of a medical device that has been placed on the market.

		
	2.4
	“CGM”: Continuous Glucose Monitoring.

		
	2.5
	“Correction” means repair, modification, adjustment, relabeling, destruction, or inspection (including patient monitoring) of a product without its physical removal to some other location.

		
	2.6
	“Document” means any information, either written or stored electronically, including specifications, procedures, standards, methods, instructions, plans, files, forms, notes, reviews, analyses, and reports.

		
	2.7
	“Government Agency” means a federal (e.g. FDA) or state (Health and Human Services Food and Drug Branch) organization that has the power to provide services for conformity assessment on the conditions set out in the Federal Food, Drug, and Cosmetic Act (FD&C Act) and United States Code (U.S.C) as part for the sale of medical device products. This normally means assessing the manufacturers conformity to the essential requirements listed in each directive. 

		
	2.8
	 “Lot” or “Batch” means one or more components or finished devices that consist of a single type, model, class, size, composition, or software version that are 

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

manufactured under essentially the same conditions and that are intended to have uniform characteristics and quality within specified limits.
		
	2.9
	“Label” means a display of written, printed, or graphic matter upon the immediate container of any article.  Any word, statement, or other information appearing on the immediate container must also appear “on the outside container or wrapper, if any there be, of the retain package of such article, or is easily legible through the outside container of wrapper.”

		
	2.10
	“Labeling” means any  Labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) displaying such article” at any time while a device is held for sale after shipment or delivery for shipment in interstate commerce.

		
	2.11
	 “Quality Records” means Documents containing recorded information, regardless of the medium or characteristic, which demonstrate the effectiveness of the quality management system and that provide evidence that products meet regulatory requirements and comply with specified product requirements.

		
	2.12
	“Removal” means the physical removal of a device from its point of use to some other location for repair, modification, adjustment, relabeling, destruction, or inspection.

		
	2.13
	“Stock Recovery” means the correction or removal of a device that has not been marketed or that has not left the direct control of the manufacturer, i.e., the device is located on the premises owned, or under the control of, the manufacturer, and no portion of the lot, model, code, or other relevant unit involved in the corrective or removal action has been released for sale or use.

		
	2.14
	"Recall" means when there is a risk of death or serious deterioration to the state of health, the return of a medical device to the supplier, its modification by the supplier at the site of installation, its exchange or its destruction, in accordance with the instructions contained in the advisory notice.

		
	2.15
	"Medical Device Reporting System" is a system of incident reporting to the Federal Food and Drug Administration (FDA), for all medical devices which are approved for inter-state commerce, where such incidents lead to corrective action relevant to medical devices.  Medical Device Reporting Systems maintained by the Distributor shall comply with all applicable laws, the rules and regulations promulgated by the Federal or any State. This system is intended to allow data to be correlated between the FDA and manufactures to improve the protection of health and safety of patients, users and others by reducing the likelihood of the same type of adverse incident being repeated in different places at different times. 

		
	3.0
	PROCESS CONTROLS

		
	3.1
	Both parties shall be responsible for all process control activities relative to the Products, including but not limited to, assurance of receipt, identification, traceability, storage, handling, inventory control, contamination control, 

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

complaint handling and trending and process validations, as required by Title 21 of United States Code of Federal Regulations, and other applicable regulations, and governmental laws.
		
	3.2
	Both parties shall maintain appropriate documented procedures.

		
	3.3
	Company shall provide evidence that packaging containers maintain the integrity, quality, function, and sterility of the product for the entire shelf life, and not produce toxic residues during storage.  Packaging must prevent or indicate the occurrence of tampering.

		
	4.0
	TRAINING AND DOCUMENT CHANGE CONTROL

		
	4.1
	Distributor shall be responsible for managing an effective employee training program and document change control system relative to the receipt, identification, traceability, storage, handling, inventory control, contamination control and complaint handling and trending at the location of Distributor and its third party suppliers.

		
	4.2
	Distributor must train its employees to perform their job function and to this Quality Agreement as required.

		
	5.0
	VALIDATION

		
	5.1
	Distributor shall be responsible for managing qualified processes and systems as required of suppliers (e.g. computer system) by law.

		
	5.2
	Both parties shall be responsible for managing an effective product and process validation system relative to the distribution of the Products at the location of the Distributor and its third party suppliers.

		
	5.3
	Company shall be responsible for managing an effective product and process validation system relative to the manufacture of the Products at the location of the Company and its third party suppliers.

		
	6.0
	DISTRIBUTION AND HANDLING

		
	6.1
	Products shipped by the Distributor must be shipped using documented procedures for the handling, storage, packaging, preservation, and delivery of the Products.  

		
	6.2
	Distributor shall deliver Products to its customers using documented procedures for handling, storage, packing, preservation, and delivery of the Products.

		
	6.3
	Disposables must have at least three months of expiration dating left, unless specific variance by lot number has been agreed to by both parties, before being shipped to any end-user customer.  

		
	6.4
	The Distributor will not modify any product packaging that it receives from the Company.  Shipping containers shall be validated to ensure that the safety and integrity of the Product is maintained during transit, including shipping methods that conform with the Product’s acceptable temperature and humidity ranges.

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

		
	6.5
	Distributor must maintain storage & handling as follows:

Seven Plus Product
	
			
	Product Name
	Storage Temperature
	Humidity

	Sensor
	2-25°C (36-77°F)
	N/A

	Transmitter
	0-45°C (32-113°F)
	Max 95% Relative

	Receiver
	0-45°C (32-113°F)
	10-85% Relative

G4 Platinum Product
	
			
	Product Name
	Storage Temperature
	Humidity

	Sensor
	2-25°C (36-77°F)
	15-85% Relative

	Transmitter
	0-45°C (32-113°F)
	10-95% Relative

	Receiver
	0-45°C (32-113°F)
	10-95% Relative

		
	7.0
	LOT TRACEABILITY

		
	7.1
	Distributor shall establish and maintain procedures for identifying the Products by suitable means from receipt and during all stages of production and delivery.  This shall include procedures to provide full lot traceability for each unit, lot, or batch of finished Products during all stages of production and delivery to the Distributor.  

		
	7.2
	Distributor shall establish and maintain procedures to provide traceability to the first consignee.

		
	7.3
	Distributor shall establish and maintain procedures to provide traceability to the end user.

		
	7.4
	Both parties shall use reasonable efforts to assist the other in maintaining respective lot traceability.

		
	7.5
	Both parties are required to track the following information detailed in the table to the end user. 

		
	8.0
	Seven Plus Product

	
			
	Product
	Description
	Lot traceability Tracking Requirement

	STK-7U-030
	SEVEN PLUS System Kit
	Lot Number identified on the box

	STS-7K-041
	SEVEN Sensors (package of one (1) or four (4))
	Lot Number identified on the box

	STR-7U- 030
	SEVEN PLUS Replacement Receiver
	Lot Number identified on the box

	STT-7U- 030
	SEVEN PLUS Replacement Transmitter
	Lot Number identified on the box

		
	9.0
	G4 Platinum Product

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

	
			
	Product
	Description
	Lot traceability Tracking Requirement

	STK-GL-001
	G4 Platinum Receiver Kit – BLK
	Lot Number identified on the box

	STK-GL-PNK
	G4 Platinum Receiver Kit – PNK
	Lot Number identified on the box

	STK-GL-BLU
	G4 Platinum Receiver Kit – BLU
	Lot Number identified on the box

	STT-GL-003
	G4 Transmitter Kit
	Lot Number identified on the box

	STR-GL-001
	G4 Platinum Replacement Receiver Kit - BLK
	Lot Number identified on the box

	STR-GL-PNK
	G4 Platinum Replacement Receiver Kit - PNK
	Lot Number identified on the box

	STR-GL-BLU
	G4 Platinum Replacement Receiver Kit - BLU
	Lot Number identified on the box

	STS-GL-011
	G4 Platinum Sensors Kit (package of one (1))
	Lot Number identified on the box

	STS-GL-041
	G4 Platinum Sensors Kit (package of four (4))
	Lot Number identified on the box

		
	10.0
	PACKAGING AND LABELING

		
	10.1
	Company shall provide packaging and labeling specifications that call out clear labeling requirements. 

		
	10.2
	Company shall ensure that the labels, inserts and accompanying documentation satisfy the requirements of the applicable regulations.

		
	10.3
	Distributor shall not modify the labels, primary or secondary packaging, inserts or accompanying documentation without the written approval of the Company.

		
	11.0
	 FINISHED PRODUCT NON-CONFORMANCES

		
	11.1
	Any nonconforming finished product requires written approval from Company’s Quality Assurance before shipment to any Customer by Distributor. 

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

		
	12.0
	COMPLAINT HANDLING AND REPORTING

		
	12.1
	Distributor shall be responsible for the establishment and maintenance of a system for handling all Tier I Complaints pertaining to Products distributed under the Agreement.  "Complaint" means any written, electronic, telephone call and/or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety, effectiveness, or performance of a device after it is released to distribution.  A complaint is any indication of the failure of a device to meet customer or user expectations for quality or to meet performance specifications.  A “Tier I Complaint” includes complaints that pertain to the purchase, payment, billing, delivery, packaging and customer service.  This system shall include receipt, review, corrective/preventative action and maintenance of files.  Distributor will not perform any Tier II Complaint Handling, as defined below.  

		
	12.2
	Company shall be responsible for the establishment and maintenance of a system for handling Tier II Complaints pertaining to Products distributed under the Agreement.  A “Tier II Complaint” includes complaints that pertain to product functionality, trouble shooting, or adverse events.  This system shall include receipt, review, investigation, corrective/preventative action and maintenance of files.  It shall also include adverse event reporting to the appropriate governmental authorities as required by regulations in the applicable jurisdictions.

		
	12.3
	Company shall notify Distributor in writing of legal and regulatory matters relating to the Products, including:

		
	12.3.1
	Any regulatory actions by governmental authorities (e.g., inspection citations, warning letters, or other non-conformance notices).

		
	12.3.2
	Regulatory enforcement actions such as injunctions or seizures.

		
	12.3.3
	FDA registration activity (e.g., non-conformance notices, hold points).

		
	12.3.4
	Complaints received from Customers within the Territory that have not been processed through the Company’s complaint handling system.

		
	12.3.5
	Adverse incidents relating to customers within the Territory (e.g., MDR’s.).

		
	12.4
	Distributor shall notify Company in writing of the following:

		
	12.4.1
	Any serious regulatory action relating to the Products.

		
	12.4.2
	Tier I Complaints regarding Products or Instruments. Distributor shall code, trend and report monthly all phone call inquiries and Tier I Complaint data pertaining to Products.  

		
	12.4.3
	If an adverse incident is received that may be subject to FDA’s Medical Device Reporting regulation that pertain to Products and Instruments, then Distributor shall notify Company  no later than 24 hours following Distributor’s initial receipt of the adverse event.

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

		
	12.4.4
	  Distributor shall forward all complaints pertaining to Products and Instruments to Company no later than 5 working days following Distributor’s initial receipt of the complaint.

		
	13.0
	FIELD ACTIONS

		
	13.1
	The Company will be responsible for the initiation of any recalls or other field actions related to the Products.

		
	13.2
	Both parties will comply with recalls or general corrective actions, provided such recalls or general corrective actions do not, in the opinion of Company violate or cause Company to violate the laws of any jurisdiction affected by the recalls or corrective action.

		
	13.3
	If Distributor and Company do not agree on a course of action, Company may initiate field actions related to the Products, but may not use field action to cause Distributor to lose Customers. 

		
	14.0
	AUDITS

		
	14.1
	  Company shall have the right to conduct audits of Distributor’s facilities and operations during normal business hours at its own expense and upon thirty (30) days notice to Distributor in order to assess compliance with all applicable regulations, procedures and this Quality Agreement.  Any such audits will be conducted by a national “big four” independent accounting firm (or other independent accounting firm whose audit department is a separate stand alone function of its business and which possesses liability insurance with coverage of at least $3,000,000), subject to such firm’s execution of a confidentiality agreement in form reasonably acceptable to Distributor. Company shall be permitted to conduct one audit per calendar year or more frequently in the instance there exists a material difference between the inventory records of Distributor and Company.

		
	15.0
	RECORD RETENTION

		
	15.1
	Both parties shall retain all sales and medical records as required by law.  

		
	15.2
	Prior to any record destruction pertaining to Company Products and Instruments, the Distributor will notify the Company in writing.  If the record destruction is not approved the Company will assume responsibility of the records.

		
	16.0
	REGULATORY AND REGISTRATION ADMINISTRATION

		
	16.1
	Distributor, at its expense, is responsible for registration responsibilities, and for agreed upon domestic registration costs in accordance with Federal and State regulations.  Distributor shall provide sufficient data and information to support domestic registrations.

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

		
	16.2
	Company, at its expense, is responsible for registration responsibilities, and for agreed upon registration costs of Products in the Territory.  Company shall provide sufficient data and information to support such registrations.

		
	17.0
	QUALITY SYSTEM COMPLIANCE

		
	17.1
	Distributor shall establish and maintain a quality system in compliance with Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws. Distributor shall also ensure that its contract vendors maintain a quality system in compliance with current Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws.

		
	17.2
	Distributor acknowledges that without registering as an out-of-state home medical device retail facility, an out-of-state home medical device retail facility shall not sell or distribute prescription devices in this state through any person or media other than a wholesaler who is licensed pursuant to Chapter 9 (commencing with Section 4000) of Division 2 of the California Business and Professions Code.  

		
	18.0
	ADDITIONAL DISTRIBUTOR REQUIREMENTS

		
	18.1
	Distributor agrees to comply with all applicable laws and regulations. Distributor agrees to obtain the necessary licenses to meet its obligations under this agreement.

		
	18.2
	Records should be accurate, indelible and legible. Entries must be dated and the person performing a documented task must be identified. Records must provide a complete history of the work performed. Products identified in this Quality Agreement are not in conflict with the laws of the importing country.

6.   All other terms and conditions of the Agreement that are not modified or amended pursuant to this Amendment Number Two shall remain in full force and effect and unaffected hereby. This Amendment Number Two may be executed in two (2) or more counterparts, each of which shall be deemed an original, but together shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

[*****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS AND ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED INFORMATION.

IN WITNESS WHEREOF, authorized representatives of the parties have executed this Amendment Number Two as of date first set out above.

Signed by:    /s/ Jess Roper            
Jess Roper
Title:      V.P. and Chief Financial Officer

for and on behalf of
DexCom, Inc.

Signed by:    /s/ Adam Graybill            
Name:  Adam Graybill
Title:      Category Director    

for and on behalf of 
RGH Enterprises, Inc.Rainmaker-2003StockIncentivePlanamendedandrestated June52013 (1)

RAINMAKER SYSTEMS, INC.
2003 STOCK INCENTIVE PLAN
Adopted by the Board of Directors: April 1, 2003 
Approved by the Stockholders: May 14, 2003 
Termination Date: June 5, 2023 
(as amended and restated effective June 5, 2013)
ARTICLE 1 
GENERAL PROVISIONS 
		
	I.
	PURPOSE OF THE PLAN 

This 2003 Stock Incentive Plan is intended to promote the interests of Rainmaker Systems, Inc., a Delaware corporation, by providing eligible persons in the Corporation’s service 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 such service. 
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 five separate equity incentives 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,

		
	•
	the Salary Investment Option Grant Program under which eligible employees may elect to have a portion of their base salary invested each year in special option grants,

		
	•
	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),

		
	•
	the Automatic Stock Issuance Program under which eligible non-employee Board members shall automatically receive stock issuances at designated intervals over their period of continued Board service, and

		
	•
	the Director Fee Stock Issuance Program under which non-employee Board members may elect to have all or any portion of their annual retainer fees or meeting fees otherwise payable in cash applied to a special stock issuance.

1
LEGAL25698463.7 

		
	B.
	The provisions of Articles One and Seven 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.
	The Primary Committee shall have sole and exclusive authority to administer the Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders.  Administration of the Discretionary Option Grant and Stock Issuance Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Primary Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to all such persons.  However, any discretionary option grants or stock issuances for members of the Primary Committee must be authorized by a disinterested majority of the Board.

		
	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 those 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 stock option or stock issuance thereunder.

		
	D.
	The Primary Committee shall have the sole and exclusive authority to determine which Section 16 Insiders and other highly compensated Employees shall be eligible for participation in the Salary Investment Option Grant Program for one or more calendar years.  However, all option grants under the Salary Investment Option Grant Program shall be made in accordance with the express terms of that program, and the Primary Committee shall not exercise any discretionary functions with respect to the option grants made under that program.

		
	E.
	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.

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	F.
	Administration of the Automatic Stock Issuance and Director Fee Stock Issuance Programs shall be self-executing in accordance with the terms of those programs, and no Plan Administrator shall exercise any discretionary functions with respect to any stock issuances made under those programs.

		
	IV.
	ELIGIBILITY 

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

		
	(i)
	Employees;

		
	(ii)
	non-employee members of the Board or the board of directors of any Parent or Subsidiary, and

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

		
	B.
	Only Employees who are Section 16 Insiders or other highly compensated individuals shall be eligible to participate in the Salary Investment Option Grant Program.

		
	C.
	Each Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan and the specific limitations described herein, have full authority to determine, (i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive such grants, the time or times when those 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 such issuances, the time or times when the 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.

		
	D.
	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.

		
	E.
	The individuals who shall be eligible to participate in the Automatic Stock Issuance Program shall be limited to (i) those individuals who first become non-employee Board members on or after the Plan Restatement Effective Date, whether through appointment by the Board or election by the Corporation’s stockholders, and (ii) those individuals who continue to serve as non-employee Board members at one or more Annual Stockholders Meetings held after the Plan Restatement Effective Date.  A non-employee Board member who has previously been in the employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to receive a stock issuance under the Automatic Stock 

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Issuance Program at the time he or she first becomes a non-employee Board member, but shall be eligible to receive periodic stock issuances under the Automatic Stock Issuance Program while he or she continues to serve as a non-employee Board member.
		
	F.
	All non-employee Board members shall be eligible to participate in the Director Fee 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 number of shares of Common Stock reserved for issuance over the term of the Plan shall not exceed 10,563,658 shares, subject to Section V.B. below.

		
	B.
	The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day of January each calendar year during the term of the Plan by an amount equal to four percent (4%) of the total number of shares of Common Stock outstanding on the last trading day in December of the immediately preceding calendar year, but in no event shall any such annual increase exceed Two Million (2,000,000) shares.

		
	C.
	No one person participating in the Plan may receive stock options or separately exercisable stock appreciation rights for more than 200,000 shares of Common Stock in the aggregate per calendar year.

		
	D.
	Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) those options expire or terminate for any reason prior to exercise in full or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two.  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 and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan.  However, should the exercise price of an option under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an option or the vesting of a stock issuance under the Plan, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the gross number of shares for which the option is exercised or which vest under the stock issuance, and not by the net number of shares of Common Stock issued to the holder of such option or stock issuance.  Shares of Common Stock underlying one or more stock appreciation rights exercised under Section V of Article Two or Section III of Article Three of the Plan shall not be available for subsequent issuance under the Plan.

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	E.
	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 by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) 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, (iii) the number and/or class of securities for which grants are subsequently to be made under the Automatic Stock Issuance Program to new and continuing non-employee Board members, (iv) the number and/or class of securities and the exercise price per share in effect under each outstanding option under the Plan, and (v) the maximum number and/or class of securities by which the share reserve is to increase automatically each calendar year pursuant to the provisions of Section V.B of this Article One.  Such adjustments to the outstanding options are to be effected in a manner that 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 2     
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.
		
	C.
	Exercise Price.

		
	2.
	The exercise price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

		
	3.
	The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Seven and the documents evidencing the option, be payable in one or more of the forms specified below:

		
	(i)
	cash or check made payable to the Corporation,

		
	(ii)
	shares of Common Stock held for the requisite period, if any, 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

		
	(iii)
	to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions to (a) a brokerage firm to effect the immediate sale of the 

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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.
		
	D.
	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.

		
	E.
	Effect of Termination of Service.  The following provisions shall govern the exercise of any options held by the Optionee at the time of termination of Service by for any reason, including death and Permanent Disability:

		
	(iv)
	Any option outstanding at the time of the Optionee’s termination of Service 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, provided that such period shall be:

(a)    at least six (6) months from the date of such termination if such termination was caused by death or Permanent Disability; or
(b)    at least thirty (30) days from the date of such termination if such termination was not caused by death or Permanent Disability but no option shall be exercisable after the expiration of the option term.
		
	(v)
	Any option held by the Optionee at the time of death and exercisable in whole or in part at that time 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 the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of that option.

		
	(vi)
	Should the Optionee’s Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while holding one or more outstanding options under this Article Two, then all those options shall terminate immediately and cease to be outstanding.

		
	(vii)
	Except to the extent otherwise provided in the documents evidencing an option, the option shall terminate and cease to be outstanding immediately upon the Optionee’s cessation of Service to the extent that the option is not at that time exercisable for vested shares.  Upon the expiration of the applicable exercise period or (if earlier) upon the 

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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.
		
	F.
	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.

		
	G.
	Repurchase Rights.  The Plan Administrator shall have the discretion to grant options that are exercisable for unvested shares of Common Stock.  Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares.  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.

		
	H.
	Limited Transferability of Options.  During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of inheritance following the Optionee’s death.  However, a Non-Statutory Option may be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s family or to a trust established exclusively for one or more such family members or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order.  The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment.  The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee, as the Plan Administrator may deem appropriate.  Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options.  Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised 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 Seven 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.
		
	G.
	Eligibility.  Incentive Options may only be granted to Employees.

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	H.
	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.
		
	I.
	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.
	CORPORATE TRANSACTION/CHANGE IN CONTROL 

		
	G.
	At least five business days before any Corporate Transaction, each outstanding option shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all the 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.  However, an outstanding option shall not become exercisable on such an accelerated basis if and to the extent: (i) such option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Corporate Transaction on any shares for which the option is not otherwise at that time exercisable and provides for subsequent payout in accordance with the same exercise/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.

		
	H.
	All outstanding repurchase rights shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except 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 repurchase right is issued.

		
	I.
	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).

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	J.
	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 and (iv) the maximum number and/or class of securities by which the share reserve is to increase automatically each calendar year.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction.

		
	K.
	The Plan Administrator shall have the discretionary authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all the shares of Common Stock at the time subject to those options and may be exercised for any or all of those shares as fully vested shares of Common Stock, whether or not those options are to be assumed in the Corporate Transaction.  In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Option Grant Program so that those rights shall not be assignable in connection with such Corporate Transaction and shall accordingly terminate upon the consummation of such Corporate Transaction, and the shares subject to those terminated rights shall thereupon vest in full.

		
	L.
	The Plan Administrator shall have full power and authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall become exercisable for all the shares of Common Stock at the time subject to those options in the event the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those options are assumed and do not otherwise accelerate.  In addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights so that those rights shall immediately terminate with respect to any shares held by the Optionee at the time of his or her Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time.

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	M.
	The Plan Administrator shall have the discretionary authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall, immediately prior to the effective date of a Change in Control, become exercisable for all the shares of Common Stock at the time subject to those options and may be exercised for any or all of those shares as fully vested shares of Common Stock.  In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Option Grant Program so that those rights shall terminate automatically upon the consummation of such Change in Control, and the shares subject to those terminated rights shall thereupon vest in full.  Alternatively, the Plan Administrator may condition the automatic acceleration of one or more outstanding options under the Discretionary Option Grant Program and the termination of one or more of the Corporation’s outstanding repurchase rights under such program upon the subsequent termination of the Optionee’s Service by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of such Change in Control.

		
	N.
	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 ($100,000) limitation is not exceeded.  To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Nonstatutory Option under the Federal tax laws.

		
	O.
	The outstanding options 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.
	CANCELLATION AND REGRANT OF OPTIONS 

		
	F.
	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 a 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.

		
	V.
	STOCK APPRECIATION RIGHTS 

		
	A.
	The Plan Administrator shall have full power and authority to grant to selected Optionees tandem stock appreciation rights and/or limited stock appreciation rights.

		
	B.
	The following terms shall govern the grant and exercise of tandem stock appreciation rights:

		
	(i)
	One or more Optionees may be granted the right, exercisable upon such terms as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock and the surrender of that option in exchange for a distribution 

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from the Corporation in an amount equal to the excess of (a) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion thereof) over (b) the aggregate exercise price payable for such shares.
		
	(ii)
	No such option surrender shall be effective unless it is approved by the Plan Administrator, either at the time of the actual option surrender or at any earlier time.  If the surrender is so approved, then the distribution to which the Optionee shall be entitled may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

		
	(iii)
	If the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (a) five (5) business days after the receipt of the rejection notice or (b) the last day on which the option is otherwise exercisable in accordance with the terms of the documents evidencing such option, but in no event may such rights be exercised more than ten (10) years after the option grant date.

		
	C.
	The following terms shall govern the grant and exercise of limited stock appreciation rights:

		
	(i)
	One or more Section 16 Insiders may be granted limited stock appreciation rights with respect to their outstanding options.

		
	(ii)
	Upon the occurrence of a Hostile Take-Over, each individual holding one or more options with such a limited stock appreciation right shall have the unconditional right (exercisable for a thirty (30)-day period following such Hostile Take-Over) to surrender each such option to the Corporation.  In return for the surrendered option, the Optionee shall receive a cash distribution from the Corporation in an amount equal to the excess of (A) the Take-Over Price of the shares of Common Stock at the time subject to such option (whether or not the option is otherwise at that time exercisable for those shares) over (B) the aggregate exercise price payable for those shares.  Such cash distribution shall be paid within five (5) days following the option surrender date.

		
	(iii)
	At the time such limited stock appreciation right is granted, the Plan Administrator shall pre-approve any subsequent exercise of that right in accordance with the terms of this Paragraph C.  Accordingly, no further approval of the Plan Administrator or the Board shall be required at the time of the actual option surrender and cash distribution.

ARTICLE 3     
SALARY INVESTMENT OPTION GRANT PROGRAM 
		
	I.
	OPTION GRANTS 

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The Primary Committee shall have the sole and exclusive authority to determine the calendar year or years (if any) for which the Salary Investment Option Grant Program is to be in effect, to adjust the program terms set forth below in any manner that the Primary Committee considers necessary or advisable in order to satisfy any applicable requirements of Code Section 409A, and to select the Section 16 Insiders and other highly compensated Employees eligible to participate in the Salary Investment Option Grant Program for such calendar year or years.  Each selected individual who elects to participate in the Salary Investment Option Grant Program must, prior to the start of each calendar year of participation, file with the Plan Administrator (or its designate) an irrevocable authorization directing the Corporation to reduce his or her base salary for that calendar year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than Fifty Thousand Dollars ($50,000.00).  Each individual who files such a timely authorization shall automatically be granted an option under the Salary Investment Grant Program on the first trading day in January of the calendar year for which the salary reduction is to be in effect.  Any person who is a California resident may not participate in the Salary Investment Option Grant Program.
		
	II.
	OPTION TERMS

Each option shall be a Non-Statutory Option 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.
		
	P.
	Exercise Price.

		
	1.
	The exercise price per share shall be thirty-three and one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock on the option grant date.

		
	2.
	The exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the alternative forms authorized under the Discretionary Option Grant Program.  Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

		
	Q.
	Number of Option Shares.  The number of shares of Common Stock subject to the option shall be determined pursuant to the following formula (rounded down to the nearest whole number):

X = A / (B x 66-2/3%), where 
X is the number of option shares,
A is the dollar amount of the reduction in the Optionee’s base salary for the calendar year to be in effect pursuant to this program, and 
B is the Fair Market Value per share of Common Stock on the option grant date.

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	R.
	Exercise and Term of Options.  The option shall become exercisable in a series of twelve (12) successive equal monthly installments upon the Optionee’s completion of each calendar month of Service in the calendar year for which the salary reduction is in effect.  Each option shall have a maximum term of ten (10) years measured from the option grant date, and (regardless of when the option is exercised) shall be settled only through the Company’s delivery of shares to the Optionee on the first to occur of (i) the option’s expiration date, (ii) the January 1st that next follows the expiration of the three (3)-year period measured from the date of the Optionee’s cessation of Service for any reason, including death, (iii) the termination of the option in connection with a Corporate Transaction, or (iv) the surrender of the option in connection with a Hostile Take-Over.

		
	S.
	Effect of Termination of Service.  Should the Optionee cease Service for any reason while holding one or more options under this Article Three, then each such option shall remain exercisable, for any or all of the shares for which the option is exercisable at the time of such cessation of Service, until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of such cessation of Service.  Should the Optionee die while holding one or more options under this Article Three, then each such option may be exercised, for any or all of the shares for which the option is exercisable at the time of the Optionee’s cessation of Service (less any shares subsequently purchased by Optionee prior to death), 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 the laws of inheritance or by the designated beneficiary or beneficiaries of the option.  Such right of exercise shall lapse, and the option shall terminate, upon the earlier of (i) the expiration of the ten (10)-year option term or (ii) the three (3)-year period measured from the date of the Optionee’s cessation of Service.  However, the option shall, immediately upon the Optionee’s cessation of Service for any reason, terminate and cease to remain outstanding with respect to any and all shares of Common Stock for which the option is not otherwise at that time exercisable.

		
	III.
	CORPORATE TRANSACTION/ CHANGE IN CONTROL/ HOSTILE TAKE-OVER 

		
	G.
	In the event of any Corporate Transaction while the Optionee remains in Service, each outstanding option held by such Optionee under this Salary Investment Option Grant Program shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all the 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.  Each such outstanding option shall terminate immediately following the Corporate Transaction, except to the extent assumed by the successor corporation (or parent thereof) in such Corporate Transaction.  Any option so assumed shall remain exercisable for the fully vested shares until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of the Optionee’s cessation of Service.

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	H.
	In the event of a Change in Control while the Optionee remains in Service, each outstanding option held by such Optionee under this Salary Investment Option Grant Program shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all the 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.  The option shall remain so exercisable until the earliest to occur of (i) the expiration of the ten (10)-year option term, (ii) the expiration of the three (3)-year period measured from the date of the Optionee’s cessation of Service, (iii) the termination of the option in connection with a Corporate Transaction or (iv) the surrender of the option in connection with a Hostile Take-Over.

		
	I.
	Upon the occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each outstanding option granted him or her under the Salary Investment Option Grant Program.  The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to the surrendered option (whether or not the option is otherwise at the time exercisable for those shares) over (ii) the aggregate exercise price payable for such shares.  Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation.  The Primary Committee shall, at the time the option with such limited stock appreciation right is granted under the Salary Investment Option Grant Program, pre-approve any subsequent exercise of that right in accordance with the terms of this Paragraph C.  Accordingly, no further approval of the Primary Committee or the Board shall be required at the time of the actual option surrender and cash distribution.

		
	J.
	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 shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of the outstanding options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction.

		
	K.
	The grant of options under the Salary Investment Option Grant Program 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.
	REMAINING TERMS 

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The remaining terms of each option granted under the Salary Investment Option Grant Program shall be the same as the terms in effect for option grants made under the Discretionary Option Grant Program, subject to changes the Primary Committee makes in order to conform the program with Code Section 409A.
ARTICLE 4     
STOCK ISSUANCE PROGRAM 
		
	I.
	STOCK ISSUANCE TERMS 

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.  Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive those shares upon the attainment of designated performance goals.
		
	T.
	Purchase Price.

		
	1.
	The purchase price per share shall be fixed by the Plan Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the issuance date.

		
	2.
	Subject to the provisions of Section I of Article Seven, 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:

		
	(i)
	cash or check made payable to the Corporation, or

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

		
	U.
	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 shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement.  Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive those shares upon the attainment of designated performance goals.

		
	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 

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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 applicable to those shares.  Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock 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.

		
	6.
	Outstanding share right awards under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards, if the performance goals established for such awards are not attained.  The Plan Administrator, however, shall have the discretionary authority to issue shares of Common Stock under one or more outstanding share right awards as to which the designated performance goals have not been attained.

		
	II.
	CORPORATE TRANSACTION/CHANGE IN CONTROL 

		
	L.
	All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction 

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or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.
		
	M.
	The Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor corporation (or parent thereof).

		
	N.
	The Plan Administrator shall also have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control.

		
	III.
	SHARE ESCROW/LEGENDS 

Unvested shares 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.
ARTICLE 5     
AUTOMATIC STOCK ISSUANCE PROGRAM
The provisions of this Article Five set forth the terms and conditions governing the automatic issuance of shares of Common Stock to non-employee Board members.
		
	I.
	STOCK ISSUANCE TERMS 

		
	O.
	Issuance Dates and Amounts.  Each individual who is first elected or appointed as a non-employee Board member shall automatically be issued, on the date of such initial election or appointment, Fifty Thousand (50,000) shares of Common Stock, provided that such individual has not previously been in the employ of the Corporation or any Parent or Subsidiary.  In addition, on the date of each Annual Stockholders Meeting, each individual who is then serving as a non-employee Board member shall automatically be issued One Hundred Thousand (100,000) shares of Common Stock, provided such individual has served as a non-employee Board member for at least six (6) months.  There shall be no limit on the number of such automatic share issuances any one non-employee Board member may receive over his or her period of Board service, and non-employee Board members who have previously been in the employ of the Corporation (or any Parent or Subsidiary) or who have otherwise received one or more stock option 

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grants or stock issuances from the Corporation shall be eligible to receive one or more such stock issuances over their period of continued Board service.
		
	P.
	Purchase Price.

		
	1.
	The purchase price per share shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the issuance date.

		
	2.
	The purchase price shall be payable in one or more of the alternative forms authorized under the Stock Issuance Program.

		
	Q.
	Vesting of Shares.  The shares subject to the initial Fifty Thousand (50,000)-share issuance and each annual One Hundred Thousand (100,000)-share issuance shall vest in a series of four (4) successive quarterly installments upon the Participant’s completion of each three (3) month period of service as a Board member over the twelve (12) month period measured from the issuance date.

		
	R.
	Termination of Board Service.  The following provisions shall govern any unvested shares of Common Stock issued under the Automatic Stock Issuance Program held by the Participant at the time the Participant ceases to serve as a Board member:

		
	1.
	Should the Participant cease to remain in Service as a Board member while holding one or more unvested shares of Common Stock issued under the Automatic Stock Issuance Program, 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.

		
	2.
	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 as a Board member.  Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies.  Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service as a Board member.

		
	II.
	CORPORATE TRANSACTION/ CHANGE IN CONTROL 

		
	D.
	All of the Corporation’s outstanding repurchase rights shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction or Change in Control.

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LEGAL25698463.7 

		
	E.
	The issuance of shares of Common Stock under the Automatic Stock Issuance Program 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.

		
	III.
	REMAINING TERMS 

The remaining terms of each issuance of Common Stock automatically issued under the Automatic Stock Issuance Program shall be the same as the terms in effect for issuances made under the Stock Issuance Program.
ARTICLE 6     
DIRECTOR FEE STOCK ISSUANCE PROGRAM 
		
	I.
	SHARE ELECTION

A non-employee Board member may make a share election (“Share Election”) to receive in the form of fully vested Common Stock all or a portion of his or her retainer fees or meeting fees earned in each calendar year that are otherwise payable in cash.  The shares of Common Stock (and cash in lieu of fractional shares) issuable pursuant to a Share Election shall be issued quarterly in accordance with Section II of this Article Six.  The Share Election must be in writing and delivered to the Chief Financial Officer of the Company (or his or her designee) on or prior to February 15 (or such later date as shall be specified by the Chief Financial Officer of the Company) of the calendar year in which the applicable retainer fees or meeting fees are to be earned; provided, however, that any non-employee Board member who commences service on the Board on or subsequent to February 15 of a calendar year may make a Share Election during the 30-day period immediately following the commencement of his or her directorship.  Unless waived by the Board, a Share Election, once made, shall be irrevocable for the calendar year with respect to which it is made and shall remain in effect for future calendar years, unless revoked in writing or modified by a subsequent Share Election with respect to future calendar years.  Such revocation or subsequent Share Election must be made on or prior to February 15 (or such later date as shall be specified by the Chief Financial Officer of the Company)of the calendar year in which such revocation or subsequent Share Election shall take effect and in accordance with the provisions hereof.
		
	II.
	ISSUANCE OF SHARES 

Shares of Common Stock issuable to a non-employee Board member pursuant to this Article Six shall be issued to such non-employee Board member on the first business day following the date on which the applicable retainer fees or meeting fees would otherwise have been paid in cash.  The total number of shares of Common Stock to be issued shall be determined by dividing (x) the dollar amount of the non-employee Board member’s retainer fees and meeting fees for the preceding calendar quarter to which a Share Election applies by (y) the Fair Market Value of the Common Stock on the date such retainer fees or meeting fees would otherwise have been paid in cash.  In no event shall the Company be required to issue fractional shares.  In the event that a fractional share of Common Stock would otherwise be required to be 

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issued, an amount in lieu thereof shall be paid in cash based on the Fair Market Value of such fractional share on the date the applicable retainer fees or meeting fees would otherwise have been paid in cash.
The issuance of shares under the Director Fee Stock Issuance Program 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.
ARTICLE 7     
MISCELLANEOUS 
		
	I.
	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 (other than the options granted or the shares issued under the Automatic Stock Issuance or Director Fee Stock Issuance Program) with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such holders may become subject 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 Withholding 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 Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder.
Notwithstanding the foregoing, the value of shares of Common Stock that may be withheld or delivered may not exceed the employer’s minimum required tax withholding rate.
		
	II.
	EFFECTIVE DATE AND TERM OF THE PLAN 

		
	A.
	The Plan, as amended and restated herein, shall become effective on the Plan Restatement Effective Date.  However, the Salary Investment Option Grant Program shall not be 

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implemented until such time as the Primary Committee may deem appropriate.  Options may be granted under the Discretionary Option Grant at any time on or after the Plan Effective Date, and stock grants under the Automatic Stock Issuance Program shall be made on or after the Plan Effective Date to any non-employee Board members eligible for such grants at that time.  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.
	Unless sooner terminated by the Board, the Plan shall terminate upon the earliest to occur of (i) June 5, 2023, (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 awards in connection with a Corporate Transaction.  Should the Plan terminate on June 5, 2023 (or any sooner date approved by the Board), then all option grants and unvested stock issuances outstanding at that time shall continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances.  Notwithstanding the foregoing, no Incentive Options may be granted more than ten years after the later of (x) the adoption of the Plan by the Board and (y) the adoption by the Board of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Code Section 422.

		
	III.
	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 pursuant to applicable laws or regulations.

		
	B.
	Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant and Salary Investment Option Grant Programs 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 stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan.  If such stockholder 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 

21
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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.
		
	IV.
	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.
		
	V.
	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.

		
	VI.
	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.

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APPENDIX TO THE PLAN
The following definitions shall be in effect under the Plan:
Automatic Stock Issuance Program shall mean the automatic stock issuance program in effect under Article Five of the Plan.
Board shall mean the Corporation’s Board of Directors.
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, 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.
Code shall mean the Internal Revenue Code of 1986, as amended.
Common Stock shall mean the Corporation’s common stock.
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 in complete liquidation or dissolution of the Corporation.
Corporation shall mean Rainmaker Systems, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Rainmaker Systems, Inc. which shall by appropriate action adopt the Plan.

Appendix-1
LEGAL25698463.7 

Director Fee Stock Issuance Program shall mean the special stock grant program in effect for non-employee Board members under Article Six of the Plan.
Discretionary Option Grant Program shall mean the discretionary option grant program in effect under Article Two of the Plan.
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.
Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.
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 or SmallCap Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or SmallCap Market.  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.
(ii)    If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be 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)    If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market or SmallCap Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.
Hostile Take-Over shall mean 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.

Appendix-2
LEGAL25698463.7 

Incentive Option shall mean an option which satisfies the requirements of Code Section 422.
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 duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under 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.
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).
1934 Act shall mean the Securities Exchange Act of 1934, as amended.
Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.
Optionee shall mean any person to whom an option is granted under the Discretionary Option Grant Program or the Salary Investment Option Grant Program.
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.
Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program, the Automatic Stock Issuance Program or the Director Fee Stock Issuance Program.

Appendix-3
LEGAL25698463.7 

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.  However, solely for purposes of the Automatic Stock Issuance Program, Permanent Disability or Permanently Disabled shall mean the inability of the non-employee Board member to perform his or her usual duties as a Board member 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.
Plan shall mean the Corporation’s 2003 Stock Incentive Plan, as set forth in this document.
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.
Plan Effective Date shall mean the date the Plan shall become effective and shall be coincident with the second trading day following stockholder approval of the Plan.
Plan Restatement Effective Date shall mean the date the Plan, as amended and restated herein, shall become effective as determined by the Board.
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 and to administer the Salary Investment Option Grant Program solely with respect to the selection of the eligible individuals who may participate in such program.
Salary Investment Option Grant Program shall mean the salary investment option grant program in effect under Article Three of the Plan.
Secondary Committee shall mean a committee of one or more Board members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect to eligible persons other than Section 16 Insiders.
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.
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.

Appendix-4
LEGAL25698463.7 

Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange.
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 or the Automatic Stock Issuance Program.
Stock Issuance Program shall mean the stock issuance program in effect under Article Four of the Plan.
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.
Take-Over Price shall mean the greater of (i) the Fair Market Value per share of Common Stock on the date the option is surrendered to the Corporation in connection with a Hostile Take-Over or (ii) the highest reported price per share of Common Stock paid by the tender offeror in effecting such Hostile Take-Over.  However, if the surrendered option is an Incentive Option, the Take-Over Price shall not exceed the clause (i) price per share.
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).
Withholding Taxes shall mean the Federal, state and local income and employment withholding taxes to which the holder of Non-Statutory Options or unvested shares of Common Stock may become subject in connection with the exercise of those options or the vesting of those shares. 

Appendix-5
LEGAL25698463.7

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