Document:

EX-10.1

 Exhibit 10.1 
  

 
  

ASSET PURCHASE AGREEMENT 

by and among 

GREENHUNTER WATER, LLC 

AND 
 KENEDY HUNTER ,
LLC 
 AND 
 COY
CITY HUNTER, LLC 
 as Sellers 

and 
 SABLE
ENVIRONMENTAL SWD 5, LLC 
 as Purchaser 

JANUARY 29, 2013 
  

 
  

 ASSET PURCHASE AGREEMENT 

This Asset Purchase Agreement (this “Agreement”) is made and entered into as of the 29TH day of January,
2014 (the “Effective Date” or “Closing Date”) by and among Kenedy Hunter, LLC, a Texas limited liability company and Coy City Hunter, LLC and GreenHunter Water, LLC, LLC, a Texas limited liability
company (herein collectively called “Sellers”), and Sable Environmental SWD 5, LLC, a Texas limited liability company or assigns (“Purchaser”). Seller and Purchaser are sometimes herein referred to
collectively as the “Parties” and singly as a “Party.” Capitalized terms shall have the meaning set forth in Article 1 unless otherwise defined herein. 

RECITALS 
  

	 	A.	Sellers own a salt water disposal permit and a salt water disposal well and operate a salt water disposal well business headquartered in Dallas County, Texas that provides salt water disposal services to the oil and gas
industry in Karnes County, Texas (the “Business”) through the following two properties: 

  

	 	a.	Coy City Hunter SWD – Karnes County, Texas 

  

	 	b.	Kenedy Hunter SWD-Karnes County, Texas 

  

	 	B.	Purchaser desires to purchase certain assets and assume certain liabilities of the Sellers used in the Business, and Sellers desire to sell such assets and assign such liabilities to Purchaser, all upon the terms and
conditions set forth in this Agreement. 

 NOW, THEREFORE, in consideration of the mutual promises and covenants contained in
this Agreement, the parties hereby agree as follows: 
  

	1.	PURCHASE AND SALE OF ASSETS. 

  

	 	1.1	Purchase and Sale. 

 (a) At Closing Purchaser shall
purchase from each Seller, and each Seller shall sell to Purchaser, all of each such Seller’s right, title and interest in and to the assets the following assets used in the Business (collectively the “Purchased
Assets”): 
 (i) Each Seller’s customer business, customer lists and transportation
contracts, contracts and agreements, copies of books and records related to the Business of Seller; 
 (ii) Computerized data
and software applications used by each Seller in the Business, in each case to the extent assignable by each Seller; 
 (iii)
Trademarks, copyrights and other intellectual property and know-how specific to Seller, in each case to the extent assignable by Seller; 

  
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 (iv) Texas Railroad Commission of Texas Salt Water Disposal Permits
No. 13602 and F18813 copy attached as Exhibit 1.1(a)(iv); 
 (v) The real property owned by Sellers related to the
Kenedy SWD Permitand the Coy City SWD permit; and 
 (vi) The following salt water disposal wells and equipment owned by
Sellers: Kenedy SWD1 as Exhibit 1.1(a)(vi). 
 (b) Notwithstanding anything in this Agreement to the contrary,
the Purchased Assets shall not include the following (the “Excluded Assets”): 

(i) Any item not specifically identified in Schedule 1.1(a); 

(ii) All cash and cash equivalents, including cash on hand or in bank accounts, certificates of deposit, commercial paper and
securities, bonds, deposits and rights to refunds; 
 (iii) All of each Seller’s accounts receivables, notes receivable,
negotiable instruments, chattel paper, driver receivables and prepaid expenses unless a purchase agreement covering those items is mutually agreed to and entered into between Seller and Purchaser and attached hereto as a schedule to this Agreement;

 (iv) All of each Seller’s supplies, furniture, fixtures, computer, telephonic and electronic equipment and
inventories; 
 (v) All of each Seller’s prepaid amounts, insurance policies (including any premium refunds), insurance
proceeds, deposits, advances, tax refunds, rights to payments under letters of credit and/or other prepaid expenses; 
 (vi)
Any and all liabilities and obligations of Seller except those specifically accepted and assumed by Purchaser under Section 1.2 below; 

(vii) Any customer contracts not specifically accepted and assumed by Purchaser in Section 1.2 below or those
contracts not assignable by Seller to Purchaser; 
 (viii) all rights, demands, claims, causes of action, rights of recovery,
credits, allowances, rebates, recoupment or rights of setoff or subrogation or defenses of each Seller against any person and general intangibles; 

(ix) Copies of books, records and other documents that: (1) relate to employees who are not hired by Purchaser;
(2) cannot be transferred under laws relating to privacy or health; (3) Seller is not permitted to transfer pursuant to confidentiality agreements with others; or (4) relate to assets, liabilities or obligations retained by Seller;

  
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 (x) Any membership interests, partnership interests, capital stock, or other form
ownership interest in any direct or indirect subsidiary of Parent or any right to acquire such ownership interests; 
 (xi)
Each Sellers’ certificates of formation, bylaws, minute books, income tax returns, books and records; 
 (xii) All of
each Sellers’ additional property, assets, capital stock, rights, claims, causes of action, contracts, records, goodwill and other intangibles relating to the Business other than the Purchased Assets; and 

(xiii) Each Sellers’ rights under this Agreement and the other agreements, certificates and instruments to be executed in
connection with, or pursuant to, this Agreement. 
 1.2 Assumption of Liabilities.
Simultaneously with the execution of this Agreement, the Purchaser shall assume and be solely responsible for those liabilities and obligations to be performed after 11:59 p.m. Central Time on the Closing Date under the contracts, leases, agreements
and/or permits assigned to Purchaser and specifically listed on Schedule 1.2, but specifically excluding any liabilities or obligations that are a result of or caused by a breach or default of Seller or any of its affiliates prior to 11:59
p.m. Central Time on the Closing Date (collectively, the “Assumed Liabilities”). 

1.3 Excluded Liabilities. Except for the Assumed Liabilities, Purchaser does not assume
and shall not be responsible for any liabilities or obligations of any Seller, of any kind or nature, whether or not relating to the Business or the Purchased Assets, whether known or unknown, absolute, accrued, contingent or otherwise, or whether
due or to become due, arising out of events or transactions or facts occurring on, prior to, or after the Closing Date (collectively the “Excluded Liabilities”), including, but not limited to, the following Excluded
Liabilities: 
 (a) all liabilities and obligations of any kind existing as of the Closing Date owed or owing
by each Seller to any shareholder of Seller and/or any affiliate of Seller or between the Sellers; 
 (b) all
liabilities and obligations relating to current or former employees, agents, consultants or other independent contractors of each Seller, whether or not such persons are employed by the Purchaser after the Closing Date, relating to services
performed, benefit accruals or claims accrued or incurred prior to the Closing Date or with respect to employee benefit plans, programs or arrangements at any time on or after the Closing Date, including but not limited to, any “employee
benefit plan,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) and all retirement, stock, stock option, welfare benefit, savings, deferred compensation,
incentive compensation, paid time off, severance pay, salary continuation, disability, fringe benefit, compensation, accrued payroll, accrued vacation pay, sick leave, severance, worker’s compensation, unemployment compensation, employee
welfare or  

  
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retirement benefits (including any liability or obligation of the Seller under any welfare plan or policy for continuing health coverage), and other employee benefit arrangements, plans,
policies, or practices maintained, contributed to, or required to be contributed by the Seller or any ERISA Affiliate (defined as any person, entity, any trade or business (whether or not incorporated) that is treated as a single employer with the
Seller under Section 414 of the Code) or with respect to which the Seller or any ERISA Affiliate may have any liability (collectively the “Benefit Plans”) or obligations under any employment agreement or arrangement,
liabilities under the Worker Adjustment and Retraining Notification (“WARN”) Act and obligations or agreements to rehire or give preferential treatment to laid-off or terminated employees; 

(c) all liabilities and obligations, whether absolute, accrued, contingent or otherwise, for federal, state, county, local,
foreign or other employee payroll or other taxes or assessments (including interest and penalties) of any kind whatsoever relating to the Business for periods up to and including the Closing Date including specifically any royalty or royalty burden
and any income taxes resulting from the transactions contemplated by this Agreement; 
 (d) any and all damages, losses,
liabilities, actions, claims, costs and expenses (including, without limitation, closure costs, fines, penalties, expenses of investigation and remediation and ongoing monitoring and reasonable attorneys’ fees) directly or indirectly based
upon, arising out of, resulting from or relating to (i) any violation of any Environmental Law by the Seller or any person or entity acting on behalf of the Seller or the person from or through which the Seller acquired title on or prior to the
Closing Date (including, without limitation, any failure to obtain or comply with any permit, license or other operating authorization under provisions of any Environmental Law), (ii) any and all liabilities under any Environmental Law arising
out of or otherwise in respect of any act, omission, event, condition or circumstance occurring or existing in connection with the Business or the Purchased Assets on or prior to the Closing Date (including, without limitation, liabilities relating
to (X) removal, remediation, containment, cleanup or abatement of the presence of any Regulated Substance, whether on-site or off-site and (Y) any claim by any third party, including without limitation, tort suits for personal or bodily
injury, property damage or injunctive relief; and 
 (e) all liabilities and obligations arising out of any lawsuit, action,
proceeding, inquiry, claim, order or investigation by or before any governmental authority related to the Business arising out of events, transactions, facts, acts or omissions which occurred prior to or on the Closing Date, including, without
limitation, personal injury or property damage, product liability or strict liability. 
 1.4 Purchase Price. The aggregate
purchase price to be paid by Purchaser to Seller for the Purchased Assets (less any amount withheld pursuant to the Affidavit of Debts and Liens to be executed by Seller and to be paid directly to the listed vendors) (“Purchase
Price”) shall be Three Million Eight Hundred Seventy Five Thousand Dollars ($3,875,000) subject to any Post-Closing Credits required by Section 1.6 of this Agreement. 

Payment of the Purchase Price. 

  
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 The Purchase Price is paid through the Cash Closing Payment and execution and delivery of the Promissory Note.
The Cash Closing Payment shall be paid by Purchaser to Sellers on Closing date by wire transfer or delivery of a cashier’s check at closing representing immediately available funds in the amount of One Million Dollars ($1,000,000). If
funds are to be wired, to the following bank account of Seller; 
  

	 	Wire To:	Amegy Bank 

 PO Box 27459 

Houston, TX 77227 
  

	 	Account Name:	GreenHunter Water LLC 

  

	 	ABA/Routing #:	113011258 

  

	 	Account #:	53746356 

 The balance of the Purchase Price shall be paid by the execution and delivery by
Purchaser to Sellers of its Promissory Note in the original principal sum of Two Million Eight Hundred Seventy Five Thousand Dollars ($2,875,000) in the form attached hereto as Exhibit 1.4. Such note shall bear interest at the rate of 10
percent per annum; shall provide for a payment based on a 10 year amortization of principal; be due and payable in 24 months (January 31, 2016); and, shall provide that the first payment in the amount of Thirty Seven Thousand Nine Hundred Ninety
Three Dollars ($37,993) shall be paid on May 1, 2014 and continuing regularly and monthly thereafter until maturity when all accrued interest and unpaid principal shall be due and payable. 

The purchase money note shall additionally provide the failure of Purchaser to make three (3) consecutive payments shall result in the
immediate adjustment of the note interest rate to 10.25 percent; and, the failure to make payments for 180 consecutive days shall automatically be a terminal event of default and the Note shall become immediately due and payable in full. 

1.5 Closing. Closing shall be on or before Wednesday January 29, 2014 in Sellers Dallas, Texas offices. Closing Date shall be at a time
mutually agreeable to the parties. 
 1.6 Allocation of Purchase Price. The Purchase Price shall be allocated among the
Purchased Assets as set forth on Schedule 1.7 which is attached hereto and incorporated by this reference herein. Seller and Purchaser each agree to comply with the requirements of Section 1060 of the Internal Revenue Code and to report
the federal, state and local income and other tax consequences of the transactions contemplated herein in a manner consistent with the purchase price allocation set forth on Schedule 1.7. 

1.7 Transfer Taxes. In the event that any sales, use, transfer, license, title or other similar taxes or charges are assessed on
or after the Closing Date as a result of the transactions described in this Agreement, upon transfer and/or reissue of vehicle titles or at any time thereafter on the transfer of any of the Purchased Assets, then in each instance such taxes or
charges incurred as a result of the transactions contemplated hereby, such as filing, recordation, and transfer taxes and other governmental charges normally levied by the State of Texas in connection with the sale of the Purchased Assets to
Purchaser or the transfer of titles thereto, will be paid by Purchaser. 

  
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 1.8 Ad Valorem Taxes. All ad valorem taxes owed for 2013 and prior years shall be
paid by Sellers. All ad valorem taxes with respect to the Purchased Assets for the calendar year 2014 shall be prorated between Seller and Purchaser as of the Closing Date. If the amount of such taxes with respect to any of the Purchased Assets for
2013 occurs has not been determined as of the Closing Date, then the ad valorem taxes with respect to such Purchased Assets for the preceding calendar year shall be used to calculate such prorations, with known changes in valuation applied. Seller
shall be responsible for paying the prorated ad valorem taxes allocable to the number of days in 2014 through the Closing Date, and Purchaser shall be responsible for paying the remainder of the prorated Ad Valorem Taxes for such calendar year. 

1.9 “As Is, Where Is” Transaction. 

(a) Purchaser hereby acknowledges and agrees that, except as otherwise expressly provided in this Agreement, Sellers make no
representations or warranties whatsoever, express or implied, with respect to any matter relating to the Purchased Assets or the Business, including, without limitation: (i) income to be derived or expenses to be incurred in connection with the
Purchased Assets or the Business, (ii) the physical condition, description or location of any of the Purchased Assets, (iii) the value of the Purchased Assets (or any portion thereof), (iv) the transferability of the Purchased Assets,
(v) the terms, amount, validity or enforceability of any Assumed Liabilities, (vi) the truth accuracy or completeness of any materials, financial information or operating data or other information delivered or made available to Purchaser
in connection with the transactions contemplated hereby (including, without limitation, due diligence materials provided to Purchaser), and (vii) THE MERCHANTABILITY OR FITNESS OF THE PURCHASED ASSETS AS A WHOLE OR ANY ITEM OR PORTION OF THE
PURCHASED ASSETS FOR ANY PARTICULAR PURPOSE, OR ANY OTHER MATTER OR THING RELATING TO THE PURCHASED ASSETS OR ANY PORTION THEREOF. WITHOUT IN ANY WAY LIMITING THE FOREGOING, SELLER HEREBY DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AS TO ANY PORTION OF THE PURCHASED ASSETS. 
 (b) Purchaser further
acknowledges that Purchaser has conducted an independent inspection and investigation of the physical condition of the Purchased Assets and all such other matters relating to or affecting the Purchased Assets as Purchaser deemed necessary or
appropriate and that in proceeding with its acquisition of the Purchased Assets, except for any representations and warranties expressly set forth in this Agreement, Purchaser is doing so based solely upon such independent inspections and
investigations and is not relying on any representations, warranties or agreements of Seller except those expressly set forth in this Agreement. ACCORDINGLY, EXCEPT WITH RESPECT TO ANY REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH
IN THIS AGREEMENT, PURCHASER WILL ACCEPT THE PURCHASED ASSETS ON THE CLOSING DATE “AS IS,”  

  
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“WHERE IS,” AND “WITH ALL FAULTS.” Purchaser hereby irrevocably waives and releases all claims against Seller and its representatives and affiliates with respect to the
Purchased Assets, other than with respect to Seller’s obligations hereunder regarding the Post-Closing Credit, the indemnification provisions and/or claims for breach of the representations, warranties and covenants specifically set forth in
this Agreement. 
 (c) Notwithstanding the foregoing and subject to any manufacturer restrictions, Seller shall use
commercially reasonable efforts to assign to Purchaser any and all equipment manufacturers’ warranties applicable to the Purchased Assets if such equipment manufacturers’ warranties exist and are transferable. 

2. CLOSING. 
 2.1 Seller’s
Deliveries. Simultaneously with the Closing of this Agreement on the Closing Date, Seller has executed and delivered to Purchaser: 

(a) Bills of sale and any other instruments of assignment and assumption conveying title to the Purchased Assets to Purchaser
and pursuant to which Purchaser assumes, and agrees to duly pay and perform, the Assumed Liabilities; 
 (b) Special Warranty
Deeds to the Kenedy and Coy City SWD Properties, as required to effectuate this Agreement. 
 (c) Ad valorem taxes for 2014
shall be pro-rated and any escrow fees shared equally. 
 (d) Executed Texas RRC Permit Transfer document prepared by
Purchaser; and 
 (e) Original Texas RRC Permit No. 13602 and
                     

(f) Affidavit of Debts and Liens for both the Kenedy and Coy City SWD Property. 

(g) Closing Statement. 

2.2 Purchaser’s Deliveries. Simultaneously with the Closing of this Agreement on the Closing Date, Purchaser has executed
and delivered to Purchaser The Purchase Price consisting of the Cash Closing Payment and execution and delivery of the Promissory Note. 
 3.
REPRESENTATIONS AND WARRANTIES OF SELLER. Each Seller hereby represents and warrants to Purchaser as follows: 
 3.1
Organization and Good Standing. Sellers are each a limited liability company validly existing and in good standing under the laws of the State of Texas. 

3.2 Limited Liability Company Power. Sellers each has the limited liability company power, authority and legal right to execute,
deliver and perform this Agreement. 

  
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 3.3 Authorization, Binding Effect. The
execution, delivery and performance of this Agreement and the other agreements, documents and instruments required to be delivered by each Seller in accordance with the provisions of this Agreement (collectively the “Seller
Documents”) and the underlying transactions contemplated by this Agreement and the Seller Documents have been duly authorized by each Seller. This Agreement and the Seller Documents have been duly executed and delivered by each Seller.
This Agreement is and the Seller Documents are the legal, valid and binding obligations of Seller enforceable in accordance with their terms subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).  
 3.4 No Conflicts; Consents and Approvals. The execution and delivery of this
Agreement and the Seller Documents, the consummation of the transactions herein and therein contemplated, and the performance of, fulfillment of and compliance with the terms and conditions hereof and thereof by Seller do not and will not conflict
with or result in a breach of the certificate of formation or the company agreement of Seller. No authorization, approval, consent of, and no registration or filing with, any governmental or regulatory official body or authority is required in
connection with Seller’s execution, delivery or performance of this Agreement or the Seller Documents other than with respect to the registration of Rolling Stock, if any, and transfers of Purchased Assets the title to which is evidenced by
certificates of title or registration, if any. 
 3.5 Title to Properties. On the Closing Purchaser will acquire all of
Seller’s right, title and interest in and to all of the Purchased Assets, free and clear of any lien, claim or encumbrance other than Permitted Liens including but not limited to any royalty or royalty burden. Sellers shall execute an Affidavit
of Debts and Liens known to be owed by Sellers and with respect to the drilling and construction of the SWD wells located on the properties being acquired pursuant to this Agreement. Such identified debts shall be paid at Closing. Sellers shall
indemnify and hold Purchaser harmless with respect to all such claims. 
 3.6 Brokers and Finders. Seller has not engaged any
person or entity to act or render services as a broker, finder or similar capacity that would be entitled to receive a fee and/or commission from Seller in connection with the transactions contemplated herein. No person or entity has, as a result of
any agreement or action by Seller, any right or valid claim against Purchaser or any of Purchaser’s affiliates for any commission, fee or other compensation as a broker or finder, or in any similar capacity in connection with the transactions
contemplated herein. 
 3.7 Material Adverse Effect. To each Seller’s knowledge, without investigation and subject to the
impact of the transactions contemplated by this Agreement and any other asset sale transactions each Seller has and/or intends to enter into, each Seller is not aware of any past, present or impending action or event, or threatened action or event,
that would cause a material adverse effect on the Business in its current condition on the Closing Date. 
 3.8 Environmental
Claims. Except as set forth in Schedule 3.8: 

  
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 (a) The Sellers are not subject to any outstanding judgment, decree, or judicial
order relating to compliance by Sellers with any Environmental Law or to investigation or cleanup of hazardous substances under any Environmental Law. 

(b) There are no claims, actions, proceedings or investigations pending or, to the Knowledge of any Seller, threatened against
the Sellers before any Governmental Authority under any Environmental Law, except those which could not reasonably be expected to have a Material Adverse Effect. 

(c) To the Knowledge of each Seller, there have been no discharges, emissions or other releases of hazardous substances by the
Sellers that are or were required to be investigated or reported under any Environmental Law, except those which could not reasonably be expected to have a Material Adverse Effect. 

3.9 Disclosure. No representation or warranty or other statement made by the Sellers in this Agreement, the certificates to be
delivered pursuant to this Agreement or otherwise in connection with the transactions contemplated hereby, and any and all reports made or issued, or that may be made or issued prior to the Closing Date by the Sellers contains or will contain any
untrue statement or omits or will omit a material fact necessary to make any of them, in light of the circumstances in which it was made, not materially misleading. 

4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents and warrants to Seller as follows: 

4.1 Organization and Good Standing. Purchaser is a duly organized, validly existing and in good standing under the Laws of the
State of Texas. 
 4.2 Corporate Power and Authority. Purchaser has the corporate power and authority to execute, deliver and
perform this Agreement. 
 4.3 Binding Effect. This Agreement has been duly authorized, executed and delivered by Purchaser and
is the legal, valid and binding obligation of Purchaser, enforceable in accordance with its terms except as their enforceability may be limited by laws and/or equitable principles relating to or affecting creditors’ rights. 

4.4 Authorization, Binding Effect. The execution, delivery and performance of this Agreement and the other agreements, documents
and instruments required to be delivered by Purchaser in accordance with the provisions of this Agreement (collectively the “Purchaser Documents”) and the underlying transactions contemplated by this Agreement and the
Purchaser Documents have been duly authorized by Purchaser. This Agreement and the Purchaser Documents have been duly executed and delivered by Purchaser. This Agreement is and the Purchaser Documents are the legal, valid and binding obligations of
Purchaser enforceable in accordance with their terms subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 

  
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 4.5 No Conflicts; Consents and Approvals. The execution and delivery of this
Agreement and the Purchaser Documents, the consummation of the transactions herein and therein contemplated, and the performance of, fulfillment of and compliance with the terms and conditions hereof and thereof by Purchaser do not and will not
conflict with or result in a breach of the articles of incorporation or bylaws of Purchaser. No authorization, approval, consent of, and no registration or filing with, any governmental or regulatory official body or authority is required in
connection with Purchaser’s execution, delivery or performance of this Agreement or the Purchaser Documents other than with respect to the registration of Rolling Stock and transfers of Purchased Assets the title to which is evidenced by
certificates of title or registration. 
 4.6 Brokers and Finders. Purchaser has not engaged any Person to act or render
services as a broker, finder or similar capacity in connection with the transactions contemplated herein and no Person has, as a result of any agreement or action by Purchaser any right or valid claim against Seller, or any of its affiliates for any
commission, fee or other compensation as a broker or finder, or in any similar capacity in connection with the transactions contemplated herein. 
 5.
CERTAIN POST-CLOSING COVENANTS. 
 5.1 Consents and Approvals. 

(a) Each of the parties hereto shall, and shall cause each of its affiliates to, use its reasonable efforts in good faith to
obtain at the earliest practicable date any approvals, authorizations and consents, including but not limited to the third party consents necessary to consummate the transactions contemplated by this Agreement and take such actions as the other
parties may reasonably request to consummate the transactions contemplated by this Agreement. For a period of up to thirty (30) days immediately following the Closing Date, Seller shall use commercially reasonable efforts (which shall not
require Seller to incur any expense) to cooperate with Purchaser in connection with Purchaser’s application for the transfer, renewal or issuance of any permits, licenses, plates, approvals or authorizations required to transfer the Purchased
Assets from Seller to Purchaser. 
 (b) Nothing in this Section 5.1 shall require a party to expend any monies to
obtain any approval or consent required hereunder, except for customary attorneys’ fees and filing fees incident to the transactions contemplated hereby or as otherwise specifically required under this Agreement. 

5.2 Employees. A list of Seller’s employees with current salaries and location is included as Schedule 5.2 

  
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 5.3 Collection of Seller Account Receivables. 

(a) From and after the Closing Date, Purchaser shall provide Seller with commercially reasonable assistance with respect to
Seller’s collection of its existing accounts receivables associated with the Business and which are not Purchased Assets. 
 Within five
(5) days of receipt, Purchaser shall remit to Seller all payments received by Purchaser from customers for revenue that accrued prior to the Closing Date (which, for the avoidance of doubt, shall exclude revenues relating to Post-Closing
Business) without setoff, netting or recoupment. 
 (b) From and after the Closing Date, Seller shall provide Purchaser with
commercially reasonable assistance with respect to Purchaser’s collection of accounts receivables associated with the Business. Within five (5) days of receipt, Seller shall remit to Purchaser all payments received by Seller from customers
for revenue that accrued after the Closing Date (which, for the avoidance of doubt, shall include revenues relating to Post-Closing Business) without setoff, netting or recoupment. 

(c) For not less than 180 days after the Closing Date, Purchaser and Seller shall keep accurate records of all payments
received in connection with the Business and allow each other reasonable access to such records for the purpose of verifying the amount and application of such payments to the period before or after the Closing Date. 

5.4 Employee Benefits. Purchaser is not assuming any liability under any Benefit Plan with respect to any employee, former
employee, dependent, beneficiary, or independent contractor and regardless of whether such liability is incurred prior to or after the Closing Date. All employees of Sellers who accept employment with Purchaser on or after the Closing Date shall be
new employees of Purchaser and any prior employment by Sellers of such employees shall not affect entitlement to, or the amount of, salary or other cash compensation, current or deferred, which Purchaser may make available to its employees. 

5.5 Employees. For a period of thirty (30) days immediately following the Closing Date, Seller shall use commercially
reasonable efforts to assist Purchaser in employing as new employees of Purchaser, those employees that Purchaser desires to hire, if any. 

5.6 Maintenance of Books and Records. Sellers shall retain all material records relating to the Purchased Assets and/or the
Business (the “Seller Records”) until the first (1st) anniversary of the Closing Date. Without the prior written consent of Seller, Purchaser and its officers,
directors and representatives shall not disclose trade secrets or confidential business information of Sellers contained in the Sellers’ Records except (i) as such disclosure is required by law or (ii) where such information becomes
generally known or available to the public and/or to Purchaser’s competitors through sources other than Purchaser, its affiliates or its officers, directors or representatives. 

5.7 Further Assurances. From time to time after the Closing Date, Sellers shall upon reasonable request from Purchaser, execute,
acknowledge and deliver to Purchaser such other instruments and take such other actions and execute and deliver such other documents, certifications and further assurances as Purchaser may reasonably require to vest more effectively in Purchaser, or
to put Purchaser more fully in possession of, any of the Purchased Assets. Each of the parties hereto shall cooperate with the other and execute and deliver to the other parties hereto such other instruments and documents and take such other actions
as may be reasonably requested from time to time by any other party hereto as necessary to carry out, evidence and confirm the intended purposes of this Agreement. 

  
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 5.8 Non-Compete. Sellers including their corporate parent/affiliates GreenHunter
Water, LLC and GreenHunter Resources, LLC for and in consideration of Purchaser Closing pursuant to this Agreement agree to not compete directly or indirectly with the oil field salt water disposal business of Purchaser for a period of not less than
twenty-four (24) months in Karnes, County, Texas. GreenHunter Water, LLC and GreenHunter Resources, LLC join in execution of this Agreement specifically for the purpose of evidencing their Agreement to this non-com0pete agreement as well as the
other indemnification provisions hereof. 
 6. INDEMNIFICATION. 

6.1 Indemnification of Purchaser. Subject to the limitations set forth in Sections 6.3 and 6.4, Each Seller and
GreenHunter Resources, LLC and GreenHunter Water, LLC shall indemnify and hold Purchaser harmless from, against, for and in respect of (i) any and all damages, losses, settlement payments, obligations, liabilities, claims, actions or causes of
action, royalty or royalty burden and encumbrances suffered, sustained, incurred or required to be paid by Purchaser, net of any resulting insurance proceeds to Purchaser and income tax benefits to Purchaser because of the breach of any written
representation, warranty, agreement or covenant of each Seller contained in this Agreement; and (ii) all reasonable costs and expenses (including, without limitation, attorneys’ fees, interest and penalties) incurred by Purchaser in
connection with any action, suit, proceeding, demand, assessment or judgment incident to any of the matters indemnified against in this Section 6.1. 

6.2 Indemnification of Sellers. Subject to the limitations set forth in Sections 6.3 and 6.4, Purchaser shall
indemnify and hold Sellers harmless from, against, for and in respect of any and all damages, losses, settlement payments, obligations, liabilities, claims, actions or causes of action and encumbrances suffered, sustained, incurred or required to be
paid by Sellers, net of any resulting insurance proceeds to Sellers and income tax benefits to Sellers, together with all reasonable costs and expenses (including, without limitation, attorneys’ fees, interest and penalties) incurred by Sellers
in connection with any action, suit, proceeding, demand, assessment or judgment incident thereto (A) because of the breach of any written representation, warranty, agreement or covenant of Purchaser contained in this Agreement or (B) in
respect of any of the Assumed Liabilities, or in respect of any liability arising out of any transaction or event relating to the Purchased Assets occurring after the Closing Date. 

6.3 Survival of Representations, Warranties and Covenants. All representations, warranties, covenants and agreements made by any
party to this Agreement or pursuant hereto shall survive the execution hereof, notwithstanding any investigation conducted at any time with respect to such representations and warranties, for twenty four (24) months immediately following the
Closing Date or until the resolution, pursuant to the dispute resolution provisions of Section 7.1, of any dispute for which written notice of such dispute was received by the Indemnifying Party (as defined below) prior to the expiration
of such 24-month period. Immediately after such 24-month period all representations, warranties, covenants and agreements made by any Party to this Agreement or in Sellers’ Documents or Purchaser Documents shall expire and be of no further
effect. Notice of any claim of a breach of a representation, warranty, covenant or agreement must be given prior to the expiration of such representation, warranty, covenant or agreement; and any claim not made within such period shall be of no
force or effect. 

  
 12 

 6.4 General Rules Regarding Indemnification. The obligations and liabilities of
each indemnifying party hereunder with respect to claims resulting from the assertion of liability by the other party shall be subject to the following terms and conditions: 

(a) The indemnified party shall give prompt written notice (which in no event shall exceed 30 days from the date on which the
indemnified party first became aware of such claim or assertion) to the indemnifying party of any claim which might give rise to a claim by the indemnified party against the indemnifying party based on the indemnity agreements contained in
Sections 6.1 or 6.2 hereof, stating in reasonable detail the nature and basis of said claims and the amounts thereof, to the extent known; 

(b) If any action, suit or proceeding is brought against the indemnified party with respect to which the indemnifying party may
have liability under the indemnity agreements contained in Sections 6.1 or 6.2 hereof, the action, suit or proceeding shall, at the election of the indemnifying party, be defended (including all proceedings on appeal or for review
which counsel for the indemnified party shall deem appropriate) by the indemnifying party. The indemnified party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the indemnified
party’s own expense unless the employment of such counsel and the payment of such fees and expenses both shall have been specifically authorized in writing by the indemnifying party in connection with the defense of such action, suit or
proceeding. Notwithstanding the foregoing, (A) if there are defenses available to the indemnified party which are inconsistent with those available to the indemnifying party to such extent as to create a conflict of interest between the
indemnifying party and the indemnified party, the indemnified party shall have the right to direct the defense of such action, suit or proceeding insofar as it relates to such inconsistent defenses, and the indemnifying party shall be responsible
for the reasonable fees and expenses of the indemnified party’s counsel insofar as they relate to such inconsistent defenses (but shall not otherwise be obligated to raise or pursue such inconsistent defenses), and (B) if such action, suit
or proceeding involves or could have an effect on matters beyond the scope of the indemnity agreements contained in Sections 6.1 and 6.2 hereof, the indemnified party shall have the right to direct (at its own expense) the defense of
such action, suit or proceeding insofar as it relates to such other matters (but shall not otherwise be obligated to raise or pursue such other matters). The indemnified party shall be kept fully informed of such action, suit or proceeding at all
stages thereof whether or not it is represented by separate counsel. 
 (c) The indemnified party shall make available to the
indemnifying party and its attorneys and accountants all books and records of the indemnified party relating to such proceedings or litigation and the parties hereto agree to render to each other such assistance as they may reasonably require of
each other in order to ensure the proper and adequate defense of any such action, suit or proceeding. 
 (d) The indemnified
party shall not make any settlement of any claims without the written consent of the indemnifying party. The indemnifying party shall not settle any claims without the written consent of the indemnified party if the settlement would impose any cost
or admission of liability or any injunctive relief upon the indemnified party. 

  
 13 

 (e) In no event shall the indemnifying party be liable hereunder for
consequential, exemplary, punitive or other speculative damages incurred by the indemnified party as a result of an indemnified claim, but shall be liable for such damages asserted by any third party against the indemnified party, subject to the
limitations of this Article 6. 
 (f) The provisions of this Article 6, shall be the exclusive remedy of the
Parties with respect to the occurrence of any event or condition referred to in this Article 6 and with respect to the breach of any representation, warranty, covenant or agreement of another Party hereto; provided, however, that
the provisions of Section 1.6 (and not this Article 6) shall be the exclusive remedy of Purchaser with respect to missing or damaged Purchased Assets. 

7. DISPUTE RESOLUTION. 
 7.1
Arbitration. It is the intention of the parties that in the event any dispute arises under this Agreement, the parties shall first meet and confer with one another to attempt to negotiate a resolution of such dispute without recourse to
arbitration and/or litigation. If, after commercially reasonable efforts to resolve any dispute arising under this Agreement, the parties are unable to agree, the dispute shall be submitted to arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (“Rules”), and further subject to the following: 

(a) There shall be one (1) independent arbitrator (“Arbitrator”) selected according to the Rules.

 (b) The Arbitrator shall determine what discovery shall be permitted, consistent with the goal of limiting the cost and
time which the parties must expend for discovery; provided the arbitrator shall permit such discovery as he or she deems necessary to permit an equitable resolution of the dispute. 

(c) The determination of the Arbitrator shall be binding on the parties hereto, and shall not, absent bad faith on the part of
the Arbitrator, be appealable or otherwise subject to challenge. 
 (d) Judgment on any award rendered by the Arbitrator may
be entered in any court having jurisdiction thereof. 
 (e) The right to arbitration hereunder shall survive any termination
of this Agreement. 
 (f) The Arbitrator shall select an exclusive location for arbitration of any such dispute, controversy,
or claim and such selection shall be limited to Dallas County, Texas. 

  
 14 

 (g) The Arbitrator shall be directed that any arbitration under this Agreement
shall be completed as soon as practicable after the filing of notice of a request for such arbitration, but in any event within ninety (90) days of the request for arbitration. 

(h) All payments determined by the Arbitrator shall be paid in U.S. funds by the responsible party within five
(5) business days following determination thereof. A disputed performance or suspended performance pending the resolution of the arbitration shall be completed within a reasonable time period following the final decision of the arbitrator. 

(i) The arbitration proceedings and the decision shall not be made public without the joint consent of the parties and each
party shall maintain the confidentiality of such proceedings and decision unless otherwise permitted by the other party. 

(j) The fees and expenses payable to the Arbitrator in connection with such determination will be borne 50% by Seller and 50%
by Purchaser pending the final decision of the Arbitrator. The final decision of the Arbitrator may, however, award costs of the Arbitrator and the arbitration costs of the parties to the arbitration in the manner provided in such final arbitration
decision. 
  

	8.	MISCELLANEOUS. 

  

	 	8.1	Certain Definitions and Interpretive Provisions. 

 (a) For the
purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1: 
 (i)
“Permitted Liens” means: 
 (A) all rights reserved to or vested in any governmental authority to
control or regulate the Purchased Assets and Business and all obligations and duties under all laws or under any permit issued by any governmental authority; 

(B) statutory liens for current Taxes not yet due and payable or the amount or validity of which is being contested in good
faith; 
 (C) statutory and contractual liens in favor of mechanics, materialmen, warehousemen, and landlords for amounts
not yet due and payable or the amount or validity of which is being contested in good faith; and 
 (D) liens arising under
the terms of the Assumed Contracts or as a matter of law securing Assumed Liabilities. 
 (ii) “Business
Days” means any day other than (a) a Saturday, (b) a Sunday or (c) a day on which commercial banks are authorized or required to close in Corpus Christi, Texas. 

  
 15 

 (b) Unless indicated otherwise, all days referred to in this Agreement are
calendar days. Whenever any obligation hereunder is required to be performed on a day which is not a “business day,” the time required for such performance shall be extended to the next succeeding calendar day which is a business day. 

(c) The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this
Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement. 
 (d) The definitions
contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. 

(e) Whenever the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” 
 (f) Any reference in this Agreement to
“$” shall mean United States dollars. 
 (g) Any agreement, instrument, statute or regulation defined or referred
to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, statute or regulation as from time-to-time amended, modified or supplemented including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes or regulations) by succession of comparable successor statutes or regulations and references to all attachments thereto and instruments incorporated therein. 

(h) All Article and Section references herein are to Articles and Sections of this Agreement, unless otherwise specified. 

(i) All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement. 

(j) “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing
words (including electronic media) in a visible form. 
 (k) References to any Party include the successors and permitted
assigns of that Party. 
 (l) “Shall” and “will” have equal force and effect. 

(m) THE PARTIES AGREE THAT THE BOLD AND/OR CAPITALIZED LETTERS IN THIS AGREEMENT CONSTITUTE CONSPICUOUS LEGENDS. 

(n) Time is of the essence in the performance of this Agreement. 

  
 16 

 8.2 Expenses. The Purchaser and each Seller shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby. Purchaser shall be responsible for transfer taxes, title registration fees and similar charges incurred in connection with the sale of the Purchased Assets, if any. 

8.3 Entire Agreement. This Agreement, the Sellers’ Documents, the Purchaser Documents and the Exhibits and Schedules hereto
contain the complete agreement among the Parties with respect to the transactions contemplated hereby and supersede all prior agreements and understandings, oral or written, among the parties with respect to such transactions. Section and other
headings are for reference purposes only and shall not affect the interpretation or construction of this Agreement. The Parties hereto make no representations or warranties except as expressly set forth in this Agreement or in any duly executed
certificate or schedule delivered pursuant hereto. 
 8.4 Public Announcements. No party to this Agreement shall issue any
press release relating to, or otherwise publicly disclose the transactions contemplated by this Agreement without the prior approval of the other party, which approval may not be unreasonably withheld or delayed. Notwithstanding the foregoing, any
party may make such disclosure as may be required by law, provided the disclosing party provides to the other party reasonable advance written notice of such required disclosure describing the substance of the proposed disclosure (such as the
content of a proposed press release). 
 8.5 Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute only one original. 

8.6 Notices. All notices, demands, requests or other communications that may be or are required to be given, served or sent by
any party to any other party pursuant to this Agreement shall be in writing and shall be transmitted by a reputable overnight courier service or by hand delivery or facsimile transmission, addressed as follows: 

If to Sellers: 
 c/o GreenHunter
Water, LLC 
 1048 Texan Trail 

Grapevine, Texas 76051 

	 	Attn:	    Morgan F. Johnston, Senior Vice President 

    General Counsel and Secretary 

Facsimile: 972-410-1066Email: mjohnston@greenhunterresources.com 

If to Purchaser: 
 Sable
Environmental SWD 5, LLC. 
 711 N. Carancahua, Suite 1130 

Corpus Christi, Texas 78401 

Phone: (361) 806-2121 

E-mail: will@sableco.com 

  
 17 

 With a copy to: 

Robert C. Pate 
 Frost Bank Plaza

 802 Carancahua, Suite 1350 

Corpus Christi, Texas 78401-0022 

Phone: (361) 888-8413 
 Fax:
(361) 887-6207 
 Email: judgepate@robertcpatelaw.com 

Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served, or sent.
Each notice, demand, request or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent and received for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, fax confirmation sheet or the affidavit of courier or messenger being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation. 

8.7 Assignment; Successors and Assigns. This Agreement may be assigned by either of the parties hereto by providing the other
party with prior written notice of such assignment. This Agreement and the rights, interests and obligations hereunder shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 8.8 Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the Laws of the
State of Texas disregarding any conflicts of law principles to the contrary. This contract is fully performable within Dallas County, Texas. 

8.9 Waiver and Other Action. This Agreement may be amended, modified, or supplemented only by a written instrument executed by
the parties against which enforcement of the amendment, modification or supplement is sought. 
 8.10 Severability. If any
provision of this Agreement is held to be illegal, invalid, or unenforceable, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision were never a part
hereof; the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance; and in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable so as to give effect to the intention of the
parties. 
 8.11 Third-Party Beneficiaries. This Agreement and the rights, obligations, duties and benefits hereunder are
intended for the parties hereto, and no other person or entity shall have any rights, obligations, duties and benefits pursuant hereto. 

8.12 Mutual Contribution. The parties to this Agreement and their counsel have mutually contributed to its drafting.
Consequently, no provision of this Agreement shall be construed against any party on the ground that such party drafted the provision or caused it to be drafted or the provision contains a covenant of such party. 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement. 

  
 18 

 
			
	SELLERS:
	
	KENEDY HUNTER, LLC
		
	By:	 	  

	Name: Kirk Trosclair
	Its: Executive Vice President
	
	COY CITY HUNTER, LLC
		
	By:	 	  

	Name:	 	  

	Its:	 	  

	
	GREENHUNTER RESOURCES, LLC
		
	By:	 	  

	Name: Kirk Trosclair
	Its: Executive Vice President
	
	GREENHUNTER WATER, LLC
		
	By:	 	  

	Name: Kirk Trosclair
	Its: Executive Vice President

  
 19 

 
			
	PURCHASER:
	
	SABLE ENVIRONMENTAL SWD 5, LLC
	A Texas limited liability Company
		
	By:	 	  

	Name: William C. Cocke, Jr.
	Its: Member

  
 20 

 LIST OF SCHEDULES 

SCHEDULE 1.2 
 Assumed Liabilities-NONE 

SCHEDULE 1.7 
 Allocation of Purchase Price 

SCHEDULE 3.8 
 Environmental Claims-NONE 

SCHEDULE 5.1 
 Employee Lists_No Employees are to be hired
by Purchaser 

  
 21 

 LIST OF EXHIBITS 

EXHIBIT 1.1(a)(iv) – Kenedy SWD Permit 
 EXHIBIT 1.1(a)(iv)
– Coy City SWD Permit 
 EXHIBIT 1.1(a)(v) – Kenedy SWD real property Special Warranty Deed 

EXHIBIT 1.1(a)(v) – Coy City SWD real property Special Warranty Deed 

EXHIBIT 1.1(a)(vi) – Kenedy SWD Asset List 
 EXHIBIT 1.4-
Form of Promissory Note 

  
 22EX-10.1

 Exhibit 10.1 

adMonitor, Inc. 

2007 STOCK INCENTIVE PLAN 

ARTICLE ONE 
 GENERAL
PROVISIONS 
  

	 	A.	Purpose of the Plan 

 1. This 2007 Stock Incentive Plan is intended to promote the
interests of adMonitor, Inc., a Delaware corporation (the “Corporation”), by providing eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the Service of the Corporation. 
 2. Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix. 
  

	 	B.	Structure of the Plan 

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

 (a) the Discretionary Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted
options to purchase shares of Common Stock; and 
 (b) 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, as bonus for services rendered the Corporation (or any Parent or Subsidiary), or pursuant to share right awards which entitle
Participants to receive shares upon the attainment of designated Performance Goals or Service requirements; and 
 2. The provisions of
Articles One and Four shall apply to all equity programs under the Plan and shall govern the interests of all persons under the Plan. 
  

	 	C.	Administration of the Plan 

 1. The Board shall administer the Plan, However, any or all
administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The
Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee. 

2. The 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 

  
 1 

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

3. The Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority to determine:
(i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive grants, the time or times when such grants are to be made, the number of shares to be covered by each such grant, the
status of a granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option
is to remain outstanding; and (ii) with respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when such issuances are to be made, the number of shares to be issued
to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration for such shares. 
 4. 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. 

5. Service on any 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 any 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, 
  

	 	D.	Eligibility 

 1. The persons eligible to participate in the Discretionary Option Grant
and Stock Issuance Programs are as follows: 
 (a) Employees, 

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

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

 

	 	E.	Stock Subject to the Plan 

 1. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock initially reserved for issuance over the term of the Plan shall not exceed 3,000,000 shares. 

  
 2 

 2. Shares of Common Stock subject to outstanding options shall be available for subsequent
issuance under the Plan to the extent those options expire or terminate for any reason prior to exercise in full. Unvested shares issued under the Plan and subsequently cancelled or repurchased by the Corporation at the original exercise or 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. In addition, 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 only by the net number of shares of Common Stock issued to the holder of such option or stock issuance, and not by the gross number of shares for which the option is exercised or which vest under the stock issuance. 

3. If any change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to: 

(a) the maximum number and/or class of securities issuable under the Plan; 

(b) the number and/or class of securities for which any one person may be granted stock options, direct stock issuances and share right
awards under this Plan per calendar year; and 
 (c) the number and/or class of securities and the exercise price per share (without change
in the total price applicable to the unexercised portion of the option). 
 The adjustments determined by the Plan Administrator shall be
final, binding and conclusive. 
 ARTICLE TWO 

DISCRETIONARY OPTION GRANT PROGRAM 
  

	 	A.	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
option. 
 1. Exercise Price. 

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

  
 3 

 (b) The exercise price shall become immediately due upon exercise of the option and may, subject
to the provisions of Section 1 of Article Four and the documents evidencing the option, be payable in one or more of the forms specified below: 

1) cash or certified check made payable to the Corporation, or 

2) shares of Common Stock valued at Fair Market Value on the Exercise Date. 

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. 
 2. 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. Except as otherwise provided by the Board in a stock option agreement entered into with an Optionee, 25% of the shares covered by the option shall become exercisable upon the
expiration of one year from the Grant Date and, thereafter, the remaining 75% of the shares covered by the option shall become exercisable in thirty-six (36) equal monthly installments at the end of each calendar month for thirty-six
(36) calendar months. No option shall have a term in excess of ten (10) years measured from the option grant date. 
 3. Effect
of Termination of Service. 
 (a) The following provisions shall govern the exercise of any options held by the Optionee at the time of
cessation of Service or death: 
 1) Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall
remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. 

2) 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 in accordance with the laws of descent and distribution or, with respect to Non-Statutory
Options, by the Optionee’s designated beneficiary or beneficiaries of that option. 
 3) Except as otherwise determined in the
discretion of the Plan Administrator either at the time an option is granted or at any time the option remains outstanding, 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. 

  
 4 

 (b) During the applicable post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be
outstanding to the extent the option is not otherwise at that time exercisable for vested shares. 
 (c) The Plan Administrator shall have
compete discretion, either at the time an option is granted or at any time while the option remains outstanding, to: 
 1) extend the
period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option term, and/or 
 2) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested had the Optionee continued in Service. 
 4. 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. 
 5. Repurchase Rights. 

The Plan Administrator shall have the discretion to grant options which 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. 

6. 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 by the laws of descent and distribution following the Optionee’s death. Non-Statutory Options shall be subject to the same limitation, except that a Non-Statutory Option may be assigned in whole or

  
 5 

 
in part during Optionee’s lifetime to one or more members of the Optionee’s Immediate Family or to a trust established for the exclusive benefit of one or more members of the
Optionee’s Immediate Family or the Optionee’s former spouse, to the extent such assignment is in connection with Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion shall be exercisable only by the
person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this 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
Non-Statutory 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 option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s
death. 
  

	 	B.	Incentive Options 

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

Incentive Options may only be granted to Employees. 

3. Exercise Price. 
 The
exercise price per share shall not be less than 100% of the Fair Market Value per share of Common Stock on the option grant date. 
 4.
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 $100,000. To the extent the Employee holds two 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. 

  
 6 

 5. Failure to Qualify as Incentive Option. 

To the extent that any option governed by this P an does not qualify as an Incentive Option by reason of the dollar limitation described in
Section B.4 of this Article Two or for any other reason, such option shall continue to be outstanding and exercisable in accordance with its terms and conditions, but as a Non-Statutory Option under the Federal tax laws. 

6. 10% Stockholder. 
 If
any Employee to whom an Incentive Option granted is a 10% Stockholder, then the exercise price per share shall not be less than 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. 
  

	 	C.	Change in Control 

 1. Except to the extent expressly provided in an option agreement
pursuant to paragraphs 5 or 6 below, no option outstanding at the time of a Change in Control shall become exercisable on an accelerated basis if and to the extent: 

(a) that option is, in connection with the Change in Control, assumed by the successor corporation (or parent thereof) or otherwise continued
in full force and effect pursuant to the terms of the Change in Control transaction, 
 (b) such option is replaced with a cash incentive
program of the successor corporation which preserves the spread existing at the time of the Change in Control on the shares of Common Stock for which the option is not otherwise at that time exercisable, provides for subsequent payout in accordance
with the same exercise/vesting schedule applicable to those option shares and does not cause any IRC 409A Consequences, or 
 (c) the
acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. 
 However,
if none of the foregoing conditions are satisfied, then each option outstanding at the time of the Change in Control but not otherwise exercisable for all the shares of Common Stock at that time subject to such option 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. 
 2. All of the Corporation’s outstanding repurchase rights under the Discretionary Option Grant
Program shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent: 

(a) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect
pursuant to the terms of the Change in Control transaction or 
 (b) such accelerated vesting is precluded by other limitations imposed by
the Plan Administrator at the time the repurchase right is issued. 

  
 7 

 3. Immediately following the consummation of the Change in Control, all outstanding options shall
terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction. 

4. Each option which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments to reflect such Change in Control shall also be made to: 
 (a) the exercise price payable per share under
each outstanding option, provided the total exercise price payable for such securities shall remain the same; 
 (b) the maximum number
and/or class of securities available for issuance over the remaining term of the Plan; 
 (c) the maximum number and/or class of securities
available for issuance over the remaining term of the Plan; 
 (d) the maximum number and/or class of securities for which any one person
may be granted options, direct stock issuances and share right awards under the Plan per calendar year; and 
 (e) the maximum number and
class of securities which may be added to the Plan through the repurchase of shares. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change
in Control transaction, the successor corporation may, in connection with the assumption of the outstanding options under the Discretionary Option Grant Program, 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 Change in Control transaction. 
 5. 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 that time subject to such options on an accelerated basis and may be exercised for any or all of such shares as fully vested shares of Common Stock, whether or not those options are to be assumed or otherwise continued
in full force and effect or replaced with a cash incentive program pursuant to the express terms of the Change in Control 

  
 8 

 
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 immediately terminate at the time of such Change in Control and shall not be assignable to the successor corporation (or parent thereof), and the shares subject to those terminated rights shall accordingly vest in
full at the time of such Change in Control. 
 6. 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 vest and become exercisable for all the shares of Common Stock at that time subject to such options on an accelerated basis in the event the Optionee’s
Service is subsequently terminated by reason of an Involuntary Termination within a designated period (not to exceed 18 months) following the effective date of any Change in Control in which those options do not otherwise accelerate. Any options so
accelerated shall remain exercisable for fully vested shares of Common Stock until the expiration or sooner termination of the option term. In addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights
under the Discretionary Option Grant Program so that those rights shall immediately terminate with respect to any shares of Common Stock 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. 
 7. The portion of any Incentive Option accelerated in
connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable $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 Non-Statutory Option under the Federal tax laws. 
 8. The grant of options under the Discretionary 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.

 ARTICLE THREE 
 STOCK
ISSUANCE PROGRAM 
  

	 	A.	Stock Issuances 

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

 

	 	B.	Stock Issuance Terms 

 1. Purchase Price. 

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

  
 9 

 (b) Subject to the provisions of Section 1 of Article Four, shares of Common Stock may be
issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance: 

1) cash or certified check made payable to the Corporation, or 

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

2. Vesting Provisions. 

(a) 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. Except as otherwise provided by the Board in the Stock Issuance Agreement entered into with a Participant, 25%
of the shares issued shall vest upon the expiration of one year from the Grant Date and, thereafter, the remaining 75% of the shares covered by the option shall vest in thirty-six (36) equal monthly installments at the end of each calendar
month for thirty-six (36) calendar months. 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 or Service requirements. Upon the attainment of such Performance Goals or Service requirements, fully vested shares of Common Stock shall be issued upon satisfaction of those share right awards. For purposes of qualifying grants of
stock as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals shall be set by the
Administrator on or before the latest date permissible to enable the stock to qualify as “performance-based compensation” under Section 162(m) of the Code. In granting stock which is intended to qualify under Section 162(m) of
the Code, the Administrator shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the stock under Section 162(m) of the Code (e.g., in determining the Performance Goals). 

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

  
 10 

 (c) 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. The holder of a share right award shall have no stockholder rights with respect to such award until shares of Common Stock have been issued to such Participant in satisfaction of such award. 

(d) 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 Participants 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. 
 (e) 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 then on-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 as to which the waiver applies. Such waiver may be effected at anytime, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance
objectives. 
 (f) 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 or Service requirements 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 or Service requirements have not been attained. 
  

	 	C.	Change in Control 

 1. 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 Change in Control, except to the extent (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the express terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other
limitations imposed in the Stock Issuance Agreement. 
 2. 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 upon the occurrence of a Change in 

  
 11 

 
Control and shall not be assignable to the successor corporation (or parent thereof), and the shares of Common Stock subject to those terminated rights shall immediately vest in full at the time
of such Change in Control. 
 3. 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 full, upon the
Involuntary Termination of the Participant’s Service within a designated period (not to exceed 18 months) following the effective date of any Change in Control in which those repurchase rights do not otherwise terminate. 

ARTICLE FOUR 

MISCELLANEOUS 
  

	 	A.	Financing 

 The Plan Administrator may permit any Optionee or Participant to pay the
option exercise price under the Discretionary Option Grant Program or the purchase price of shares issued under the Stock Issuance Program by delivering an interest bearing promissory note payable in one or more installments that is recourse as to
at least 25% of the purchase price and secured by the shares issuable, provided that such purchase with a promissory note shall not be permitted, and any outstanding promissory note shall be required to be repaid, if it will cause any violation of
the Sarbanes-Oxley Act of 2002. The terms of any such promissory note (including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the
Participant in connection with the option exercise or share purchase. 
  

	 	B.	First Refusal Rights 

 The Corporation shall have the right of first refusal with respect
to any proposed disposition by the Optionee or Participant (or any successor in interest) of any shares of Common Stock issued under the Plan. Such right of first refusal shall be exercisable and lapse in accordance with the terms established by the
Plan Administrator and set forth in the document evidencing such right. 
  

	 	C.	Share Escrow/Legends 

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

  
 12 

	 	D.	Tax Withholding 

 1. 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. 

2. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory Options or unvested shares of Common Stock under
the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their options or the vesting of their shares. Such right may be provided to any such holder
in either or both of the following formats: 
 (a) 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 amount of the Taxes (not to exceed one hundred percent
(100%) of such Taxes) to be satisfied in such manner as designated by the holder in writing; or 
 (b) Stock Delivery: The
election to deliver to the Corporation, at the time the Non-Statutory Option is exercised or the shares vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the option exercise or share vesting
triggering the Taxes) with an aggregate Fair Market Value equal to the amount of the Taxes (not to exceed 100% of such Taxes) to be satisfied in such manner as designated by the holder in writing. 

 

	 	E.	Effective Date and Term of the Plan 

 1. The Plan shall become effective immediately upon
the Plan Effective Date. Options may be granted under the Discretionary Option Grant at any time on or after the Plan Effective Date. However, no options granted under the Plan maybe 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 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. 
 2. The Plan shall terminate upon the EARLIEST of
(1) the tenth (10th) anniversary of the Plan Effective Date, (2) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares or
(3) the termination of all outstanding options in connection with a Change in Control. Upon such plan termination, all outstanding option grants and unvested stock issuances shall thereafter continue to have force and effect in accordance with
the provisions of the documents evidencing such grants or issuances. 
  

	 	F.	Amendment of the Plan 

 1. 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 

  
 13 

 
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. 

2. Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant Program and shares of Common Stock may be
issued under the Stock Issuance Program that are in each instance in excess of the number of shares then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is
obtained any required approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such approval is not obtained within twelve (12) months after the date the first such excess
issuances are made, then (1) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (2) the Corporation shall promptly refund to the Optionees and the Participants the exercise or
purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest(at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically
cancelled and cease to be outstanding. 
  

	 	G.	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. 
  

	 	H.	Regulatory Approvals 

 1. The implementation of the Plan, the granting of any stock
option under the Plan and the issuance of any shares of Common Stock (1) upon the exercise of any granted option or (2) 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. 

2. 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, 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. 

 

	 	I.	Financial Information 

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

  
 14 

	 	J.	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. 

ARTICLE FIVE 
 APPENDIX

 The following definitions shall be in effect under the Plan: 

A. BOARD shall mean the Corporation’s Board of Directors. 

B. CHANGE IN CONTROL shall mean a change in ownership or control of the Corporation effected through any of the following transactions: 

1. a stockholder-approved merger, consolidation or other reorganization in which securities representing more than 50% of the total combined
voting power of the Corporation’s outstanding securities become beneficially owned, directly or indirectly, by a person or related group of persons (other than a person or related group of persons that, immediately prior to such transaction,
directly or indirectly controlled, was controlled by, or was under common control with, the Corporation); 
 2. a stockholder-approved sale,
transfer or other disposition of all or substantially all of the Corporation’s assets to any person or related group of persons (other than a person or related group of persons that, immediately prior to such transaction, directly or indirectly
controlled, was controlled by, or was under common control with, the Corporation); or 
 3. 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 13-d3 of the
1934 Act) of securities possessing more than 50% of the total combined voting power of the Corporation’s outstanding securities from a person or persons other than the Corporation. 

In no event shall any public offering of the Corporation’s securities be deemed to constitute a Change in Control. 

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

D. COMMITTEE shall mean a committee or one or more Board members, appointed by the Board to exercise one or more administrative functions
under the Plan. 
 E. COMMON STOCK shall mean the Corporation’s common stock. 

  
 15 

 F. CORPORATION shall mean adMonitor, Inc., a Delaware corporation, and its successors. 

G. DISABILITY shall means a medically determinable physical or mental impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than twelve (12) months and which: (1) renders the individual unable to engage in any substantial gainful activity; or (2) results in the individual receiving income replacement benefits for
a period of not less than three (3) months under any policy of long-term disability insurance maintained by a Corporation for the benefit of its employees. 

H. DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary option grant program in effect under the Plan. 

I. EMPLOYEE shall mean an “employee” of the Corporation (or any Parent or Subsidiary) within the meaning of Section 3401(c) of
the Code and the regulations thereunder. 
 J. EXERCISE DATE shall mean the date on which the Corporation shall have received written notice
of the option exercise. 
 K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance with the
following provisions: 
 1. If the Common Stock is at the time listed on the Nasdaq Stock Market, then the Fair Market Value shall be the
closing selling price per share c f Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq Stock Market and published in The Wall Street Journal. 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. 

2. 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 and published in
The Wall Street Journal. 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. 

3. If the Common Stock is at the time neither listed on any Stock Exchange or the Nasdaq Stock 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. In making any such determination, the Plan Administrator shall follow any procedures determined by it from time to time to
be necessary to avoid the application of IRC 409A Consequences to any option. 
 L. IMMEDIATE FAMILY shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in- law, brother-in-law, or sister-in-law, and shall include adoptive relationships. 

  
 16 

 M. INCENTIVE OPTION shall mean an option which satisfies the requirements of Code
Section 422. 
 N. INVOLUNTARY TERMINATION shall mean the termination of the Service of any individual which occurs by reason of: 

1. such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or 

2. such individual’s voluntary resignation following (1) a change in his or her position with the Corporation which materially
reduces his or her level of responsibility or the level of management to which Optionee reports, (2) a reduction in his or her level of compensation (including base salary, fringe benefits and participation in any corporate-performance based
bonus or incentive programs) by more than 15% or (3) 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. 
 O. IRC 409A CONSEQUENCES shall mean, to the extent imposed by Section 409A of the Code,
(1) inclusion in gross income of deferred compensation from current and prior years, (2) interest liability on deferred taxes at increased federal rate and (3) 20% excise tax on deferred compensation. 

P. 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). 
 Q. 1934 ACT shall mean the
Securities Exchange Act of 1934, as amended. 
 R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the requirements of
Code Section 422. 
 S. OPTIONEE shall mean any person to whom an option s granted under the Discretionary Option Grant Program. 

T. 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 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

U. PARTICIPANT shall mean any person who is issued shares of Common Stock or a share right award under the Stock Issuance Program. 

  
 17 

 V. PERFORMANCE GOALS shall mean the goal(s) (or combined goal(s)) determined by the Administrator
(in its discretion) to be applicable to a Participant with respect to a share of stock. As determined by the Plan Administrator, the Performance Goals shall be objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of the
Code, and shall be based upon one or more of the following performance-based business criteria, either on a business unit or Company-specific basis or in comparison with peer group performance: net sales; gross sales; return on net assets; return on
assets; return on equity; return on capital; return on revenues; asset turnover; economic value added; total stockholder return; net income; pre-tax income; operating profit margin; net income margin; sales margin; market share; inventory turnover;
days sales outstanding; sales growth; capacity utilization; increase in customer base; cash flow; book value; share price performance (including options tied solely to appreciation in the fair market of the shares of Common Stock); earnings per
share; stock price earnings ratio; earnings before interest, taxes, depreciation and amortization expenses (“EBITDA”); earnings before interest and taxes (“EBIT”); or EBITDA, EBIT or earnings before taxes and unusual or
nonrecurring items as measured either against the annual budget or as a ratio to revenue. The Performance Goals may differ for each Participant and for each stock grant. 

W. PLAN shall mean the Corporation’s 2007 Stock Incentive Plan, as set forth in this document. 

X. PLAN ADMINISTRATOR shall mean either the Board or the Committee acting in its capacity as administrator under the Plan. 

Y. PLAN EFFECTIVE DATE shall mean the date on which the Plan was adopted by the Board. 

Z. 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 or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. 

AA. SHORT TERM FEDERAL RATE shall mean the federal short-term rate in effect under Section 1274(d) of the Code at the beginning of the
period the shares were held in escrow. 
 BB. STOCK EXCHANGE shall mean either the American Stock Exchange or the New York Stock Exchange.

 CC. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of
shares of Common Stock under the Stock Issuance Program. 
 DD. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect under
the Plan. 
 EE. SUBSIDIARY shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain. 

  
 18 

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

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

  
 19 

 The Rubicon Project, Inc. 

2007 Stock Incentive Plan 

Plan Addendum for UK Optionees 
  

 
 This Plan Addendum for UK Employees supplements
and amends The Rubicon Project 2007 Stock Incentive Plan (the “Plan”) for purposes of stock options granted under the Plan to UK residents (“UK Optionees”). Certain capitalized terms are defined below. Other terms used but not
defined herein shall have the meanings given to them in the Plan. 
  

	 	1.	UK Options. Options granted to UK Optionees under the Plan may be designated EMI Options or Unapproved Options. EMI Options may be granted to Eligible Employees only. Unapproved Options may be granted to
Employees and other eligible optionees under the Plan who are not eligible to receive EMI Options or to Eligible Employees for whom the £120,000 EMI Options limit has been reached. 

 

	 	2.	Date of Grant for EMI Options. For UK tax purposes, the date of Grant of an EMI Option shall be regarded as being the date on which the Company and the Optionee have signed the option agreement providing for such
EMI Option. 

  

	 	3.	UK Option Agreement. Stock options granted to UK Optionees under the Plan shall be made pursuant to a Stock Option Agreement (the “UK Option Agreement”) approved by the Plan Administrator and which will
contain provisions intended to comply with applicable provisions of the law of England and Wales and the appropriate UK tax legislation. 

  

	 	4.	Certain Definitions. For purposes of stock options granted to UK Optionees, the following terms shall have the following meanings: 

“Disqualifying Event” shall have the meaning given to it in sections 534, 535 and 536 of ITEPA. 

“Employee” shall mean any employee of the Corporation or any Parent or Subsidiary of the Corporation. 

“Eligible Employee” shall mean an Employee who fulfills the requirements of Part 4, Schedule 5 of ITEPA. 

“EMI” means enterprise management incentive. 

“EMI Option” means an option that satisfies the requirements of Schedule 5 of ITEPA. 

 “ITEPA” means the Income Tax (Earnings and Pensions) Act 2003. 

“Joint Election” means the election made between the Optionee and the Corporation or if and to the extent that there is a change in
the law, any other company or person who is or becomes a secondary contributor for NIC purposes in respect of an Option, in such terms and such forms as provided in paragraphs 3A and 3B of Schedule 1 to the Social Security Contributions and Benefits
Act 1992 which has been approved by HM Revenue & Customs, for the transfer of Secondary NIC Liability. 
 “NIC” means
Class 1 national insurance contributions. 
 “Option” shall mean an Unapproved Option or an EMI Option granted under the Sub- Plan
and entitling the holder to purchase Shares. 
 “Option Tax Liability” means any tax or employee’s social security liability
to the extent arising from the grant, exercise, release or cancellation of an Option or arising out of the acquisition, retention and disposal of the Shares acquired pursuant to an Option or by a Disqualifying Event. 

“Secondary NIC Liability” means any liability to employer’s Class 1 NIC to the extent arising from the grant, exercise, release
or cancellation of an Option or arising out of the acquisition, retention and disposal of the Shares acquired pursuant to an Option. 

“Section 431 Election” means an election under section 431 ITEPA in such form as may be determined by HM Revenue & Customs
from time to time. 
 “Unapproved Option” means an option or part of an option which fails to meet the requirements of Schedule 5
of ITEPA. 
  

	 	5.	Certain Definitions. Any references to the “Plan” in any UK Stock Option Agreement shall refer to the Plan including this Addendum. 

 THE RUBICON PROJECT, INC. 

STOCK PLAN AMENDMENTS 
 As used below, the
“Company” refers to The Rubicon Project, Inc. (f/k/a adMonitor, Inc.) and the “Plan” refers to the Company’s 2007 Stock Incentive Plan. 

The Plan was adopted on May 18, 2007. 
 Effective
December 13, 2007, the Company’s name was changed from adMonitor, Inc. to The Rubicon Project, Inc. 
 Effective December 14, 2007, by action
of the board of directors and stockholders, the number of shares reserved for issuance under the Plan was increased from 3,000,000 to 5,500,000. 

Effective September 10, 2009, by action of the board of directors and stockholders, the number of shares reserved for issuance under the Plan was
increased from 5,500,000 to 6,000,000. 
 Effective October 29, 2010, by action of the board of directors and stockholders, the number of shares
reserved for issuance under the Plan was increased from 6,000,000 to 7,431,746. 
 Effective October 29, 2010, all shares of the Company’s Common
Stock were reclassified into shares of Class A Common Stock and, accordingly, all shares issued or reserved for issuance under the Stock Plan are Class A Common Stock. 

Effective July 21, 2011, the board of directors ratified the Plan Addendum for UK Optionees. 

Effective December 7, 2011, by action of the board of directors and stockholders, the number of shares reserved for issuance under the Plan was increased
from 7,431,746 to 9,019,664. 
 Effective May 21, 2012, by action of the board of directors and stockholders, the number of shares reserved for
issuance under the Plan was increased from 9,019,664 to 13,217,815. 
 Effective February 22, 2013, by action of the board of directors and stockholders,
the number of shares reserved for issuance under the Plan was increased from 13,217,815 to 18,913,600. 
 Effective September 30, 2013, by action of
the board of directors and stockholders, the number of shares reserved for issuance under the Plan was increased from 18,913,600 to 20,913,600.

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