Document:

Exhibit 10.6

 Exhibit 10.6 
  
 LOAN AGREEMENT 
  
 This LOAN AGREEMENT, amended as of November 10, 2005, is by and between Luna Innovations Incorporated and First National Bank, headquartered in
Christiansburg, VA. 
  
 BORROWER: 
  
 Luna Innovations Incorporated, a Delaware Corporation 
  
 TYPE OF LOAN: 
  
 Revolving Line of Credit 953469 
  
 PURPOSE: 
  
 Loan proceeds may be used by the Borrower to finance working capital needs. 
  
 AMOUNT OF LOAN: 
  
 Up to $2,500,000.00 
  
 INTEREST RATE: 
  
 Prime Rate Daily: Interest on the daily unpaid principal balance from date until paid in full at a rate per annum equal to the Wall Street Journal
Prime Rate +0% in effect on each respective day. During the term of this loan, the interest rate will not exceed 10.0% per annum or fall below 6.0% per annum. 
  
 LOAN AGREEMENT: 
  
 This agreement shall serve as the loan agreement. 
  
 REPAYMENT TERMS: 
  
 During the term of this loan, Borrower may borrow, prepay and re-borrow under this loan so long as the maximum principal amount outstanding does not
exceed the maximum amount permitted under the Borrowing Base and no default has occurred. The outstanding principal balance of the loan will be payable in full on demand or at expiration, whichever occurs first. The Revolving Line of Credit shall
expire on 5/23/06. Interest on the outstanding principal balance will be due and payable monthly on the 10th day of
each month. Any renewal, extension of maturity and/or expiration date, or increase in amount of this loan by the Bank shall be governed by the terms of this agreement unless otherwise agreed to by the Bank, in writing. The Bank will review the loan
annually prior to expiration to determine whether the Bank will extend, modify or renew it. 
  
 COLLATERAL: 
  
 This loan
is secured by a first lien Uniform Commercial Code security interest in (i) all of the Borrower’s Inventory, Equipment, Farm Products, whether now owned by Borrower or hereafter acquired, (ii) Accounts, Instruments, Documents, Chattel
Paper and Other Rights to Payment, General Intangibles, Government Payments and Programs, whether presently existing or arising in the future, and (iii) all proceeds and products from the foregoing (including insurance proceeds). 

 Loan Agreement 
 Page 2 
  

 ADVANCES GOVERNED BY BORROWING BASE / CONDITIONS TO EACH ADVANCE: 
  
 A Borrowing Base will govern advances up to the maximum amount of
$2,500,000.00 under the Revolving Line of Credit. Upon each request, or monthly while the Line of Credit maintains a balance, the Borrower will submit a Borrowing Base Certificate to the Bank together with a copy of a current aging of the
Borrower’s accounts receivable, a listing of Furniture, Fixtures, and Equipment, and the Contract Backlog Report. The report will be certified as to accuracy by the Borrower’s CFO, and will be presented in the format attached hereto.

  
 The Borrowing Base will exclude accounts receivable from
affiliates and subsidiary companies, and as any accounts receivable associated with intellectual property or license revenue. Any Borrowing Base shortfall evidenced by a monthly Borrowing Base Certificate shall not exceed the amount of $300,000 for
more than sixty days. To the extent the total of advances outstanding hereunder at any time exceeds the Borrowing Base by $300,000 or less than more than sixty days, Borrower shall immediately prepay this loan to such extent. 
  
 The Borrower may advance additional principal under the Line of Credit
according to the following calculation: 
  
 90% of Amount of
Accounts Receivable* 0-60 days old 
  
 Plus, 70%
of Amounts of Accounts Receivable* 61 -90 days old 
  
 Plus, 60% of the net depreciated value of Furniture, Fixtures and Equipment ** 
  
 Less, Existing Principal Balance on Line of Credit 
  
 Equals: Additional Availability under Line of Credit 
  

	*	Excludes Accounts Receivable from affiliates and subsidiary companies, and as any accounts receivable associated with intellectual property or license revenue

	**	The net asset value of leasehold improvements and leased equipment will be deducted from this calculation 

  
 FINANCIAL COVENANTS: 
  
 During the Term of the Loan, the Borrower will be subject to maintenance of the following financial covenants. Compliance with the covenants will be
calculated annually based upon the Borrower’s fiscal year-end financial statements. 
  
 The covenants are as follows: 
  

	 	•	 	The Borrower will maintain a minimum interest coverage ratio of 2.25:1.00. The ratio will be calculated as Numerator: Earnings Before Interest and Taxes divided by
Denominator: Annual interest expense. 

	 	•	 	The Borrower will maintain a maximum overall debt to worth ratio of 2.0:1.0. The ratio will be calculated as Numerator: Total Liabilities divided by
Denominator: Total Net Worth. 

 Loan Agreement 
 Page 3 
  

 OTHER CONDITIONS/COVENANTS: 
  
 The Borrower will be subject to the maintenance of a Liquidity Covenant at all times during the term of the Revolving Line
of Credit. The Liquidity Covenant is defined as follows: 
  

	 	•	 	The Borrower will maintain a minimum dollar amount of cash and cash equivalents at all times in an amount equal to the balance outstanding on the Revolving Line of Credit; however,
the minimum liquidity requirement is $1,000,000, regardless of the balance outstanding on the Revolving Line of Credit, and the maximum liquidity requirement is $2,000,000, regardless of the balance outstanding on the Revolving Line of Credit.

  

	 	•	 	Without prior approval, the Borrower will not 

  

	 	a.	Make a direct loan to an affiliate or subsidiary of the Borrower exceeding $500,000 annually 

  

	 	b.	Guaranty the debt of an affiliate or subsidiary 

  

	 	c.	Incur debt in excess of $200,000.00 non-First National Bank debt annually 

  

	 	•	 	The Borrower will continue to provide the Bank an assignment of life insurance in a minimum amount of $1,000,000.00 on the life of Kent A. Murphy. This assignment will cover all
indebtedness of the Borrower to the Bank. 

  
 REPORTING
REQUIREMENTS: 
  
 So long as the Borrower is indebted to the
Bank, the Borrower shall submit to the Bank the following: 
  
 Within 120 days following the Borrower’s fiscal year end, the Borrower will deliver to the Bank its Audit quality financial statements (to include a balance sheet, income statement and supporting schedules) prepared according to
generally accepted accounting principles by an accounting firm acceptable to us. 
  
 Within 20 days after the end of each quarter, the Borrower will deliver to the Bank its internally generated financial statements, certified by the Borrower to be true and accurate. 
  
 Until the loan is repaid in full, the Borrower and each Guarantor will be
obligated on a continuing basis to provide the Bank with such financial information concerning the Borrower and each Guarantor as the Bank may request from time to time. 
  
 The Borrower will immediately inform the Bank of any material change in the condition, financial or otherwise, of the
Borrower and of any actual or threatened litigation, which might substantially affect the condition, financial or otherwise, of the Borrower. 
  
 INSURANCE: 
  
 At the time the loan closes and all times thereafter until the loan is paid in full, you must maintain hazard insurance on the collateral for this line of
credit against such risks and in such form and amount as the Bank may require. The Bank must be named as a lender loss payee on the policy and 

 Loan Agreement 
 Page 4 
  

 
you must provide us with an insurance certificate. A company approved by the Bank and licensed to transact business in the state in which the collateral is
located must issue the insurance. 
  
 REPRESENTATIONS AND WARRANTIES:

  
 All information that has been and continues to be
furnished to the Bank is true and accurate and the Borrower has not failed to disclose any information of a material nature regarding its business or financial condition. 
  
 All financial statements, certificates and other information furnished, or to be furnished, to the Bank are, or shall be,
true and accurate; the Borrower has not failed to disclose any information that could materially affect its properties, business or financial condition; and there has occurred no material adverse change in the financial condition of the Borrower or
any other person liable to the Bank for the repayment of this loan since the date of the Borrower’s most recent financial statement. 
  
 The Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is authorized to transact business in
the Commonwealth of Virginia and all necessary jurisdictions. 
  
 This loan, when accepted, and all documents and instruments to be executed and delivered to the Bank in connection with this loan and the funding thereof, shall be duly authorized, valid, enforceable and binding on the parties thereto, and
shall not conflict with or constitute a breach of any other agreements or corporate documents of the Borrower. 
  
 SURVIVAL: 
  
 The terms
and provisions of this loan shall survive the closing of the loan made hereunder, the delivery of all documents necessary to carry out the provision of this loan, and the funding and making of loans and disbursements hereunder. 
  
 NON-ASSIGNABLE: 
  
 This loan and the right of Borrower to receive loans hereunder may not be assigned by Borrower. 
  
 AMENDMENT AND WAIVER: 
  
 No alteration, modification, amendment or waiver of any terms and conditions of this loan, or of any of the documents
required by or delivered to the Bank under this loan, shall be effective or enforceable against the Bank unless set forth in a writing signed by the Bank. 
  
 INTEGRATION: 
  
 The terms set forth above represent the entire understanding between the Borrower and the Bank with respect to the subject matter of this loan, and this
loan supersedes any prior and contemporaneous agreements, loans, discussions and understandings, oral or written, with respect to the subject matter of this loan. 

 Loan Agreement 
 Page 5 
  

 The terms and conditions set forth above are accepted this 10th day of November, 2005. 
  
  

			
	First National Bank
		
	 By:
	 	 /s/    KAREN W. TURNER

	 	 	 Karen W. Turner, SVP

  

			
	Luna Innovations Inc.
		
	By:	 	/S/    KENT MURPHY
	 	 	Kent Murphy, President and CEO

 First National Bank Borrowing Base Certificate 
  
 Luna Innovations Incorporated Line of Credit 953469 
 Status As Of Month Ended 00/00/05 
  

				
	 Accounts Receivable* (£ 60 Days Past
Invoice)
	  	$	 —
	 Accounts Receivable* (> 60 Days Past Invoice)
	  	$	—  
	 	  	
	

	 Total Accounts Receivable
	  	$	—  
	
	  	 	 
	 *  Excludes AR from affiliates and subsidiaries, and AR associated with intellectual property or license revenue
	  	 	 
		
	 Less Ineligible ( 3 90 Days Past
Invoice)
	  	$	—  
		
	 Net Accounts Receivable
	  	$	—  
		
	 Net Depreciated FF&E *
	  	$	—  
	
 *  Excludes net asset value of
leasehold improvements and leased equipment
	  	 	 
		
	 Advance Calculations
	  	$	—  
	 a. 90% Eligible AR ( £ 60 Days Past
Invoice)
	  	 	 
	 b. 70% Eligible AR (> 60 Days Past Invoice)
	  	$	—  
	 c. 60% Net Depreciated FF&E
	  	$	—  
	 	  	
	

	 Equals Total Available Per Advance Calculation
	  	$	—  
		
	 Maximum Loan Amount
	  	$	—  
	 (Lesser of $2,500,000 and Line #5)
	  	 	 
		
	 Outstanding Balance on RLOC
	  	$	—  
		
	 Total Available for Future Advances
	  	$	—  
	 (Line 6 Minus Line 7)
	  	 	 
		
	 Liquidity Requirement Confirmation:
	  	 	 
	 Cash and Equivalents shall be equal to the balance outstanding under the line of credit (Line 7)
	  	$	—  
		
	 Subject To:
	  	 	 
	 Minimum Liquidity Required
	  	$	1,000,000
	 Maximum Liquidity Required
	  	$	2,000,000
	 Minimum Liquidity Required
	  	$	—  
	 Liquidity Requirement Met? (Yes/No)
	  	 	 

					
	 Attachments Required for Calculation of Availability:

	  	Report Dated

	  	 Attached
 YES/NO

			
	 Accounts Receivable Aging Report Dated (Monthly)
	  	 	  	 
	 Backlog Report (Monthly)
	  	 	  	 
	 Furniture, Fixture, and Equipment Listing (Monthly)
	  	 	  	 
	 Financial Statements (Quarterly)
	  	 	  	 

  

			
	 Certified By: LUNA INNOVATIONS INCORPORATED

	 	 
	 Prepared By:
                                        
                
	 	 Date: 00/00/05

		
	 Mark Mariotti, Controller
 Authorized By:
                                        
            
	 	 
		
	 Scott Graeff, Chef Financial Officer
	 	 Date: 00/00/05Exhibit 10.7

 Exhibit 10.7 
  
 LUNA INNOVATIONS INCORPORATED 
  

2003 STOCK PLAN 
  
 As Amended February 4, 2006 
  
 1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as
determined by the Administrator at the time of grant. 
  
 2.
Definitions. As used herein, the following definitions shall apply: 
  
 (a) “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof. 
  
 (b) “Applicable Laws” means the requirements relating to the administration of stock option
plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Class B Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where
Options are granted under the Plan. 
  
 (c)
“Board” means the Board of Directors of the Company. 
  
 (d) “Change in Control” means the occurrence of any of the following events: 
  
 (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner”
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities;
provided, however, that any such “person” becoming a “beneficial owner” of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then
outstanding voting securities as a result of a private financing of the Company (as reasonably determined by the Company) shall not constitute a Change of Control; or 
  
 (ii) The consummation of the sale or disposition by the Company of all or substantially all of the
Company’s assets; or 
  
 (iii) The
consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or consolidation. 

 (e) “Code” means the Internal Revenue Code of 1986, as amended.

  
 (f) “Committee” means a
committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof. 
  
 (g) “Class B Common Stock” means the Class B Common Stock of the Company. 
  
 (h) “Company” means Luna Innovations, a
Delaware corporation. 
  
 (i)
“Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity. 
  
 (j) “Director” means a member of the Board. 
  
 (k) “Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code. 
  
 (l) “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s
fee by the Company shall be sufficient to constitute “employment” by the Company. 
  
 (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 (n) “Fair Market Value” means, as of any
date, the value of Class B Common Stock determined as follows: 
  
 (i) If the Class B Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; 
  
 (ii) If the Class B Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Class B Common Stock on
the day of determination; or 
  
 (iii) In the
absence of an established market for the Class B Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 
  
 (o) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code. 
  
 (p)
“Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option. 
  

 -2- 

 (q) “Option” means a stock option granted pursuant to the Plan.

  
 (r) “Option Agreement” means
a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. 
  
 (s) “Optioned Stock” means the Class B
Common Stock subject to an Option. 
  
 (t)
“Optionee” means the holder of an outstanding Option granted under the Plan. 
  
 (u) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e)
of the Code. 
  
 (v) “Plan”
means this 2003 Stock Plan. 
  
 (w)
“Restricted Stock” means Shares of restricted stock issued pursuant to an Option. 
  
 (x) “Restricted Stock Purchase Agreement” means a written agreement between the Company and the Optionee evidencing the
terms and restrictions applying to Shares of restricted stock purchased under an Option. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the notice of grant. 
  
 (y) “Service Provider” means an Employee,
Director or Consultant. 
  
 (z)
“Share” means a share of the Class B Common Stock, as adjusted in accordance with Section 12 below. 
  
 (aa) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code. 
  
 3. Stock Subject to the
Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is Nine Million Seven Hundred Fifteen Thousand (9,715,000) Shares. The Shares may
be authorized but unissued, or reacquired Class B Common Stock. 
  
 If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of
Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. 
  
 4. Administration of the Plan. 
  
 (a) Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be
constituted to comply with Applicable Laws. 
  

 -3- 

 (b) Powers of the Administrator. Subject to the provisions of the Plan and, in the
case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion: 
  
 (i) to determine the Fair Market Value; 
  
 (ii) to select the Service Providers to whom Options may
from time to time be granted hereunder; 
  
 (iii)
to determine the number of Shares to be covered by each such award granted hereunder; 
  
 (iv) to approve forms of agreement for use under the Plan; 
  
 (v) to determine the terms and conditions of any Option granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or the Class B Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 
  
 (vi) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws; 
  
 (vii) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is
to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and 
  
 (viii) to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan. 
  
 (c)
Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees. 
  
 5. Eligibility. Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees. 
  
 6. Limitations. 

 
 (a) Incentive Stock Option Limit. Each Option
shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee 

  

 -4- 

 
during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such
Shares is granted. 
  
 (b) At-Will
Employment. Neither the Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or
the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice. 
  
 7. Term of Plan. Subject to shareholder approval in accordance with Section 18, the Plan shall become effective upon its adoption by the
Board. Unless sooner terminated under Section 14, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the earlier of the most recent Board or shareholder approval
of an increase in the number of Shares reserved for issuance under the Plan. 
  
 8. Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement. 
  
 9. Option Exercise Price and Consideration. 
  
 (a) Exercise Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following: 
  
 (i) In the case of an Incentive Stock Option 
  
 (A) granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the
exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 
  
 (B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date
of grant. 
  
 (ii) In the case of a Nonstatutory
Stock Option, the per Share exercise price shall be determined by the Administrator. 
  
 (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction. 
  
 (b)
Forms of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the 

  

 -5- 

 
Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of, without
limitation, (1) cash, (2) check, (3) promissory note, (4) other Shares, provided Shares acquired directly from the Company (x) have been owned by the Optionee for more than six months on the date of surrender, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented
by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company. 
  
 10.
Exercise of Option. 
  
 (a) Procedure
for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option
may not be exercised for a fraction of a Share. 
  
 An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option
shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan. 
  
 Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 
  
 (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service
Provider, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of
the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination,
the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  

 -6- 

 (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If,
on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to
Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom
the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee’s termination. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (e) Leaves of Absence. 
  
 (i) Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of
absence. 
  
 (ii) A Service Provider shall not
cease to be an Employee in the case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. 
  
 (iii) For purposes of Incentive Stock Options, no such leave
may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months
following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as
an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. 
  
 11. Transferability of Options. Unless determined otherwise by the Administrator, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. 
  

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 12. Adjustments; Dissolution or Liquidation; Merger or Change in Control. 
  
 (a) Adjustments. In the event that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option. 
  
 (b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option will
terminate immediately prior to the consummation of such proposed action. 
  
 (c) Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option shall be assumed or an equivalent option substituted by
the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume or substitute for the Option, then the Optionee shall fully vest in and
have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event
of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that this Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall
terminate upon expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the option confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Class B Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the
merger or Change in Control is not solely Class B Common Stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the
Option, for each Share of Optioned Stock subject to the Option, to be solely Class B Common Stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Class B Common Stock in the
merger or Change in Control. 
  
 13. Time of Granting
Options. The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such later date as is determined by the Administrator. Notice of the determination shall be
given to each Service Provider to whom an Option is so granted within a reasonable time after the date of such grant. 
  

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 14. Amendment and Termination of the Plan. 
  
 (a) Amendment and Termination. The Board may at any
time amend, alter, suspend or terminate the Plan. 
  
 (b) Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. 
  
 (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the
Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the
Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination. 
  
 15. Conditions Upon Issuance of Shares. 
  
 (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
  
 (b) Investment Representations. As a condition to the
exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 
  
 16. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained. 
  
 17. Reservation of
Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 
  
 18. Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve
(12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws. 
  

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