Document:

cnv_Ex4_9

		

			Exhibit 4.9

		

		

			 

		

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

		
			 
		

		
			BETWEEN THE UNDERSIGNED:
		

		
			 
		

		
			1  BANQUE DU GROUPE CASINO, Société Anonyme with capital of 23,470,000 euros with head office situated at 6 avenue de Provence in Paris (IX arrondissement), registered with the trade and companies register in Paris under number 434 130 423, represented by Mrs Catherine Vidal, in her capacity as Chief Executive Officer, duly authorized for the purposes hereof;
		

		
			 
		

		
			hereafter referred to as "Banque Casino"
		

		
			 
		

		
			 
		

		
			CDISCOUNT, Société Anonyme with capital of 5,631,441.34 euros, with head office situated at 120-126 Quai de Bacalan - 33000 Bordeaux, registered with the trade and companies register in BORDEAUX under number 424 059 822,represented by Mr. Stéphane BRUNEL, acting as Chief financial Officer, duly authorized for the purposes hereof;
		

		
			 
		

		
			Hereafter referred to as "Cdiscount"
		

		
			 
		

		
			Cdiscount and Banque Casino are hereafter referred to individually as a "Party" and collectively the "Parties"
		

		
			 
		

		
			INTRODUCTION
		

		
			 
		

		
			On 30 December 2011 Cdiscount and Banque Casino concluded a commercial agreement for the development, promotion and distribution to Customers of Cdiscount, via the Cdiscount website, and any marketing or distribution channels used by Cdiscount, of financial products and services offered by Banque Casino (hereafter the Commercial Agreement).
		

		
			 
		

		
			By way of Addendum No. 1 dated 20 December 2012, Cdiscount entrusted Banque Casino with the marketing of a payment service in 4 x CB by bank card (hereafter the "4 x CB payment" service).
		

		
			 
		

		
			The Parties have stipulated the operating procedures forming the subject of the Addendum to the said service in the special conditions to Amendment No 1 dated June 28, 2013.
		

		
			 
		

		
			By way of reminder, on the day hereof, the "4 x CB payment" service is offered by Banque Casino to the Customer and made available for the settlement of orders, the total amount of which is between € 60 and € 2,600 (VAT and any shipping fees included).
		

		
			 
		

		
			Due Dates:
		

		
			R1 = 1st due date=> On day of order, of 25% + "insignificant fees"
		

		
			R2 = 2nd due date=> on 30th day following order, of 25%
		

		
			R3 = 3rd due date=> on 60th day following order, of 25%
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

R4 = 4th due date=> on 90th day following order, of 25%
		

		
			 
		

		
			As at the date of signature of this Amendment, the fees charged to the consumer are of 2.28% of total order. They are deducted with rank 1.
		

		
			 
		

		
			Prior to offering "4 x CB payment", Cdiscount carries out filtering and scoring of Customers.
		

		
			 
		

		
			"4 x CB payment" is then offered to all Customers whose order amount is between € 60 and € 2,600 (VAT and shipping costs included) and whose scoring is positive.
		

		
			 
		

		
			"4 x CB payment" is not subject to the provisions of Articles L. 311-1 and following of the Consumer Code, in particular because of its duration and the insignificant fees associated with it.
		

		
			 
		

		
			The "4 x CB payment" service represents at the date of signature of this Amendment No. 3 approximately 35% of the total orders on online sales platforms operated for the Cdiscount brand (hereafter the "Cdiscount" site), it being understood that this is an average rate for the first half of 2015, which is liable to fluctuate throughout the year, and which is also likely to change from one year to another. Hereafter "Catch Rate".
		

		
			 
		

		
			Given the fundamental characteristic in relation to the growth of its business and the differentiating character of "4 x CB payment", Cdiscount would like to present this service directly to its Customers while also benefiting from funding and thus the sale of loans that it holds with its Customers to Banque Casino under the conditions stated below.
		

		
			 
		

		
			In this context, and convinced of their mutual complementarity, Cdiscount and Banque Casino have met, in order to formalize by means of Amendment No. 3 to the Commercial Agreement, the terms, including in particular, the operational and financial conditions under which Cdiscount will sell to Banque Casino the loans that holds for its Customers, in connection with the "4 x CB payment" service.
		

		
			 
		

		
			This Addendum terminates and replaces Amendment No. 2 in respect of the conditions of Article 7.1 "Duration".
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

1.Purpose
		

		
			 
		

		
			The purpose of this Addendum is to set the terms and conditions under which Cdiscount shall sell Banque Casino certain loans that it holds respect of its Customers as part of the "4 x CB payment" service it offers commercially.
		

		
			 
		

		
			All the provisions of the Commercial Agreement remain applicable, as well as those of Amendment No. 1 (i.e. the specific conditions related thereto), unless expressly departed from in writing in this Amendment.
		

		
			 
		

		
			2.OPERATIONAL DESCRIPTION OF THE 4 X PAYMENT SERVICE
		

		
			 
		

		
			2.1. Service Description of "CB x 4 payment" service (Customer Vision)
		

		
			 
		

		
			2.1.1. Marketing of "4xCB Payment" Service by Cdiscount
		

		
			 
		

		
			From the date of entry into effect of this Amendment the "4xCB Payment" service will be operated by Cdiscount in relation to "double acceptance" and "single acceptance" loans (definitions - 2.2.1).
		

		
			 
		

		
			At the time of order placement, Cdiscount shall offer to its Customers, including the Customers of its marketplace, on the Cdiscount website, where applicable, the "4xCB Payment" service operated by Cdiscount and Banque Casino.
		

		
			 
		

		
			2.1.2. Maintenance of Customer routing
		

		
			 
		

		
			Maintaining the current Customer routing in terms of the placement of orders and sign-up to the "4xCB Payment" Service represents a major challenge for Cdiscount. Indeed, the Customer routing can have a significant impact on the rate of firm order placement by the Customer. Therefore, it is agreed between the parties that the Customer routing existing at the date of this Addendum may be changed by Cdiscount and in general may only be changed by Cdiscount. Despite this, Banque Casino has informed Cdiscount that a certain number of items of information are essential to it. Therefore, Cdiscount undertakes to be in a position to provide the information below to Banque Casino
		

		
			 
		

		
			Name
		

		
			First name
		

		
			Address
		

		
			Sex / Title
		

		
			Phone number
		

		
			E-mail address
		

		
			Date, name and department of birth - optional data
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

2.1.2. Loans capable of definitive, irrevocable sale and process
		

		
			 
		

		
			At the time of order placement, Cdiscount offers some of its Customers multiple payment methods, including the "4xCB Payment" service.
		

		
			 
		

		
			The loans capable of being sold to Banque Casino are those from the "4xCB Payment" service relating to orders whose total amount is between € 60 and € 2,600 (VAT and shipping costs included) (hereafter the "Eligibility Range). Cdiscount is free:
		

		
			 
		

		
			   to modify the floor or the ceiling of the Eligibility Range within the 60 euros - 2600 euro bracket,
		

		
			 
		

		
			   to lower the floor of the Eligibility Range from 60 to 30 euros under the conditions defined in the "Monitoring" section. Both the lowering of the floor of the Eligibility Range below 30 euros and increase of the ceiling beyond 2600 euros may only be effected by agreement between the Parties.
		

		
			 
		

		
			In the particular case where Cdiscount offers the "4xCB Payment" Service outside the Eligibility Range and Banque Casino does not wish to meet this demand, Cdiscount shall offer the "4xCB Payment" Service directly (under a contract separate from this Addendum and concluded directly between Cdiscount and the consumer), or shall resort to any third party of their choice (as part of a contract separate from this Addendum and concluded directly between the Cdiscount and the third party considered and in accordance with the provisions of the Commercial Agreement), and is not permitted to sell to Banque Casino the loans concerned
		

		
			 
		

		
			Prior to offering "4 x CB payment", Cdiscount shall carry out filtering and scoring of Customers.
		

		
			 
		

		
			The "4xCB Payment" service shall be expressly presented to the Customer as a service provided by Cdiscount.
		

		
			 
		

		
			The General Conditions of Sale of the "4xCB Payment" service are distinct from the General Conditions of Sale of Cdiscount and shall contain a specific clause providing for the right to sell to Banque Casino the loans relating thereto.
		

		
			 
		

		
			These shall be brought to the attention of the Customer upstream of approval of the Customer's order. The Customer who elects to sign up for this service must approve the general conditions of for the "4xCB Payment" Service at the time of selecting the method of payment and again at the time of confirming the order and bank details (double click).
		

		
			 
		

		
			The Customer who elects to sign up for this service must meet or implement in relation to Cdiscount:
		

		
			 
		

		
			-   The first payment deadline "R1" D-day of placing the order on the Cdiscount website;
		

		
			-   Then "R2", "R3," and "R4", respectively D+30, D+60 and D+90 hereafter "the Loans"
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

2.2. Description of "4xCB Payment" Service (BCA-CD vision)
		

		
			 
		

		
			2.2.1. Process Description
		

		
			 
		

			
	
			
				 a)
			

			
	
			
			Cdiscount carries out an initial filtering of Customers in accordance with the rules contained in the special conditions of this Amendment.

		
			 
		

			
	
			
				 b)
			

			
	
			
			For Customers eligible for this initial filter, Cdiscount will then carry out a scoring of its Customers.

		
			 
		

		
			This scoring, which by its very nature can evolve, leaving Cdiscount with the option of either increasing or altering the score, will be implemented by Cdiscount using computerized tools that give a mark to the Customer based on certain criteria, such as:
		

		
			 
		

		
			   Age of customer
		

		
			   Average unemployment rate of Customer's residential area 
		

		
			   Average homeowner rate of Customer's residential area
		

		
			   Seniority of Customer (how many years with bank),
		

		
			   Amount in cart and its contents
		

		
			 
		

		
			These ratings are expressed quantitatively.
		

		
			 
		

			
	
			
				 c)
			

			
	
			
			For Customers whose scoring is positive, Cdiscount then seeks a second scoring with Banque Casino.

		
			 
		

			
	
			
				 d)
			

			
	
			
			This second scoring is carried out by Banque Casino.

		
			 
		

			
	
			
				 e)
			

			
	
			
			The combination of both scoring procedures classifies Customers into three categories (as defined in the special conditions of this Addendum)

		
			 
		

		
			-   a first category corresponding to loans refused 
		

		
			-   a second category for loans under an agreement with Cdiscount and a refusal by Banque Casino called "single acceptance of loans"; 
		

		
			-   a third category for loans under an agreement with Cdiscount and an agreement with Banque Casino called "double acceptance of loans".
		

		
			 
		

			
	
			
				 f)
			

			
	
			
			Since Cdiscount wishes to sell its loans, Cdiscount promises to effect to Banque Casino the final and irrevocable sale of loans held by Cdiscount on its Customers, provided the Customer has been subjected to an initial positive scoring by Cdiscount for loans of simple acceptance and a second positive scoring by Banque Casino i.e. on day D of placement by the Customer of its order, for double acceptance loans.

		
			Banque Casino agrees to accept definitively and irrevocably these loans up 10% in total amount of loans sold in relation to single acceptance of loans.
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

If this limit is exceeded, the Parties agree to meet as a Steering Committee to discuss and fix the financial terms applicable to the sale of those loans that exceed the 10% ceiling.
		

		
			 
		

		
			The rules for filtering and scoring are shown in the special conditions of this Amendment.
		

		
			 
		

		
			The Parties may amend the rules for this article 2.1.2 by agreement at the time of the “4 x CB” Steering Committee meeting, whereby this must be formalized by way of written agreement.
		

		
			 
		

			
	
			
				 g)
			

			
	
			
			On the day D that the Customer places the order, Cdiscount shall collect "R1" and sell to Banque Casino the loan consisting of "R2", "R3" and "R4".

		
			 
		

			
	
			
				 h)
			

			
	
			
			The Parties agree that the sale price for the loans (the "Price") equals the expected amount of the loan, discounted by "x." The discount rate "x" is attached as of the present day to 4.77% of the amount of the loan for double acceptance loans and 12.10% for single acceptance loans.

		
			 
		

		
			The discount rate includes 0.25% of the loan under an exceptional and specific risk that would be caused by Cdiscount due to a particular, significant failure of its process, filtering rules or score, which Cdiscount conducts in relation to the eligible loans (particularly eligible loans below the score thresholds), at the level of the loss suffered by Banque Casino within a limit of 0.25%. This advance will be refunded by Banque Casino to Cdiscount 15 months after its acquisition by Banque Casino in respect of the unused share.
		

		
			 
		

		
			Banque Casino shall pay to Cdiscount at D+1 an amount corresponding to the price.
		

		
			 
		

		
			The discount rates may be reviewed quarterly, or on an "ad hoc" basis as part of 4 x CB Steering Committee activity, as provided by Article 4 "Monitoring" below. In case of disagreement on how to revise the discount rate, either Party may enforce the provisions of Article 7 below.
		

		
			 
		

			
	
			
				 i)
			

			
	
			
			Banque Casino undertakes to Cdiscount to cover excess losses beyond a preset limit (110% of the Reference Loss Rate), provided that the losses between the Reference Loss rate and the said limits are covered by the Insurance Reserve granted by Cdiscount. Consequently, any such excess losses beyond this limit will not be made to SEP. The operating conditions governing this sub-paragraph are contained in the specific conditions appended to this Amendment No. 3.

		
			 
		

			
	
			
				 j)
			

			
	
			
			Cdiscount shall collect the monthly payments due from Customers "R2", "R3", "R4" on behalf of Banque Casino, under a collection mandate, respectively at D+30, D+60 and D+90 (the terms of this mandate are described below).

		
			 
		

		
			In the event of any payment default committed by the Customer, Cdiscount shall initiate amicable debt collection procedures in the name and on behalf of Banque Casino, under a recovery mandate (the terms of this mandate are described below);
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

Cdiscount shall repay to Casino Bank by way of direct debit an amount equal to R2, R3, R4 respectively to D+31, D+ 61 and D + 91, including in the event of any payment defaults committed by the Customer.
		

		
			 
		

		
			Once one of the ranks of a given bank loan granted by Casino becomes more than 7 days overdue, Banque Casino shall refund to Cdiscount, on the first following business day, the difference corresponding to the amount actually collected by Cdiscount on all the ranks of the Banque Casino loan and the amount repaid by Cdiscount to Banque Casino in respect of that loan.
		

		
			 
		

		
			Cdiscount shall continue to remit monthly to Banque Casino all the receipts obtained through its recovery procedures.
		

		
			 
		

		
			2.2.2. Scoring
		

		
			 
		

		
			Cdiscount shall send Banque Casino at its request the data needed for a performance analysis of the score that would enable Banque Casino to check the relevance of the selection rules.
		

		
			 
		

		
			Cdiscount is not permitted to implement changes to the scoring parameters without the prior written consent of Banque Casino, as given at the meetings of the "4x CB" Steering Committee.
		

		
			 
		

		
			Cdiscount will make available to Banque Casino every week a sample of the Customers and data needed to check the scoring implementation rules.
		

		
			 
		

		
			2.2.3. Customer relationship management and litigation
		

		
			 
		

		
			Cdiscount undertakes to treat all commercial litigation (including withdrawal, non-compliance of products, after-sales service, failure to deliver) relating to the products and services it markets resulting in any loan payment default and / or repayment of a debit, in accordance with the terms of Article 11.3 of the Commercial Agreement.
		

		
			 
		

		
			Cdiscount will be responsible for managing any Customer complaints relating to the proper conclusion or performance of the General Conditions of the "4 x CB" payment service.
		

		
			 
		

		
			Given that Banque Casino is not able to detect fraudulent claims at the time of sale of the said loans by Cdiscount, Cdiscount agrees to bear the risk of any such fraudulent claims. Fraudulent loans means loans that have been the subject of a cancelled payment, in respect of the holder of the payment card used to conclude a sale on the Cdiscount website, within a maximum period of six months from the date of order placement. Banque Casino is aware that at the date of signature of this Amendment fraudulent orders represent approximately 0.25% of the volume of business done by Cdiscount.
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

3. COLLECTION AND RECOVERY AUTHORITY
		

		
			 
		

		
			Collection: Banque Casino grants authority to Cdiscount to collect in the name and on behalf of Banque Casino, all payments in respect of Customer loans sold to Banque Casino pertaining to the Loans.
		

		
			 
		

		
			Recovery: Banque Casino grants authority to Cdiscount to conduct the amicable recovery of all payment defaults incurred by Customers.
		

		
			 
		

		
			This collection and recovery authority, which is remunerated in accordance with the cost incurred and in conformity with the Commercial Agreement, is revocable and does not include any litigation undertaken.
		

		
			 
		

		
			Banque Casino hereby issues instructions to Cdiscount under this authority to perform the following services:
		

		
			1.        Presentation of payment to the bank six times;
		

		
			2.        Fractional duplication;
		

		
			3.        Sending reminder e-mails and SMS messages;
		

		
			4.        Telephone recovery: automated calls and / or call centres;
		

		
			5.        Research mandates to bailiffs and / or collection companies (recovery by telephone and post);
		

		
			6.        Sale of the Casino Bank loan on behalf of Banque Casino on exhaustion of debt collection procedures.
		

		
			 
		

		
			Banque Casino shall issue instructions to Cdiscount concerning the conversations that Cdiscount may have with Customers in situations of payment arrears, on behalf of Banque Casino in its capacity as a financial institution.
		

		
			 
		

		
			Cdiscount may subcontract all or part of the debt collection actions after informing Banque Casino accordingly.
		

		
			 
		

		
			Any additional services requested by Banque Casino must be paid for separately, by agreement between the Parties.
		

		
			 
		

		
			The parties undertake to agree an SLA with regard to recovery within three months of the signing of Amendment No. 3.
		

		
			 
		

		
			4. MONITORING
		

		
			 
		

		
			As part of the monitoring of implementation of this Amendment, the parties hereby provide for the creation of an organisation based in particular on:
		

		
			 
		

		
			(i)A "4xCB" Production Committee
		

		
			 
		

		
			The Production Committee shall be made up of employees of both Cdiscount and Banque Casino in charge of the operational monitoring of the implementation of this Amendment and shall convene every week by telephone or videoconference, or physically, at the option of the Parties. Its members can arrange to be represented in their absence.
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

Its mission is to conduct an operational review of activities, including: 
		

		
			-Correct workflow integration
		

		
			-Weekly indicators of rates paid by Customers of the "4 x CB payment" service
		

		
			-Unpaid rates by rank and by generation ( "R1", "R2", "R3", "R4") 
		

		
			-Eligibility of loans sold: “Eligibility Range" and scores 
		

		
			-Recovery performance indicators: collection rates by generation ("R1", "R2", "R3", "R4") and the related amounts.
		

		
			-A report is prepared after each Production Committee.
		

		
			 
		

		
			(ii)"4 x CB" Steering Committee:
		

		
			 
		

		
			This committee aims to ensure the proper functioning of "4 x CB payment" operations within the framework of the Agreement and to set the financial terms of the "4 x CB payment" service. It has sole jurisdiction over amending the rules governing filtering, scoring by Cdiscount and Banque Casino and the discount level for future loans.
		

		
			 
		

		
			The Joint Steering Committee is composed of six representatives from the management of Cdiscount and Banque Casino (three representatives each) and is held monthly by telephone or videoconference, or physically at the option of the Parties. It may be convened with a minimum notice period of 24 hours at the initiative of either Party and its members may arrange to be represented.
		

		
			 
		

		
			Committee’s decisions are taken unanimously, except as regards the eligibility conditions (filtering, scores, rules and Eligibility Range) and the discount rate.
		

		
			 
		

		
			In particular, the Committee bases its activities on the work of the Production Committee.
		

		
			 
		

		
			The Committee will be responsible for:
		

		
			 
		

		
			- the approval of amendments to the eligibility conditions (filtering, scores, rules and Eligibility Range), together with an estimate of the impact on the cost of risk carried out in advance and any discount assessments that would result.
		

		
			 
		

		
			- No changes to the floor or ceiling of the Eligibility Range, rule, filtering or score of the "4 x CB payment" service can be carried out, which is not approved in advance by the Committee, which shall not withhold approval without reason.
		

		
			 
		

		
			- In terms of eligibility conditions (filtering, scores, rules and Eligibility Range), and these conditions only, it is agreed that Banque Casino shall have a casting vote and that Cdiscount shall have a veto enabling it to invoke the termination clause referred to in paragraph 7.3 with a notice period that may be reduced by Cdiscount and that shall be between three and six months in any event.
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

- Adaptation of the discount on a quarterly basis or with a frequency such that in any event the Committee is able to make the necessary arrangements so that the discount rate for future sales is greater than the level of risk for the credit projected.
		

		
			 
		

		
			- In terms of setting the discount, it is agreed that Banque Casino shall have a casting vote and that, in the event of a disagreement, Cdiscount shall have a veto enabling it to invoke the termination clause referred to in paragraph 7.3 with a notice period that may be reduced by Cdiscount and that shall be between three and six months in any event.
		

		
			 
		

		
			- Monitoring of key indicators: payment rate, breakage rate by rank, by generation, collection rates.
		

		
			 
		

		
			- Checks on good performance of scores and recovery.
		

		
			 
		

		
			- Approval of the recovery budget and the monitoring of resources used and their adaptation, depending on observed performance.
		

		
			 
		

		
			- Monitoring of compliance with eligibility conditions set by relying on the work of the Permanent Control Department of Banque Casino, which issues monthly reports on the same.
		

		
			 
		

		
			In the particular case where Cdiscount wishes to lower the eligibility threshold for the "4xCB Payment" Service in baskets between 30 and 60 € pursuant to Article 2.1.2 above, Cdiscount shall notify Banque Casino of the proposed change before its implementation; whereby an e-mail notification is sufficient for this purpose.
		

		
			 
		

		
			The first Committee following notification from Cdiscount shall deliberate on the threshold changes and on possible impacts on the discount.
		

		
			 
		

		
			A report on the decision-making is prepared after each Production Committee meeting. Any alteration to the conditions of eligibility, the rules applicable to scoring or the discount shall require the formal drafting of a report and express approval by both parties via e-mail.
		

		
			 
		

		
			In addition, the Parties agree to submit to the Steering Committee any dispute that may arise on the above topics, and generally any difficulty encountered in the pursuit of the Parties' commercial and financial objectives within the framework of the implementation of this Amendment.
		

		
			 
		

		
			In the event of a dispute at the said Committee that remains unresolved, a meeting of the Chief Executive Officers of each company shall be called at the initiative of either of the Parties within 15 days of the date on which the Committee reveals the existence of the dispute.
		

		
			 
		

		
			Failing agreement between the Chief Executive Officers within 30 days of their first meeting, either party may terminate this Amendment No. 3 to the conditions stipulated in Article 4 of Amendment No. 1.
		

		
			 
		

		
			5. PERMANENT CONTROL
		

		
			 
		

		
			Banque Casino carries out permanent control of the "4xCB Payment" service.
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

To this end, Cdiscount shall make available to Banque Casino on a weekly basis all information and documents necessary for it to perform the requisite checks as stated in the special conditions of this Amendment.
		

		
			 
		

		
			6. SURVEY BY BANQUE CASINO OF CUSTOMER FILES CONNECTED WITH CDISCOUNT CUSTOMERS THAT SIGNED UP TO THE "4xCB PAYMENT" SERVICE AT CDISCOUNT AND WHOSE LOANS WERE TRANSFERRED TO BANQUE CASINO
		

		
			 
		

		
			"Customer Files" shall be used in accordance with the terms of the Commercial Agreement signed by the Parties.
		

		
			 
		

		
			7. DURATION - SCOPE – TERMINATION
		

		
			 
		

		
			7.1 Duration
		

		
			 
		

		
			This Amendment shall enter into effect retrospectively on 15 October 2015 but not including Article 2.2.1 (i) which comes into effect on 31 December 2015.
		

		
			 
		

		
			The duration of this Amendment is the same as that of the Commercial Agreement.
		

		
			 
		

		
			7.2. Scope
		

		
			 
		

		
			This Amendment No. 3 cancels and replaces Amendment No 2.
		

		
			 
		

		
			This Amendment No. 3 completes Amendment No. 1 of 20 December 2012 and the Special Conditions thereto of 28 June 2013.
		

		
			 
		

		
			7.3. Termination
		

		
			 
		

		
			In the case of a dispute that remains unresolved following the procedure stated under Article 4 "Monitoring," either Party may terminate this Amendment by recorded delivery post and a notice period of 6 months.
		

		
			 
		

		
			In the event of a serious breach by a party of one of its main obligations under this Amendment, the other Party shall send by recorded delivery to the defaulting party a notice requiring it to comply with the obligations due within five days.If at the end of this period the obligations in question have still not been met, the non-defaulting party may terminate this Amendment as of right without prejudice to any damages and interest that might be claimed from the defaulting party. This termination shall then take effect immediately.
		

		
			 
		

		
			It is stated expressly that the failure by Cdiscount to observe the eligibility procedures for altering the "4xCB Payment" service constitutes a serious breach. (Eligibility procedures for altering the "4xCB Payment" service means changes to the Customer routing, filtering, scoring, floor / ceiling of the eligibility range.) In such a case, Cdiscount undertakes henceforth to indemnify Banque Casino from any damaging consequences regarding the level of risk entered into and to correct the eligibility/score criteria within five days.
		

		
			 
		

		
			7.4. Consequence of terminating this Amendment
		

		
			 
		

		
			The Commercial Agreement shall remain in effect between the Parties for all other products and services as well as Amendment 1 (special conditions thereto).
		

		
			 
		

		
			The Parties shall apply Article 13.2 of the Commercial Agreement to Customer Files created based on Customers who have signed up for the "4xCB Payment" service.
		

		
			 
		

		
			The provisions of this Amendment shall continue to apply for existing business constituted at the date of termination until its extinction.
		

		
			 
		

		
			Done at BORDEAUX, December 15, 2015, in two original copies.
		

		
			 
		

		
			
		

		

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

	
					
						 

					
					
						 

					
					
						 

				
	
					
						For Banque Casino

					
					
						   

					
					
						For Cdiscount

				
	
					
						Name: Catherine VIDAL

					
					
						 

					
					
						Name: Stéphane BRUNEL

				
	
					
						Capacity: CEO 

					
					
						 

					
					
						Capacity: CFO

				
	
					
						Signature : 

					
					
						 

					
					
						Signature :

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Signature :

					
					
						 

					
					
						Signature :

				

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

SPECIAL CONDITIONS
		

		
			Eligibility conditions
		

		
			 
		

		
			1)Eligibility Range 
		

		
			 
		

		
			Minimum = 60 € 
		

		
			Maximum = 2,600 €
		

		
			 
		

		
			2)Filter Rules
		

		
			 
		

		
			Excluded from eligibility for "CB x 4 payment":
		

			
	
			
				 -
			

			
	
			
			Customers in debit vis-à-vis Cdiscount (recognition based on e-mail address, landline number, mobile phone number, name, first name and postal code of delivery);

			
	
			
				 -
			

			
	
			
			Bank cards whose expiry date falls before the R4 rank date + 30 days;

			
	
			
				 -
			

			
	
			
			Bank cards issued by non-French banks;

			
	
			
				 -
			

			
	
			
			"e-cards" and "pre-paid" cards.

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

3) Scoreboard and rules
		

		
			 
		

			
					
						Category

					
					
						CD scoring

					
					
						BCA scoring

					
					
						Decision

				
	
					
						 

					
					
						>829

					
					
						No question 

					
					
						Double acceptance

				
	
					
						 

					
					
						 

					
					
						OK

					
					
						Double acceptance

				
	
					
						Existing Customers

					
					
						801-829

					
					
						No reply

					
					
						Double acceptance

				
	
					
						Information unavailable

					
					
						Double acceptance

				
	
					
						 

					
					
						 

					
					
						<0

					
					
						Refusal

				
	
					
						min. amount in cart = 75 € 

					
						max. amount in cart = 2600 € 

					
					
						 

					
					
						OK

					
					
						Double acceptance

				
	
					
						741-800

					
					
						No reply

					
					
						Single acceptance

				
	
					
						Information unavailable

					
					
						Single acceptance

				
	
					
						 

					
					
						 

					
					
						<0

					
					
						Refusal

				
	
					
						 

					
					
						0-740

					
					
						No question

					
					
						Refusal

				
	
					
						 

					
					
						>769

					
					
						No question

					
					
						Double acceptance

				
	
					
						 

					
					
						 

					
					
						OK

					
					
						Double acceptance

				
	
					
						 

					
					
						741-769

					
					
						No reply

					
					
						Double acceptance

				
	
					
						New Customers

					
					
						Information unavailable

					
					
						Single acceptance

				
	
					
						 

					
					
						 

					
					
						<0

					
					
						Refusal

				
	
					
						minimum cart amount = 75 €

					
					
						 

					
					
						OK

					
					
						Refusal

				
	
					
						maximum cart amount = 1000 €

					
					
						732-740

					
					
						No reply

					
					
						Refusal

				
	
					
						 

					
					
						Information unavailable

					
					
						Refusal

				
	
					
						 

					
					
						 

					
					
						<0

					
					
						Refusal

				
	
					
						 

					
					
						0-731

					
					
						No question

					
					
						Refusal

				

		
			 
		

			
	
			
				 -
			

			
	
			
			"No response" Banque Casino scoring unrealized during the period of approval by Cdiscount of order(s) of product(s) purchased by the Customer. 

		
			 
		

			
	
			
				 -
			

			
	
			
			"Unavailable items": department of birth of Customer, or maiden name (if applicable).

		
			 
		

		
			The following are considered to be "Existing Customers": Cdiscount Customers who have placed at least one order (not cancelled) within the last two years. All other ones are classed as "New Customers".
		

		
			 
		

		
			Operating procedures of the cover specified in Article 2.2.1 (i) of the Amendment No. 3
		

		
			Note: All rates are based on the amounts transferred
		

		
			 
		

			
	
			
				 -
			

			
	
			
			Cdiscount pays Banque Casino, in addition to the discount, an "Insurance Reserve" for each loan sold: this amount is set aside by Banque Casino.

			
	
			
				 -
			

			
	
			
			For a monthly generation, the Insurance Reserve is 10% of the rate of loss taken into account when setting the discount rate applied to loans (the "Reference Loss Rate"). To date, the Reference Loss Rate is 3.07% for "double acceptance loans" and 8.81% for "single acceptance loans". On this basis, the Insurance Reserve is 0.31% for the "double acceptance loans" and 0.88% for the "single acceptance loans" of the month. Changes in the Reference Loss Rate for the future generations, shall be notified to Cdiscount by Banque Casino at the "4xCB" Steering Committees meetings. 

			
	
			
				 -
			

			
	
			
			18 months after their sale, once the loans of a monthly generation are at end of life, all losses shall be recorded for accounting purposes by Banque Casino.The Actual Loss Rate is thus found on the generation concerned (the "Actual Loss Rate" = actual loss / amount transferred of the monthly generation). The Actual Loss Rate is compared to the Reference Loss Rate for the generation.

		
			 
		

		
			For each generation of monthly loans:
		

		
			 
		

			
	
			
				 -
			

			
	
			
			If the Actual Loss Rate is lower than the Reference Loss Rate for the monthly generation, then the Insurance Reserve will be refunded to Cdiscount in full by Banque Casino.

		
			
		

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

			
	
			
				 -
			

			
	
			
			If the difference between the Actual Loss Rate and the Reference Loss Rate of the monthly generation is less than the Insurance Reserve, the latter will be refunded to Cdiscount by Banque Casino in the same proportion.

		
			 
		

			
	
			
				 -
			

			
	
			
			If the Actual Loss Rate is higher than the Reference Loss Rate increased by the Insurance Reserve of the monthly generation, then no refund of the Insurance Reserve will be made. Therefore, the balance (Actual Loss Rate - Reference Loss Rate - Insurance Reserve) will be covered by Banque Casino.

		
			 
		

		
			This mechanism applies globally to all "single acceptance loans" and "double acceptance loans" (see numerical example appended hereto).
		

		
			 
		

			
	
			
				 -
			

			
	
			
			Finally, the Parties agree that the Insurance Reserve will be refunded by Banque Casino to Cdiscount definitively and irrevocably at 50% after six months after the transfer of the loans, provided the Actual Loss Rate of the monthly generations to 6 months does not exceed "X" for "double acceptance loans" and "Y" for "single acceptance loans".

		
			 
		

		
			At the date hereof, "X" = 3.61% and "Y" = 9.18%."X" and "Y" are the reference loss rate at 6 months. Changes in "X" and "Y" for future generations will be notified to Cdiscount by Banque Casino at the "4xCB" Steering Committees meetings.
		

		
			 
		

		
			
		

		

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Correspondence score Experian

				
	
					
						Existing Customers

				
	
					
						> 829

					
					
						<->

					
					
						TB scores (very good) and B (good)

				
	
					
						801-829

					
					
						 

					
					
						<->

					
					
						M scores (average)

				
	
					
						759-800

					
					
						 

					
					
						<->

					
					
						TM5 scores (5th decile of very poor Customers)

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						New Customers

					
					
						 

					
					
						 

					
					
						 

				
	
					
						> 769

					
					
						<->

					
					
						TB scores (very good) and B (good)

				
	
					
						741-769

					
					
						 

					
					
						<->

					
					
						M scores (average)

				
	
					
						720-740

					
					
						 

					
					
						<->

					
					
						TM10 best scores (10th decile of very poor Customers)

				

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

PERMANENT CONTROL
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						BCA Source Master checks

					
					
						Frequency

					
					
						Arrangements

				
	
					
						Check presence of score mark (scoring performed*)

					
					
						weekly

					
					
						sample

				
	
					
						check application of eligibility conditions

					
					
						weekly

					
					
						sample

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						BCA source checks Cdiscount

					
					
						 

					
					
						 

				
	
					
						Check prior filtering affecting Customer / Prospect distinction

					
					
						weekly

					
					
						sample

				
	
					
						Check application of Customer tariff conditions

					
					
						once every
quarter

					
					
						sample

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						BCA source checks Experian 

					
					
						 

					
					
						 

				
	
					
						Check correct calculation of score

					
					
						half-yearly

					
					
						entire population

				

		

		
			* Exception: if planned forcing
		

		
			 
		

		
			
		

		
			

		 

 

		

			AMENDMENT No 3

		

		

			to Commercial Agreement of 20 December 2012

		

		

			regarding "4xCB Payment" Service 

		

		

			 

		

SCHEDULE: example of application of insurance reserve in the amount of 100M€ 4XCB payment, 75 000 K € of transferred loans
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						 

					
					
						Example: January 2016 Generation

				
	
					
						Payment: 4XCB

					
					
						100 00 000

				
	
					
						Amount financed 

					
						 

					
						Double acceptance

					
						Simple acceptance

					
					
						 

					
						75 000 000

					
						69 000 000

					
						6 000 000

				

		
			 
		

		
			 
		

			
					
						 

					
					
						Amount

					
					
						% of amount financed

				
	
					
						Double acceptance and single acceptance

					
					
						Discount (4.52% for double acceptance loans, 11,85% for single acceptance loans)

					
						insurance reserve (10% of Reference Loss Rate ),

					
					
						3 829 800

					
						264 690

					
					
						5.11%

					
						 

					
						 

					
						0.35%

				
	
					
						Reference Loss : 3.07% for double acceptance loans, 8.81% for single acceptance loans (on amount financed)

					
					
						2 646 900

					
					
						3.53%

				

		
			 
		

		
			18 months later, i.e. July 2017
		

			
					
						 

					
					
						Amount

					
					
						% of amount financed

				
	
					
						 

					
					
						Actual losses in principal

					
					
						2 625 000

					
					
						3.50%

				
	
					
						 

					
					
						Reference losses

					
					
						2 646 900

					
					
						3.53%

				
	
					
						H1: %actual losses < %reference losses

					
					
						Deviation in value

					
					
						21 900

					
					
						-0.03%

				
	
					
						 

					
					
						Borne by Cdiscount

					
					
						 

					
					
						0.00%

				
	
					
						 

					
					
						Refund to CDiscount reserve balance

					
					
						264 690

					
					
						0.35%

				
	
					
						 

					
					
						Borne by Banque Casino

					
					
						 

					
					
						0.00%

				
	
					
						 

					
						H2: (%reference losses + insurance reserve) < %actual losses

					
					
						Actual losses in principal 

					
						Reference Losses 

					
						Difference in value

					
					
						3 225 000

					
						2 646 900

					
						578 100

					
					
						4.30%

					
						3.53%

					
						0.77%

				
	
					
						Borne by CDiscount

					
						Refund to CDiscount reserve balance

					
						Borne by Banque Casino

					
					
						264 690

					
						 

					
						313 410

					
					
						0.35%

					
						0.00%

					
						0.42%

				
	
					
						 

				
	
					
						 

					
						H3: %reference losses < %actual losses < (%reference losses + insurance reserve)

					
					
						Actual losses in principal 

					
						Reference Losses 

					
						Difference in value

					
					
						2 812 500

					
						2 646 900

					
						165 600

					
					
						3.75%

					
						3.53%

					
						0.22%

				
	
					
						Borne by CDiscount

					
						Refund to CDiscount reserve balance

					
						Borne by Banque Casino

					
					
						165 600

					
						99 090

					
					
						0.22%

					
						0.13%

					
						0.00%EX-10.7

 Exhibit 10.7 
  

			
	VALERITAS HOLDINGS, INC. 2016 INCENTIVE COMPENSATION PLAN	  	

  

	ARTICLE ONE:	GENERAL PROVISIONS 

  

	I.	PURPOSE OF THE PLAN 

 This 2016 Incentive Compensation Plan is intended to promote the
interests of Valeritas Holdings, Inc., a Delaware corporation, by providing eligible persons in the Corporation’s service with the opportunity to participate in one or more cash or equity incentive compensation programs designed to encourage
them to continue their service relationship with the Corporation. 
 Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix. 
  

	II.	STRUCTURE OF THE PLAN 

  

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

  

	 	•	 	the Discretionary Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock or stock appreciation rights tied to the value of such
Common Stock; 

  

	 	•	 	the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock pursuant to restricted stock awards, restricted stock units or other stock-based
awards which vest upon the completion of a designated service period or the attainment of pre-established performance milestones, or such shares of Common Stock may be issued through direct purchase or as a bonus for services rendered the
Corporation (or any Parent or Subsidiary); and 

  

	 	•	 	the Incentive Bonus Program under which eligible persons may, at the discretion of the Plan Administrator, be provided with incentive bonus opportunities through performance unit awards and special cash incentive
programs tied to the attainment of pre-established performance milestones. 

  

	 	B.	The provisions of Articles One and Five shall apply to all incentive compensation programs under the Plan and shall govern the interests of all persons under the Plan. 

 

	III.	ADMINISTRATION OF THE PLAN 

  

	 	A.	 The Plan shall be administered and interpreted by a committee consisting of members of the Board, which shall be
appointed by the Board (the “Committee”). The Committee shall consist of two or more persons who are “outside directors” as defined under section 162(m) of the Code, and related Treasury regulations, “non-employee
directors” as defined under Rule 16b-3 under the 1934 Act, and “independent directors” as determined in accordance with the independence standards established by the Stock Exchange on which the Common Stock is at the time primarily
traded. However, the Board may ratify or approve any Awards as it deems appropriate, and the Board shall approve and administer all Awards made to 

	 	
non-employee directors. The Committee may delegate authority to one or more subcommittees, as it deems appropriate. To the extent the Board, the Committee or a subcommittee administers the Plan,
references in the Plan to the “Plan Administrator” shall be deemed to refer to the Board, the Committee or subcommittee. 

  

	 	B.	Members of the Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. 

 

	 	C.	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 establish such rules and regulations as it may deem
appropriate for proper administration of the Discretionary Grant, Stock Issuance and Incentive Bonus Programs and to make such determinations under, and issue such interpretations of, the provisions of those programs and any outstanding Awards
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 Grant,
Stock Issuance and Incentive Bonus Programs under its jurisdiction or any Award thereunder. 

  

	 	D.	Service on the Committee shall constitute service as a Board member, and the members of the Committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on the
Committee. No member of the Committee shall be liable for any act or omission made in good faith with respect to the Plan or any Award made thereunder. 

  

	IV.	ELIGIBILITY 

  

	 	A.	The persons eligible to participate in the Plan are as follows: 

  

	 	(i)	Employees; 

  

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

  

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

  

	 	B.	 The Plan Administrator shall have full authority to determine, (i) with respect to Awards made under the
Discretionary Grant Program, which eligible persons are to receive such Awards, the time or times when those Awards are to be made, the number of shares to be covered by each such Award, the time or times when the Award is to become exercisable, the
vesting schedule (if any) applicable to an Award, the maximum term for which such Award is to remain outstanding and the status of a granted option as either an Incentive Option or a Non-Statutory Option, (ii) with respect to Awards made under the
Stock Issuance Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the number of shares subject to each such Award, the vesting and issuance schedule (if any) applicable to the shares which
are the subject of such Award and the cash consideration (if any) payable for those shares, and (iii) with respect to 

  
 2 

	 	
Awards under the Incentive Bonus Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the performance objectives for each such Award, the
amounts payable at designated levels of attained performance, any applicable service vesting requirements, the payout schedule for each such Award and the form (cash or shares of Common Stock) in which the Award is to be settled. 

 

	 	C.	The Plan Administrator shall have the absolute discretion to grant options or stock appreciation rights in accordance with the Discretionary Grant Program, to effect stock issuances and other stock-based awards in
accordance with the Stock Issuance Program and to grant incentive bonus awards in accordance with the Incentive Bonus Program. 

  

	V.	STOCK SUBJECT TO THE PLAN 

  

	 	A.	The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including treasury shares and shares repurchased by the Corporation on the open market. Subject to adjustment
as provided in Section V.G, the number of shares of Common Stock reserved for issuance over the term of the Plan shall initially be limited to 3,000,000 shares. 

  

	 	B.	Following the Underwriting Date, the number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day in January each calendar year during the term of the
Plan, beginning on the first trading day in January of the first calendar year following the Underwriting Date, by an amount equal to four percent (4%) of the total number of shares of Common Stock outstanding as measured as of the last trading day
in the immediately preceding calendar year, but in no event shall any such annual increase exceed 1,500,000 shares. 

  

	 	C.	Subject to adjustment as provided in Section V.G, the maximum number of shares of Common Stock that may be issued pursuant to Incentive Options granted under Plan shall not exceed 3,000,000 shares. Such share
limitation shall automatically be increased on the first trading day in January each calendar year, beginning on the first trading day in January of the calendar year following the Underwriting Date, by the number of shares of Common Stock added to
the share reserve on that day pursuant to the provisions of Section V.B of this Article One. 

  

	 	D.	Each person participating in the Plan shall be subject the following limitations: 

  

	 	(i)	no one person participating in the Plan may receive stock options and stand-alone stock appreciation rights for more than 1,500,000 shares of Common Stock in the aggregate per calendar year; 

 

	 	(ii)	no one person participating in the Plan may receive direct stock issuances (whether vested or unvested) or stock-based awards (other than stock options and stand-alone stock appreciation rights) for more than 1,500,000
shares of Common Stock in the aggregate per calendar year; and 

  
 3 

	 	(iii)	for Awards denominated in terms of cash (whether payable in cash, Common Stock or a combination of both) and subject to one or more performance-vesting conditions, the maximum dollar amount for which such Awards may be
made to such person in any calendar year shall not exceed 3,000,000 dollars for each calendar year within the applicable performance measurement period, with any such performance period not to exceed five (5) years and with pro-ration based on the
foregoing dollar amount in the event of any fractional calendar year included within such performance period. 

  

	 	E.	Shares of Common Stock subject to outstanding Awards made under the Plan shall be available for subsequent issuance under the Plan to the extent those Awards expire, terminate or are forfeited or cancelled for any
reason prior to the issuance of the shares of Common Stock subject to those Awards. Such shares shall be added back to the number of shares of Common Stock reserved for award and issuance under the Plan as follows: 

 

	 	(i)	for each share of Common Stock subject to such an expired, forfeited, cancelled or terminated Award made under the Discretionary Grant Program, one share of Common Stock shall become available for subsequent award and
issuance under the Plan; 

  

	 	(ii)	for each share of Common Stock subject to a forfeited or cancelled Full Value Award made under the Stock Issuance or Incentive Bonus Program, one share shall become available for subsequent award and issuance; and

  

	 	(iii)	for each unvested share of Common Stock issued under the Discretionary Grant or Stock Issuance Program for cash consideration not less than the Fair Market Value per share of Common Stock on the Award date and
subsequently repurchased by the Corporation, at a price per share not greater than the original issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan, one share shall become available for subsequent award
and issuance under the Plan. 

  

	 	F.	Should the exercise price of an option under the Plan be paid with shares of Common Stock subject to such option, then the authorized reserve of Common Stock under the Plan shall be reduced by the net number of shares
issued under the exercised stock option, and not by the gross number of shares for which that option is exercised. Upon the exercise of any stock appreciation right under the Plan, the share reserve shall be reduced by the net number of shares
actually issued by the Corporation upon such exercise, and not the gross number of shares as to which such right is exercised. If shares of Common Stock otherwise issuable under the Plan are withheld by the Corporation in satisfaction of the
Withholding Taxes incurred in connection with the issuance, exercise or vesting of an Award, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the net number of shares issued, exercised or vesting
under such Award, calculated in each instance after any such share withholding. 

  

	 	G.	 Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, spin-off 

  
 4 

	 	
transaction, merger, reorganization, consolidation, reclassification or change in par value, or any other unusual or infrequently occurring event affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration, or if the value of outstanding shares of Common Stock is substantially reduced as a result of a spin-off transaction or the Corporation’s payment of an extraordinary dividend or
distribution, then equitable adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities by which the share reserve is to
increase automatically each calendar year pursuant to the provisions of Article One, Section V.B, (iii) the maximum number and/or class of securities that may be issued pursuant to Incentive Options granted under the Plan, (iv) the maximum number
and/or class of securities for which any one person may receive Common Stock-denominated Awards under the Plan per calendar year, (v) the maximum number and/or class of securities for which any one person may receive stock options and stock
appreciation rights under the Plan per calendar year, (vi) the number and/or class of securities and the exercise or base price per share in effect under each outstanding Award under the Discretionary Grant Program, (vii) the number and/or class of
securities subject to each outstanding Award under the Stock Issuance Program and the cash consideration (if any) payable per share, (viii) the number and/or class of securities subject to each outstanding Award under the Incentive Bonus Program
denominated in shares of Common Stock and (ix) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. In the event of a Change in Control,
the applicable Change in Control provisions of the Plan shall apply. The adjustments shall be made by the Plan Administrator in such manner as the Plan Administrator deems appropriate in order to prevent the dilution or enlargement of benefits
under the Plan and outstanding Awards. The adjustments shall be final, binding and conclusive. 

  

	 	H.	Outstanding Awards under the Plan 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. 

  

	VI.	REPRICING PROGRAMS 

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

	ARTICLE TWO:	DISCRETIONARY GRANT PROGRAM 

  

	I.	OPTION TERMS 

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

  
 5 

	 	A.	Exercise Price. 

  

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

  

	 	(ii)	The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of the documents evidencing the option, be payable in cash or check made payable to the
Corporation. Should the Common Shares be publicly traded at the time the option is exercised, then the exercise price may also be paid as follows: 

  

	 	(a)	in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date;

  

	 	(b)	in shares of Common Stock otherwise issuable under the option but withheld by the Corporation in satisfaction of the exercise price, with such withheld shares to be valued at Fair Market Value on the Exercise Date; or

  

	 	(c)	to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions to (A) a brokerage firm
(reasonably satisfactory to the Corporation for purposes of administering such procedure in compliance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (B) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. 

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

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

  
 6 

	 	C.	Effect of Termination of Service. The following provisions shall govern the exercise of any options granted pursuant to the Discretionary Grant Program that are outstanding at the time of the Optionee’s
cessation of Service or death: 

  

	 	(i)	Any option outstanding at the time of the Optionee’s cessation of Service for any reason other than death, Retirement, Permanent Disability and Misconduct 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, but no such option shall be exercisable after the expiration of the option term, and provided that if such documents do not include such a period
of time, any such option shall remain so exercisable until the earlier of (i) the expiration of the three (3)-month period following the date of Optionee’s cessation of Service, and (ii) the expiration of the option term set forth in the
documents evidencing the option. 

  

	 	(ii)	Any option held by the Optionee at the time of the Optionee’s cessation of Service due to Retirement or Permanent Disability shall remain exercisable until the earlier of (i) the expiration of the twelve (12)-month
period following the date of Optionee’s cessation of Service and (ii) the expiration of the option term set forth in the documents evidencing the option. 

  

	 	(iii)	Any option held by the Optionee at the time of the Optionee’s death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee’s estate or by
the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of that option. Any such option shall remain so
exercisable until the earlier of (i) the expiration of the twelve (12)-month period following the date of Optionee’s death, and (ii) the expiration of the option term set forth in the documents evidencing the option. 

 

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

  

	 	(v)	During the applicable post-Service exercise period, the option may not be exercised for more than the number of vested shares for which the option is at the time exercisable. No additional shares shall vest under
the option following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion pursuant to an express written agreement with the Optionee. 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. 

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

	 	(a)	 extend the period of time for which the option is to remain exercisable following the Optionee’s cessation
of Service from the limited exercise 

  
 7 

	 	
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;

  

	 	(b)	include an automatic extension provision whereby the specified post-Service exercise period in effect for any option granted under this Article Two shall automatically be extended by an additional period of time equal
in duration to any interval within the specified post-Service exercise period during which the exercise of that option or the immediate sale of the shares acquired under such option could not be effected in compliance with applicable federal and
state securities laws, but in no event shall such an extension result in the continuation of such option beyond the expiration date of the term of that option; and/or 

 

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

 

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

  

	 	E.	Repurchase Rights. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while such shares are
unvested, the Corporation shall have the right to repurchase any or all of those unvested shares at a price per share equal to the lower of (i) the exercise price paid per share or (ii) the Fair Market Value per share of Common Stock at the time of
repurchase. 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. 

  

	 	F.	Transferability of Options. The transferability of options granted under the Plan shall be governed by the following provisions: 

 

	 	(i)	Incentive Options: During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of inheritance
following the Optionee’s death. 

  

	 	(ii)	 Non-Statutory Options. Non-Statutory Options shall be subject to the same limitation on transfer as
Incentive Options, except that the Plan Administrator may structure one or more Non-Statutory Options so that the option may be assigned in whole or in part during the Optionee’s lifetime to one or more Family Members of the Optionee or to a
trust established 

  
 8 

	 	
exclusively for the Optionee and/or one or more such Family Members, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations
order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for
the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. 

  

	 	(iii)	Beneficiary Designations. Notwithstanding the foregoing, the Optionee may designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two (whether
Incentive Options or Non-Statutory Options), and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the
option may be exercised following the Optionee’s death. 

  

	 	(iv)	Hedging. Prior to the date the Corporation first becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act, outstanding options under the Plan, together with the shares of Common
Stock subject to those options during the period prior to exercise, shall not be the subject of any short position, put equivalent position (as such term is defined in Rule 16a-1(h) under the 1934 Act) or call equivalent position (as such term is
defined Rule 16a-1(b) of the 1934 Act). 

  

	 	(v)	Pledges, Gifts and other Transfers. Except as otherwise provided in subparagraph (i), (ii) or (iii) above, until the date the Corporation first becomes subject to the reporting requirements of Section 13 or
15(d) of the 1934 Act, outstanding options under the Plan, together with the shares of Common Stock subject to those options during the period prior to exercise, shall not be the subject of any pledges, gifts, hypothecations or other transfers,
other than pursuant to the Corporation’s repurchase rights or in connection with a Change in Control in which such options shall terminate and cease to be outstanding. 

 

	II.	INCENTIVE OPTIONS 

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

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

  

	 	B.	 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 

  
 9 

	 	
granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). 

 To the extent the Employee holds two (2)
or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are
granted. 
  

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

  

	III.	STOCK APPRECIATION RIGHTS 

  

	 	A.	Authority. The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock appreciation rights in accordance with this Section III to selected Optionees or
other individuals eligible to receive option grants under the Discretionary Grant Program. 

  

	 	B.	Types. Two types of stock appreciation rights shall be authorized for issuance under this Section III: (i) tandem stock appreciation rights (“Tandem Rights”) and (ii) stand-alone stock appreciation
rights (“Stand-alone Rights”). 

  

	 	C.	Tandem Rights. The following terms and conditions shall govern the grant and exercise of Tandem Rights. 

  

	 	(i)	One or more Optionees may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock
or the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested
under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested shares. 

  

	 	(ii)	No such option surrender shall be effective unless it is approved by the Plan Administrator, either at the time of the actual option surrender or at any earlier time. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this Section III may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate. 

  

	 	(iii)	 If the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever
rights the Optionee had under the 

  
 10 

	 	
surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (i) five (5) business days after the receipt
of the rejection notice or (ii) the last day on which the option is otherwise exercisable in accordance with the terms of the instrument evidencing such option, but in no event may such rights be exercised more than ten (10) years after the date of
the option grant. 

  

	 	D.	Stand-Alone Rights. The following terms and conditions shall govern the grant and exercise of Stand-alone Rights: 

  

	 	(i)	One or more individuals eligible to participate in the Discretionary Grant Program may be granted a Stand-alone Right not tied to any underlying option under this Discretionary Grant Program. The Stand-alone Right
shall relate to a specified number of shares of Common Stock and shall be exercisable upon such terms and conditions as the Plan Administrator may establish. In no event, however, may the Stand-alone Right have a maximum term in excess of ten
(10) years measured from the grant date. Upon exercise of the Stand-alone Right, the holder shall be entitled to receive a distribution from the Corporation in an amount equal to the excess of (i) the aggregate Fair Market Value (on the
exercise date) of the shares of Common Stock underlying the exercised right over (ii) the aggregate base price in effect for those shares. 

  

	 	(ii)	The number of shares of Common Stock underlying each Stand-alone Right and the base price in effect for those shares shall be determined by the Plan Administrator in its sole discretion at the time the Stand-alone Right
is granted. In no event, however, may the base price per share be less than the Fair Market Value per underlying share of Common Stock on the grant date. In the event outstanding Stand-alone Rights are to be assumed in connection with a
Change in Control transaction or otherwise continued in effect, the shares of Common Stock underlying each such Stand-alone Right shall be adjusted immediately after such Change in Control so as to apply to the number and class of securities into
which those shares of Common Stock would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time. Appropriate adjustments to reflect such Change in Control shall also be made to the
base price per share in effect under each outstanding Stand-alone Right, provided the aggregate base price shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding Stand-alone Rights under the Discretionary Grant Program, substitute, for the
securities underlying those assumed rights, 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 the Change in Control transaction. 

 

	 	(iii)	 Stand-alone Rights shall be subject to the same transferability restrictions applicable to Non-Statutory Options
and may not be transferred during the 

  
 11 

	 	
holder’s lifetime, except if such assignment is in connection with the holder’s estate plan and is to one or more Family Members of the holder or to a trust established for the holder
and/or one or more such Family Members or pursuant to a domestic relations order covering the Stand-alone Right as marital property. In addition, one or more beneficiaries may be designated for an outstanding Stand-alone Right in accordance with
substantially the same terms and provisions as set forth in Section I.F of this Article Two. 

  

	 	(iv)	The distribution with respect to an exercised Stand-alone Right may be made in shares of Common Stock valued at Fair Market Value on the exercise date, in cash or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate. 

  

	 	(v)	The holder of a Stand-alone Right shall have no stockholder rights with respect to the shares subject to the Stand-alone Right unless and until such person shall have exercised the Stand-alone Right and become a holder
of record of the shares of Common Stock issued upon the exercise of such Stand-alone Right. 

  

	 	E.	Post-Service Exercise. The provisions governing the exercise of Tandem, and Stand-alone Stock Appreciation Rights following the cessation of the recipient’s Service shall be substantially the same as those
set forth in Section I.C of this Article Two for the options granted under the Discretionary Grant Program. 

  

	 	F.	Net Counting. Upon the exercise of any Tandem or Stand-alone Right under this Section III, the share reserve under Section V of Article One shall be reduced by the net number of shares actually issued by the
Corporation upon such exercise and not by the gross number of shares as to which such right is exercised. 

  

	IV.	CHANGE IN CONTROL 

  

	 	A.	Except as otherwise set forth in the applicable Award agreement, the following provisions shall be in effect in the event of a Change in Control transaction: 

 

	 	(i)	 In the event of a Change in Control, each option or stock appreciation right outstanding under the Discretionary
Grant Program on the effective date of the Change in Control may, as determined by the Plan Administrator in its sole discretion, be (i) 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, or (ii) replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control on any shares as to which the option or
stock appreciation right is not otherwise at that time exercisable and provides for subsequent payout of that spread in accordance with the same exercise/vesting schedule applicable to those shares, but only if such replacement cash program would
not result in the treatment of the option or stock appreciation right as an item of deferred compensation subject to Code Section 409A. However, to the extent that the Plan Administrator determines in its sole discretion that any option or
stock appreciation right outstanding 

  
 12 

	 	
under the Discretionary Grant Program on the effective date of such Change in Control transaction is not to be so assumed, continued or replaced, that option or stock appreciation right shall
automatically accelerate so that each such option or stock appreciation right shall, immediately prior to the effective date of that Change in Control, become exercisable as to all the shares of Common Stock at the time subject to such option or
stock appreciation right and may be exercised as to any or all of those shares as fully vested shares of Common Stock.

  

	 	(ii)	To the extent the Plan Administrator determines, in its sole discretion, that any option or stock appreciation right outstanding under the Discretionary Grant Program on the date of a Change in Control is not to be
assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect or replaced with a cash incentive program in accordance with Section IV.A.1. of this Article Two, the holder of any such option or stock
appreciation right shall be entitled to receive, upon consummation of the Change in Control, a lump sum cash payment in an amount equal to the spread, if any, existing on the shares of Common Stock subject to the option or stock appreciation right
at the time of the Change in Control over the aggregate exercise or base price in effect for such option or stock appreciation right. The Plan Administrator shall have the authority to determine, in its sole discretion, that any option or stock
appreciation right outstanding under the Discretionary Grant Program on the date of such Change in Control that is not to be assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect or replaced with a
cash incentive program in accordance with Section IV.A.1. of this Article Two shall be subject to cancellation and termination, without cash payment or other consideration due the award holder, if the Fair Market Value per share of Common Stock on
the date of such Change in Control is less than the per share exercise or base price in effect for such option or stock appreciation right. 

  

	 	(iii)	All outstanding repurchase rights under the Discretionary Grant Program shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of a
Change in Control, except to the extent: (i) the Plan Administrator determines in its sole discretion that those repurchase rights are to be assigned to the successor corporation (or parent thereof) or are otherwise to continue in full force and
effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued. 

 

	 	(iv)	 Each option or stock appreciation right 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 those shares
actually been 

  
 13 

	 	
outstanding at the time. Appropriate adjustments to reflect such Change in Control shall also be made to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan, (iii) the maximum number and/or class of
securities for which any one person may be granted Awards under the Plan per calendar year, (iv) the maximum number and/or class of securities for which Incentive Options may be granted under the Plan, and (v) the number and/or class of securities
subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. 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, the Plan Administrator may, in its sole discretion, provide in the document evidencing the Change in Control transaction that the successor corporation, in connection with the assumption or
continuation of the outstanding options or stock appreciation rights under the Discretionary Grant Program, shall 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. 

  

	 	B.	Immediately following the consummation of the Change in Control, all outstanding options or stock appreciation rights under the Discretionary Grant Program shall terminate and cease to be outstanding, except to the
extent 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. 

 

	 	C.	The Plan Administrator shall have the discretionary authority to structure one or more outstanding options or stock appreciation rights under the Discretionary Grant Program so that those options or stock appreciation
rights shall, immediately prior to the effective date of a Change in Control, become exercisable as to all the shares of Common Stock at the time subject to those options or stock appreciation rights and may be exercised as to any or all of those
shares as fully vested shares of Common Stock, whether or not those options or stock appreciation rights are to be assumed in the Change in Control transaction or otherwise continued in effect. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Grant Program so that those rights shall immediately terminate upon the consummation of the Change in Control transaction, and the
shares subject to those terminated rights shall thereupon vest in full. 

  

	 	D.	 The Plan Administrator shall have full power and authority to structure one or more outstanding options or stock
appreciation rights under the Discretionary Grant Program so that those options or stock appreciation rights shall become exercisable as to all the shares of Common Stock at the time subject to those options or stock appreciation rights in the event
the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a designated period following the effective date of any Change in Control transaction in which those options or stock

  
 14 

	 	
appreciation rights do not otherwise fully accelerate. In addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights so that those rights shall
immediately terminate with respect to any shares held by the Optionee at the time of such Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time. 

 

	 	E.	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 One Hundred Thousand Dollar ($100,000) limitation
is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws. 

 

	ARTICLE THREE:	STOCK ISSUANCE PROGRAM 

  

	I.	STOCK ISSUANCE TERMS 

 Shares of Common Stock may be issued under the Stock Issuance
Program, either as vested or unvested shares, 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, restricted stock units or performance shares which entitle the recipients to receive the shares underlying those Awards upon the
attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those awards or units. 

 

	 	A.	Consideration. Shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual
instance: 

  

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

  

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

  

	 	(iii)	any other valid consideration under the Delaware General Corporation Law. 

  

	 	B.	Transferability. Awards under the Stock Issuance Program shall be transferable by will and by the laws of descent and distribution, and during the lifetime of the recipient, such Awards shall be
transferable, by gift or pursuant to a domestic relations order, to a Family Member to the extent and in the manner determined by the Plan Administrator and set forth in the applicable agreement evidencing the Award. Notwithstanding the
foregoing, the recipient of an Award under the Stock Issuance Program may designate a beneficiary of the recipient’s Award in the event of the recipient’s death on a beneficiary designation form provided by the Plan Administrator.

  
 15 

	 	C.	Vesting Provisions. 

  

	 	(i)	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 the attainment of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program shall be determined by
the Plan Administrator and incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to restricted stock units or performance shares which entitle the recipients to receive
the shares underlying those Awards upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those Awards, including (without
limitation) a deferred distribution date following the termination of the Participant’s Service. 

  

	 	(ii)	The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Awards under the Stock Issuance Program so that the shares of Common Stock subject to
those Awards shall vest (or vest and become issuable) upon the achievement of certain pre-established corporate performance objectives based on one or more Performance Goals and measured over the performance period (not to exceed five (5) years)
specified by the Plan Administrator at the time of the Award. 

  

	 	(iii)	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 transaction described in Section V.G of Article One shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate. 

  

	 	(iv)	 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, subject to any applicable vesting requirements, including (without limitation) the requirement that any dividends paid on shares subject to performance-vesting conditions shall be held in escrow by the Corporation and shall not vest or
actually be paid to the Award holder prior to the time those shares vest. The Participant shall not have any stockholder rights with respect to the shares of Common Stock subject to a restricted stock unit or share right award until that award
vests and the shares of Common Stock are actually issued thereunder. However, dividend-equivalent units may be paid or 

  
 16 

	 	
credited, either in cash or in actual or phantom shares of Common Stock, on outstanding restricted stock unit or share right awards, subject to such terms and conditions as the Plan Administrator
may deem appropriate; provided, however, that no such dividend-equivalent units relating to restricted stock unit or share right awards subject to performance-vesting conditions shall vest or otherwise become payable prior to the time the underlying
award (or portion thereof to which such dividend-equivalents units relate) vests upon the attainment of the applicable performance goals and shall accordingly be subject to cancellation and forfeiture to the same extent as the underlying award.

  

	 	(v)	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, the Corporation shall repay to the Participant the lower of (i) the cash consideration paid for the surrendered shares
or (ii) the Fair Market Value of those shares at the time of cancellation. 

  

	 	(vi)	The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those shares. Any such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of Performance Goals may
be waived with respect to Awards which were intended at the time of grant to qualify as performance-based compensation under Code Section 162(m). 

  

	 	(vii)	Outstanding Awards of restricted stock units or performance shares 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 or satisfied. The Plan Administrator, however, shall have the discretionary authority to issue vested shares of Common Stock under one or more
outstanding Awards of restricted stock units or performance shares as to which the designated performance goals or Service requirements have not been attained or satisfied. However, no vesting requirements tied to the attainment of Performance
Goals may be waived with respect to Awards which were intended, at the time those Awards were made, to qualify as performance-based compensation under Code Section 162(m). 

  
 17 

	 	(viii)	The following additional requirements shall be in effect for any performance shares awarded under this Article Three: 

  

	 	(a)	At the end of the performance period, the Plan Administrator shall determine the actual level of attainment for each performance objective and the extent to which the performance shares awarded for that period are to
vest and become payable based on the attained performance levels. 

  

	 	(b)	The performance shares which so vest shall be paid as soon as practicable following the end of the performance period, unless such payment is to be deferred for the period specified by the Plan Administrator at the time
the performance shares are awarded or the period selected by the Participant in accordance with the applicable requirements of Code Section 409A. 

  

	 	(c)	Performance shares may be paid in (i) cash, (ii) shares of Common Stock or (iii) any combination of cash and shares of Common Stock, as set forth in the applicable Award agreement. 

 

	 	(d)	Performance shares may also be structured so that the shares are convertible into shares of Common Stock, but the rate at which each performance share is to so convert shall be based on the attained level of performance
for each applicable performance objective. 

  

	II.	CHANGE IN CONTROL 

  

	 	A.	Except as otherwise set forth in the applicable Award agreement, the following provisions shall be in effect in the event of a Change in Control transaction: 

 

	 	(i)	Each Award outstanding under the Stock Issuance Program on the effective date of an actual Change in Control transaction may, as determined by the Plan Administrator in its sole discretion, be (i) 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, or (ii) replaced with a cash incentive program of the successor corporation which preserves the
Fair Market Value of the underlying shares of Common Stock at the time of the Change in Control and provides for the subsequent vesting and payment of that value in accordance with the same vesting schedule in effect for those shares at the time of
such Change in Control. However, to the extent that the Plan Administrator determines in its sole discretion that any Award outstanding under the Stock Issuance Program on the effective date of such Change in Control Transaction is not to be so
assumed, continued or replaced, that Award shall vest in full immediately prior to the effective date of the actual Change in Control transaction and the shares of Common Stock underlying the portion of the Award that vests on such accelerated basis
shall be issued in accordance with the applicable Award agreement, unless such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement. 

  
 18 

	 	(ii)	Each outstanding Award under the Stock Issuance Program which is assumed in connection with a Change in Control or otherwise continued in effect shall be adjusted immediately after the consummation of that Change in
Control so as to apply to the number and class of securities into which the shares of Common Stock subject to that Award immediately prior to the Change in Control would have been converted in consummation of such Change in Control had those shares
actually been outstanding at that time, and appropriate adjustments shall also be made to the cash consideration (if any) payable per share thereunder, provided the aggregate amount of such cash consideration shall remain the same. To the
extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the Plan Administrator may, in its sole discretion, provide in the document
evidencing the Change in Control transaction that the successor corporation, in connection with the assumption or continuation of the outstanding Awards, shall 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. 

  

	 	B.	The Plan Administrator shall have the discretionary authority to structure one or more unvested Awards under the Stock Issuance Program so that the shares of Common Stock subject to those Awards shall automatically vest
(or vest and become issuable) in whole or in part immediately upon the occurrence of a Change in Control or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period
following the effective date of that Change in Control transaction. The Plan Administrator’s authority under this Section II.B shall also extend to any Awards under the Stock Issuance Program which are intended to qualify as performance-based
compensation under Code Section 162(m), even though the actual vesting of those Awards pursuant to this Section II.B may result in their loss of performance-based status under Code Section 162(m). 

 

	III.	SHARE ESCROW/LEGENDS 

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

ARTICLE FOUR: INCENTIVE BONUS PROGRAM 
  

	I.	INCENTIVE BONUS TERMS 

  

	 	A.	Incentive Bonus Programs. The Plan Administrator shall have full power and authority to implement one or more of the following incentive bonus programs under the Plan: 

 

	 	(i)	cash bonus awards (“Cash Awards”), 

  

	 	(ii)	performance unit awards (“Performance Unit Awards”), and 

  

	 	(iii)	dividend equivalent rights (“DER Awards”) 

  
 19 

	 	B.	Cash Awards. The Plan Administrator shall have the discretionary authority under the Plan to make Cash Awards which are to vest in one or more installments over the Participant’s continued Service with the
Corporation or upon the attainment of specified performance objectives. Each such Cash Award 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. 

  

	 	(i)	The elements of the vesting schedule applicable to each Cash Award shall be determined by the Plan Administrator and incorporated into the Incentive Bonus Award agreement. 

 

	 	(ii)	The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Cash Awards so that those Awards shall vest upon the achievement of pre-established
corporate performance objectives based upon one or more Performance Goals measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time of the Award. 

 

	 	(iii)	Outstanding Cash Awards shall automatically terminate, and no cash payment or other consideration shall be due the holders of those Awards, if the performance objectives or Service requirements established for those
Awards are not attained or satisfied. The Plan Administrator may in its discretion waive the cancellation and termination of one or more unvested Cash Awards which would otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those Awards. Any such waiver shall result in the immediate vesting of the Participant’s interest in the Cash Award as to which the waiver applies. Such wavier may be effected at any
time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of Performance Goals may be waived with
respect to Awards which were intended, at the time those Awards were made, to qualify as performance-based compensation under Code Section 162(m), except in the event of the Participant’s cessation of Service by reason of death or Permanent
Disability or as otherwise provided in Section II of this Article Four. 

  

	 	(iv)	Cash Awards which become due and payable following the attainment of the applicable performance objectives or satisfaction of the applicable Service requirement (or the waiver of such goals or Service requirement) may
be paid in (i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock as set forth in the applicable Award agreement. 

  
 20 

	 	C.	Performance Unit Awards. The Plan Administrator shall have the discretionary authority to make Performance Unit Awards in accordance with the terms of this Article Four. Each such Performance Unit Award
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. 

 

	 	(i)	A Performance Unit shall represent either (i) a unit with a dollar value tied to the level at which pre-established corporate performance objectives based on one or more Performance Goals are attained or (ii) a
participating interest in a special bonus pool tied to the attainment of pre-established corporate performance objectives based on one or more Performance Goals. The amount of the bonus pool may vary with the level at which the applicable
performance objectives are attained, and the value of each Performance Unit which becomes due and payable upon the attained level of performance shall be determined by dividing the amount of the resulting bonus pool (if any) by the total number of
Performance Units issued and outstanding at the completion of the applicable performance period. 

  

	 	(ii)	Performance Units may also be structured to include a Service requirement which the Participant must satisfy following the completion of the performance period in order to vest in the Performance Units awarded with
respect to that performance period. 

  

	 	(iii)	Performance Units which become due and payable following the attainment of the applicable performance objectives and the satisfaction of any applicable Service requirement may be paid in (i) cash, (ii) shares of Common
Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock, as set forth in the applicable Award agreement. 

  

	 	D.	DER Awards. The Plan Administrator shall have the discretionary authority to make DER Awards in accordance with the terms of this Article Four. Each such DER Award 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. 

  

	 	(i)	The DER Awards may be made as stand-alone awards or in tandem with other Awards made under the Plan. The term of each such DER Award shall be established by the Plan Administrator at the time of grant, but no DER
Award shall have a term in excess of ten (10) years. 

  

	 	(ii)	Each DER shall represent the right to receive the economic equivalent of each dividend or distribution, whether in cash, securities or other property (other than shares of Common Stock), which is made per issued and
outstanding share of Common Stock during the term the DER remains outstanding. A special account on the books of the Corporation shall be maintained for each Participant to whom a DER Award is made, and that account shall be credited per DER with
each such dividend or distribution made per issued and outstanding share of Common Stock during the term of that DER remains outstanding. 

  
 21 

	 	(iii)	Payment of the amounts credited to such book account may be made to the Participant either concurrently with the actual dividend or distribution made per issued and outstanding share of Common Stock or may be deferred
for a period specified by the Plan Administrator at the time the DER Award is made or selected by the Participant in accordance with the requirements of Code Section 409A. In no event, however, shall any DER Award made with respect to an Award
subject to performance-vesting conditions under the Stock Issuance or Incentive Bonus Program vest or become payable prior to the vesting of that Award (or the portion thereof to which the DER Award relates) upon the attainment of the applicable
performance goals and shall accordingly be subject to cancellation and forfeiture to the same extent as the underlying Award in the event those performance conditions are not attained. 

 

	 	(iv)	Payment may be paid in (i) cash, (ii) shares of Common Stock or (iii) a combination of cash and shares of Common Stock, as set forth in the applicable Award agreement. If payment is to be made in the form of Common
Stock, the number of shares of Common Stock into which the cash dividend or distribution amounts are to be converted for purposes of the Participant’s book account may be based on the Fair Market Value per share of Common Stock on the date of
conversion, a prior date or an average of the Fair Market Value per share of Common Stock over a designated period, as set forth in the applicable Award agreement. 

 

	 	(v)	The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more DER Awards so that those Awards shall vest only after the achievement of pre-established
corporate performance objectives based upon one or more Performance Goals measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time the Award is made. 

 

	II.	CHANGE IN CONTROL 

  

	 	A.	The Plan Administrator shall have the discretionary authority to structure one or more Awards under the Incentive Bonus Program so that those Awards shall automatically vest in whole or in part immediately prior to the
effective date of an actual Change in Control transaction or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period following the effective date of such Change in Control.
To the extent any such Award is, at the time of such Change in Control, subject to a performance-vesting condition tied to the attainment of one or more specified performance goals, then that performance vesting condition shall automatically be
cancelled on the effective date of such Change in Control, and such Award shall thereupon be converted into a Service-vesting Award that will vest upon the completion of a Service period co-terminous with the portion of the performance period (and
any subsequent Service vesting component that was originally part of that Award) remaining at the time of the Change in Control. 

  

	 	B.	 The Plan Administrator’s authority under Section II.A above shall also extend to any Award under the
Incentive Bonus Program intended to qualify as performance-based 

  
 22 

	 	
compensation under Code Section 162(m), even though the automatic vesting of that Award may result in the loss of performance-based status under Code Section 162(m). 

ARTICLE FIVE: MISCELLANEOUS 
  

	I.	DEFERRED COMPENSATION 

  

	 	A.	The Plan Administrator may, in its sole discretion, structure one or more awards under the Stock Issuance Program so that the Participants may be provided with an election to defer the compensation associated with
those awards for federal income tax purposes. Any such deferral opportunity shall comply with all applicable requirements of Code Section 409A. 

  

	 	B.	To the extent the Corporation maintains one or more separate non-qualified deferred compensation arrangements which allow the participants the opportunity to make notional investments of their deferred account balances
in shares of Common Stock, the Plan Administrator may authorize the share reserve under the Plan to serve as the source of any shares of Common Stock that become payable under those deferred compensation arrangements. In such event, the share
reserve under the Plan shall be reduced on a share-for-share basis for each share of Common Stock issued under the Plan in settlement of the deferred compensation owed under those separate arrangements. 

 

	 	C.	To the extent there is any ambiguity as to whether any provision of any award made under the Plan that is deemed to constitute a deferred compensation arrangement under Code Section 409A would otherwise contravene one
or more requirements or limitations of such Code Section 409A and the Treasury Regulations thereunder, such provision shall be interpreted and applied in a manner that complies with the applicable requirements of Code Section 409A and the Treasury
Regulations thereunder. 

  

	II.	TAX WITHHOLDING 

  

	 	A.	The Corporation’s obligation to deliver shares of Common Stock upon the issuance, exercise or vesting of an Award under the Plan shall be subject to the satisfaction of all applicable income and employment tax
withholding requirements. 

  
 23 

	 	B.	The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory Options, stock appreciation rights, restricted stock units or any other share right awards pursuant to which vested shares of
Common Stock are to be issued under the Plan and any or all Participants to whom vested or unvested shares of Common Stock are issued in a direct issuance under the Stock Issuance Program with the right to use shares of Common Stock in satisfaction
of all or part of the Withholding Taxes to which such holders may become subject in connection with the exercise of their options or stock appreciation rights, the issuance to them of vested shares or the subsequent vesting of unvested shares issued
to them. Such right may be provided to any such holder in either or both of the following formats: 

  

	 	(i)	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 stock appreciation right or upon the
issuance of fully-vested shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%), provided that such withholding amount may not exceed the
maximum applicable Withholding Tax rate for federal (including FICA), state and local tax liabilities or such other amount required to avoid adverse accounting consequences to the Corporation, as determined by the Plan Administrator in its
discretion). The shares of Common Stock so withheld shall reduce the number of shares of Common Stock authorized for issuance under the Plan. 

  

	 	(ii)	Stock Delivery: The election to deliver to the Corporation, at the time the Non-Statutory Option or stock appreciation right is exercised, the vested shares are issued or the unvested shares
subsequently vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the exercise, share issuance or share vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the
percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder. The shares of Common Stock so delivered shall neither reduce the number of shares of Common Stock authorized for issuance under the Plan
nor be added to the shares of Common Stock authorized for issuance under the Plan 

  

	III.	ASSUMPTION OR SUBSTITUTION OF OPTIONS 

  

	 	A.	The shares of Common Stock reserved for issuance under the Plan may, in the sole discretion of the Plan Administrator, be used to fund one or more shares of Common Stock issuable upon the exercise of (i) any Code
Section 422 incentive stock option originally granted by a corporation or other entity acquired by the Corporation (or any Parent or Subsidiary), whether by merger or asset or stock sale, and assumed by the Corporation in connection with that
acquisition or (ii) any Incentive Option granted under this Plan in substitution for such incentive stock option of the acquired entity. Any such assumption or substitution of options shall not be deemed to contravene the option exercise
price requirements of Section I.A of Article Two, even if the exercise price per share of Common Stock under the assumed or substituted option is less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the date
such assumption or substitution is effected, provided all of the following requirements are satisfied: 

  

	 	(i)	The excess of the aggregate Fair Market Value of the shares of Common Stock subject to the assumed or substituted option immediately after the assumption or substitution over the aggregate exercise price in effect for
those shares is not greater than the excess of the aggregate fair market value of the shares of stock subject to the option immediately prior to such assumption or substitution over the aggregate exercise price payable for those shares.

  
 24 

	 	(ii)	The ratio of the exercise price to the Fair Market Value per share of Common Stock subject to the assumed or substituted option immediately after such assumption or substitution is no more favorable to the Optionee than
the ratio of the exercise price to the fair market value per share immediately prior to such assumption or substitution. 

  

	 	(iii)	The assumed or substituted option does not provide the Optionee with any additional benefits the Optionee did not otherwise have under the option immediately prior to the assumption or substitution. 

 

	 	(iv)	In the case of a substitution, the option granted by the acquired entity must be cancelled at the time of such substitution, and the Optionee must have no further rights under that cancelled option. 

 

	IV.	SHARE ESCROW/LEGENDS 

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

 

	V.	EFFECTIVE DATE AND TERM OF THE PLAN 

  

	 	A.	The Plan became effective on the Plan Effective Date, and was approved by the Corporation’s stockholders on May 3, 2016. 

  

	 	B.	The Plan shall terminate upon the earliest to occur of (i) May 2, 2026, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully vested shares or
(iii) the termination of all outstanding Awards in connection with a Change in Control. Should the Plan terminate on May 2, 2026, then all Awards outstanding at that time shall continue to have force and effect in accordance with the
provisions of the documents evidencing those Awards. 

  

	VI.	AMENDMENT OF THE PLAN 

  

	 	A.	The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with
respect to Awards at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, amendments to the Plan will be subject to stockholder approval to the extent required under
applicable law or regulation or pursuant to the listing standards of the Stock Exchange on which the Common Stock is at the time primarily traded, and no amendment that would reduce or limit the scope of the prohibition on repricing programs set
forth in Section VI of Article Two or otherwise eliminated such prohibition shall be effective unless approved by the stockholders. 

  

	 	B.	 The Committee shall have the discretionary authority to adopt and implement from time to time such addenda or
subplans to the Plan as it may deem necessary in order to bring the Plan into compliance with applicable laws and regulations of any foreign 

  
 25 

	 	
jurisdictions in which grants or awards are to be made under the Plan and/or to obtain favorable tax treatment in those foreign jurisdictions for the individuals to whom the grants or awards are
made. 

  

	 	C.	Awards may be made under the Plan that involve shares of Common Stock in excess of the number of shares then available for issuance under the Plan, provided no shares shall actually be issued pursuant to those Awards
until the number of shares of Common Stock available for issuance under the Plan is sufficiently increased by stockholder approval of an amendment of the Plan authorizing such increase. If stockholder approval is required and is not obtained
within twelve (12) months after the date the first excess Award is made, then all Awards granted on the basis of such excess shares shall terminate and cease to be outstanding. 

 

	 	D.	The provisions of the Plan and the outstanding Awards under the Plan shall, in the event of any ambiguity, be construed, applied and interpreted in a manner so as to ensure that all Awards and Award agreements provided
to Optionees or Participants who are subject to U.S. income taxation either qualify for an exemption from the requirements of Section 409A of the Code or comply with those requirements; provided, however, that the Corporation shall not make any
representations that any Awards made under the Plan will in fact be exempt from the requirements of Section 409A of the Code or otherwise comply with those requirements, and each Optionee and Participant shall accordingly be solely responsible for
any taxes, penalties or other amounts which may become payable with respect to his or her Awards by reason of Section 409A of the Code. 

  

	VII.	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. 
  

	VIII.	REGULATORY APPROVALS 

  

	 	A.	The implementation of the Plan, the grant of any Award and the issuance of shares of Common Stock in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the
Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the shares of Common Stock issuable pursuant to those Awards. 

 

	 	B.	No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of applicable securities laws. 

 

	IX.	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. 

  
 26 

	X.	RECOUPMENT 

 Optionees and Participants shall be subject to any clawback, recoupment or
other similar policy adopted by the Board as in effect from time to time, and Awards and any cash, shares of Common Stock or other property or amounts due, paid or issued to the holder of an Award shall be subject to the terms of such policy, as in
effect from time to time. 

  
 27 

 APPENDIX 

The following definitions shall be in effect under the Plan: 
  

	A.	Award shall mean any of the following awards authorized for issuance or grant under the Plan: stock options, stock appreciation rights, direct stock issuances, restricted stock or restricted stock unit
awards, performance shares, performance units, dividend-equivalent rights and cash incentive awards. 

  

	B.	Board shall mean the Corporation’s Board of Directors. 

  

	C.	Change in Control shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for
purposes of defining such term, and in the absence of such a Change in Control definition shall mean a change in ownership or control of the Corporation effected through any of the following transactions: 

 

	 	(i)	the closing of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the
voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities
immediately prior to such transaction; 

  

	 	(ii)	the closing of a stockholder-approved sale, transfer or other disposition (including in whole or in part through one or more licensing arrangements) of all or substantially all of the Corporation’s assets; or

  

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

 Unless
otherwise determined by the Board, in no event shall (i) any public offering of the Company’s securities (whether directly or via a reverse merger with a public shell company) be deemed to constitute a Change in Control, (ii) a Change in
Control be deemed to have occurred for purposes of the Plan as a result of a majority of the Board being designated by Capital Royalty Partners II, L.P. and/or its affiliates or Capital Royalty Partners II, L.P. and/or its affiliates acquiring,
directly or indirectly, beneficial ownership of securities (or interests convertible into or exercisable for securities) of the Corporation as a result of one or more equity financing transactions, (iii) a change in the Stock Exchange in which the
Common Stock is listed or (iv) the merger of Valeritas, Inc. with and into a subsidiary of the Corporation, in each case, be deemed to constitute a Change in Control. 
  

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

  

	E.	Common Stock shall mean the Corporation’s common stock. 

  

	F.	Corporation shall mean Valeritas Holdings, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Valeritas Holdings, Inc. which has
by appropriate action assumed the Plan. 

	G.	Discretionary Grant Program shall mean the discretionary grant program in effect under Article Two of the Plan pursuant to which stock options and stock appreciation rights may be granted to one or
more eligible individuals. 

  

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

  

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

 

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

 

	 	(i)	If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value per share of Common Stock on any relevant date shall be the closing selling price per share of Common Stock at the close of
regular trading hours (i.e., before after-hours trading begins) 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 reported by the National Association
of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Corporation’s common stock is then primarily traded.
If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 

 

	 	(ii)	If the Common Stock is not at the time listed on any Stock Exchange, then the Fair Market Value shall be determined by the Plan Administrator through the reasonable application of a reasonable valuation method that
takes into account the applicable valuation factors set forth in the Treasury Regulations issued under Section 409A of the Code; provided, however, that with respect to an Incentive Option, such Fair Market Value shall be determined in accordance
with the standards of Section 422 of the Code and the applicable Treasury Regulations thereunder. 

  

	K.	Family Member means, with respect to a particular Optionee or Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law. 

  

	L.	Full Value Award means any of the following Awards made under the Stock Issuance or Incentive Bonus Programs that are settled in shares of Common Stock: restricted stock awards (unless issued for cash
consideration equal to the Fair Market Value of the shares of Common Stock on the award date), restricted stock unit awards, performance shares, performance units, cash incentive awards and any other Awards under the Plan other than (i) stock
options and stock appreciation rights issued under the Discretionary Grant Program and (ii) dividend equivalent rights under the Incentive Bonus Program. 

  

	M.	Incentive Bonus Program shall mean the incentive bonus program in effect under Article Four of the Plan. 

  

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

	O.	Involuntary Termination shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for
purposes of defining such term. In the absence of such an Involuntary Termination definition, such term shall mean the termination of the Service of any individual which occurs by reason of: 

 

	 	(i)	such individual’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than Misconduct, or 

 

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

  

	P.	Misconduct shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for purposes of
defining such term, and in the absence of such, 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 in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any
other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct. 

  

	Q.	1933 Act shall mean the Securities Act of 1933, as amended. 

  

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

  

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

  

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

  

	U.	Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

 

	V.	Participant shall mean any person who is issued (i) shares of Common Stock, restricted stock units, performance shares, performance units or other stock-based awards under the Stock Issuance Program
or (ii) an incentive bonus award under the Incentive Bonus Program. 

  

	W.	 Performance Goals shall mean any of the following performance criteria upon which the vesting of
one or more Awards under the Plan may be based: (i) revenue, organic revenue, net sales, or new-product revenue or net sales, (ii) achievement of specified milestones in the discovery and development of the Corporation’s technology or of one or
more of the Corporation’s products, (iii) achievement of specified milestones in the commercialization of one or more of the Corporation’s products, (iv) achievement of specified milestones in the manufacturing of one or more of the
Corporation’s products, (v) expense targets, (vi) share price, (vii) total shareholder return, (viii) earnings per share, (ix) operating margin, (x) gross margin, (xi) return measures (including, but not limited to, return on assets, capital,
equity, or sales), (xii) productivity ratios, (xiii) operating income, (xiv) net operating profit, (xv) net earnings or net income (before or after taxes), (xvi) cash flow (including, but not limited to, operating cash flow,

	 	
free cash flow and cash flow return on capital), (xvii) earnings before or after interest, taxes, depreciation, amortization and/or stock-based compensation expense, (xviii) economic value added,
(xix) market share, (xx) working capital targets, (xxi) achievement of specified milestones relating to corporate partnerships, collaborations, license transactions, distribution arrangements, mergers, acquisitions, dispositions or similar business
transactions, and (xxii) employee retention and recruiting and human resources management. In addition, such performance goals may be based upon the attainment of specified levels of the Corporation’s performance under one or more of the
measures described above relative to the performance of other entities and may also be based on the performance of any of the Corporation’s business units or divisions or any Parent or Subsidiary. Performance goals may include a minimum
threshold level of performance below which no award will be earned, levels of performance at which specified portions of an award will be earned and a maximum level of performance at which an award will be fully earned. Each applicable performance
goal may be structured at the time of the Award to provide for appropriate adjustments or exclusions for one or more of the following items: (A) asset impairments or write-downs; (B) litigation or governmental investigation expenses and
any judgments, verdicts and settlements in connection therewith; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring
programs; (E) any unusual or infrequently occurring item or event; (F) items of income, gain, loss or expense attributable to the operations of any business acquired by the Corporation or costs and expenses incurred in connection with mergers
and acquisitions; (G) items of income, gain, loss or expense attributable to one or more business operations divested by the Corporation or the gain or loss realized upon the sale of any such business the assets thereof, (H) accruals for bonus or
incentive compensation costs and expenses associated with cash-based awards made under the Plan or other bonus or incentive compensation plans of the Corporation, and (I) the impact of foreign currency fluctuations or changes in exchange rates.

  

	X.	Permanent Disability or Permanently Disabled have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award
agreement for purposes of defining such term, and in the absence of such a definition shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. 

  

	Y.	Plan shall mean the Corporation’s 2016 Incentive Compensation Plan as set forth in this document and as subsequently amended or restated from time to time. 

 

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

 

	AA.	Plan Effective Date shall mean May 3, 2016, the date that the Plan was adopted by the Board. 

  

	BB.	Retirement shall have the meaning assigned to such term in the Award agreement for the particular Award or in any other agreement incorporated by reference into the Award agreement for purposes of defining
such term. In the absence of such a Retirement definition, such term shall mean the Award holder’s cessation of Service after attaining age sixty (60) with at least five (5) completed years of Service to the Corporation. 

 

	CC.	 Service shall mean the performance of services for the Corporation (or any Parent or
Subsidiary, whether now existing or subsequently established) by a person in the capacity of an Employee, a non-employee 

	 	
member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. For
purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing capacities
for the Corporation or any Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is performing such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Optionee or Participant may subsequently
continue to perform services for that entity. Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that should such leave of absence exceed
three (3) months, then for purposes of determining the period within which an Incentive Option may be exercised as such under the federal tax laws, the Optionee’s Service shall be deemed to cease on the first day immediately following the
expiration of such three (3)-month period, unless Optionee is provided with the right to return to Service following such leave either by statute or by written contract. Except to the extent otherwise required by law or expressly authorized by the
Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Optionee or Participant is on a leave of absence. 

 

	DD.	Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange. 

 

	EE.	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.

  

	FF.	Stock Issuance Program shall mean the stock issuance program in effect under Article Three of the Plan. 

  

	GG.	Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

 

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

  

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

 

	JJ.	Underwriting Date shall mean the date on which the Underwriting Agreement is executed and priced in connection with the initial public offering of the Common Stock or, if earlier, the closing of a private
placement of securities of the Corporation of at least $25,000,000. 

  

	KK.	Withholding Taxes shall mean the applicable federal and state income and employment withholding taxes to which the holder of an Award under the Plan may become subject in connection with the issuance,
exercise, vesting or settlement of that Award.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}]]