Document:

Fourth Loan Modification Agreement dated May 4, 2005

 Exhibit 10.1 
  
 FOURTH LOAN MODIFICATION AGREEMENT 
  
 This Fourth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of March 26, 2005,
but effective as of May 4, 2005, by and between SILICON VALLEY BANK, a California-chartered bank, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at One Newton
Executive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts 02462 (“Bank”) and BOTTOMLINE TECHNOLOGIES (de), Inc., a Delaware corporation with its chief executive office located at 325 Corporate Drive, Portsmouth, New
Hampshire 03801(“Borrower”). 
  

	1.	DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant
to a loan arrangement dated as of December 28, 2001, evidenced by, among other documents, a certain Loan and Security Agreement dated as of December 28, 2001, between Borrower and Bank, as amended by a certain First Loan Modification Agreement dated
as of December 31, 2002, between Borrower and Bank, and as further amended by a certain Second Loan Modification Agreement dated January 19, 2004, between Borrower and Bank, and as further amended by a certain Third Loan Modification Agreement dated
February 4, 2005, between Borrower and Bank (as amended, the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement. 

  
 Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be referred to
as the “Obligations”. 
  

	2.	DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement (together with any other collateral security granted
to Bank, the “Security Documents”). 

  
 Hereinafter, the
Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”. 
  

	3.	DESCRIPTION OF CHANGE IN TERMS. 

  

	 	A.	Modifications to Loan Agreement. 

  

	 	1.	The Loan Agreement shall be amended by deleting the following, appearing as Section 2.1.1(a) thereof, in its entirety: 

  
 “(a) Availability. Bank shall make Advances not exceeding (i)
the lesser of (A) the Committed Revolving Line or (B) the Borrowing Base minus (ii) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), minus (iii) the FX Reserve, and minus (iv) the aggregate
outstanding Advances hereunder (including any Cash Management Services). Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement.” 
  
 and insert in lieu thereof the following: 
  
 “(a) Availability. Bank shall make Advances not exceeding (i) the Committed Revolving Line minus (ii) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), minus (iii) the FX Reserve, and minus (iv) the aggregate outstanding Advances hereunder (including any Cash Management Services). Amounts borrowed
under this Section may be repaid and reborrowed during the term of this Agreement.” 

	 	2.	The Loan Agreement shall be amended by deleting the following, appearing as Section 2.1.2(a) thereof, in its entirety: 

  
 “(a) Bank shall issue or have issued Letters of Credit for
Borrower’s account not exceeding (i) the lesser of the Committed Revolving Line or the Borrowing Base minus (ii) the outstanding principal balance of any Advances (including any Cash Management Services), minus (iii) the amount of all Letters
of Credit (including drawn but unreimbursed Letters of Credit), minus (iv) the FX Reserve, plus an amount equal to any Letter of Credit Reserves. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit
and any Letter of Credit Reserve) may not exceed Two Million Dollars ($2,000,000.00). Each Letter of Credit shall have an expiry date no later than 180 days after the Revolving Maturity Date provided Borrower’s Letter of Credit reimbursement
obligation shall be secured by cash on terms acceptable to Bank on and after (i) the Maturity Date of the Committed Revolving Line if the Maturity Date of the Committed Revolving Line is not extended by Bank, or (ii) the occurrence of an Event of
Default hereunder. All Letters of Credit shall be, in form and substance, acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s form of standard Application and Letter of Credit Agreement. Borrower
agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request.” 
  
 and inserting in lieu thereof the following: 
  
 “(a) Bank shall issue or have issued Letters of Credit for Borrower’s account not exceeding (i) the Committed Revolving Line minus (ii) the
outstanding principal balance of any Advances (including any Cash Management Services), minus (iii) the amount of all Letters of Credit (including drawn but unreimbursed Letters of Credit), minus (iv) the FX Reserve, plus an amount equal to any
Letter of Credit Reserves. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed Three Million Dollars ($3,000,000.00). Each Letter of Credit shall have
an expiry date no later than 180 days after the Revolving Maturity Date provided Borrower’s Letter of Credit reimbursement obligation shall be secured by cash on terms acceptable to Bank on and after (i) the Maturity Date of the Committed
Revolving Line if the Maturity Date of the Committed Revolving Line is not extended by Bank, or (ii) the occurrence of an Event of Default hereunder. All Letters of Credit shall be, in form and substance, acceptable to Bank in its sole discretion
and shall be subject to the terms and conditions of Bank’s form of standard Application and Letter of Credit Agreement. Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably
request.” 
  

	 	3.	The Loan Agreement shall be amended by deleting the following, appearing as Section 2.1.3 thereof, in its entirety : 

  
 “2.1.3 Foreign Exchange Sublimit. If there is
availability under the Revolving Line and the Borrowing Base, then Borrower may enter in foreign exchange forward contracts with the Bank under which Borrower commits to purchase from or sell to Bank a set amount of foreign currency more than one
business day after the contract date (the “FX Forward Contract”). Bank shall subtract 10% of each outstanding FX Forward Contract from the foreign exchange sublimit, which sublimit is a maximum of Five Hundred Thousand Dollars (the
“FX Reserve”). The total FX Forward Contracts at any one time 

 
may not exceed 10 times the amount of the FX Reserve. Bank may terminate the FX Forward Contracts if an Event of Default occurs.” 
  
 and insert in lieu thereof the following: 
  
 “2.1.3. Foreign Exchange Sublimit. Borrower may
enter into foreign exchange forward contracts with Bank under which Borrower commits to purchase from or sell to Bank a set amount of foreign currency more than one (1) Business Day after the contract date (the “FX Forward Contract”). Bank
shall subtract 10% of each outstanding FX Forward Contract (the “FX Reserve”) from the foreign exchange sublimit, which sublimit is a maximum of Three Million Dollars ($3,000,000.00). The total FX Forward Contracts at any one time may not
exceed ten (10) times the amount of the FX Reserve. Bank may terminate the FX Forward Contracts if an Event of Default occurs. The Obligations of Borrower relating to this Section may not exceed Revolving Line Availability.” 

 

	 	4.	The Loan Agreement shall be amended by deleting the following, appearing as Section 2.1.4 thereof, in its entirety : 

  
 “2.1.4 Cash Management Services Sublimit.
Borrower may use up to Two Hundred Fifty Thousand Dollars ($250,000.00) for the Bank’s Cash Management Services, which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in
the various cash management services agreements related to such Cash Management Services (the “Cash Management Services”). Such aggregate amounts utilized under the Cash Management Services Sublimit shall at all times reduce the amount
otherwise available for Credit Extensions under the Revolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash Management Services will be treated as Advances under the Revolving Line and
will accrue interest at the interest rate applicable to Advances.” 
  
 and inserting in lieu thereof the following: 
  
 “2.1.4 Cash Management Services Sublimit. Borrower may use up to Three Million Dollars ($3,000,000.00) for the Bank’s Cash Management Services, which may include merchant services, direct
deposit of payroll, business credit card, and check cashing services identified in the various cash management services agreements related to such Cash Management Services (the “Cash Management Services”). Such aggregate amounts utilized
under the Cash Management Services Sublimit shall at all times reduce the amount otherwise available for Credit Extensions under the Revolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any
Cash Management Services will be treated as Advances under the Revolving Line and will accrue interest at the interest rate applicable to Advances.” 
  

	 	5.	The Loan Agreement shall be amended by deleting the Section 2.2 thereof, entitled “Overadvances” in its entirety. 

  

	 	6.	The Loan Agreement shall be amended by deleting the following, appearing as Section 2.3(a) thereof, in its entirety: 

  
 “(a) Interest Rate. Advances accrue interest on the outstanding
principal balance at a per annum rate equal to the aggregate of the Bank’s Prime Rate, and one-half of one percent (0.50%). After an Event of Default, Obligations shall bear interest at four 

 
percent (4.0%) above the rate effective immediately before the Event of Default. The interest rate shall increase or decrease when the Prime Rate changes.
Interest is computed on the basis of a 360 day year for the actual number of days elapsed.” 
  
 and inserting in lieu thereof the following: 
  
 “(a) Interest Rate. Advances accrue interest on the outstanding principal balance at a per annum rate equal to the Prime Rate. After an Event
of Default, Obligations shall bear interest at four percent (4.0%) above the rate effective immediately before the Event of Default. The interest rate shall increase or decrease when the Prime Rate changes. Interest is computed on the basis of a 360
day year for the actual number of days elapsed.” 
  

	 	7.	The Loan Agreement shall be amended by deleting the following, appearing as Section 2.4(b) thereof, in its entirety: 

  
 “(b) Unused Facility Fee. As compensation for Bank’s
maintenance of sufficient funds available for such purpose, Bank shall have earned a Unused Facility Fee (so referred to herein), which fee shall be paid in full quarterly in arrears, in an amount equal to (i) 0.50% of the unused portion of the
available proceeds of the Committed Revolving Line minus that portion of the Committed Revolving Line which is available to be used to issue Letters of Credit and (ii) 0.40% of the unused portion of the available proceeds of the Committed Revolving
Line which are available to be used to issue Letters of Credit, which shall be calculated based on the average daily availability during each such quarter. The Borrower shall not be entitled to any credit, rebate or repayment of any Unused Facility
Fee previously earned by the Bank pursuant to this Section notwithstanding any termination of the within Agreement, or suspension or termination of the Bank’s obligation to make loans and advances hereunder; and” 
  
 and inserting in lieu thereof the following: 
  
 “(b) Unused Facility Fee. As compensation for Bank’s
maintenance of sufficient funds available for such purpose, Bank shall have earned a Unused Facility Fee (so referred to herein), which fee shall be paid in full quarterly in arrears, in an amount equal to (i) 0.50% of the unused portion of the
available proceeds of the Committed Revolving Line minus that portion of the Committed Revolving Line which is available to be used to issue Letters of Credit and (ii) 0.40% of the unused portion of the available proceeds of the Committed Revolving
Line which are available to be used to issue Letters of Credit, which shall be calculated based on the average daily availability during each such quarter. Notwithstanding the foregoing, commencing April 1, 2005, as compensation for Bank’s
maintenance of sufficient funds available for such purpose, Bank shall have earned a Unused Facility Fee, which fee shall be paid quarterly, in arrears, on a calendar year basis, in an amount equal to one-quarter of one percent (0.25%) per annum of
the average unused portion of the Committed Revolving Line, as determined by Bank. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Facility Fee previously earned by the Bank pursuant to this Section notwithstanding
any termination of the within Agreement, or suspension or termination of the Bank’s obligation to make loans and advances hereunder; and” 
  

	 	8.	The Loan Agreement shall be amended by deleting Section 6.2 entitled “Financial Statements, Reports, Certificates” in its entirety, and inserting in lieu thereof the
following: 

 “6.2. Financial Statements, Reports, Certificates. 
  
 (a) Borrower shall deliver to Bank: (i) as soon as
available, but no later than thirty (30) days after the last day of each quarter, a company prepared consolidated and consolidating balance sheet and income statement covering Borrower’s consolidated operations and Borrower’s U.S.
operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) within five (5) days of filing, Borrower shall provide Bank copies of or electronic notice of links to all statements, reports and notices made
available to Borrower’s security holders or to any holders of Subordinated Debt and all reports on Form 10-K filed with the Securities and Exchange Commission; (iii) a prompt report of any legal actions pending or threatened against Borrower or
any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of Three Hundred Thousand Dollars ($300,000.00) or more; (iv) annual financial projections, as approved by the Borrower’s Board of Directors and (v) other
financial information reasonably requested by Bank. 
  
 (b) Borrower shall deliver to Bank, with the quarterly financial statements, a Compliance Certificate signed by a Responsible Officer in the form of Exhibit C. 
  

	 	9.	The Loan Agreement shall be amended by deleting Section 6.7 entitled “Financial Covenants” in its entirety, and inserting in lieu thereof the following:

  
 “6.7 Financial Covenants.

  
 Borrower shall maintain at all times, to be tested as of
the last day of each quarter, unless otherwise notes: 
  
 (a)
Adjusted Quick Ratio. As of the last day of each month, Borrower shall maintain a ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 2.0 to 1.0. Commencing on April 1, 2005, and as of the last day of each quarter
thereafter, Borrower shall maintain a ratio of Quick Assets to Current Liabilities of at least 2.0 to 1.0. 
  
 (b) Maximum Net Loss/Minimum Net Profit. Commencing on April 1, 2005, Borrower (together with its subsidiaries on a consolidated basis) shall have
(i) Net Loss not to exceed (A) Five Hundred Thousand Dollars ($500,000.00) as of the quarter ended December 31, 2004, (B) One Million Dollars ($1,000,000.00) as of the quarters ending March 31, 2005 and June 30, 2005, (C) Five Hundred Thousand
Dollars ($500,000.00) as of the quarter ending September 30, 2005; and (ii) net profit of (A) Five Hundred Thousand Dollars ($500,000.00) as of the quarter ending December 31, 2005, and (B) the greater of either (i) Five Hundred Thousand Dollars
($500,000.00) or (ii) fifty (50.0%) percent of the Borrower’s board of director’s approved operating plan for Borrower for the quarter ending March 31, 2006 ,and as of the last day of each quarter thereafter.” 
  

	 	10.	The Loan Agreement shall be amended by deleting the definitions of “Borrowing Base” and “Eligible Accounts” appearing in Section 13.1 thereof.

  

	 	11.	The Loan Agreement shall be amended by inserting the following definition to appear alphabetically in Section 13.1 thereof: 

 “Total Liabilities” is on any day, obligations that should, under GAAP, be classified
as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt.” 
  

	 	12.	The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof: 

  
 ““Committed Revolving Line” is Five Million Dollars
($5,000,000.00).” 
  
 ““Quick Assets”
is, on any date, the Borrower’s consolidated, unrestricted cash held by Bank, cash equivalents held by Bank, net billed accounts receivable and investments with maturities of fewer than 12 months held by Bank, determined according to GAAP;
provided that until March 1, 2002, unrestricted cash or cash equivalents on deposit by Borrower with Fleet National Bank shall be included as Quick Assets herein.” 
  
 ““Revolving Maturity Date” means March 26, 2005.” 
  
 and inserting in lieu thereof the following: 
  
 ““Committed Revolving Line” is Three Million Dollars
($3,000,000.00).” 
  
 ““Quick Assets”
is, on any date, the Borrower’s consolidated, unrestricted cash held by Bank, cash equivalents held by Bank, net billed accounts receivable and investments with maturities of fewer than 12 months held by Bank, determined according to GAAP;
provided that until March 1, 2002, unrestricted cash or cash equivalents on deposit by Borrower with Fleet National Bank shall be included as Quick Assets herein. Notwithstanding the foregoing, commencing on April 1, 2005, “Quick Assets”
shall be defined as, on any date, Borrower’s unrestricted cash, and investments maintained at Bank, plus accounts receivable determined according to GAAP.” 
  
 ““Revolving Maturity Date” means March 26, 2007”. 
  

	 	13.	The Borrowing Base Certificate appearing as Exhibit C to the Loan Agreement is hereby deleted in its entirety. 

  

	 	14.	The Compliance Certificate appearing as Exhibit D to the Loan Agreement is hereby replaced with the Compliance Certificate attached as Exhibit A hereto.

  

	4.	FEES. Borrower shall pay to Bank a fully earned, non-refundable modification fee equal to Twenty-Five Thousand Dollars and 00/100 ($25,000.00), which fee shall be due on the
date hereof and payable as follows: (i) Twelve Thousand Five Hundred Dollars ($12,500.00) on the date hereof, and (ii) Twelve Thousand Five Hundred Dollars ($12,500.00) on the sooner to occur of (x) an Event of Default, (y) the early termination of
the Loan Agreement, or (z) March 26, 2006. The Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents. 

  

	5.	 RATIFICATION OF NEGATIVE PLEDGE AGREEMENT. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Negative
Pledge/Intellectual Property 

	 	 
Security Agreement dated as of December 28, 2001, between Borrower and Bank, and acknowledges, confirms and agrees that said Negative Pledge Agreement shall
remain in full force and effect. 

  

	6.	RATIFICATION OF PERFECTION CERTIFICATE. Borrower acknowledges, confirms and agrees that the disclosures and information about Borrower provided to Bank in the Perfection
Certificate dated January 9, 2004, is accurate in all material respects, as of the date thereof. 

  

	7.	CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above. 

  

	8.	RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and
confirms that the indebtedness secured thereby includes, without limitation, the Obligations. 

  

	9.	NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no defenses against the obligations to pay any amounts under the Obligations. 

 

	10.	CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and
agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank’s agreement to
modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification
Agreement. 

  

	11.	COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank. 

  
 [The remainder of this page is intentionally left blank] 
  
  

 This Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first written above. 
  

							
	 BORROWER:
  
 BOTTOMLINE TECHNOLOGIES (de), Inc.
	 	 BANK:
  
 SILICON VALLEY BANK

				
	By:	 	 /s/ ROBERT EBERLE

	 	 By:
	 	 /s/ IRINA CASE

	Name:	 	 Robert Eberle

	 	Name:	 	 Irina Case

	Title:	 	 President & COO

	 	Title:	 	 SVP

  
  
  
 56120/510 

 EXHIBIT A 
  

COMPLIANCE CERTIFICATE 
  

	TO:	SILICON VALLEY BANK 

  

	FROM:	BOTTOMLINE TECHNOLOGIES (de), INC. 

  
 The undersigned authorized officer of BOTTOMLINE TECHNOLOGIES (de), INC. certifies that under the terms and conditions of the Loan and Security Agreement between Borrower
and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending
                         with all required covenants except as noted below and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles
(GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance
with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. 
  
 Please indicate compliance status by circling Yes/No under “Complies” column. 
  

									
	 Reporting Covenant

	  	 Required

	  	Complies 

	 Quarterly financial statements with CC
	  	Quarterly within 30 days	  	Yes	  	No
	 10-K
	  	Within 5 days after filing with SEC	  	Yes	  	No
	 Financial Projections
	  	Annually, as approved by Borrower’s BOD	  	Yes	  	No
				
	 Financial Covenant

	  	 Required

	  	 Actual

	  	Complies 

	 Maintain on a Quarterly Basis:
	  	 	  	 	  	 	  	 
	 Minimum Adjusted Quick Ratio
	  	2.0:1.0	  	_____:1.0	  	Yes	  	No
					
	 Profitability(net loss/min profit)
	  	$________*	  	$________	  	Yes	  	No

  
 *As set forth in
Section 6.7(b) of the Agreement. 
  
                     BANK USE ONLY 
  
 Received by:
                                        
             
                         AUTHORIZED SIGNER 
  
 Date:
                                        
                         
  
 Verified:
                                        
                   
                         AUTHORIZED SIGNER 
  
 Date:
                                        
                         
 Compliance Status: Yes No 
 3 
  
 Comments Regarding Exceptions: See Attached. 
  

Sincerely, 
  

 SIGNATURE 
  

 TITLE 
  

 DATE 
  
 872128.21997 Stock Option Plan

 Exhibit 10.5 
  
 POWER INTEGRATIONS, INC. 
 1997 STOCK OPTION PLAN 
 (As Amended Through January 25, 2005) 
  

	 	1.	ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

  
 1.1 Establishment.
The Power Integrations, Inc. 1997 Stock Option Plan (the “Plan”) is hereby established effective as of June 3, 1997 (the “Effective Date”). 
  
 1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its
stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group.

  
 1.3 Term of Plan. The Plan shall continue in effect
until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing
Options granted under the Plan have lapsed. However, all Incentive Stock Options shall be granted, if at all, within ten (10) years from the Effective Date. 
  

	 	2.	DEFINITIONS AND CONSTRUCTION. 

  
 2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below: 
  
 (a)
“Board” means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s). 
  
 (b) “Code” means the Internal Revenue Code of 1986,
as amended, and any applicable regulations promulgated thereunder. 
  
 (c) “Committee” means the Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law. 
  
 (d)
“Company” means Power Integrations, Inc., a Delaware corporation, or any successor corporation thereto. 
  
 (e) “Consultant” means any person, including an advisor, engaged by a Participating Company to render services other than as an
Employee or a Director. 

 (f) “Director” means a member of the Board or of the board of directors of any
other Participating Company. 
  
 (g)
“Disability” means the inability of the Optionee, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Optionee’s position with the Participating Company group because of
the sickness or injury of the Optionee. 
  
 (h)
“Employee” means any person treated as an employee (including an officer or a Director who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to
such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. 
  
 (i) “Exchange Act” means the Securities Exchange Act
of 1934, as amended. 
  
 (j) “Fair Market
Value” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its sole discretion, or by the Company, in its sole discretion, if such determination is expressly allocated to the Company
herein, subject to the following: 
  
 (i) If, on such date,
there is a public market for the Stock, the Fair Market Value of a share of Stock shall be the closing sale price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted
on the Nasdaq National Market, the Nasdaq Small-Cap Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in the Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock
was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its sole discretion. 
  
 (ii) If, on such date, there is no public market for the Stock, the Fair Market Value of a share of Stock shall be as determined by the Board without
regard to any restriction other than a restriction which, by its terms, will never lapse. 
  
 (k) “Incentive Stock Option” means an Option intended to be (as set forth in the Option Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the
Code. 
  
 (l) “Insider” means an officer
or a Director of the Company or any other person whose transactions in Stock are subject to Section 16 of the Exchange Act. 

 (m) “Nonstatutory Stock Option” means an Option not intended to be (as set forth
in the Option Agreement) or which does not qualify as an Incentive Stock Option. 
  
 (n) “Option” means a right to purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to the terms and conditions of the Plan. An Option may be either an Incentive Stock
Option or a Nonstatutory Stock Option. 
  
 (o) “Option
Agreement” means a written agreement between the Company and an Optionee setting forth the terms, conditions and restrictions of the Option granted to the Optionee and any shares acquired upon the exercise thereof. 
  
 (p) “Optionee” means a person who has been granted
one or more Options. 
  
 (q) “Parent
Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code. 
  
 (r) “Participating Company” means the Company or any Parent Corporation or Subsidiary Corporation. 
  
 (s) “Participating Company Group” means, at any
point in time, all corporations collectively which are then Participating Companies. 
  
 (t) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation. 
  
 (u) “Section 162(m)” means Section 162(m) of the Code. 
  
 (v) “Securities Act” means the Securities Act of
1933, as amended. 
  
 (w) “Service” means
an Optionee’s employment or service with the Participating Company Group, whether in the capacity of an Employee, a Director or a Consultant. The Optionee’s Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Optionee renders Service to the Participating Company Group or a change in the Participating Company for which the Optionee renders such Service, provided that there is no interruption or termination of the Optionee’s
Service. Furthermore, an Optionee’s Service with the Participating Company Group shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved by the Company; provided,
however, that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed to have terminated unless the Optionee’s right to return to Service with the Participating
Company Group is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the
Optionee’s Option Agreement. The Optionee’s Service shall be deemed to have terminated either upon an actual termination of Service or upon 

 the corporation for which the Optionee performs Service ceasing to be a Participating Company. Subject to the foregoing,
the Company, in its sole discretion, shall determine whether the Optionee’s Service has terminated and the effective date of such termination. 
  
 (x) “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2. 
  
 (y) “Subsidiary Corporation” means any present or
future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code. 
  
 (z) “Ten Percent Owner Optionee” means an Optionee who, at the time an Option is granted to the Optionee, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code. 
  
 2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or
interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the
context clearly requires otherwise. 
  

	 	3.	ADMINISTRATION. 

  
 3.1 Administration by the Board. The Plan shall be administered by the Board. All questions of interpretation of the
Plan or of any Option shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. Any officer of a Participating Company shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter,
right, obligation, determination or election. 
  
 3.2
Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act,
the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3. 
  
 3.3 Powers of the Board. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Board shall have the full and final power and authority,
in its sole discretion: 
  
 (a) to determine the persons to
whom, and the time or times at which, Options shall be granted and the number of shares of Stock to be subject to each Option; 
  
 (b) to designate Options as Incentive Stock Options or Nonstatutory Stock Options; 

 (c) to determine the Fair Market Value of shares of Stock or other property; 
  
 (d) to determine the terms, conditions and restrictions applicable to each
Option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for shares purchased upon the exercise of the Option, (iii) the
method for satisfaction of any tax withholding obligation arising in connection with the Option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the Option or
the vesting of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the Optionee’s termination of Service with the Participating Company Group on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan; 
  
 (e) to approve one or more forms of Option Agreement; 
  
 (f) to amend, modify, extend, cancel, renew, reprice or otherwise adjust the exercise price of, or grant a new Option in substitution for, any Option or
to waive any restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof; 
  
 (g) to accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise thereof, including
with respect to the period following an Optionee’s termination of Service with the Participating Company Group; 
  
 (h) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan,
including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options; and 
  
 (i) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent consistent with the Plan and applicable law.

  
 3.4 Committee Complying with Section
162(m). If a Participating Company is a “publicly held corporation” within the meaning of Section 162(m), the Board may establish a Committee of “outside directors” within the meaning of Section 162(m) to
approve the grant of any Option which might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section 162(m).

	 	4.	SHARES SUBJECT TO PLAN. 

  
 4.1 Maximum Number of Shares Issuable.
Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be the sum of (a) 1,386,764 shares, and (b) the number of shares of Stock, as of the Effective Date, subject to
outstanding options granted pursuant to the Company’s 1988 Stock Option Plan (the “Prior Plan”), which amount is 2,877,690 (the “Prior Plan Options”), resulting in an aggregate total of 4,264,454, increased on
the first day of each fiscal year of the Company beginning on or after January 1, 1999 by a number of shares equal to five percent (5%) and on and after January 1, 2006 by a number of shares equal to three and one-half percent (3.5%) of the number
of shares of Stock issued and outstanding on the last day of the preceding fiscal year (the “Share Reserve”). The Share Reserve shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.
Notwithstanding the foregoing, the Share Reserve, determined at any time, shall be reduced by the number of shares remaining subject to outstanding Prior Plan Options. In addition, except as adjusted pursuant to Section 4.2, in no event shall more
than 6,704,454 shares of Stock be cumulatively available for issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share Issuance Limit”); provided, however, that the ISO Share Issuance Limit shall be increased to
9,476,454 shares of Stock effective as of January 1, 2004. If an outstanding Option for any reason expires or is terminated or canceled or shares of Stock acquired, subject to repurchase, upon the exercise of an Option are repurchased by the
Company, the shares of Stock allocable to the unexercised portion of such Option, or such repurchased shares of Stock, shall again be available for issuance under the Plan. 
  
 4.2 Adjustments for Changes in Capital Structure. In the event of any stock dividend,
stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan, in the ISO
Share Issuance Limit set forth in Section 4.1, the Section 162(m) Grant Limit set forth in Section 5.4 and to any outstanding Options and in the exercise price per share of any outstanding Options. If a majority of the shares which are of the same
class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 8.1) shares of another corporation (the “New
Shares”), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise price per share of,
the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its sole discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be
rounded up or down to the nearest whole number, as determined by the Board, and in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to the Option. The adjustments
determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive. 

	 	5.	ELIGIBILITY AND OPTION LIMITATIONS. 

  
 5.1 Persons Eligible for Options. Options
may be granted only to Employees, Consultants, and Directors. For purposes of the foregoing sentence, “Employees,” “Consultants” and “Directors” shall include prospective
Employees, prospective Consultants and prospective Directors to whom Options are granted in connection with written offers of an employment or other service relationship with the Participating Company Group. Eligible persons may be granted more than
one (1) Option. 
  
 5.2 Option Grant
Restrictions. Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective Employee upon the
condition that such person become an Employee shall be deemed granted effective on the date such person commences service with a Participating Company, with an exercise price determined as of such date in accordance with Section 6.1. 
  
 5.3 Fair Market Value Limitation. To the
extent that options designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by an Optionee for the first time during any calendar year for stock having a
Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section 5.3, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different
limitation from that set forth in this Section 5.3, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 5.3, the Optionee may designate which portion of such Option the Optionee is exercising. In the absence of
such designation, the Optionee shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. 
  
 5.4 Section 162(m) Grant Limit. Subject to adjustment as provided in
Section 4.2, at any such time as a Participating Company is a “publicly held corporation” within the meaning of Section 162(m), no Employee shall be granted one or more Options within any fiscal year of the Company which in the aggregate
are for the purchase of more than four hundred thousand (400,000) shares of Stock (the “Section 162(m) Grant Limit”). An Option which is canceled in the same fiscal year of the Company in which it was granted shall
continue to be counted against the Section 162(m) Grant Limit for such period. 

	 	6.	TERMS AND CONDITIONS OF OPTIONS. 

  
 Options shall be evidenced by Option Agreements specifying the number of
shares of Stock covered thereby, in such form as the Board shall from time to time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement. Option
Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions: 
  
 6.1 Exercise Price. The exercise price for each Option shall be established in the sole discretion of the Board;
provided, however, that (a) the exercise price per share for an Incentive Stock Option shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option, (b) the exercise price per share for a Nonstatutory
Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option, and (c) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall have an exercise
price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock
Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a)
of the Code. 
  
 6.2 Exercise
Period. Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria, and restrictions as shall be determined by the Board and set forth in the Option
Agreement evidencing such Option; provided, however, that (a) no Incentive Stock Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten
Percent Owner Optionee shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, and (c) no Option granted to a prospective Employee, prospective Consultant or prospective Director may become
exercisable prior to the date on which such person commences Service with a Participating Company. 
  
 6.3 Payment of Exercise Price. 
  
 (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of shares of Stock owned by the Optionee having a Fair Market Value (as determined by the Company without regard to any
restrictions on transferability applicable to such stock by reason of federal or state securities laws or agreements with an underwriter for the Company) not less than the exercise price, (iii) by the assignment of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of
the Federal 

 
Reserve System) (a “Cashless Exercise”), (iv) by the Optionee’s promissory note in a form approved by the Company, provided, the
Optionee is not an Insider, (v) by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, or (vi) by any combination thereof. The Board may at any time or from time to time, by adoption
of or by amendment to the standard forms of Option Agreement described in Section 7, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise
restrict one or more forms of consideration. 
  
 (b) Tender
of Stock. Notwithstanding the foregoing, an Option may not be exercised by tender to the Company of shares of Stock to the extent such tender of Stock would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock. Unless otherwise provided by the Board, an Option may not be exercised by tender to the Company of shares of Stock unless such shares either have been owned by the Optionee for more than six
(6) months or were not acquired, directly or indirectly, from the Company. 
  
 (c) Cashless Exercise. The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures
for the exercise of Options by means of a Cashless Exercise. 
  
 (d) Payment by Promissory Note. No promissory note shall be permitted if the exercise of an Option using a promissory note would be a violation of any law. Any permitted promissory note shall be on such terms as the Board
shall determine at the time the Option is granted. The Board shall have the authority to permit or require the Optionee to secure any promissory note used to exercise an Option with the shares of Stock acquired upon the exercise of the Option or
with other collateral acceptable to the Company. Unless otherwise provided by the Board, if the Company at any time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company’s securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent
necessary to comply with such applicable regulations. 
  
 6.4
Tax Withholding. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to such Option
or the shares acquired upon the exercise thereof. Alternatively or in addition, in its sole discretion, the Company shall have the right to require the Optionee, through payroll withholding, cash payment or otherwise, including by means of a
Cashless Exercise, to make adequate provision for any such tax withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon the exercise thereof. 

 
The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Option Agreement
until the Participating Company Group’s tax withholding obligations have been satisfied by the Optionee. 
  
 6.5 Repurchase Rights. Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase
options, or other conditions and restrictions as determined by the Board in its sole discretion at the time the Option is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is
then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. 
  
 6.6 Effect of Termination of Service. 
  
 (a) Option Exercisability. Subject to
earlier termination of the Option as otherwise provided herein, an Option shall be exercisable after an Optionee’s termination of Service as follows: 
  
 (i) Disability. If the Optionee’s Service with the Participating Company Group is terminated because of the Disability of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee (or the Optionee’s guardian or legal representative) at any time prior to the expiration of six (6)
months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the date of expiration of the Option’s term as
set forth in the Option Agreement evidencing such Option (the “Option Expiration Date”). 
  
 (ii) Death. If the Optionee’s Service with the Participating Company Group is terminated because of the death of the Optionee, the Option, to
the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legal representative or other person who acquired the right to exercise the Option by reason of the
Optionee’s death at any time prior to the expiration of six (6) months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any
event no later than the Option Expiration Date. The Optionee’s Service shall be deemed to have terminated on account of death if the Optionee dies within three (3) months after the Optionee’s termination of Service. 
  
 (iii) Other Termination of Service. If the Optionee’s Service
with the Participating Company Group terminates for any reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee’s Service terminated, may be exercised by the
Optionee within three (3) months (or such longer or shorter period of time as determined by the Board, in its sole discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date.

 (b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise
of an Option within the applicable time periods set forth in Section 6.6(a) is prevented by the provisions of Section 12 below, the Option shall remain exercisable until three (3) months after the date the Optionee is notified by the Company that
the Option is exercisable, but in any event no later than the Option Expiration Date. 
  
 (c) Extension if Optionee Subject to Section16(b). Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.6(a) of shares acquired upon the exercise of the
Option would subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Optionee’s termination of Service, or (iii) the Option Expiration Date. 
  

	 	7.	STANDARD FORMS OF OPTION AGREEMENT. 

  
 7.1 Incentive Stock Options. Unless otherwise provided by the Board
at the time the Option is granted, an Option designated as an “Incentive Stock Option” shall comply with and be subject to the terms and conditions set forth in the form of Immediately Exercisable Incentive Stock Option
Agreement adopted by the Board concurrently with its adoption of the Plan and as amended from time to time. 
  
 7.2 Nonstatutory Stock Options. Unless otherwise provided by the Board at the time the Option is granted, an Option designated as a
“Nonstatutory Stock Option” shall comply with and be subject to the terms and conditions set forth in the form of Immediately Exercisable Nonstatutory Stock Option Agreement adopted by the Board concurrently with its adoption
of the Plan and as amended from time to time. 
  
 7.3 Standard
Term of Options. Except as otherwise provided in Section 6.2 or by the Board in the grant of an Option, any Option granted hereunder shall have a term of ten (10) years from the effective date of grant of the Option. 
  
 7.4 Authority to Vary Terms. The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new standard form or
forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement shall be in accordance with the terms of the Plan. Such authority shall include, but not by way of limitation, the
authority to grant Options which are not immediately exercisable. 

	 	8.	CHANGE IN CONTROL. 

  
 8.1 Definitions. 
  
 (a) An “Ownership Change Event” shall be deemed to have occurred if any of the following occurs
with respect to the Company: 
  
 (i) the direct or indirect sale
or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; 
  
 (ii) a merger or consolidation in which the Company is a party; 
  
 (iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company; or 
  
 (iv) a liquidation or dissolution
of the Company. 
  
 (b) A “Change in
Control” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, the “Transaction”) wherein the stockholders of the Company immediately before the Transaction do not
retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding voting stock of the Company or the corporation or corporations to which the assets of the Company were transferred (the “Transferee Corporation(s)”), as the case may
be. For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company
or the Transferee Corporation(s), as the case may be, either directly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final, binding and conclusive. 
  
 8.2 Effect of Change in Control on Options. In the event of a Change in Control, the surviving, continuing, successor,
or purchasing corporation or parent corporation thereof, as the case may be (the “Acquiring Corporation”), may either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding
Options substantially equivalent options for the Acquiring Corporation’s stock. For purposes of this Section 8.2, an Option shall be deemed assumed if, following the Change in Control, the Option confers the right to purchase in accordance with
its terms and conditions, for each share of Stock subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) to which a holder of a share of Stock on the effective date
of the Change in Control was entitled. Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor 

 exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of
the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject
to all applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement. Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding
Options immediately prior to an Ownership Change Event described in Section 8.1(a)(i) constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the
total combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of
the Code, the outstanding Options shall not terminate unless the Board otherwise provides in its sole discretion. 
  

	 	9.	PROVISION OF INFORMATION. 

  
 Each Optionee shall be given access to information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders. 
  

	 	10.	NONTRANSFERABILITY OF OPTIONS. 

  
 During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or
legal representative. No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution, provided, however, that to the extent permitted by the Board and set forth in the agreement evidencing
such Option, a Nonstatutory Stock Option may be transferred pursuant to a domestic relations order (as defined in Section 414(p) of the Code). 
  

	 	11.	COMPLIANCE WITH SECURITIES LAW. 

  
 The grant of Options and the issuance of shares of Stock upon exercise of
Options shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. Options may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of
any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Option may be exercised unless (a) a
registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel to the Company, the shares issuable upon
exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority,
if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite
authority shall not 

 have been obtained. As a condition to the exercise of any Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 
  

	 	12.	INDEMNIFICATION. 

  

In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company
Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including
attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure
to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct
in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same. 
  

	 	13.	TERMINATION OR AMENDMENT OF PLAN. 

  
 The Board may terminate or amend the Plan at any time. However, subject to
changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan
(except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s stockholders under
any applicable law, regulation or rule. In any event, no termination or amendment of the Plan may adversely affect any then outstanding Option or any unexercised portion thereof, without the consent of the Optionee, unless such termination or
amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option or is necessary to comply with any applicable law, regulation or rule.

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