Document:

Form of Stock Appreciation Rights Award Agreement und. 2008 Stock Incentive Plan

 Exhibit 10.13 
 THEROX, INC. 
 STOCK APPRECIATION RIGHTS AWARD AGREEMENT 
 UNDER THE COMPANY’S 
 2008 STOCK
INCENTIVE PLAN 
 THIS STOCK APPRECIATION RIGHTS AWARD AGREEMENT (the “Agreement”) is entered into as of
            , 20     (the “Grant Date”), by TherOx, Inc., a Delaware corporation (the “Company”), and
             (the “Holder”) pursuant to the Company’s 2008 Stock Incentive Plan (the “Plan”). Any capitalized term not defined herein shall have the same
meaning ascribed to it in the Plan. 
 R E C I T A L S: 
 A. Holder is an employee or director, and in connection therewith has rendered services for and on behalf of the Company or its Affiliates. 
 B. The Company desires to issue Stock Appreciation Rights to Holder to provide an incentive for Holder to remain a Service Provider of the Company and to
exert added effort towards its growth and success. 
 NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and for
other good and valuable consideration, the parties agree as follows: 
 1. Grant of Stock Appreciation Rights.
The Company hereby grants to the Holder under the Plan and on the terms and on conditions set forth in this Agreement stock appreciation rights with respect to             
(            ) shares of the Company’s Common Stock at the “Base Value” per share set forth in Section 2 below (the “SARs”). 
 2. Base Value and Benefit. The Base Value of each SAR is
$            , which is equal to the Fair Market Value of a share of the Company’s Common Stock on the Grant Date. Each SAR entitles Holder to receive from the Company upon the
settlement of the SAR an amount, payable in shares of the Company’s Common Stock, equal to the excess, if any, of (a) the Fair Market Value of one share of Stock on the date of settlement, over (b) the Base Value per share.

 3. Vesting of SARs. 
 (a) The SARs shall vest as follows: 
 [TIME-BASED TEMPLATE] 
 The right to exercise SARs shall vest in installments, and such SARs shall be exercisable from time to time in whole or in
part as to any vested installment (“Vested Shares”).              percent (    %) of the Shares shall become Vested Shares on the first
anniversary of the “Vesting Commencement Date,” and the remainder shall vest in equal monthly installments during the subsequent              (__) months, such that one
hundred percent (100%) of the Shares shall be Vested Shares on the              (__) anniversary of the “Vesting Commencement Date.” For these purposes, the Vesting
Commencement Date shall be the Optionee’s date of hire with the Company [OPTIONAL:: SPECIFY OTHER VESTING COMMENCEMENT DATE             ]. No additional Shares shall vest
after the date of termination of Holder’s Continuous Service (as 

 
defined below), but as to any Vested Shares, SARs shall continue to be exercisable in accordance with Section 4 hereof. with respect to that number of
Shares that have vested as of the date of termination of Holder’s Continuous Service. 
 [PERFORMANCE-BASED TEMPLATE] 
  

			
	 Upon the Attainment of the following
Performance Goals
	  	 This Option shall be Exercisable as to

	[Performance Goal]	  	___________ (__________) Shares
	[Performance Goal]	  	___________ (__________) Shares
	[Performance Goal]	  	___________ (__________) Shares

 No additional Shares shall vest after the date of termination of Holder’s “Continuous Service” (as
defined below) regardless of whether or not the relevant Performance Goal is subsequently achieved, but as to any Vested Shares, SARs shall continue to be exercisable in accordance with Section 4 hereof with respect to that number of shares
that have vested as of the date of termination of Holder’s Continuous Service. 
 ********************************** 
 As used herein, the term “Continuous Service” means (i) employment by either the Company or any parent or subsidiary corporation of the Company, or by any
successor entity following a Change in Control, which is uninterrupted except for vacations, illness, or leaves of absence which are approved in writing by the Company or any of such other employer corporations, if applicable, or (ii) service
as a member of the Board of Directors of the Company until Holder resigns, is removed from office, or Holder’s term of office expires and he or she is not reelected. The Holder’s Continuous Service shall not terminate merely because of a
change in the capacity in which the Holder renders service to the Company or a corporation or subsidiary corporation described in clause (i) above. For example, a change in the Holder’s status from an employee to a Non-Employee Director
will not constitute an interruption of the Holder’s Continuous Service, provided there is no interruption in the Holder’s performance of such services. Notwithstanding the foregoing, for any employee of a subsidiary of the Company located
outside the United States, such employee’s Continuous Service shall be deemed terminated upon the commencement of such employee’s “garden leave period,” “notice period,” or other similar period where such employee is
being compensated by such subsidiary but not actively providing service to such subsidiary. 
 (b) In the event of a Change in
Control (as defined in Section 2.4 of the Plan) of the Company, any surviving corporation or acquiring corporation (or parent thereof) may assume the SARs or shall substitute similar awards (including an award to acquire the same consideration
paid to the stockholders in such Change in Control). Notwithstanding the foregoing, if the Change in Control is not approved by a majority of the Continuing Directors (as defined below), or if any surviving corporation or acquiring corporation does
not assume the SARs or agree to substitute similar awards for the SARs covered by this Agreement, the SARs shall fully vest and Holder shall have the right to exercise such SARs immediately prior to the consummation of such Change in Control. If in
connection with a Change in Control approved by a majority of the Continuing Directors the acquiring or successor entity (or parent thereof) provides for the continuance or assumption of this Agreement or the substitution for this Agreement of a new
agreement of 

  

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comparable value, then vesting of the SARs shall not accelerate; provided, however, in the event of an Involuntary Termination (as defined below) of
Holder’s Continuous Service within twelve (12) months following such Change in Control, the SARs shall accelerate and become fully vested effective upon such termination. For purposes of this Section 3(b), the following terms shall
have the meanings set forth below: 
 “Involuntary Termination” shall mean the termination of Optionee’s
Continuous Service by reason of: 
 Holder’s involuntary dismissal or discharge by the Company, or by the acquiring or
successor entity (or parent or any subsidiary thereof employing the Holder) for reasons other than Misconduct (as defined below), or 
 Holder’s voluntary resignation following (x) a change in Holder’s position with the Company, the acquiring or successor entity (or parent or any subsidiary thereof) which materially reduces
Holder’s duties and responsibilities or the level of management to which Holder reports, (y) a material reduction in Holder’s level of compensation (including base salary, fringe benefits and target bonus under any performance based
bonus or incentive programs) by more than ten percent (10%), or (z) a relocation of Holder’s principal place of employment by more than thirty (30) miles, provided and only if such change, reduction or relocation is effected without
Holder’s written consent. 
 “Misconduct” shall mean (A) the commission of any act of fraud, embezzlement or dishonesty
by Holder which materially and adversely affects the business of the Company, the acquiring or successor entity (or parent or any subsidiary thereof), (B) any unauthorized use or disclosure by Holder of confidential information or trade secrets
of the Company, the acquiring or successor entity (or parent or any subsidiary thereof), (C) the continued refusal or omission by the Holder to perform any material duties required of him if such duties are consistent with duties customary for
the position held with the Company, the acquiring or successor entity (or parent or any subsidiary thereof), (D) any material act or omission by the Holder involving malfeasance or gross negligence in the performance of Holder’s duties to,
or material deviation from any of the policies or directives of, the Company or the acquiring or successor entity (or parent or any subsidiary thereof), (E) conduct on the part of Holder which constitutes the breach of any statutory or common
law duty of loyalty to the Company, the acquiring or successor entity (or parent or any subsidiary thereof), or (F) any illegal act by Holder which materially and adversely affects the business of the Company, the acquiring or successor entity
(or parent or any subsidiary thereof), or any felony committed by Holder, as evidenced by conviction thereof. The provisions of this Section shall not limit the grounds for the dismissal or discharge of Holder or any other individual in the service
of the Company, the acquiring or successor entity (or parent or any subsidiary thereof). 
 “Continuing Director” means any member
of the Board of Directors of the Company who was a member of the Board prior to the adoption of the Plan, and any person who is subsequently elected to the Board if such person is recommended or approved by a majority of the Continuing Directors.

 4. Term of SARs and Limitations on Right to Exercise. The term of the SARs is a period of ten (10) years,
expiring on the tenth (10th) anniversary of the Grant Date (the “Expiration Date”). To the extent not previously exercised, the SARs will lapse three months after the termination of the Holder’s employment with the Company for
any reason. The Committee may, 

  

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subject to Section 9(c) below, prior to the lapse of the SARs under the circumstances described in this Section, extend the time to exercise the SARs.
If the Holder or his or her beneficiary exercises a SAR after termination of employment, the SARs may be exercised only with respect to the shares that were otherwise vested as of such termination. 
 5. Value and Settlement of SARs. The value due upon exercise or settlement of the SARs is calculated as follows: the number of SARs
being exercised or settled, times the excess, if any, of (i) the Fair Market Value of one share of Stock on the date of exercise or settlement, over (ii) the Base Value of the SAR. Upon settlement of the SARs, the related delivery of
shares of Common Stock shall be subject to the tax withholding provisions of Section 9. The value of any fractional shares of Common Stock shall be paid in cash at the time certificates are delivered to Holder in payment of the SARs.

 6. Dividend Equivalents. No dividend equivalent rights shall attach to the SARs granted hereby. 
 7. Adjustments to SARs. Upon or in contemplation of any reclassification, recapitalization, stock split, reverse stock split or stock
dividend; any merger, combination, consolidation or other reorganization; any split-up, spin-off, or similar extraordinary dividend distribution in respect of the Common Stock (whether in the form of securities or property); any exchange of Common
Stock or other securities of the Company, or any similar, unusual or extraordinary corporate transaction in respect of the Common Stock; or a sale of substantially all the assets of the Company as an entirety; then the Company shall, in such manner,
to such extent (if any) and at such time as it deems appropriate and equitable in the circumstances, make adjustments if appropriate in the number or terms of the SARs as provided in Section 4.3 of the Plan. 
 8. Limitation of Rights. The SARs do not confer to Holder or Holder’s beneficiary any rights of a shareholder of the Company unless
and until shares of Stock are in fact issued to such person in connection with the exercise of the SARs. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any affiliate to terminate Holder’s
employment at any time, nor confer upon Holder any right to continue in the employment of the Company or any affiliate. 
 9. Income
Tax Matters. 
 (a) In order to comply with all applicable federal or state income tax laws or regulations, the
Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Holder, are withheld or collected from Holder.

 (b) The Company shall reasonably determine the amount of any federal, state, local or other income, employment, or other
taxes which the Company or any of its affiliates may reasonably be obligated to withhold with respect to the grant, vesting, or other event with respect to the SARs. The Company may, in its sole discretion, withhold an amount from the proceeds of
the SARs upon exercise or settlement sufficient to satisfy the amount of any such withholding obligations that arise with respect to the vesting of such SARs. The Company may take such action(s) without notice to the Holder and shall remit to the
Holder the balance of any proceeds from withholding such proceeds in excess of the amount reasonably determined to be necessary to satisfy such withholding obligations. The Holder shall have no discretion as to the satisfaction of tax 

  

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withholding obligations in such manner. If, however, any withholding event occurs with respect to the SARs other than upon the vesting of such SARs, or if
the Company for any reason does not satisfy the withholding obligations with respect to the vesting of the SARs as provided above in this Section 9(b), the Company shall be entitled to require a cash payment by or on behalf of the Holder and/or
to deduct from other compensation payable to the Holder the amount of any such withholding obligations. 
 (c) The SARs
evidenced by this Agreement, and the related payments to Holder in settlement of vested SARs, are intended to be taxed under the provisions of Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), and are
not intended to provide and do not provide for the deferral of compensation within the meaning of Section 409A(d) of the Code. The Company reserves the right to amend this Agreement, without the Holder’s consent, to the extent it
reasonably determines from time to time that such amendment is necessary in order to achieve the purposes of this Section. 
 10.
Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and effective (i) when delivered by hand, (ii) when
otherwise delivered against receipt therefor, or (iii) three (3) business days after being mailed if sent by registered or certified mail, postage prepaid, return receipt requested. Any notice shall be addressed to the parties as follows
or at such other address as a party may designate by notice given to the other party in the manner set forth herein: 
 (a) if
to the Company: 
 TherOx, Inc. 
 ______________ 
 ______________ 
 (b) if to the Holder, at the address shown on the signature page of this Agreement or at his most recent address as shown in the
employment or stock records of the Company. 
 11. Binding Obligations. All covenants and agreements herein contained by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the parties hereto and their permitted successors and assigns. 
 12. Captions and Section Headings. Captions and section headings used herein are for convenience only, and are not part of this Agreement and shall not be used in construing it. 
 13. Amendment. This Agreement may not be amended, waived, discharged, or terminated other than by written agreement of the parties.

 14. Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior or contemporaneous written or oral agreements and understandings of the parties, either express or implied. 
 15. Conflict of Provisions. The terms contained in the Plan are incorporated into and made a part of this Agreement and this Agreement shall be governed by and construed in accordance with the Plan. In
the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall be controlling and determinative. 
  

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 16. Assignment. Holder shall have no right, without the prior written consent of the
Company, to (i) sell, assign, mortgage, pledge or otherwise transfer any interest or right created hereby, or (ii) delegate his or her duties or obligations under this Agreement. This Agreement is made solely for the benefit of the parties
hereto, and no other person, partnership, association or corporation shall acquire or have any right under or by virtue of this Agreement. 
 17. “Market Stand-Off” Agreement. Holder agrees that, if requested by the Company or the managing underwriter of any proposed public offering of the Company’s securities (including any acquisition transaction
where Company securities will be used as all or part of the purchase price), Holder will not sell or otherwise transfer or dispose of any Shares held by Holder without the prior written consent of the Company or such underwriter, as the case may be,
during such period of time, not to exceed 180 days following the effective date of the registration statement filed by the Company with respect to such offering, as the Company or the underwriter may specify. 
 18. Severability. Should any provision or portion of this Agreement be held to be unenforceable or invalid for any reason, the remaining
provisions and portions of this Agreement shall be unaffected by such holding. 
 19. Applicable Law. This Agreement shall be
construed in accordance with the laws of the State of California without reference to choice of law principles, as to all matters, including, but not limited to, matters of validity, construction, effect or performance. 
 20. No Agreement to Employ. Nothing in this Agreement shall affect any right with respect to continuance of employment by the Company or
any of its subsidiaries. The right of the Company or any of its subsidiaries to terminate at will the Holder’s employment at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically reserved, subject to
any other written employment agreement to which the Company and Holder may be a party. 
 21. Attorneys’ Fees. If any
party shall bring an action in law or equity against another to enforce or interpret any of the terms, covenants and provisions of this Agreement, the prevailing party in such action shall be entitled to recover reasonable attorneys’ fees and
costs. 
 22. Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall
constitute one agreement and any party hereto may execute this Agreement by signing any such counterpart. This Agreement shall be binding upon Holder and the Company at such time as the Agreement, in counterpart or otherwise, is executed by Holder
and the Company. 
 [Signature Page] 
  

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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

  

									
	THE COMPANY:	 		 		 	HOLDER:
			
	THEROX, INC.	 		 	
				
		 		 		 	 
	By:	 	 	 		 		 	(Print Name)
					
	Name:	 	 	 		 		 	
					
	Title:	 	 	 		 		 	
		 		 		 		 	Address:
					
		 		 		 		 	 
					
		 		 		 		 	 

  

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 CONSENT AND RATIFICATION OF SPOUSE 
 The undersigned, the spouse of             , a party to the attached Stock
Appreciation Rights Award Agreement (the “Agreement”), dated as of             , hereby consents to the execution of said Agreement by such party; and ratifies, approves,
confirms and adopts said Agreement, and agrees to be bound by each and every term and condition thereof as if the undersigned had been a signatory to said Agreement, with respect to the Stock Appreciation Rights (as defined in the Agreement) made
the subject of said Agreement in which the undersigned has an interest, including any community property interest therein. 
 I also
acknowledge that I have been advised to obtain independent counsel to represent my interests with respect to this Agreement but that I have declined to do so and I hereby expressly waive my right to such independent counsel. 
  

					
			
	Date: ______________________	 		 	  
		 		 	(Signature)
			
		 		 	  
		 		 	(Print Name)2008 Employee Stock Purchase Plan

 Exhibit 10.14 
 THEROX, INC. 
 2008 EMPLOYEE STOCK PURCHASE PLAN 
 This EMPLOYEE STOCK PURCHASE PLAN (the “Plan”) is hereby established by Therox, Inc., a Delaware corporation (the
“Company”) as of the Effective Date (as defined in Section 2.3). 
 ARTICLE I 
 PURPOSE OF THE PLAN 
 1.1
Purpose. The Company has determined that it is in its best interests to provide an incentive to attract and retain employees and to increase employee morale by providing a program through which employees may acquire a proprietary interest
in the Company through the purchase of shares of the common stock of the Company (“Company Stock”). The Plan is hereby established by the Company to permit employees to subscribe for and purchase directly from the Company shares of the
Company Stock at a discount from the market price, and to pay the purchase price in installments by payroll deductions. The Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue
Code of 1986, as amended from time to time (the “Code”). The provisions of the Plan are to be construed in a manner consistent with the requirements of Section 423 of the Code. The Plan is not intended to be an employee benefit plan
under the Employee Retirement Income Security Act of 1974, and therefore is not required to comply with that Act. 
 ARTICLE II

 DEFINITIONS 
 2.1 Compensation. “Compensation” means the (i) regular base salary paid to a Participant by the Company during such individual’s period of participation in one or more Offering Periods under the Plan plus
(ii) any pre-tax contributions made by the Participant to any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit program now or hereafter established by the Company or any of its affiliates. The
following items of compensation shall be included in Compensation: all (i) overtime payments, commissions that function as base salary equivalents, vacation and sick leave compensation and bonuses. The following items of compensation shall not
be included in Compensation: (i) commissions that do not function as base salary equivalents, (ii) profit-sharing distributions (iii) incentive compensation and incentive payments and (iv) any and all contributions (other than
Code Section 401(k) or Code Section 125 contributions) made on the Participant’s behalf by the Company or any of its affiliates under any employee benefit or welfare plan now or hereafter established. 
 2.2 Employee. “Employee” means each person currently employed by the Company or any of its operating subsidiaries, any portion of
whose income is subject to withholding of income tax or for whom Social Security retirement contributions are made by the Company or any of its operating subsidiaries. 
 2.3 Effective Date. “Effective Date” means the date the Company’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission is declared effective for the
Company’s initial public offering. 
 2.4 5% Owner. “5% Owner” means an Employee who, immediately after the
grant of any rights under the Plan, would own Company Stock or hold outstanding options to purchase Company Stock possessing 5% or more of the total combined voting power of all classes of stock of the Company. For purposes of this Section, the
ownership attribution rules of Code Section 425(d) shall apply. 
 2.5 Grant Date. “Grant Date” means the first
day of each Offering Period (May 1 and November 1) under the Plan. For the first Offering Period, the Grant Date shall be the Effective Date. 
 2.6 Participant. “Participant” means an Employee who has satisfied the eligibility requirements of Section 3.1 and has become a participant in the Plan in accordance with Section 3.2.

 2.7 Plan Year. “Plan Year” means the twelve consecutive month period ending on October 31. 

 2.8 Offering Period. “Offering Period” means the consecutive six-month periods
from November 1 through April 30 and May 1 through October 31 of each calendar year. However, the first Offering Period shall commence on the Effective Date and end April 30, 2009, regardless of whether such initial Offering
Period is more or less than six months. 
 2.9 Purchase Date. “Purchase Date” means the last day of each Offering
Period (April 30 and October 31). 
 ARTICLE III 
 ELIGIBILITY AND PARTICIPATION 
 3.1 Eligibility. Each Employee of the Company or
any of its operating subsidiaries, who, on the Grant Date, is customarily engaged on a regularly-scheduled basis of more than twenty (20) hours per week and who has been employed for at least thirty (30) days (or, for the initial Offering
Period only, such Employees who are employed on the Effective Date) in the rendition of personal services to the Company, or any of its operating subsidiaries, may become a Participant in the Plan on the Grant Date coincident with or next following
his satisfaction of such requirements of employment with the Company or any of its operating subsidiaries. 
 3.2
Participation. An Employee who has satisfied the eligibility requirements of Section 3.1 may become a Participant in the Plan upon his or her completion and delivery to the Human Resources Department of the Company of a subscription
agreement provided by the Company (the “Subscription Agreement”) authorizing payroll deductions. Payroll deductions for a Participant shall commence on the Grant Date coincident with or next following the filing of the Participant’s
Subscription Agreement and shall remain in effect until revoked by the Participant by the filing of a notice of withdrawal from the Plan under Article VIII or by the filing of a new Subscription Agreement providing for a change in the
Participant’s payroll deduction rate under Section 5.2. 
 3.3 Special Rules. Under no circumstances shall:

 (a) A 5% Owner be granted a right to purchase Company Stock under the Plan; or 
 (b) A Participant be entitled to purchase Company Stock under the Plan which, when aggregated with all other employee stock purchase plans
of the Company, exceeds an amount equal to the Aggregate Maximum. “Aggregate Maximum” means an amount equal to twenty-five thousand dollars ($25,000) worth of Company Stock (determined using the fair market value of such Company Stock at
each applicable Grant Date) during each Plan Year. 
 (c) The number of shares of Company Stock purchasable by a Participant
on any Purchase Date exceeds 2,500 shares, subject to necessary adjustments under Section 10.4 
 ARTICLE IV 
 OFFERING PERIODS 
 The initial grant of the
right to purchase Company Stock under the Plan shall commence on the Effective Date and terminate on the next Purchase Date. Thereafter, the Plan shall provide for Offering Periods commencing on each Grant Date and terminating on the next following
Purchase Date. 
  

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 ARTICLE V 
 PAYROLL DEDUCTIONS 
 5.1 Participant Election. Within the Subscription
Agreement, each Participant shall designate the amount of payroll deductions to be made from his or her paycheck to purchase Company Stock under the Plan. The amount of payroll deductions shall be designated as a whole percentage of
Participant’s Compensation, not to exceed twenty percent (20%) of Compensation for any Plan Year. The amount so designated within the Subscription Agreement shall be effective as of the next Grant Date and shall continue until terminated
or altered in accordance with Section 5.2 below. 
 5.2 Changes in Election. A Participant may terminate participation in
the Plan at any time prior to the close of an Offering Period as provided in Article VIII. A Participant may decrease or increase the rate of payroll deductions at any time during any Offering Period by completing and delivering to the Human
Resources Department of the Company a new Subscription Agreement setting forth the desired change. A Participant may also terminate payroll deductions and have accumulated deductions for the Offering Period applied to the purchase of Company Stock
as of the next Purchase Date by completing and delivering to the Human Resources Department a new Subscription Agreement setting forth the desired change. Any change under this Section shall become effective on the next payroll period (to the extent
practical under the Company’s payroll practices) following the delivery of the new Subscription Agreement. 
 5.3 Participant
Accounts. The Company shall establish and maintain a separate account (“Account”) for each Participant. The amount of each Participant’s payroll deductions shall be credited to his or her Account. No interest will be paid or
allowed on amounts credited to a Participant’s Account. All payroll deductions received by the Company under the Plan are general corporate assets of the Company and may be used by the Company for any corporate purpose. The Company is not
obligated to segregate such payroll deductions. 
 ARTICLE VI 
 GRANT OF PURCHASE RIGHTS 
 6.1 Right to Purchase Shares. On
each Grant Date, each Participant shall be granted a right to purchase at the price determined under Section 6.2 that number of whole shares of Company Stock that can be purchased or issued by the Company based upon that price with the amounts
held in his Account, subject to the limits set forth in Section 3.3. In the event that there are amounts held in a Participant’s Account that are not used to purchase Company Stock, such amounts shall remain in the Participant’s
Account and shall be eligible to purchase Company Stock in any subsequent Offering Period. 
 6.2 Purchase Price. The purchase
price for any Offering Period shall be the lesser of: 
 (a) 85% of the Fair Market Value of Company Stock on the Grant Date;
or 
 (b) 85% of the Fair Market Value of Company Stock on the Purchase Date. 
 6.3 Fair Market Value. “Fair Market Value” means for the initial Grant Date (which is the Effective Date), the price per share at
which the Common Stock is to be sold to the public in the initial public offering of the Common Stock. For any subsequent date thereafter, “Fair Market Value” on any given date means the value of one share of Company Stock, determined as
follows: 
 (a) If the Company Stock is then listed or admitted to trading on the Nasdaq National Market System or a stock
exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on the Nasdaq National Market System or principal stock exchange on which the Company Stock is then listed or admitted to
trading, or, if no closing sale price is quoted or no sale takes place on such day, then the Fair Market Value shall be the closing sale price of the Company Stock on the Nasdaq National Market System or such exchange on the next preceding day on
which a sale occurred. 
  

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 (b) If the Company Stock is not then listed or admitted to trading on the Nasdaq National
Market System or a stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid and asked prices of the Company Stock in the over-the-counter market on the date of valuation. 
 (c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the
Administrator (defined in Section 9.1(a) below) in good faith using any reasonable method of valuation, which determination shall be conclusive and binding on all interested parties. 
 ARTICLE VII 
 PURCHASE OF STOCK 
 7.1 Purchase of Company Stock. Absent an election by the Participant to terminate and have his or her Account returned, on each Purchase
Date, the Plan shall purchase on behalf of each Participant the maximum number of whole shares of Company Stock at the purchase price determined under Section 6.2 above as can be purchased with the amounts held in each Participant’s
Account. The Plan shall not be required to purchase any fractional shares of Company Stock. In the event that there are amounts held in a Participant’s Account that are not used to purchase Company Stock, all such amounts shall be held in the
Participant’s Account and carried forward to the next Offering Period. 
 7.2 Delivery of Company Stock. 
 (a) Company Stock acquired under the Plan may either be issued directly to Participants or may be issued to a contract administrator (the
“Agent”) engaged by the Administrator under Article IX to carry out responsibilities under the Plan. If the Company Stock is issued in the name of the Agent, all Company Stock so issued (“Plan Held Stock”) shall be held in
the name of the Agent for the benefit of the Plan. The Agent shall maintain accounts for the benefit of the Participants which shall reflect each Participant’s interest in the Plan Held Stock. Such accounts shall reflect the number of shares of
Company Stock that are being held by the Agent for the benefit of each Participant. 
 (b) Any Participant may elect to have
the Company Stock purchased under the Plan from his or her Account be issued directly to the Participant. Any election under this paragraph shall be on the forms provided by the Company and shall be issued in accordance with paragraph (c)
below. 
 (c) In the event that Company Stock under the Plan is issued directly to a Participant, the Company will deliver to
each Participant a number of shares of Company Stock purchased as soon as practicable after the Purchase Date. Shares shall be delivered either in certificated form, or otherwise, as elected by the Company in the exercise of its reasonable
discretion and subject to applicable law. The time of issuance and delivery of shares may be postponed for such period as may be necessary to comply with the registration requirements under the Securities Act of 1933, as amended, the listing
requirements of any securities exchange on which the Company Stock may then be listed, or the requirements under other laws or regulations applicable to the issuance or sale of such shares. 
 ARTICLE VIII 
 WITHDRAWAL 
 8.1 In Service Withdrawals. At any time prior to the Purchase Date of an Offering Period, any Participant may withdraw the amounts held in
his Account by executing and delivering to the Human Resources Department for the Company written notice of withdrawal on the form provided by the Company. In such a case, the entire balance of the Participant’s Account shall be paid to the
Participant, without interest, as soon as is practicable. Upon such notification, that Participant shall cease to participate in the Plan for the remainder of the Offering Period in which the notice is given. Any Employee who has withdrawn under
this Section shall be excluded from participation in the Plan for the remainder of the Offering Period and the next succeeding Offering Period, but may then be reinstated as a Participant for a subsequent Offering Period by executing and delivering
a new Subscription Agreement to the Company. 
  

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 8.2 Termination of Employment. 
 (a) In the event that a Participant’s employment with the Company terminates for any reason, the Participant shall cease to
participate in the Plan on the date of termination. As soon as is practical following the date of termination, the entire balance of the Participant’s Account shall be paid to the Participant or his beneficiary, without interest. 
 (b) A Participant may file a written designation of a beneficiary who is to receive any shares of Company Stock purchased under the Plan
or any cash from the Participant’s Account in the event of his or her death subsequent to a Purchase Date, but prior to delivery of such shares and cash. In addition, a Participant may file a written designation of a beneficiary who is to
receive any cash from the Participant’s Account under the Plan in the event of his death prior to a Purchase Date under paragraph (a) above. 
 (c) Any beneficiary designation under paragraph (b) above may be changed by the Participant at any time by written notice. In the event of the death of a Participant, the Company may rely upon the most recent
beneficiary designation it has on file as being the appropriate beneficiary. In the event of the death of a Participant, and no valid beneficiary designation exists or the beneficiary has predeceased the Participant, the Company shall deliver any
cash or shares of Company Stock to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed to the knowledge of the Company, the Company, in its sole discretion, may deliver such
shares of Company Stock or cash to the spouse or any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 
 ARTICLE IX 
 PLAN ADMINISTRATION

 9.1 Plan Administration. 
 (a) Authority to control and manage the operation and administration of the Plan shall be vested in the Board of Directors of the Company,
or a committee thereof (herein referred to as the “Administrator”). The Administrator shall have all powers necessary to supervise the administration of the Plan and control its operations. 
 (b) In addition to any powers and authority conferred on the Administrator elsewhere in the Plan or by law, the Administrator shall have
the following powers and authority: 
 (i) To designate agents to carry out responsibilities relating to the Plan; 

(ii) To administer, interpret, construe and apply this Plan and to answer all questions which may arise or which may be raised under
this Plan by a Participant, his beneficiary or any other person whatsoever; 
 (iii) To establish rules and procedures from
time to time for the conduct of its business and for the administration and effectuation of its responsibilities under the Plan; and 
 (iv) To perform or cause to be performed such further acts as it may deem to be necessary, appropriate, or convenient for the operation of the Plan. 
 (c) Any action taken in good faith by the Administrator in the exercise of authority conferred upon it by this Plan shall be conclusive
and binding upon a Participant and his or her beneficiaries. All discretionary powers conferred upon the Administrator shall be absolute. 
  

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 9.2 Limitation on Liability. No Employee of the Company or member of the Administrator
shall be subject to any liability with respect to his duties under the Plan unless the person acts fraudulently or in bad faith. To the extent permitted by law, the Company shall indemnify each member of the Administrator, and any other Employee of
the Company with duties under the Plan who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative, or investigative, by reason of the person’s conduct
in the performance of his duties under the Plan. 
 ARTICLE X 
 COMPANY STOCK 
 10.1 Limitations on Purchase of Shares. The
maximum number of shares of Company Stock that shall be made available for future sale under the Plan shall be six hundred thousand (600,000) shares plus an annual increase to be added on the first day of each Plan Year beginning with the Plan
Year Ending October 31, 2010, equal to the lessor of (i) two percent (2%) of the outstanding shares of Common Stock determined on the last day of the immediately preceding Plan Year or (ii) an amount determined by the
Administrator, subject to adjustment under Section 10.4 below. The shares of Company Stock to be sold to Participants under the Plan will be either purchased in broker’s transactions in accordance with the requirements of federal
securities laws or issued by the Company. If the total number of shares of Company Stock that would otherwise be issuable or purchasable pursuant to rights granted pursuant to Section 6.1 of the Plan at the Purchase Date exceeds the number of
shares then available under the Plan, the Company shall make a pro rata allocation of the shares remaining available in as uniform and equitable a manner as is practicable. In such event, the Company shall give written notice of such reduction of
the number of shares to each participant affected thereby and any unused payroll deductions shall be returned to such participant if necessary. 
 10.2 Voting Company Stock. The Participant will have no interest or voting right in shares to be purchased under Section 6.1 of the Plan until such shares have been purchased. 
 10.3 Registration of Company Stock. Shares to be delivered to a Participant under the Plan will be registered in the name of the
Participant unless designated otherwise by the Participant. 
 10.4 Changes in Capitalization of the Company. Subject to any
required action by the stockholders of the Company, the number of shares of Company Stock covered by each right under the Plan which has not yet been exercised and the number of shares of Company Stock which have been authorized for issuance under
the Plan but have not yet been placed under rights or which have been returned to the Plan upon the cancellation of a right, as well as the Purchase Price per share of Company Stock covered by each right under the Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Company Stock resulting from a stock split, stock dividend, spin-off, reorganization, recapitalization, merger, consolidation, exchange of
shares or the like. Such adjustment shall be made by the Board of Directors of the Company, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Company Stock subject to any right granted hereunder.

 10.5 Merger of Company. In the event that the Company at any time proposes to merge into, consolidate with or to enter into
any other reorganization pursuant to which the Company is not the surviving entity (including the sale of substantially all of its assets or a “reverse” merger in which the Company is the surviving entity), the Plan shall terminate, unless
provision is made in writing in connection with such transaction for the continuance of the Plan and for the assumption of rights theretofore granted, or the substitution for such rights of new rights covering the shares of a successor corporation,
with appropriate adjustments as to number and kind of shares and prices, in which event the Plan and the rights theretofore granted or the new rights substituted therefore, shall continue in the manner and under the terms so provided. If such
provision is not made in such transaction for the continuance of the Plan and the assumption of rights theretofore granted or the substitution for such rights of new rights covering the shares of a successor corporation, then the Administrator shall
cause written notice of the proposed transaction to be given to the persons holding rights not less than 10 days prior to the anticipated effective date of the proposed transaction, and, concurrent with the effective date of the proposed
transaction, such rights shall 

  

 6 

 
be exercised automatically, in accordance with Section 7.1, as if such effective date were a Purchase Date of the applicable Offering Period unless a
Participant withdraws from the Plan as provided in Section 8.1. 
 ARTICLE XI 
 MISCELLANEOUS MATTERS 
 11.1
Amendment and Termination. The Plan shall terminate on the ten year anniversary of the Effective Date. Since future conditions affecting the Company cannot be anticipated or foreseen, the Company reserves the right to amend, modify, or
terminate the Plan at any time. Upon termination of the Plan, all benefits shall become payable immediately. Notwithstanding the foregoing, no such amendment or termination shall affect rights previously granted, nor may an amendment make any change
in any right previously granted which adversely affects the rights of any Participant. In addition, no amendment may be made without prior approval of the stockholders of the Company if such amendment would: 
 (a) Increase the number of shares of Company Stock that may be issued under the Plan; 
 (b) Materially modify the requirements as to eligibility for participation in the Plan; or 
 (c) Materially increase the benefits which accrue to Participants under the Plan. 
 11.2 Stockholder Approval. Continuance of the Plan and the effectiveness of any right granted hereunder shall be subject to approval by the
stockholders of the Company, within twelve months before or after the date the Plan is adopted by the Board of Directors of the Company. 
 11.3 Benefits Not Alienable. Benefits under the Plan may not be assigned or alienated, whether voluntarily or involuntarily. Any attempt at assignment, transfer, pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw funds in accordance with Article VIII. 
 11.4 No Enlargement of
Employee Rights. This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Employee or to be consideration for, or an inducement to, or a condition
of, the employment of any Employee. Nothing contained in the Plan shall be deemed to give the right to any Employee to be retained in the employ of the Company or to interfere with the right of the Company to discharge any Employee at any time.

 11.5 Governing Law. To the extent not preempted by Federal law, all legal questions pertaining to the Plan shall be
determined in accordance with the laws of the State of California without regard for conflicts of laws principles. 
 11.6 Non-business
Days. When any act under the Plan is required to be performed on a day that falls on a Saturday, Sunday or legal holiday, that act shall be performed on the next succeeding day which is not a Saturday, Sunday or legal holiday.
Notwithstanding the above, Fair Market Value shall be determined in accordance with Section 6.3. 
 11.7 Compliance With
Securities Laws. Notwithstanding any provision of the Plan, the Administrator shall administer the Plan in such a way to insure that the Plan at all times complies with any requirements of Federal Securities Laws. For example, affiliates may
be required to make irrevocable elections in accordance with the rules set forth under Section 16b-3 of the Securities Exchange Act of 1934. 
  

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