Document:

Consent Order

 Exhibit 10.2 
 FEDERAL DEPOSIT INSURANCE CORPORATION 
 WASHINGTON, D.C. 

 

					
	  
	 	)	 	
	In the Matter of	 	)	 	CONSENT ORDER
		 	)	 	
	Bank of the Carolinas	 	)	 	
	Mocksville, North Carolina	 	)	 	FDIC-11-064b
		 	)	 	
	(INSURED STATE NONMEMBER BANK)	 	)	 	
	  
	 	)	 	

 The Federal Deposit Insurance Corporation (“FDIC”) is the appropriate Federal banking
agency for Bank of the Carolinas, Mocksville, North Carolina, (“Bank”), under section 3(q) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1813(q). 

The Bank, by and through its duly elected and acting Board of Directors (“Board”), has executed a “Stipulation to the
Issuance of a Consent Order” (“Stipulation”), dated April 20, 2011, that is accepted by the FDIC and the North Carolina Commissioner of Banks (the “Commissioner”). The Commissioner may issue an order pursuant to the
provisions of N.C. Gen. Stat. § 53-107.1 (2005). 
 With the Stipulation, the Bank has consented, without admitting or
denying any charges of unsafe or unsound banking practices or violations of law or regulation relating to weaknesses in capital, asset quality, management, earnings, interest rate risk, liquidity, and information technology to the issuance of this
Consent Order (“ORDER”) by the FDIC and the Commissioner. 

 Having determined that the requirements for issuance of an order under section 8(b) of the
Act, 12 U.S.C. § 1818(b) and section 53-107.1 of the North Carolina General Statutes have been satisfied, the FDIC and the Commissioner hereby order that: 
 BOARD OF DIRECTORS 
 1. (a) As of the effective date of this ORDER, the Board shall
increase its participation in the affairs of the Bank, assuming full responsibility for the approval of sound policies and objectives and for the supervision of all of the Bank’s activities, consistent with the role and expertise commonly
expected for directors of banks of comparable size. This participation shall include meetings to be held no less frequently than monthly at which, at a minimum, the following areas shall be reviewed and approved: reports of income and expenses; new,
overdue, renewal, insider, charged off, and recovered loans; investment activity; adoption or modification of operating policies; individual committee reports; audit reports; internal control reviews including management’s responses;
reconciliation of general ledger accounts; and compliance with this ORDER. Board meeting minutes shall document these reviews and approvals, including the names of any dissenting directors. 

(b) Within 30 days from the effective date of this ORDER, the Board shall establish a Board committee (“Directors’
Committee”), consisting of at least 5 members, to oversee the Bank’s compliance with this ORDER. At least 3 of the members of such committee shall be directors not employed in any capacity by the Bank other than as a director. The
Directors’ Committee shall formulate and review monthly reports detailing the Bank’s actions with respect to compliance with this ORDER. The Directors’ Committee shall present a report to the Board at each regularly scheduled Board
meeting, and such report shall detail the Bank’s adherence to this ORDER. Such report shall be recorded in the appropriate minutes and shall be retained in the 

 
Bank’s records. Establishment of this committee does not in any way diminish the responsibility of the entire Board to ensure compliance with the provisions of this ORDER. 

(c) Within 90 days from the effective date of this ORDER, the Board shall develop, adopt, and submit to the Regional Director of the
FDIC’s Atlanta Regional Office (“Regional Director”) and the Commissioner (collectively, “Supervisory Authorities”) an educational program for periodic training for each member of the Board. The educational program shall
include, at a minimum: 
 (i) Specific training in the areas of lending, operations, and compliance with laws, rules, and
regulations applicable to banks of comparable size and complexity chartered in the state of North Carolina; and 
 (ii) Specific
training in the duties and responsibilities of the Board in connection with the safe and sound operation of the Bank. 
 (d)
Upon adoption of the educational program, the Board shall document the training activities in the minutes of the next Board meeting following completion of any such training. The Board’s actions as required by this paragraph shall be
satisfactory to the Supervisory Authorities as determined at the initial review and at subsequent examinations or visitations. 

MANAGEMENT 
 2.
(a) Within 60 days from the effective date of this ORDER, the Bank shall have and retain qualified management with the qualifications and experience commensurate with assigned duties and responsibilities at the Bank. Each member of management shall
be provided appropriate written authority from the Board to implement the provisions of this ORDER. At a minimum, management shall include the following: 

 (i) A chief executive officer with proven ability in managing a bank of comparable size and
in effectively implementing lending, investment and operating policies in accordance with safe and sound banking practices; 

(ii) A senior lending officer with a significant amount of appropriate lending, collection, and loan supervision experience, and
experience in upgrading a low quality loan portfolio; and 
 (iii) A chief operating officer with a significant amount of
appropriate experience in managing the operations of a bank of similar size and complexity in accordance with sound banking practices. 
 (b) The qualifications of management shall be assessed on its ability to: 
 (i)
Comply with the requirements of this ORDER; 
 (ii) Operate the Bank in a safe and sound manner; 

(iii) Comply with applicable laws and regulations; and 
 (iv) Restore all aspects of the Bank to a safe and sound condition, including, but not limited to, asset quality, capital adequacy, earnings, management effectiveness, risk management, liquidity, and
sensitivity to market risk. 
 (c) Within 30 days from the effective date of this ORDER, the Board shall retain a bank
consultant who will develop a written analysis and assessment of the Bank’s management needs (“Management Report”) for the purpose of providing qualified management for the Bank. 

(d) The Management Report shall be developed within 90 days from the effective date of this ORDER and shall include, at a minimum:

 (i) Identification of both the type and number of officer positions needed to properly manage and supervise the affairs of
the Bank; 

 (ii) Identification and establishment of such Bank committees as are needed to provide
guidance and oversight to active management; 
 (iii) Written evaluation of all senior executive officers to determine whether
such individuals possess the ability, experience and other qualifications required to perform present and anticipated duties, including, but not limited to, adherence to the Bank’s established policies and practices, restoration of the Bank to
a safe and sound condition, and maintenance of the Bank in a safe and sound condition thereafter; 
 (iv) Evaluation of all Bank
officers’ compensation, including salaries, director fees, and other benefits; 
 (v) A plan to recruit and hire any
additional or replacement personnel with the requisite ability, experience and other qualifications to fill those officer or staff member positions consistent with the needs identified in the Management Plan; and 

(vi) An organizational chart. 
 (e) Within 30 days from the effective date of this ORDER, the Bank Shall provide the Regional Director with a copy of the proposed engagement letter or third party contract for review before it is
executed. 
 (f) The contract or engagement letter, at a minimum, shall include: 

(i) A description of the work to be performed under the contract or engagement letter, the fees for each significant element of the
engagement, and the aggregate fee; 
 (ii) The responsibilities of the firm or individual; 

(iii) An identification of the professional standards covering the work to be performed; 

 (iv) Identification of the specific procedures to be used when carrying out the work to be
performed; 
 (v) The qualifications of the employee(s) who will perform the work; 

(vi) The time frame for completion of the work; 
 (vii) Any restrictions on the use of the reported findings; 
 (viii) A provision
for unrestricted examiner access to work papers; and 
 (ix) A certification that neither the firm, nor any individual involved
in the work to be perform is affiliated in any matter with the Bank. 
 (g) Within 60 days from receipt of the Management
Report, the Bank shall formulate a written plan (“Management Plan”) that incorporates the findings of the Management Report, a plan of action in response to each recommendation contained in the Management Report, and a time frame for
completing each action. At a minimum, the Management Plan shall: 
 (i) Contain a recitation of the recommendations included in
the Management Report; 
 (ii) Incorporate a plan to provide necessary training and development for all employees; 

(iii) Establish procedures to periodically review and update the Management Plan, as well as periodically review and assess the
performance of each officer and staff member; and 
 (iv) Contain a current management succession plan. 

(h) Such Management Plan and its implementation shall be satisfactory to the Supervisory Authorities at the initial review and at
subsequent examinations and/or visitations. 

 (i) During the life of this ORDER, the Bank shall notify the Supervisory Authorities, in
writing, of the resignation of any of the Bank’s directors or senior executive officers. Prior to the addition of any individual to the Board or the employment of any individual as a senior executive officer, the Bank shall comply with the
requirements of section 32 of the Federal Deposit Insurance Act, 12 U.S.C. § 1831i, 12 C.F.R. §§ 303.100-303.104, and any State requirement for prior notification and approval. If the Supervisory Authorities issue a notice of
disapproval pursuant to 12 U.S.C. § 1831i, with respect to the proposed individual, then such individual may not be added to the Board or employed by the Bank. 
 CAPITAL 
 3. (a) During the life of this ORDER, the Bank shall maintain a Leverage
Ratio of at least 8 percent and a Total Risk-Based Capital Ratio of at least 10 percent as those capital ratios are defined in 12 C.F.R. § 325. 
 (b) The level of Tier 1 Capital to be maintained pursuant to this paragraph shall be in addition to a fully funded allowance for loan and lease losses (“ALLL”), the adequacy of which shall be
satisfactory to the Supervisory Authorities as determined at subsequent examinations and/or visitations. 
 (c) If such capital
ratios are less than the percentages required by the ORDER, as determined as of the date of any Consolidated Report of Condition and Income or at an examination by the FDIC or the State, the Bank shall, within thirty (30) days from receipt of a
written notice of the capital deficiency from the Supervisory Authorities, present to the Supervisory Authorities a plan to increase the Bank’s Tier 1 Capital or to take other measures to bring all the capital ratios to the percentages required
by this ORDER. After the Regional 

 
Director responds to the plan, the Board shall implement the plan, including any modification and/or amendments requested by the Supervisory Authorities. 

(d) Any increase in Tier 1 Capital necessary to meet the requirements of this ORDER may be accomplished by the following: 

(i) Sale of common stock; 
 (ii) Sale of noncumulative perpetual preferred stock; 
 (iii) Direct contribution
of cash by the Board, shareholders, and/or parent holding company; 
 (iv) Any combination of the above means; or 

(v) Any other means acceptable to the Supervisory Authorities. 
 (e) No increase in Tier 1 Capital that is necessary to meet the requirements of this ORDER may be accomplished through a deduction from the Bank’s ALLL. 

(f) If all or part of any necessary increase in Tier 1 Capital required by this ORDER is accomplished by the sale of new securities, the
Board shall take all necessary steps to implement a plan for the sale of such additional securities, including the voting of any shares owned or proxies held or controlled by them in favor of the plan. Should the implementation of the plan involve a
public distribution of the Bank’s securities (including a distribution limited only to the Bank’s existing shareholders), the Bank shall prepare offering materials fully describing the securities being offered, including an accurate
description of the financial condition of the Bank and the circumstances giving rise to the offering, and any other material disclosures necessary to comply with applicable federal securities laws. Prior to the implementation of the plan and, in any
event, not less than 15 days prior to the dissemination of such materials, the plan and any materials used in the sale of the securities shall be submitted to 

 
the FDIC, Accounting and Securities Disclosure Section, 550 17th Street, N.W., Room F-6066, Washington, D.C. 20429 and to the North Carolina Office of the Commissioner of Banks, 4309 Mail Service
Center, Raleigh, North Carolina 27699 for review. Any changes requested to be made in the plan or materials by the FDIC shall be made prior to the dissemination of the plan and materials. If the increase in Tier 1 Capital is provided by the sale of
noncumulative perpetual preferred stock, then all terms and conditions of the issue, including but not limited to those terms and conditions relative to interest rate and convertibility factor, shall be presented to the Supervisory Authorities for
prior approval. 
 (g) In complying with the provisions of the Capital paragraph of this ORDER, the Bank shall provide written
notice of any planned or existing development, or other changes that are materially different from the information reflected in any offering materials used in connection with the sale of Bank securities, to any subscriber and/or purchaser of the
Bank’s securities. The written notice required by this paragraph shall be furnished within 10 days from the date such material development or change was planned or occurred, whichever is earlier, and shall be furnished to every subscriber
and/or purchaser of the Bank’s securities who received or was tendered the information contained in the Bank’s original offering materials. 
 LIQUIDITY AND FUNDS MANAGEMENT POLICY 
 4. (a) Within 60 days from the effective
date of this ORDER, the Bank shall adopt and implement a written plan to improve liquidity, contingency funding, interest rate risk, and asset liability management. 
 (b) The plan shall incorporate the guidance contained in Liquidity Risk Management, FIL-84-2008 (Aug. 26, 2008). The plan shall provide restrictions on the use of brokered and internet deposits
consistent with safe and sound banking practices. 

 (c) A copy of the plan shall be acceptable to the Supervisory Authorities at the initial
review and at subsequent examinations and/or visitations. The Bank shall adopt, implement, and follow the plan, and its implementation shall be in a form and manner acceptable to the Supervisory Authorities at the initial review and at subsequent
examinations and/or visitations. 
 (d) Beginning with the effective date of this ORDER, the Bank’s management shall review
its liquidity position to ensure that the Bank has sufficient liquid assets or sources of liquidity to meet current and anticipated liquidity needs. This review shall include an analysis of the Bank’s sources and uses of funds (cash flow
analysis). The results of this review shall be presented to the Board for review each month, with the review noted in the Board meeting minutes. 
 CLASSIFIED ASSET REDUCTION 
 5. (a) Within 60 days from the effective date of this
ORDER, the Bank shall submit a written plan to the Supervisory Authorities to reduce the remaining assets classified “Doubtful” and “Substandard” in the Report of Examination dated as of September 30, 2010
(“Report”) or any future regulatory examination report. The plan shall address each asset so classified with a balance of $500,000 or greater and provide the following: 

(i) The name under which the asset is carried on the books of the Bank; 

(ii) Type of asset; 
 (iii) Actions to be taken in order to reduce the classified asset; and 
 (iv)
Timeframes for accomplishing the proposed actions. 
 (b) The plan shall also include, at a minimum: 

(i) A review of the financial position of each such borrower, including the source of repayment, repayment ability, and alternate
repayment sources; and 

 (ii) An evaluation of the available collateral for each such credit, including possible
actions to improve the Bank’s collateral position. 
 (c) In addition, the Bank’s plan shall contain a schedule
detailing the projected reduction of total classified assets on a quarterly basis. Further, the plan shall require the submission of monthly progress reports to the Board and mandate a review by the Board. 

(d) The Bank shall present the plan to the Supervisory Authorities for review. Within 30 days from the Supervisory Authorities’
response, the plan, including any requested modifications or amendments, shall be adopted by the Board and the approval shall be recorded in the Board minutes. The Bank shall then immediately implement the plan. 

(e) For purposes of the plan, the reduction of adversely classified assets as of September 30, 2010 shall be detailed using
quarterly targets expressed as a percentage of the Bank’s Tier 1 Capital plus the Bank’s ALLL and may be accomplished by: 
 (i) Charge-off; 
 (ii) Collection; 

(iii) Sufficient improvement in the quality of adversely classified assets so as to warrant removing any adverse classification, as
determined by the FDIC or the Commissioner; and/or 
 (iv) Increase in the Bank’s Tier 1 Capital. 

ALLOWANCE FOR LOAN AND LEASE LOSSES AND CALL REPORT 
 6. (a) Immediately upon the issuance of this ORDER, the Board shall make a provision to replenish the Allowance for Loan and Lease Losses (“ALLL”), which as of the date of the examination was
underfunded as set forth in the Report. 

 (b) Within 30 days from the effective date of this ORDER, the Bank shall review Consolidated
Reports of Condition and Income filed with the Supervisory Authorities on or after December 31, 2010, and shall amend said reports if necessary to accurately reflect the financial condition of the Bank as of the date of each such report. In
particular, such reports shall contain an adequate ALLL. Reports filed after the effective date of this ORDER shall accurately reflect the financial condition of the Bank as of the reporting date. 

(c) Within 60 days from the effective date of this ORDER, the Board shall establish and submit to the Supervisory Authorities a
comprehensive policy for determining the adequacy of the ALLL. For the purpose of this determination, the adequacy of the ALLL shall be determined after the charge-off of all loans or other items classified “Loss”. The policy shall provide
for a review of the ALLL at least once each calendar quarter. Said review shall be completed in time to properly report the ALLL in the quarterly Consolidated Reports of Condition and Income. The review shall focus on the results of the Bank’s
internal loan review, loan and lease loss experience, trends of delinquent and non-accrual loans, an estimate of potential loss exposure of significant credits, concentrations of credit, and present and prospective economic conditions. The review
should include a review of compliance with ASC 450 (Topic 450, “Contingencies”) and ASC 310-10-35 (Section 35, “Subsequent Measurement General,” of Subtopic 310-10). The policy shall adhere to the guidance set forth in the
Interagency Policy Statement on the Allowance for Loan and Lease Losses, FIL-105-2006 (Dec. 13, 2006). A deficiency in the ALLL shall be remedied in the calendar quarter it is discovered, prior to submitting the next Consolidated Report of
Condition and Income, by a charge to current operating earnings. The Board meeting minutes for the meeting at which such review is undertaken shall indicate the results of the review. The Bank’s policy for determining the

 
adequacy of the ALLL and its implementation shall be satisfactory to the Supervisory Authorities as determined at the initial review and at subsequent examinations and/or visitations. 

CONCENTRATIONS OF CREDIT 
 7. (a) Within 60 days from the effective date of this ORDER, the Bank shall perform a risk segmentation analysis with respect to the concentrations of credit listed on the Concentrations page(s) of the
Report. The analysis should incorporate applicable guidance set forth in Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices, FIL-104-2006 (Dec. 12, 2006). Concentrations should be identified by
product type, geographic distribution, underlying collateral, or other asset groups which are considered economically related, and in the aggregate represent a large portion of the Bank’s Tier 1 Capital and reserve for ALLL. A copy of this
analysis shall be provided to the Supervisory Authorities. The plan and its implementation shall be in a form and manner acceptable to the Supervisory Authorities at the initial review and at subsequent examinations and/or visitations. 

(b) Within 60 days from the effective date of this ORDER, the Bank shall develop and submit to the Supervisory Authorities a written plan
for systematically reducing and monitoring the Bank’s Commercial Real Estate (“CRE”) and Acquisition, Construction, and Development (“ACD”) Loans concentration of credit identified in the Report to an amount which is
commensurate with the Bank’s business strategy, management expertise, size, and location (“Concentration Reduction Plan”). 
 (c) The Concentration Reduction Plan shall comply with applicable guidance referenced in Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices, FIL-104-2006
(Dec. 12, 2006), and Managing Commercial Real Estate 

 
Concentrations in a Challenging Environment, FIL-22-2008 (Mar. 17, 2008). The Concentration Reduction Plan shall include, but not be limited to: 

(i) Dollar levels and percent of total capital to which the Bank shall reduce the concentration; 

(ii) Timeframes for achieving the reduction in dollar levels in response to subparagraph (i), above; 

(iii) Provisions for controlling and monitoring of CRE and ACD, including plans to address the rationale for CRE and ACD levels as they
relate to growth and capital targets, segmentation, and testing of the CRE and ACD portfolios to detect and limit concentrations with similar risk characteristics; and 
 (iv) Provisions for the submission of monthly written progress reports to the Board for review and notation in minutes of the Board meetings. 

(d) The Concentration Reduction Plan shall be acceptable to the Supervisory Authorities at the initial review and at subsequent
examinations and/or visitations. The Board shall approve the Concentration Reduction Plan, which approval shall be recorded in the Board meeting minutes. Thereafter, the Bank shall implement and fully comply with the Concentration Reduction Plan.

 CHARGE-OFF LOSS AND DOUBTFUL 
 8. (a) Within 10 days from the effective date of this ORDER, the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified “Loss” and 50
percent of those assets or portions of assets classified “Doubtful” in the Report, that have not been previously collected or charged-off. If an asset is classified “Doubtful”, the Bank may, in the alternative, charge-off the
amount that is considered uncollectible in accordance with the 

 
Bank’s written analysis of loan or lease impairment. Such analysis shall be accomplished in accordance with generally accepted accounting principles, the Federal Financial Institutions
Examination Council’s (“FFIEC”) Instructions for Preparation of Consolidated Reports of Condition and Income (FFIEC 031 and 041), http://www.ffiec.gov/, Interagency Statements of Policy on the ALLL, and other applicable
regulatory guidance that addresses the adequacy of the Bank’s ALLL. Elimination of any of these assets through proceeds of other loans made by the Bank is not considered collection for purposes of this paragraph. 

(b) Additionally, while this ORDER remains in effect, the Bank shall, within 30 days from the receipt of any official Report of
Examination of the Bank from the FDIC or the Commissioner, eliminate from its books, by collection, charge-off, or other proper entry, the remaining balance of any asset classified “Loss” and 50 percent of those assets classified
“Doubtful” unless otherwise approved in writing by the Supervisory Authorities. 
 NO ADDITIONAL CREDIT

 9. (a) Beginning with the effective date of this ORDER, the Bank shall not extend, directly or indirectly, any additional credit to,
or for the benefit of, any borrower who has a loan or other extension of credit from the Bank that has been charged off or classified, in whole or in part, “Loss” or “Doubtful” and is uncollected. The requirements of this
paragraph shall not prohibit the Bank from renewing credit already extended to a borrower after full collection, in cash, of interest due from the borrower. 
 (b) Additionally, during the life of this ORDER, the Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower who has a loan or other extension of
credit from the Bank that has been classified, in whole or part, “Substandard.” 

 (c) The preceding limitations on additional credit shall not apply if the Bank’s
failure to extend further credit to a particular borrower would be detrimental to the best interests of the Bank. Prior to the extension of any additional credit pursuant to this paragraph, either in the form of an extension or further advance of
funds, such additional credit shall be approved by a majority of the Board or a designated committee thereof, who shall certify in writing that: 
 (i) The failure of the Bank to extend such credit would be detrimental to the best interests of the Bank, including an explanatory statement of why it would be detrimental to the Bank’s best
interests; 
 (ii) The Bank’s position would be improved thereby, including an explanatory statement of how the Bank’s
position would be improved; and 
 (iii) An appropriate workout plan has been developed and will be implemented in conjunction
with the additional credit to be extended. 
 (d) The signed certification shall be made a part of the meeting minutes of the
Board or its designated committee and a copy of the signed certification shall be retained in the borrower’s credit file. 

LENDING 
 10.
Within 60 days from the effective date of this ORDER, the Board shall review, revise, adopt, implement, and submit to the Supervisory Authorities its written lending and collection policy to provide effective guidance and control over the
Bank’s lending and credit administration functions, which implementation shall include the resolution of those exceptions enumerated in the Report. The written policy shall include specific guidelines for concentrations of credit, placing loans
on nonaccrual status, limitations on interest reserves and deferred payment plans, procedures to ensure that the Bank performs appropriate underwriting prior to 

 
purchasing loan participations, and provisions which establish a written policy governing the Bank’s Other Assets portfolio. In addition, the Bank shall obtain adequate and current
documentation for all loans in the Bank’s loan portfolio. Such policy and its implementation shall be in a form and manner acceptable to the Supervisory Authorities at the initial review and at subsequent examinations and/or visitations.

 LOAN REVIEW 
 11. Within 90 days from the effective date of this ORDER, the Bank shall review, revise, adopt, and submit to the Supervisory Authorities an effective internal loan review and grading system to provide
for the periodic review of the Bank’s loan portfolio in order to identify and categorize the Bank’s loans, and other extensions of credit which are carried on the Bank’s books as loans, on the basis of credit quality. Such system and
its implementation shall be satisfactory to the Supervisory Authorities at the initial review and at subsequent examinations and/or visitations. 
 OTHER REAL ESTATE 
 12. (a) Within 60 days from the effective date of this ORDER,
the Board shall develop a written policy for managing the Other Real Estate (“ORE”) of the Bank. At a minimum, the policy shall provide for: 
 (i) Establishment of a workout plan for each parcel of ORE in excess of $100,000; 

(ii) Documentation that taxes and insurance premiums are paid in a timely manner; 

(iii) Resolution of documentation exceptions; 

 (iv) A realistic and comprehensive budget for each parcel with a book value in excess of
$200,000, including projections of the Bank’s carrying costs (e.g., upkeep, repairs, and insurance costs) and projections of the marketing costs; 
 (v) An independent appraisal of each parcel at the time of foreclosure and periodically thereafter (but no more than 12 months from the date of the prior appraisal report); 

(vi) Each parcel of ORE to be listed with a real estate broker or otherwise made widely available for sale within an appropriate
timeframe and at a realistic selling price; 
 (vii) Periodic progress reports from each real estate broker marketing Bank ORE,
including projected sales timeframes; 
 (viii) Detailed monthly reports to the Board on the status of each ORE parcel in excess
of $100,000, with such reports made part of the Board meeting minutes; and 
 (ix) Requirements for accounting, documentation,
resale terms, and action plans for the orderly liquidation of ORE from the Bank’s books. 
 (b) The Bank shall submit an
acceptable ORE policy to the Supervisory Authorities for review. The Bank shall approve the policy, which approval shall be recorded in the Board meeting minutes. Thereafter, the Bank shall implement and fully comply with the policy. 

STRATEGIC PLAN 

13. (a) Within 90 days from the effective date of this ORDER, the Bank shall prepare and submit to the Supervisory Authorities an acceptable written
business/strategic plan covering the overall operation of the Bank. At a minimum the plan shall establish objectives for the Bank’s earnings performance, growth, balance sheet mix, liability structure, capital adequacy, and reduction of
nonperforming and underperforming assets, together with strategies for achieving those objectives. The plan shall also identify capital, funding, managerial, and other 

 
resources needed to accomplish its objectives. Such plan shall specifically provide for the following: 
 (i) Goals for the composition of the loan portfolio by loan type including strategies to diversify the type and improve the quality of loans held; 

(ii) Goals for the composition of the deposit base including strategies to reduce reliance on volatile and costly deposits; and

 (iii) Plans for effective risk management and collection practices. 

(b) The Board shall approve the business/strategic plan, which approval shall be recorded in the Board meeting minutes for the meeting at
which the business/strategic plan was approved. 
 BUDGET 
 14. (a) Within 90 days from the effective date of this ORDER, the Bank shall implement a written plan and a comprehensive budget for all categories of income and expense for the calendar year ending 2011.
The plan and budget required by this paragraph shall include formal goals and strategies, consistent with sound banking practices, and take into account the Bank’s other written policies in order to improve the Bank’s net interest margin,
increase interest income, reduce discretionary expenses, control overhead, and improve and sustain earnings of the Bank. The plan shall include a description of the operating assumptions that form the basis for, and adequately support, major
projected income and expense components. Thereafter, the Bank shall formulate such a plan and budget by November 30 of each subsequent year and submit the plan and budget to the Supervisory Authorities for review and comment by December 15
of each subsequent year. The plan and budget required by this ORDER shall be acceptable to 

 
the Supervisory Authorities at the initial review and at subsequent examinations and/or visitations. 
 (b) On a monthly basis, the Board shall evaluate the Bank’s actual performance in relation to the plan and budget required by this ORDER and shall record the results of the evaluation, and any
actions taken by the Bank, in the minutes of the Board meeting at which such evaluation is undertaken. The actual performance compared to the budget shall be submitted to the Supervisory Authorities with the quarterly progress reports required by
this ORDER. 
 ASSET GROWTH 
 15. While this ORDER is in effect, the Bank shall notify the Supervisory Authorities at least 60 days prior to undertaking asset growth that exceeds 10 percent or more per annum or initiating material
changes in asset or liability composition. In no event shall asset growth result in noncompliance with the capital maintenance provisions of this ORDER unless the Bank receives prior written approval from the Supervisory Authorities. 

ASSET/LIABILITY POLICY 
 16. Within 60 days from the effective date of this ORDER, the Board shall review and revise, as necessary, the Bank’s written policy and procedures for managing interest rate risk, taking into
consideration examination findings. The policy shall comply with the Joint Agency Policy Statement on Interest Rate Risk, FIL-52-1996 (June 26, 1996), shall be consistent with the comments and recommendations detailed in the Report, and shall
include, at a minimum, the means by which the interest rate risk position will be monitored, the establishment of risk parameters, and provisions for periodic reporting to management and the Board regarding

 
interest rate risk. Such policy and its implementation shall be satisfactory to the Supervisory Authorities at the initial review and at subsequent examinations and/or visitations. 

RESTRICTIONS OF CERTAIN PAYMENTS 
 17. (a) While this ORDER is in effect, the Bank shall not declare or pay dividends, pay bonuses, or pay any form of payment outside the ordinary course of business resulting in a reduction of capital,
without the prior written approval of the Supervisory Authorities. All requests for prior approval shall be received at least 30 days prior to the proposed dividend or bonus payment declaration date (or at least 5 days with respect to any request
filed within the first 30 days from the date of this ORDER) and shall contain, but not be limited to, an analysis of the impact such dividend or bonus payment would have on the Bank’s capital, income, and/or liquidity positions. 

(b) During the term of this ORDER, the Bank shall not make any distributions of interest, principal or other sums on subordinated
debentures, if any, without the prior written approval of the Supervisory Authorities. 
 BROKERED DEPOSITS

 18. Throughout the effective life of this ORDER, the Bank shall not accept, renew, or rollover any brokered deposit, as defined in 12
C.F.R. § 337.6(a)(2), unless it is in compliance with the requirements of 12 C.F.R. § 337.6(b) which governs the solicitation and acceptance of brokered deposits by insured depository institutions. The Bank shall comply with the
restrictions on the effective yields on deposits as described in 12 C.F.R. § 337.6. 
 INFORMATION TECHNOLOGY

 19. (a) Within ninety (90) days from the effective date of this Order, the Bank shall prepare a written assessment of the
Information Technology function. This assessment shall 

 
address the following areas: adequate updated risk assessment, audit scope to include electronic funds transfer activities, adequate vendor management program, adequate business continuity plan
based on a business impact analysis with annual testing, as well as other findings of the Technology Assessment contained in the Report. The assessment shall include the Bank’s proposed corrective measures. 

(b) Within 10 days after the completion of the written assessment referenced above, the Bank’s Board shall review, approve, and
submit the written assessment to the Supervisory Authorities. The written assessment shall be acceptable to the Supervisory Authorities at the initial review and at subsequent examinations and/or visitations. 

PROGRESS REPORTS 

20. Within 30 days from the end of the first full quarter following the effective date of this ORDER, and within 30 days from the end of each quarter
thereafter, the Bank shall furnish written progress reports to the Supervisory Authorities detailing the form and manner of any actions taken to secure compliance with this ORDER and the results thereof. Such reports shall include a copy of the
Bank’s Consolidated Reports of Condition and of Income. Such reports may be discontinued when the corrections required by this ORDER have been accomplished and the Supervisory Authorities have released the Bank in writing from making further
reports. All progress reports and other written responses to this ORDER shall be reviewed by the Board and made a part of the appropriate Board meeting minutes. 
 VIOLATIONS OF LAW, REGULATION, AND CONTRAVENTION OF POLICY 
 21. Within 60 days from
the effective date of this ORDER, the Bank will eliminate and/or correct all violations of laws, regulations, and/or contraventions of statements of policy in the 

 
Report and shall adopt and implement appropriate procedures to ensure future compliance with all such applicable federal and state laws, regulations, and/or statements of policy. 

SHAREHOLDER DISCLOSURE 
 22. The Bank shall provide to its shareholders or otherwise furnish a description of this ORDER, in conjunction with the Bank’s next shareholder communication and in conjunction with its notice or
proxy statement preceding the Bank’s next shareholder meeting. The description shall fully describe this ORDER in all material respects. The description and any accompanying communication, statement, or notice shall be sent to the FDIC,
Division of Supervision and Consumer Protection, Accounting and Securities Disclosure Section, 550 17th Street, N.W., Room F-6066, Washington, D.C. 20429 and to the North Carolina Office of the Commissioner of Banks, 4309 Mail Service Center,
Raleigh, North Carolina 27699-4309 for non-objection or comment at least 15 days prior to dissemination to shareholders. Any changes requested by the FDIC shall be made prior to dissemination of the description, communication, notice, or statement.

 The provisions of this ORDER shall not bar, stop, or otherwise prevent the FDIC, the Commissioner, or any other federal or
state agency or department from taking any other action against the Bank or any of the Bank’s current or former institution-affiliated parties. 
 This ORDER shall be effective on the date of issuance. 
 The provisions of this
ORDER shall be binding upon the Bank, its institution-affiliated parties, and any successors and assigns thereof. 
 The
provisions of this ORDER shall remain effective and enforceable except to the extent that and until such time as any provision has been modified, terminated, suspended, or set aside by the Supervisory Authorities. 

 Issued Pursuant to Delegated Authority 

Dated this 27th day of April, 2011. 

 

	
	By:
	
	 /s/ John P. Henrie (for)

	Thomas J. Dujenski
	Regional Director
	Division of Risk Management
	Atlanta Region
	Federal Deposit Insurance Corporation

 The North Carolina Commissioner of Banks having duly approved the foregoing ORDER, and the
Bank, through its Board, agree that the issuance of the said ORDER by the Federal Deposit Insurance Corporation shall be binding as between the Bank and the Commissioner to the same degree and legal effort that such ORDER would be binding on the
Bank if the Commissioner had issued a separate order that included and incorporated all of the provisions of the foregoing ORDER pursuant to the provisions of N.C. Stat. § 53-107.1 (2005). 

Dated this 27th day of April, 2011. 

 

	
	By:
	
	 /s/ Joseph A. Smith, Jr.

	Joseph A. Smith, Jr.
	 Commissioner of Banks
 State of
North Carolina2005 Equity Incentive Plan, as amended

 Exhibit 10.25 
 DEXCOM INC. 
 2005 EQUITY INCENTIVE PLAN 

Approved by Stockholders on March 21, 2005 (and as amended thereafter) 

1. PURPOSE. The purpose of the Plan is to provide incentives to attract, retain and motivate eligible persons whose
present and potential contributions are important to the success of the Company, its Parent or Subsidiaries by offering them an opportunity to participate in the Company’s future performance through awards of Options, Restricted Stock, Stock
Bonuses Stock Appreciation Rights (“SARs”) and Restricted Stock Units (“RSUs”). Capitalized terms not defined in the text are defined in Section 26. 
 2. SHARES SUBJECT TO THE PLAN.  

2.1 Number of Shares Available. Subject to Sections 2.2 and 21 below,
14,816,762* Shares are available for grant and issuance
under the Plan. The number of shares authorized for issuance under this Plan and all other share amounts set forth in this Plan reflect the 1-for-2 reverse split of the Company’s Common Stock to be effected on or before the Effective Date. In
addition, any shares issued under the Dexcom 1999 Stock Option Plan (the “1999 Plan”) on the Effective Date (as defined below) that are forfeited or that are issuable upon exercise of options granted pursuant to the 1999 Plan that expire
without having been exercised in full, will no longer be available for grant and issuance under the 1999 Plan but will be available for grant and issuance under this Plan. Shares that are subject to: (a) issuance upon exercise of an Option
or SAR granted under this Plan but cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) Awards granted under this Plan but are forfeited or are repurchased by the Company at the original issue
price; or (c) Awards granted under this Plan that otherwise terminate without Shares being issued, will return to the pool of Shares available for grant and issuance under this Plan. The number of Shares available for grant and issuance under
the Plan shall be increased on the first day of each January 2006 through 2015, by the lesser of: (i) three percent (3%) of the number of Shares issued and outstanding on the preceding December 31, and (ii) a lesser number
of Shares determined by the Board. In order that ISOs may be granted under this Plan, no more than 4,009,026 Shares shall be issued as ISOs. The Company may issue Shares that are authorized but unissued or treasury shares pursuant to the Awards
granted under this Plan. At all times the Company will reserve and keep available a sufficient number of Shares to satisfy the requirements of all outstanding Options and SARs granted under the Plan and all other outstanding but unvested Awards
granted under the Plan. 
 2.2 Adjustment of Shares. If the number of outstanding Shares is changed
by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for
issuance and future grant under the Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the
maximum number of shares that may be issued as ISOs set forth in Section 2.1; (e) the maximum number of shares that may be issued to an individual in any one calendar year set forth in Section 3; and (f) the number of Shares that
are granted as Awards to Non-Employee Directors as set forth in Section 8, will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided
that fractions of a Share will not be issued but will either be replaced by a cash payment equal to the Fair Market Value of such fraction of a Share or will be rounded up (down in the case of ISOs) to the nearest whole Share, as determined by the
Committee; and provided further that the Exercise Price of any Option may not be decreased to below the par value of the Shares. 
  

 

	*	3,000,000 shares were available for grant and issuance when the Plan was initially approved in 2005. An additional 3,962,250 shares became available under the 2005 Plan
from the 1999 Plan pursuant to Section 2.1 of the 2005 Plan. Additional increases to the Plan of 762,496, 844,910, 858,719, 894,709, 1,381,338, and 1,862,340 shares occurred in 2006, 2007, 2008, 2009, 2010 and 2011 respectively, pursuant to
Section 2.1 of the Plan. An additional 1,250,000 shares were approved pursuant to Proposal 2 of the Company’s 2008 definitive proxy. 

 3. ELIGIBILITY. ISOs may be granted only to employees (including officers
and directors who are also employees) of the Company or of a corporation that is Parent or Subsidiary. All other Awards may be granted to employees, officers, directors, consultants, independent contractors and advisors of the Company or any Parent
or Subsidiary; provided that such consultants, contractors and advisors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. The Committee (or its designee under Section 4.1(c))
will from time to time determine and designate among the eligible persons who will be granted one or more Awards under the Plan. A person may be granted more than one Award under the Plan. However, no person will be eligible to receive more than
500,000 Shares issuable under Awards granted in any calendar year, other than new employees of the Company or of a Parent or Subsidiary (including new employees who are also officers and directors of the Company or any Parent or Subsidiary), who are
eligible to receive up to a maximum of 1,000,000 Shares issuable under Awards granted in the calendar year in which they commence their employment. 
 4. ADMINISTRATION.  

4.1 Committee Authority. The Plan shall be administered by the Committee or by the Board acting as the Committee.
Except for grants to Non-Employee Directors pursuant to Section 8 hereof, and subject to the general purposes, terms and conditions of the Plan, the Committee will have full power to implement and carry out the Plan. Without limiting the
previous sentence, the Committee will have the authority to: 
 (a) construe and interpret the Plan, any Award
Agreement and any other agreement or document executed pursuant to the Plan; 
 (b) prescribe, amend and rescind
rules and regulations relating to the Plan or any Award, including determining the forms and agreements used in connection with the Plan, provided that the Committee may delegate to the President, the Chief Financial Officer or the officer in
charge of human resources, in consultation with the Company’s General Counsel, the authority to approve revisions to the forms and agreements used in connection with the Plan that are designed to facilitate Plan administration, and that are not
inconsistent with the Plan or with any resolutions of the Committee relating to the Plan; 
 (c) select persons
to receive Awards; provided that the Committee may delegate to one or more Executive Officers (who would also be considered “officers” under Delaware law) the authority to grant an Award under the Plan to Participants who are not Insiders;

 (d) determine the terms of Awards; 

(e) determine the number of Shares or other consideration subject to Awards; 

(f) determine whether Awards will be granted singly, in combination, or in tandem with, in replacement of, or as
alternatives to, other Awards under the Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary; 
 (g) grant waivers of Plan or Award conditions; 
 (h) determine the
vesting, exercisability, transferability, and payment of Awards; 
 (i) correct any defect, supply any omission,
or reconcile any inconsistency in the Plan, any Award or any Award Agreement; 
 (j) determine whether an Award
has been earned; 
 (k) amend the Plan; or 

(l) make all other determinations necessary or advisable for the administration of the Plan. 

4.2 Committee Interpretation and Discretion. Except for grants to Non-Employee Directors pursuant to Section 8
hereof, any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such
determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award shall be submitted by the Participant or Company to the
Committee for review. The 

 
resolution of such a dispute by the Committee shall be final and binding on the Company and Participant. The Committee may delegate to one or more Executive Officers, the authority to review and
resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and Participant. 
 5. OPTIONS. The Committee may grant Options to Participants and will determine (a) whether the Options will be ISOs or NSOs; (b) the number of Shares subject to the Option,
(c) the Exercise Price of the Option, (d) the period during which the Option may be exercised, (e) the exercisibility of the Option and (f) all other terms and conditions of the Option, subject to the provisions of the Plan. With
respect to Options granted to Non-Employee Directors pursuant to Section 8 in the event of a conflict between the provisions of Section 8 and this Section 5, the provisions of Section 8 shall prevail. 

5.1 Form of Option Grant. Each Option granted under the Plan will be evidenced by a Stock Option
Agreement that will expressly identify the Option as an ISO or NSO. Except as otherwise required by Section 8 regarding the terms of Options to Non-Employee Directors, the Stock Option Agreement will be substantially in a form and contain such
provisions (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of the Plan. 

5.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the
determination to grant the Option, unless a later date is otherwise specified by the Committee. The Stock Option Agreement, and a copy of the Plan (plus any additional documents required to be delivered under applicable laws), will be delivered to
the Participant within a reasonable time after the Option is granted. The Stock Option Agreement, Plan, and other documents may be delivered in any manner (including electronic distribution or posting) that meets applicable legal requirements.

 5.3 Exercise Period and Expiration Date. An Option will vest and become exercisable within the times or
upon the occurrence of events determined by the Committee and set forth in the Stock Option Agreement governing such Option, subject to the provisions of Section 5.6, and subject to Company policies established by the Committee from time to
time. The Committee may provide for Options to vest and become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on
Performance Factors), in such number of Shares or percentage of Shares subject to the Option as the Committee determines. The Stock Option Agreement shall set forth the Expiration Date; provided that no Option will be exercisable after the
expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a Ten Percent Stockholder will be exercisable after the expiration of five years from the date the Option is granted. 

An Option may only be exercised by the personal representative of a Participant or an Authorized Transferee or by the person or persons
to whom a Participant’s rights under the Option shall pass by such person’s will or by the laws of descent and distribution of the state of such person’s domicile at the time of death, and then only as and to the extent that such
person was entitled to exercise the Option on the date of death. 
 5.4 Exercise Price. The Exercise Price
of an Option will be determined by the Committee when the Option is granted and, in the case of an ISO will not be less than the Fair Market Value of the Shares on the date of grant provided that the Exercise Price of any ISO granted to a Ten
Percent Stockholder will not be less than 110% of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with Section 11 of the Plan and the Stock Option Agreement. 

5.5 Procedures for Exercise. A Participant or Authorized Transferee may exercise Options by following the procedures
established by the Company’s Stock Administration Department, as communicated and made available to Participants. 

5.6 Termination. Notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option
will always be subject to the following: 

	 	(a)	If the Participant is Terminated for any reason except Cause, death or Disability, then the Participant may exercise such Participant’s Options only to the extent
that such Options would have been exercisable upon the Termination Date and no later than three (3) months after the Termination Date (or such shorter or longer time period not exceeding five (5) years as may be determined by the
Committee, with any such exercise beyond three (3) months after the Termination Date deemed to be an NSO), but in any event, no later than the Expiration Date of the Options. 

 

	 	(b)	If the Participant is Terminated because of Participant’s death (or the Participant dies within three (3) months after a Termination other than for Cause),
then Participant’s Options may be exercised only to the extent that such Options would have been exercisable by Participant on the Termination Date and must be exercised by Participant (or Participant’s legal representative or authorized
assignee) no later than twelve (12) months after the Termination Date (or such shorter or longer time period not exceeding five (5) years as may be determined by the Committee, with any such exercise beyond twelve (12) months after
the Termination Date, deemed to be an NSO), but in any event no later than the Expiration Date of the Options. 

  

	 	(c)	If the Participant is Terminated because of Participant’s Disability (or the Committee determines that the Participant experiences a Disability within three
(3) months after a Termination other than because of Participant’s Disability or for Cause), then Participant’s Options may be exercised only to the extent that such Options would have been exercisable by Participant on the
Termination Date and must be exercised by Participant (or Participant’s legal representative or authorized assignee) no later than six (6) months after the Termination Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any such exercise beyond twelve (12) months after the Termination Date, deemed to be an NSO), but in any event no later than the Expiration Date of the Options.

  

	 	(c)	Notwithstanding the provisions in paragraph 5.6(a) above, if a Participant is terminated for Cause, neither the Participant, the Participant’s estate nor such
other person who may then hold the Option shall be entitled to exercise any Option with respect to any Shares whatsoever, after termination of service, whether or not after termination of service the Participant may receive payment from the Company
or Subsidiary for vacation pay, for services rendered prior to termination, for services rendered for the day on which termination occurs, for salary in lieu of notice, or for any other benefits. In making such determination, the Board shall give
the Participant an opportunity to present to the Board evidence on his behalf. For the purpose of this paragraph, termination of service shall be deemed to occur on the date when the Company dispatches notice or advice to the Participant that his
service is terminated. 

 5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an Option; provided that the minimum number will not prevent a Participant from exercising an Option for the full number of Shares for which it is then exercisable.

 5.8 Limitations on ISOs. The aggregate Fair Market Value (determined as of the date of grant) of
Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under the Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary) shall not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds $100,000, the Options for the first $100,000 worth of Shares to become exercisable
in that calendar year will be ISOs, and the Options for the Shares with a Fair Market Value in excess of $100,000 that become exercisable in that calendar year will be NSOs. If the Code is amended to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISOs, such different limit shall be automatically incorporated into the Plan and will apply to any Options granted after the effective date of the Code’s amendment. 

5.9 Notice of Disqualifying Dispositions of Shares Acquired on Exercise of an ISO. If a Participant sells or otherwise
disposes of any Shares acquired pursuant to the exercise of an ISO on or before the later of (a) the date two years after the Date of Grant, and (b) the date one year after the exercise of the ISO (in

 
either case, a “Disqualifying Disposition”), the Company may require the Participant to immediately notify the Company in writing of such Disqualifying Disposition. 

5.10 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options
and authorize the grant of new Options in substitution therefor; provided that any such action may not, without the written consent of Participant, impair any of Participant’s rights under any Option previously granted; and provided, further
that without stockholder approval, the modified, extended, renewed or new Option may not have a lower Exercise Price than the outstanding Option. Any outstanding ISO that is modified, extended, renewed or otherwise altered shall be treated in
accordance with Section 424(h) of the Code. The Committee may reduce the Exercise Price of outstanding Options without the consent of Participants affected, by a written notice to them. 

5.11 No Disqualification. Notwithstanding any other provision in the Plan, no term of the Plan relating to ISOs
will be interpreted, amended or altered, and no discretion or authority granted under the Plan will be exercised, so as to disqualify the Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code. 
 6. RESTRICTED STOCK AWARDS.  

6.1 Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company to sell to a Participant Shares that
are subject to restrictions. The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and
conditions of the Restricted Stock Award, subject to the following: 
 6.2 Restricted Stock Purchase
Agreement. All purchases under a Restricted Stock Award will be evidenced by a Restricted Stock Purchase Agreement, which will be in substantially a form (which need not be the same for each Participant) that the Committee has from
time to time approved, and will comply with and be subject to the terms and conditions of the Plan. A Participant accepts a Restricted Stock Award by signing and delivering to the Company a Restricted Stock Purchase Agreement with full payment of
the Purchase Price, within thirty days from the date the Restricted Stock Purchase Agreement was delivered to the Participant. If the Participant does not accept the Restricted Stock Award within thirty days, then the offer of the Restricted Stock
Award will terminate, unless the Committee determines otherwise. The Restricted Stock Award, Plan and other documents may be delivered in any manner (including electronic distribution or posting) that meets applicable legal requirements. 

6.3 Purchase Price. The Purchase Price for a Restricted Stock Award will be determined by the Committee and, may be
less than Fair Market Value (but not less than the par value of the Shares) on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan and the Restricted Stock
Purchase Agreement, and in accordance with any procedures established by the Company’s Stock Administration Department, as communicated and made available to Participants. 

6.4 Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may
impose. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of the performance goals based on Performance Factors during any Performance Period as set out in advance in the
Participant’s Restricted Stock Purchase Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award;
(b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Prior to the payment for Shares to be purchased under any
Restricted Stock Award, the Committee shall determine the extent to which such Restricted Stock Award has been earned. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are
subject to different Performance Periods and having different performance goals and other criteria. 

 6.5 Termination During Performance Period. Except as set forth in the
Participant’s Restricted Stock Award, any Restricted Stock Award vesting will cease to vest on the Participant’s Termination Date. 
 7. STOCK BONUS AWARDS.  

7.1 Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person of Shares (which may
consist of Restricted Stock or Restricted Stock Units) for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made pursuant to a Stock Bonus Agreement, which
shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of the Plan. No payment will be required for Shares
awarded pursuant to a Stock Bonus Award. 
 7.2 Terms of Stock Bonus Awards. The Committee will
determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction
of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. If the Stock Bonus Award is to be earned upon the satisfaction of performance goals, the Committee
shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of
Shares that may be awarded to the Participant. Prior to the issuance of any Shares or other payment to a Participant pursuant to a Stock Bonus Award, the Committee will determine the extent to which the Stock Bonus Award has been earned. Performance
Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined by the Committee. The Committee may adjust the performance goals applicable to a Stock Bonus Award to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships. 

7.3 Form of Payment to Participant. The Stock Bonus Award will be paid to the Participant currently. Payment
may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, either in a lump sum payment or in installments, all as the Committee
determines. 
 7.4 Termination of Participant. In the event of a Participant’s Termination during a
Performance Period or vesting period, for any reason, then such Participant will be entitled to payment (whether in Shares, cash or otherwise) with respect to the Stock Bonus Award only to the extent earned as of the date of Termination in
accordance with the Stock Bonus Agreement, unless the Committee determines otherwise. 
 8. GRANTS TO
NON-EMPLOYEE DIRECTORS.  
 8.1 Types of Awards. Non-Employee Directors are eligible to receive any type of
Award offered under this Plan except ISOs. Awards pursuant to this Section 8 may be automatically made pursuant to a policy adopted by the Board, or made from time to time as determined in the discretion of the Board. 

8.2 Eligibility. Awards pursuant to this Section 8 shall be granted only to Non-Employee Directors. A Non-Employee
Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 8. 

8.3 Vesting, Exercisability and Settlement. Awards shall vest, become exercisable and be settled as determined by the
Board. With respect to Options and SARs (as defined below), the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time such Option or SAR is granted. 

9. STOCK APPRECIATION RIGHTS.  

 9.1 Awards of SARs. A Stock Appreciation Right (“SAR”) is an
award to an eligible person that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to the value determined by multiplying the difference between the Fair Market Value on the date of exercise over the
Exercise Price and the number of Shares with respect to which the SAR is being settled. The SAR may be granted for services to be rendered or for past services already rendered to the Company, or any Parent or Subsidiary. All SARs shall be made
pursuant to a SAR Agreement, which shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.
 
 9.2 Terms of SARs. The Committee will determine the terms of a SAR including, without limitation:
(a) the number of Shares deemed subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect on each
SAR of the Participant’s Termination. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted and, may be less than Fair Market Value (but not less than the par value of the Shares. A SAR may be awarded upon
satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s individual SAR Agreement. If the SAR is being earned upon the satisfaction of performance goals,
then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Prior to settlement of any
SAR earned upon the satisfaction of performance goals pursuant to a SAR Agreement, the Committee shall determine the extent to which such SAR has been earned. Performance Periods may overlap and Participants may participate simultaneously with
respect to SARs that are subject to different performance goals and other criteria. 
 9.3 Exercise Period and
Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the SAR Agreement governing such SAR. The SAR Agreement shall set forth the Expiration Date; provided
that no SAR will be exercisable after the expiration of seven years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without
limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. 

9.4 Form and Timing of Settlement. The portion of a SAR being settled may be paid currently or on a deferred basis
with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code and any regulations or rulings promulgated by the Internal
Revenue Service. Payment may be made in the form of cash or whole Shares or a combination thereof, either in a lump sum payment or in installments, as the Committee determines. 

10. RESTRICTED STOCK UNITS 
 10.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to an eligible person covering a number of Shares that may be settled in cash, or by
issuance of those Shares (which may consist of Restricted Stock) for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary. All RSUs shall be made pursuant to a RSU Agreement, which shall be in
substantially a form (which need not be the same for each Participant) that the Committee or an officer of the Company (pursuant to Section 4.1(b)) has from time to time approved, and will comply with and be subject to the terms and conditions
of the Plan. 
 10.2 Terms of RSUs. The Committee will determine the terms of a RSU including, without
limitation: (a) the number of Shares deemed subject to the RSU; (b) the time or times during which the RSU may be exercised; (c) the consideration to be distributed on settlement, and the effect on each RSU of the Participant’s
Termination. A RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s individual RSU Agreement. If the RSU is being earned upon
satisfaction of performance goals, then the Committee 

 
will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if
any; and (z) determine the number of Shares deemed subject to the RSU. Prior to settlement of any RSU earned upon the satisfaction of performance goals pursuant to a RSU Agreement, the Committee shall determine the extent to which such SAR has
been earned. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria. The number of Shares may be fixed
or may vary in accordance with such performance goals and criteria as may be determined by the Committee. The Committee may adjust the performance goals applicable to the RSUs to take into account changes in law and accounting and to make such
adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships. 
 10.3 Form and Timing of Settlement. The portion of a RSU being settled shall be paid currently. To the extent permissible under law, the Committee may also permit a Participant to
defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code and any regulations or rulings promulgated by the Internal Revenue
Service. Payment may be made in the form of cash or whole Shares or a combination thereof, either in a lump sum payment or in installments, all as the Committee determines. 
 11. PAYMENT FOR SHARE PURCHASES.  

11.1 Payment. Payment for Shares purchased pursuant to the Plan may be made by any of the following methods (or any
combination of such methods) that are described in the applicable Award Agreement and that are permitted by law: 

(a) in cash (by check); 
 (b) in the case of exercise by the Participant, Participant’s guardian or legal representative or the authorized legal representative of Participants’ heirs or legatees after Participant’s
death, by cancellation of indebtedness of the Company to the Participant; 
 (c) by surrender of shares of the
Company’s Common Stock that either: (1) were obtained by the Participant or Authorized Transferee in the public market; or (2) if the shares were not obtained in the public market, they have been owned by the Participant or
Authorized Transferee for more than six months and have been paid for within the meaning of SEC Rule 144 (and, if the shares were purchased from the Company by use of a promissory note, the note has been fully paid with respect to the
shares); 
 (d) in the case of exercise by the Participant, Participant’s guardian or legal representative
or the authorized legal representative of Participants’ heirs or legatees after Participant’s death, by waiver of compensation due or accrued to Participant for services rendered; 

(e) by tender of property; or 
 (f) with respect only to purchases upon exercise of an Option, and provided that a public market for the Company’s stock exists: 

(1) through a “same day sale” commitment from the Participant or Authorized Transferee and an NASD Dealer
meeting the requirements of the Company’s “same day sale” procedures and in accordance with law; 

(2) through a “margin” commitment from Participant or Authorized Transferee and an NASD Dealer meeting the
requirements of the Company’s “margin” procedures and in accordance with law; or 
 (3) through a
cashless exercise program implemented by the Company in connection with the Plan. 
 11.2 Issuance of
Shares. Upon payment of the applicable Purchase Price or Exercise Price (or a commitment for payment from the NASD Dealer designated by the Participant or Authorized Transferee in the case of an exercise by means of a “same-day
sale” or “margin” commitment), and compliance with 

 
other conditions and procedures established by the Company for the purchase of shares, the Company shall issue the Shares registered in the name of Participant or Authorized Transferee (or in the
name of the NASD Dealer designated by the Participant or Authorized Transferee in the case of an exercise by means of a “same-day sale” or “margin” commitment) and shall deliver certificates representing the Shares (in physical
or electronic form, as appropriate). The Shares may be subject to legends or other restrictions as described in Section 15 of the Plan. 
 12. WITHHOLDING TAXES.  

12.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under the Plan, the
Company may require the Participant to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate(s) for the Shares. If a payment in satisfaction of an
Award is to be made in cash, the payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements. 
 12.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding
and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may, in its sole discretion, allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from
the Shares to be issued that number of whole Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to
have Shares withheld for this purpose shall be made in accordance with the requirements established by the Committee and be in writing in a form acceptable to the Committee. 
 13. PRIVILEGES OF STOCK OWNERSHIP. No Participant or Authorized Transferee will have any rights as a stockholder of the Company with respect to any Shares until the Shares are issued to
the Participant or Authorized Transferee. After Shares are issued to the Participant or Authorized Transferee, the Participant or Authorized Transferee will be a stockholder and have all the rights of a stockholder with respect to the Shares
including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if the Shares are Restricted Stock, any new, additional or different securities the Participant or Authorized
Transferee may become entitled to receive with respect to the Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted
Stock; provided further, that the Participant or Authorized Transferee will have no right to retain such dividends or distributions with respect to Shares that are repurchased at the Participant’s original Exercise Price or Purchase Price
pursuant to Section 15. 
 14. TRANSFERABILITY. No Award and no interest therein, shall be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution, and no Award may be made subject to execution, attachment or similar process; provided, however that with the consent of
the Committee a Participant may transfer a NSO to an Authorized Transferee. Transfers by the Participant for consideration are prohibited. Without such consent by the Committee, a NSO shall, like all other Awards under the Plan, be exercisable
(a) during a Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative; and (b) after Participant’s death, by the legal representative of the Participant’s heirs or legatees.

 15. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company may reserve to itself and/or its
assignee(s) in the Award Agreement a right to repurchase all or a portion of a Participant’s Shares that are not “Vested” (as defined in the Award Agreement), following the Participant’s Termination, at any time within
ninety days after the later of (a) the Participant’s Termination Date or (b) the date the Participant purchases Shares under the Plan, for cash or cancellation of purchase money indebtedness with respect to Shares, at the
Participant’s original Exercise Price or Purchase Price; provided that upon assignment of the right to repurchase, the assignee must pay the Company, upon assignment of the right to repurchase, cash equal to the excess of the Fair Market Value
of the Shares over the original Purchase Price. 

 16. CERTIFICATES. All certificates for Shares or other securities delivered
under the Plan (whether in physical or electronic form, as appropriate) will be subject to stock transfer orders, legends and other restrictions that the Committee deems necessary or advisable, including without limitation restrictions under any
applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system on which the Shares may be listed. 

17. ESCROW. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to
deposit all certificates representing Shares, together with stock powers or other transfer instruments approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company, to hold in escrow until such
restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. 
 18. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall not be effective unless the Award is in compliance with all applicable state, federal and foreign securities laws,
rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system on which the Shares may then be listed, as they are in effect on the date of grant of the Award and also on the date of
exercise or other issuance. Notwithstanding any other provision in the Plan, the Company shall have no obligation to issue or deliver certificates for Shares under the Plan prior to (a) obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable, and/or (b) completion of any registration or other qualification of such shares under any state, federal or foreign law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company shall be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state, federal or foreign securities laws, stock
exchange or automated quotation system, and the Company shall have no liability for any inability or failure to do so. 

19. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award granted under the Plan shall confer or be deemed to confer
on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary or limit in any way the right of the Company or any Parent or Subsidiary to terminate Participant’s
employment or other relationship at any time, with or without cause. 
 20. REPRICING, EXCHANGE, BUYOUT OF
AWARDS. The repricing of Options or SARs is permitted without prior stockholder approval, provided that the terms of the repricing satisfy the requirements of Section 409A of the Code and any regulations or rulings promulgated by the
Internal Revenue Service. The Committee may, at any time or from time to time authorize the Company, in the case of an Option or SAR exchange without stockholder approval, and with the consent of the respective Participants, to issue new Awards in
exchange for the surrender and cancellation of any or all outstanding Awards. The Committee may at any time buy from a Participant an Option previously granted with payment in cash, Shares or other consideration, based on such terms and conditions
as the Committee and the Participant shall agree. 
 21. CORPORATE TRANSACTIONS.  

21.1 Assumption or Replacement of Awards by Successor. In the event of a Corporate Transaction
any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide
substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by
the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor corporation, if any, refuses to assume or replace the Awards, as provided above,
pursuant to a Corporate Transaction or if there is no successor corporation due to a dissolution or liquidation of the Company, such Awards shall immediately vest as to 100% of the Shares subject thereto at such time and on such conditions as the
Board shall determine and the Awards shall expire at the closing of the transaction or at the time of dissolution or liquidation. 

 21.2 Other Treatment of Awards. Subject to any greater
rights granted to Participants under Section 21.1, in the event of a Corporate Transaction, any outstanding Awards shall be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation or sale of
assets. 
 21.3 Assumption of Awards by the Company. The Company, from time to time,
also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (a) granting an Award under the Plan in substitution of such other
company’s award, or (b) assuming such award as if it had been granted under the Plan if the terms of such assumed award could be applied to an Award granted under the Plan. Such substitution or assumption shall be permissible if the holder
of the substituted or assumed award would have been eligible to be granted an Award under the Plan if the other company had applied the rules of the Plan to such grant. In the event the Company assumes an award granted by another company, the
terms and conditions of such award shall remain unchanged (except that the exercise price and the number and nature of Shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code).
In the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. 
 22. ADOPTION AND STOCKHOLDER APPROVAL. The Plan was adopted by the Board on February 9, 2005. The Plan shall become effective upon the Effective Date. The stockholders of the Company
must approve the Plan in a manner consistent with applicable law within twelve (12) months of its approval by the Board. 

23. TERM OF PLAN. The Plan will terminate ten years following the Effective Date. 

24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend the Plan in any respect, including
without limitation grants to Non-Employee Directors pursuant to Section 8 of the Plan and amendment of any form of Award Agreement or instrument to be executed pursuant to the Plan. Notwithstanding the foregoing, neither the Board nor the
Committee shall, without the approval of the stockholders of the Company, amend the Plan in any manner that requires such stockholder approval pursuant to the Code or the regulations promulgated thereunder as such provisions apply to ISO plans, or
pursuant to the Exchange Act or any rule promulgated thereunder. In addition, no amendment that is detrimental to a Participant may be made to any outstanding Award without the consent of the Participant. 

25. NON-EXCLUSIVITY OF THE PLAN; UNFUNDED PLAN. Neither the adoption of the Plan by the Board, the submission of the
Plan to the stockholders of the Company for approval, nor any provision of the Plan shall be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including,
without limitation, the granting of stock options and bonuses otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. The Plan shall be unfunded. Neither the Company nor the Board
shall be required to segregate any assets that may at any time be represented by Awards made pursuant to the Plan. Neither the Company, the Committee, nor the Board shall be deemed to be a trustee of any amounts to be paid under the Plan.

 26. DEFINITIONS. As used in the Plan, the following terms shall have the following meanings: 

(a) “Authorized Transferee” means the permissible recipient, as authorized by this Plan and the Committee, of an
NSO that is transferred during the Participant’s lifetime by the Participant by gift or domestic relations order. For purposes of this definition a “permissible recipient” is: (i) a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the Participant, including any such person with such relationship to the
Participant by adoption; (ii) any person (other than a tenant or employee) sharing the Participant’s household; (iii) a trust in which the persons in (i) or (ii) have more than fifty percent of the beneficial interest;
(iv) a foundation in which the persons in (i) or (ii) or the Participant control the management of assets; or (v) any other entity in which the person in (i) or (ii) or the Participant own more than fifty percent of the
voting interest. 

 (b) “Award” means any award under the Plan, including any Option,
Restricted Stock, Stock Bonus, Stock Appreciation Right or Restricted Stock Unit. 

(c) “Award Agreement” means, with respect to each Award, the signed written agreement between the Company
and the Participant setting forth the terms and conditions of the Award. 
 (d) “Board” means the
Board of Directors of the Company. 
 (e) “Cause” means termination of the Participant’s
employment on the basis of the Participant’s conviction (or a plea of nolo contendere) of fraud, misappropriation, embezzlement or any other act or acts of dishonesty constituting a felony and resulting or intended to result directly or
indirectly in a substantial gain or personal enrichment to the Participant at the expense of the Company or any Subsidiary. 

(f) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 (g) “Committee” means the Compensation Committee of the Board or such other committee appointed by
the Board to administer the Plan, or if no committee is appointed, the Board. Each member of the Committee shall be (i) a “non-employee director” for purposes of Section 16 and Rule 16b-3 of the Exchange Act, and
(ii) an “outside director” for purposes of Section 162(m) of the Code, unless the Board has fewer than two such outside directors. 
 (h) “Company” means DexCom Inc., a corporation organized under the laws of the State of Delaware, or any successor corporation. 

(i) “Corporate Transaction” means (a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the stockholders of the Company and the
Awards granted under the Plan are assumed or replaced by the successor corporation, which assumption shall be binding on all Participants), (b) a dissolution or liquidation of the Company, (c) the sale of substantially all of the
assets of the Company, (d) a merger in which the Company is the surviving corporation but after which the stockholders of the Company immediately prior to such merger (other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their shares or other equity interest in the Company; or (e) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of
the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company). 

(j) “Disability” means a disability within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee. 
 (k) “Effective Date” means the date on which the Registration
Statement covering the initial public offering of shares of the Company’s common stock is declared effective by the SEC. 

(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations promulgated
thereunder. 
 (m) “Executive Officer” means a person who is an “executive officer” of the
Company as defined in Rule 3b-7 promulgated under the Exchange Act. 

(n) “Exercise Price” means the price at which a Participant who holds an Option or SAR may purchase the
Shares issuable upon exercise of the Option or SAR. 
 (o) “Expiration Date” means the last date on
which an Option or SAR may be exercised as determined by the Committee. 

 (p) “Fair Market Value” means, as of any date, the
value of a share of the Company’s Common Stock determined as follows: 
 (1) if such Common Stock is then
quoted on the NASDAQ National Market, its closing price on the NASDAQ National Market on such date; 
 (2) if
such Common Stock is publicly traded and is then listed on a national securities exchange, the last reported sale price on such date or, if no such reported sale takes place on such date, the average of the closing bid and asked prices on the
principal national securities exchange on which the Common Stock is listed or admitted to trading; 
 (3) if such
Common Stock is publicly traded but is not quoted on the NASDAQ National Market nor listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on such date, as reported by The Wall Street
Journal, for the over-the-counter market; or 
 (4) if none of the foregoing is applicable, by the Board of
Directors in good faith. 
 (q) “Insider” means an officer or director of the Company or any other
person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act. 

(r) “ISO” means an Incentive Stock Option within the meaning of Section 422 of the Code. 

(s) “NASD Dealer” means broker-dealer that is a member of the National Association of Securities
Dealers, Inc. 
 (t) “NSO” means a nonqualified stock option that does not qualify as an ISO.

 (u) “Option” means an Award pursuant to Section 5 or Section 8 of the Plan. 

(v) “Non-Employee Director” means a member of the Company’s Board of Directors who is not a current
employee of the Company or any Parent or Subsidiary. 
 (w) “Parent” means any corporation (other
than the Company) in an unbroken chain of corporations ending with the Company, if at the time of the granting of an Award under the Plan, each of such corporations other than the Company owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain or such lesser percentage as determined by the Committee. 
 (x) “Participant” means a person who receives an Award under the Plan. 
 (y) “Performance Factors” means the factors selected by the Committee from among the following measures (whether or not in comparison to other peer companies) to determine
whether the performance goals established by the Committee and applicable to Awards have been satisfied: 
 (1)
Net revenue and/or net revenue growth; 
 (2) Earnings per share and/or earnings per share growth; 

(3) Earnings before income taxes and amortization and/or earnings before income taxes and amortization growth; 

(4) Operating income and/or operating income growth; 

(5) Net income and/or net income growth; 

(6) Total stockholder return and/or total stockholder return growth; 

(7) Return on equity; 
 (8) Operating cash flow return on income; 
 (9) Adjusted operating
cash flow return on income; 

 (10) Economic value added; 

(11) Individual business objectives; and 

(12) Company specific operational metrics. 
 (z) “Performance Period” means the period of service determined by the Committee, not to exceed five years, during which years of service or performance is to be measured for
the Award. 
 (aa) “Plan” means this DexCom Inc. 2005 Equity Incentive Plan, as amended from time to
time. 
 (bb) “Purchase Price” means the price to be paid for Shares acquired under the Plan, other
than Shares acquired upon exercise of an Option. 
 (cc) “Restricted Stock Award” means an
award of Shares pursuant to Section 6 or Section 8 of the Plan. 
 (dd) “Restricted Stock Purchase
Agreement” means an agreement evidencing a Restricted Stock Award granted pursuant to Section 6 or Section 8 of the Plan. 
 (ee) “Restricted Stock Unit” means an Award granted pursuant to Section 8 or Section 10 of the Plan. 

(ff) “RSU Agreement” means an agreement evidencing a Restricted Stock Unit Award granted pursuant to
Section 8 or Section 10 of the Plan. 
 (gg) “SAR Agreement” means an agreement evidencing
a Stock Appreciation Right granted pursuant to Section 8 or Section 9 of the Plan. 

(hh) “SEC” means the Securities and Exchange Commission. 

(ii) “Securities Act” means the Securities Act of 1933, as amended, and the regulations promulgated
thereunder. 
 (jj) “Shares” means shares of the Company’s Common Stock $0.001 par value,
reserved for issuance under the Plan, as adjusted pursuant to Sections 2 and 21, and any successor security. 

(kk) “Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 9 of the
Plan. 
 (ll) “Stock Bonus” means an Award granted pursuant to Section 7 or Section 8
of the Plan. 
 (mm) “Stock Bonus Agreement” means an agreement evidencing a Stock Bonus Award
granted pursuant to Section 7 or Section 8 of the Plan. 
 (nn) “Stock Option
Agreement” means the agreement which evidences a Stock Option, granted pursuant to Section 5 or Section 8 of the Plan. 
 (oo) “Subsidiary” means any entity directly or indirectly controlled by the Company, as determined by the Committee. 

(pp) “Ten Percent Stockholder” means any person who directly or by attribution owns more than ten percent of
the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary. 

(qq) “Termination” or “Terminated” means, for purposes of the Plan with respect to a
Participant, that the Participant has ceased to provide services as an employee, director, consultant, independent contractor or adviser, to the Company or a Parent or Subsidiary; provided that a Participant shall not be deemed to be Terminated if
the Participant is on a leave of absence approved by the Committee or by an 

 
officer of the Company designated by the Committee; and provided further, that during any approved leave of absence, vesting of Awards shall be suspended or continue in accordance with guidelines
established from time to time by the Committee. Subject to the foregoing, the Committee shall have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide
services (the “Termination Date”).

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