Exhibit 10.2

  EXECUTION COPY

 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (the “Agreement”), effective as of this 1st day of
July, 2019, is entered into by Palatin Technologies, Inc., a Delaware
corporation with its principal place of business at 4B Cedar Brook Drive,
Cranbury, NJ, 08512 (the “Company”), and Stephen T. Wills (“Employee”).
 
The Company desires to continue employing the Employee, and the Employee desires
to continue to be employed by the Company. In consideration of the mutual
covenants and promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties agree that the following terms of this
Employment Agreement shall supersede in all respects any prior agreements
governing employment between the parties:
 
1.0

Term of Employment. The Company hereby agrees to continue employing the
Employee, and the Employee hereby accepts the continuation of employment with
the Company, upon the terms set forth in this Agreement, for the period
commencing on July 1, 2019 (the “Commencement Date”) and ending on June 30, 2022
unless sooner terminated in accordance with the provisions of Section 4 (the
“Employment Period”).

2.0
Position Title & Capacity.

2.1
The Employee shall serve as Chief Financial Officer and Chief Operating Officer,
with responsibilities consistent with this position and as the Company’s Board
of Directors (the "Board") may determine from time to time, with powers and
duties as may be determined, from time to time, by the Board, consistent with
the Employee’s position. The Employee shall report to the Company’s Board of
Directors. The Employee shall be based at the Company’s corporate headquarters,
which is based in Cranbury, New Jersey. The Employee shall also be available for
travel at such times and to such places as may be reasonably necessary in
connection with the performance of his duties hereunder.

2.2
The Employee may serve as an employee director on the Board as determined and
approved by the Board during the Employment Period and for no additional
compensation; however, upon termination of employment for any reason, the
Employee will no longer serve as a member of the Company’s Board of Directors
and will take any and all actions necessary to effectuate such resignation as
may be reasonably requested by the Company.

2.3
The Employee hereby accepts such employment and agrees to undertake the duties
and responsibilities inherent in such position and such other duties and
responsibilities as the Board shall from time to time reasonably assign to him.
The Employee agrees to devote substantially all of his business time, attention
and energies to the business and interests of the Company during the Employment
Period. The Employee agrees to abide by the rules, regulations, instructions,
personnel practices and policies of the Company and any changes therein which
may be adopted from time to time by the Company. The Employee acknowledges
receipt of copies of all such rules and policies committed to writing as of the
date of this Agreement.

2.4
The Employee specifically covenants, warrants and represents to the Company that
he has the full, complete and entire right and authority to enter into this
Agreement, that he has no agreement, duty, commitment or responsibility of any
kind or nature whatsoever with any corporation, partnership, firm, company,
joint venture or other entity or other person which would conflict in any manner
whatsoever with any of his duties, obligations or responsibilities to the
Company pursuant to this Agreement, that he is not in possession of any document
or other tangible property of any corporation, partnership, firm, company, joint
venture or other entity or other person of a confidential or proprietary nature
which would conflict in any manner whatsoever with any of his duties,
obligations or responsibilities to the Company pursuant to his Agreement, and
that he is fully ready, willing and able to perform each and all of his duties,
obligations and responsibilities to the Company pursuant to this Agreement.
 
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3.0
Compensation and Benefits. During the Employment Period, unless sooner
terminated in accordance with the provisions of Section 4, the Employee shall
receive the following compensation and benefits:

3.1
Salary. The Company shall pay the Employee, in equal semi-monthly installments
or otherwise in accordance with the Company’s standard payroll policies as such
policies may exist from time to time, an annual base salary of $550,000. Such
salary shall be subject to review, as determined by the Company’s Compensation
Committee and approved by the Board, on an annual basis, but the Board shall not
decrease the Employee’s annual base salary at any such annual review.

3.2
Cash Performance Bonus. The Employee will be included in the Company’s annual
bonus compensation program based on a June 30th year end in an amount to be
decided by the Company’s Compensation Committee and approved by the Board,
payable no later than September 30th of each year during the Employment Period.
The annual incentive bonus target shall be set by the Compensation Committee,
but shall be no less than sixty percent (60%) of annual base salary and will be
based on specific performance objectives as predetermined by the Compensation
Committee, with the Compensation Committee determining the June 30th year end
percent achievement of performance objectives. The Compensation Committee may
recommend a discretionary additional amount based on performance.

3.3
Stock Options. As additional compensation for services rendered, the Company has
granted to the Employee the right and option to purchase shares of the Company’s
Common Stock and in the future may grant additional options to purchase shares
of the Company’s Common Stock to the Employee in accordance with the terms of
the Company’s stock plan then in effect. Notwithstanding any option certificate
or agreement to the contrary, the following provisions apply to all options
granted to the Employee either prior to or after the Commencement Date:

(a)
All such options that are not vested as of the Date of Termination (as defined
in Section 6) shall immediately vest and become fully exercisable as of the Date
of Termination, except in the case of termination: (i) for Cause (as defined in
Section 6) or (ii) at the election of the Employee for any reason other than
pursuant to Section 4.1 or for Good Reason pursuant to Section 4.4 or 4.5.
Notwithstanding the foregoing if upon a Change in Control as defined in Section
6.5 (c) or (d), any of the options are terminated in connection with the Change
in Control, then all such options that are not vested as of the date of the
Change in Control shall immediately vest and become fully exercisable
immediately prior to the Change in Control; and

(b)
All of such options that are vested as of the Date of Termination and that were
outstanding immediately prior to the Commencement Date shall expire on the first
to occur of: (i) 24 months following the Employee’s retirement; (ii) 24 months
following the Employee’s Date of Termination other than (A) for Cause (as
defined in Section 6), or (B) termination at the election of the Employee
pursuant to Section 4.6; (iii) the expiration date of the option as set forth in
the applicable option certificate or agreement; or (iv) as otherwise provided in
the applicable option plan in the event of the dissolution or liquidation of the
Company, or a merger, reorganization or consolidation in which the Company is
not the surviving corporation. For purposes of this subsection, “retirement”
requires that the Employee not render services of any nature for any entity as a
regular employee, and not render services of any nature for any entity for more
than an average of twenty (20) hours per week as a consultant or term employee.
All of such options that were granted on or after the Commencement Date shall
expire on the expiration date of the option as set forth in the applicable
option certificate or agreement in the event the Employee’s employment
terminates other than (A) for Cause (as defined in Section 6), or (B) at the
election of the Employee pursuant to Section 4.6.

Nothing in this Section 3.3 shall apply to or affect any equity award that is
not either an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”) or a non-qualified stock option.
 
3.4
Restricted Share Units. As additional compensation for services rendered, the
Company has granted to the Employee restricted share units for the issuance of
the Company’s Common Stock and in the future may grant additional restricted
share units for the issuance of the Company’s Common Stock to the Employee in
accordance with the terms of the Company’s stock plan then in effect.
Notwithstanding any restricted share unit certificate or agreement to the
contrary, all restricted share units granted to the Employee either prior to or
after the Commencement Date that are not vested as of the Date of Termination
(as defined in Section 6) shall immediately vest as of the Date of Termination,
except in the case of termination: (a) for Cause (as defined in Section 6) or
(b) at the election of the Employee for any reason other than pursuant to
Section 4.1 or for Good Reason pursuant to Section 4.4 or 4.5. To the extent
that vesting of any such restricted shares units otherwise would have been
contingent upon the achievement of performance objectives, vesting of such
restricted share units pursuant to this Section 3.4 shall be (i) at the “target”
level, regardless of achievement of performance objectives, in the case of
termination pursuant to Section 4.3 or 4.5; or (ii) based upon actual
achievement of performance objectives as determined after the end of the
applicable performance period, in the case of termination under any other
circumstances entitling the Employee to accelerated vesting pursuant to this
Section 3.4. Notwithstanding the foregoing, if upon a Change in Control as
defined in Section 6.5 (c) or (d), any of the restricted share units are
terminated in connection with the Change in Control, then all such restricted
share units that are not vested as of the date of the Change in Control shall
vest as of the date of the Change in Control.
 
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3.5
Fringe-Benefits. The Employee shall be entitled to participate in all benefit
programs that the Company establishes and makes available to its employees, if
any, to the extent that the Employee’s position, tenure, salary, age, health and
other qualifications make him eligible to participate. The Employee shall also
be entitled to holidays and annual vacation leave in accordance with the
Company’s policy as it exists from time to time.

3.6
Reimbursement of Expenses. The Company shall reimburse the Employee for all
reasonable travel, entertainment and other expenses incurred or paid by the
Employee in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request, provided however, that the
amount available for such travel, entertainment and other expenses may be fixed
in advance by the Board.

3.7
Insurance. The Employee will be covered under the Company’s Directors’ and
Officers’ liability insurance to the same extent the Company’s directors and
other officers are covered.

4.0
Employment Termination. The employment of the Employee by the Company pursuant
to this Agreement shall terminate upon the occurrence of any of the following:

4.1
Expiration of the Employment Period in accordance with Section 1, unless the
Company and Employee agree to extend the Agreement term or otherwise continue
Employee’s employment on mutually agreeable terms.

4.2
At the election of the Company, for Cause (as defined in Section 6), immediately
upon written notice by the Company to the Employee, which notice of termination
shall have been approved by a majority of the Board.

4.3
Immediately upon the death or determination of Disability (as defined in Section
6) of the Employee.

4.4
At the election of the Employee, for Good Reason (as defined in Section 6),
immediately upon written notice of not less than sixty (60) days prior to
termination by the Employee to the Company.

4.5
At the election of the Company upon or within twelve (12) months following a
Change in Control (as defined in Section 6), or at the election of the Employee
for Good Reason (as defined in Section 6) upon or within twelve (12) months
following a Change in Control (as defined in Section 6), immediately upon
written notice of termination.

4.6
At the election of either party, upon written notice of termination.

5.0
Effect of Termination.

5.1
Compensation & Benefits.

(a)
As referenced in this section, compensation following the Employee’s termination
shall be in the form of severance. Severance will be based on the employee’s
base salary in effect as of the employee’s last day of employment (without
regard to any reduction that constitutes Good Reason) and will be paid in one
lump-sum amount.

(b)
Severance is not considered compensation for purposes of employee and employer
matching contributions under the 401(k) plan.

(c)
As referenced in this section, upon termination of the Employee’s employment
with the Company, medical and dental benefits will be available to the Employee,
at his election, solely pursuant to the provisions of COBRA with the Company
paying the full cost of COBRA coverage for a period up to 24 months if
employment is terminated for any reason except an Employee resignation without
Good Reason (as defined in Section 6) and a Company discharge for Cause (as
defined in Section 6). If the Employee is discharged for Cause or the Employee
resigns without Good Reason, the Employee will be required to remit the COBRA
cost (102% of total benefit cost) of coverage.

(d)
Upon termination of the Employee’s employment with the Company, apart from the
Employee’s election under COBRA to continue medical and dental benefits (as
described in Section 5.1(c)), the Employee will cease to be eligible for
participation in the Company’s health and welfare insurance and any other fringe
benefit programs that pursuant to their contracts or Company policy require an
active employee status.
 
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5.2
Termination By The Company or at Election of the Employee (other than for Good
Reason).

(a)
If the Employee elects to terminate his employment for any reason other than for
Good Reason pursuant to Section 4.4 or 4.5, no severance and/or benefits shall
be paid, and the Employee shall be entitled only to receive payment of his
earned but unpaid salary, and accrued vacation, as of his last day of actual
employment by the Company, which amounts shall be paid within ten (10) days
after the Date of Termination;

(b)
If the Company elects to terminate the Employee (other than for Cause) pursuant
to Section 4.6, or if the Employee’s employment terminates upon the expiration
of this Agreement pursuant to Section 4.1, the Company shall pay to the Employee
twenty-four (24) months of his salary in effect on the Date of Termination in
one-lump sum amount within sixty (60) days after the Date of Termination, plus
medical and dental benefits (as described in Section 5.1(c));

(c)
If the Company terminates the Employee for Cause pursuant to Section 4.2, no
severance and/or benefits shall be paid, and the Employee shall be entitled only
to receive payment of his earned but unpaid salary, and accrued vacation, as of
the Date of Termination. Employee may elect COBRA medical and dental benefits,
in which case the Employee will be required to remit the COBRA cost (102% of
total benefit cost) of coverage.

5.3
Termination By Employee Election For Good Reason. If the Employee terminates
employment at his election for Good Reason pursuant to Section 4.4, other than
as provided for in Section 5.4, the Company shall pay to the Employee
twenty-four (24) months of his salary in effect on the Date of Termination in
one-lump sum amount within sixty (60) days after the Date of Termination, plus
medical and dental benefits (as described in Section 5.1(c)).

5.4
Termination Following a Change In Control. If the Company terminates the
employment relationship upon or following a Change In Control pursuant to
Section 4.5, or if the Employee terminates employment at his election for Good
Reason upon or following a Change in Control pursuant to Section 4.5:

(a)
The Company shall pay to the Employee his annual salary in effect at that time
in a lump sum amount, calculated at two (2.0) times such annual salary, within
sixty (60) days after the Date of Termination, plus medical/dental care benefits
(as described in Section 5.1(c)); and

(b)
For a six (6) month period after the Date of Termination, the Company shall
reimburse the Employee for reasonable fees and expenses actually incurred by him
for outplacement services in an amount, not to exceed $25,000, mutually agreed
upon by and between the Employee and the Company, promptly, within ten days,
receipt by the Company of satisfactory evidence of payment of such fees and
expenses, but in no event no later than March 15 of the year following the year
in which the expenses were actually incurred.

5.5
Termination by Reason of the Employee’s Death or Disability. If, prior to the
expiration of the Employment Period, the Employee’s employment is terminated by
the Employee’s death or Disability pursuant to Section 4.3, the Company shall
pay to the Employee, or in the case of the Employee’s death, to the estate of
the Employee, twenty-four (24) months of his salary in effect on the Date of
Termination in one-lump sum amount within sixty (60) days after the Date of
Termination, plus medical and dental benefits (as described in Section 5.1(c)).
 
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5.6
Withholding and Deductions, 409A.

(a)
All payments hereunder shall be subject to withholding and to such other
deductions as shall at the time of such payment be required pursuant to any
income tax or other law, whether of the United States or any other jurisdiction,
and, in the case of payments to the executors or administrators to the
Employee's estate, the delivery to the Company of all necessary tax waivers and
other documents.

(b)
Notwithstanding anything in this Agreement to the contrary, in the event it
shall be determined that any payment or distribution by the Company or any of
its affiliated companies to or for the benefit of the Employee (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise) (a “Payment”) would be an excess parachute payment within the
meaning of section 280G of the Code (such excess only, an “Excess Payment”),
then the Employee shall forfeit the Excess Payments to the extent the after-tax
value to the Employee of the Payments as reduced by such forfeiture would be
greater than the after-tax value to the Employee of the Payments absent such
forfeiture. The forfeiture of Excess Payments, if applicable, shall be applied
by: first reducing the cash severance described in Section 5.4(a) hereof, then
to cancellation of accelerated vesting of performance-based equity awards (based
on the reverse order of the date of grant), then to cancellation of accelerated
vesting of other equity awards (based on the reverse order of the date of
grant), and then to any other Payments on a pro-rata basis. All determinations
required to be made under this Section 5.6(b), and the assumptions to be used in
arriving at such determination, shall be made by a major accounting firm with
expertise in such matters designated by the Company and reasonably acceptable to
the Employee (the “Accounting Firm”), which shall provide detailed supporting
calculations both to the Company and the Employee within 15 business days of the
receipt of notice from the Employee that there has been (or that there is likely
to be) a Payment, or such earlier time as is requested by the Company. In
connection with making determinations under this Section 5.6(b), the Accounting
Firm shall take into account the value of any reasonable compensation for
services to be rendered by the Employee before or after the change in control,
including any noncompetition provisions that may apply to the Employee (whether
set forth in this Agreement or otherwise), and the Company shall cooperate in
the valuation of any such services, including any noncompetition provisions. Any
determination by the Accounting Firm in good faith shall be binding upon the
Company and the Employee. All fees and expenses of the Accounting Firm for
services performed pursuant to this Section 5.6(b) shall be borne solely by the
Company.

(c)
As provided herein, the Company shall pay the full cost of the Employee’s COBRA
premiums under this Section 5.

(d)
The payments and benefits provided for in Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b)
and 5.6(c) of this Agreement are intended to constitute a short-term deferral
pursuant to Treas. Reg. § 1.409A-1(b)(4) and thus not “nonqualified deferred
compensation” subject to Section 409A of the Code. If the payments and benefits
provided for in Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) of this
Agreement are deemed to provide for the payment of non-qualified deferred
compensation benefits in connection with a separation of service under Section
409A(2)(a)(i) of the Code, the following interpretations apply to Sections
5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c): (i) Any termination of the Employee’s
employment triggering payment of benefits under Sections 5.2(b), 5.3, 5.4, 5.5,
5.6(b) and 5.6(c) must constitute a “separation from service” under Section
409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before distribution of
such benefits can commence. To the extent that the termination of Employee’s
employment does not constitute a separation of service under Section
409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of
further services that are reasonably anticipated to be provided by Employee to
the Company at the time the Employee’s employment terminates), any benefits
payable under Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) that constitute
deferred compensation under Section 409A of the Code shall be delayed until
after the date of a subsequent event constituting a separation of service under
Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes
of clarification, this Section 5.6(d) shall not cause any forfeiture of benefits
on the Employee’s part, but shall only act as a delay until such time as a
“separation from service” occurs; (ii) If the Employee is a “specified employee”
(as that term is used in Section 409A of the Code and regulations and other
guidance issued thereunder) on the date his separation from service becomes
effective, any benefits payable under Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b) and
5.6(c) that constitute non-qualified deferred compensation under Section 409A of
the Code shall be delayed until the earlier of (A) the business day following
the six-month anniversary of the date his separation from service becomes
effective, and (B) the date of his death, but only to the extent necessary to
avoid such penalties under Section 409A of the Code. On the earlier of (A) the
business day following the six-month anniversary of the date his separation from
service becomes effective, and (B) the Employee’s death, the Company shall pay
the Employee in a lump sum the aggregate value of the non-qualified deferred
compensation that the Company otherwise would have paid to the Employee prior to
that date under Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) of this
Agreement; (iii) It is intended that each installment of the payments and
benefits provided under Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) of
this Agreement shall be treated as a separate “payment” for purposes of Section
409A of the Code; (iv) Neither the Company nor the Employee shall have the right
to accelerate or defer the delivery of any such payments or benefits except to
the extent specifically permitted or required by Section 409A of the Code); and
(v) to the extent that the period between the Date of Termination and the date
upon which payment is required to be made or commence begins in one calendar
year and ends in a second calendar year, payment will be made or commence in the
second calendar year.

5.7
Release of Claims.  The Employee’s entitlement to severance, payment of COBRA
premiums, and accelerated vesting of options, restricted share units and other
equity incentive awards, is contingent upon the Employee’s execution, within 21
days after the Date of Termination (or such longer period as required by
applicable law), and non-revocation of a general release of claims in a form
prepared by the Company and presented to the Employee upon termination of his
employment hereunder, as well as the Employee’s compliance with the provisions
of Section 7 hereof.

5.8
No Requirement to Mitigate. The Employee shall not be required to mitigate the
amount of any payment provided for in this Section 5 by seeking other employment
or otherwise.
 
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6.0
Definitions. For purposes of this Agreement the following definitions apply:

6.1
“Cause” shall mean the occurrence of any of the following circumstances:

(a)
(i) the Employee’s material breach of, or habitual neglect or failure to perform
the material duties which he is required to perform under, the terms of this
Agreement; (ii) the Employee’s material failure to follow the reasonable
directives or policies established by or at the direction of the Board; or (iii)
the Employee’s engaging in conduct that is materially detrimental to the
interests of the Company such that the Company sustains a material loss or
injury as a result thereof, provided that the breach or failure of performance
by the Employee under subparagraphs (i) through (iii) hereof is not cured, to
the extent cure is possible, within ten (10) days of the delivery to the
Employee of written notice thereof;

(b)
the willful breach by the Employee of Section 7 of this Agreement or any
provision of any confidentiality, invention and non-disclosure, non-competition
or similar agreement between the Employee and the Company; or

(c)
the conviction of the Employee of, or the entry of a pleading of guilty or nolo
contendere by the Employee to, any crime involving moral turpitude or any
felony.

6.2
“Date of Termination” shall mean the Employee’s last day of actual employment by
the Company (or its successor) for any reason including death or Disability.

6.3
“Disability” shall mean the inability of the Employee, by reason of illness,
accident or other physical or mental disability, for a period of 120 days,
whether or not consecutive, during any 360-day period, to perform the services
contemplated under this Agreement. A determination of disability shall be made
by a physician satisfactory to both the Employee and the Company; provided,
however, that if the Employee and the Company do not agree on a physician, the
Employee and the Company shall each select a physician and these two together
shall select a third physician, whose determination as to disability shall be
binding on all parties.

6.4
“Good Reason” shall mean the occurrence of any of the following circumstances,
and the Company’s failure to cure such circumstances within thirty (30) days of
the delivery to the Company of written notice by the Employee of such
circumstances; provided that the Employee gives notice to the Company of the
existence of the event or condition constituting Good Reason within thirty (30)
days after such event or condition initially occurs or exists, and the Employee
terminates his employment within one hundred and twenty (120) days after the
initial occurrence of the event or condition constituting Good Reason:

(a)
any material adverse change in the Employee’s duties, authority or
responsibilities as described in Section 2.1 hereof which causes the Employee’s
position with the Company to become of significantly less responsibility or
assignment of duties and responsibilities inconsistent with the Employee’s
position;

(b)
a material reduction in the Employee’s salary as in effect on the Commencement
Date or as the same may be increased from time to time;

(c)
the failure of the Company to continue in effect any material compensation or
benefit plan in which the Employee participates as in effect on the Commencement
Date, unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by the
Company to continue the Employee’s participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the Employee’s participation
relative to other participants, as in effect on the Commencement Date;

(d)
any material adverse change in the Employee’s compensation resulting from (i)
the failure by the Company to continue to provide the Employee with benefits
substantially similar to those enjoyed by the Employee under any of the
Company’s health and welfare insurance, retirement and other fringe-benefit
plans insurance, in which the Employee was participating as in effect on the
Commencement Date, (ii) the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits, or (iii) the
failure by the Company to provide the Employee with the number of paid vacation
days to which he is entitled in accordance with the Company’s normal vacation
policy in effect on the Commencement Date or in accordance with any agreement
between the Employee and the Company existing at that time; or

(e)
the relocation of the Employee to a location which is a material distance from
Cranbury, New Jersey.

(f)
For purposes of this Agreement, “Good Reason” shall be interpreted in a manner,
and limited to the extent necessary, so that it will not cause adverse tax
consequences for either party with respect to Section 409A of the Code, and any
successor statute, regulation and guidance thereto.
 
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6.5
“Change in Control” shall mean the occurrence of any of the following events:

(a)
any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company) becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 50% of the combined voting power of the Company’s
then outstanding securities;

(b)
the date the individuals who, during any twelve month period, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director during the
twelve month period whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) shall be, for purposes of this Agreement, considered as though
such person were a member of the Incumbent Board;

(c)
a merger or consolidation of the Company approved by the stockholders of the
Company with any other corporation, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) 50% or more of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to implement a
re-capitalization of the Company (or similar transaction) in which no “person”
(as defined in Section 6.4(a)) acquires more than 50% of the combined voting
power of the Company’s then outstanding securities; or

(d)
a sale of all or substantially all of the assets of the Company.

7.0
Restrictive Covenants.

(a)
For the purposes of this Agreement:

(i)
“Competing Products” means any products or processes of any person or
organization other than the Company in existence or under development, which are
substantially the same, may be substituted for, or applied to substantially the
same end use as the products or processes that the Company is developing or has
developed or commercialized during the time of the Employee’s employment with
the Company.

(ii)
“Competing Organization” means any person or organization engaged in, or with
definitive plans to become engaged in, research or development, production,
distribution, marketing or selling of a Competing Product.

(b)
The Employee acknowledges that he has, on or prior to the date of the Agreement,
executed and delivered to the Company an Employee Agreement on Confidentiality,
Intellectual Property, Debarment Certification and Conflict of Interest (the
“Confidentiality Agreement”) and the Employee hereby affirms and ratifies his
obligations thereunder; and the Employee agrees that after termination by the
Company for Cause pursuant to Section 4.2 (except in the case where such
termination occurs within 12 months following a Change in Control), by the
Employee pursuant to Section 4.6, or by either party upon expiration of the
Employment Period, he will not render services of any nature, directly or
indirectly, to any Competing Organization in connection with any Competing
Product within any geographical territory as the Company and such Competing
Organization are or would be in actual competition, for a period of twenty-four
(24) months, commencing on the Date of Termination.

(c)
The Employee agrees that he will not, during the Employment Period and for a
period of nine (9) months commencing on the Date of Termination, directly or
indirectly employ, solicit for employment, or advise or recommend to any other
person that they employ or solicit for employment, any person whom he knows to
be an employee of the Company or any parent, subsidiary or affiliate of the
Company.

(d)
In the event a court of competent jurisdiction should find any provision in this
Section 7 to be unfair or unreasonable, such finding shall not render such
provision unenforceable, but, rather, this provision shall be modified as to
subject matter, time and geographic area so as to render the entire section
valid and enforceable.
 
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8.0
Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon either: (a) personal delivery; or (b)
three (3) days following deposit with the United States Postal Service for
delivery by registered or certified mail, postage prepaid, or one (1) day
following deposit with a reputable overnight courier service, addressed to the
other party at the address shown above, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 8.

9.0
Pronouns. Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular forms of nouns and pronouns shall include the plural, and vice versa.

10.0
Entire Agreement. This Agreement, together with the Confidentiality Agreement,
constitutes the entire agreement between the parties and supersedes all prior
agreements and understandings, whether written or oral, relating to the subject
matter of this Agreement, including the Employment Agreement between the Company
and the Employee dated as of July 1, 2016.

11.0
Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee. Any such amendment
shall comply with the requirements of Section 409A of the Code, if applicable.

12.0
Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of New Jersey, without regard to its principles of
conflict of laws.

13.0
Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including
any corporation with which or into which the Company may be merged or which may
succeed to its assets or business; provided, however, that the obligations of
the Employee are unique and personal and shall not be assigned by him.

14.0
Waiver of Breach.

14.1
Waiver by the Company. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion. No waiver by the Company shall be valid unless in writing
signed by an authorized officer of the Company and approved by a majority of the
Board.

14.2
Waiver by the Employee. No delay or omission by the Employee in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Employee on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion. No waiver by the Employee shall be valid unless in a
writing signed by the Employee.

15.0
Miscellaneous.

15.1
The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section
of this Agreement.

15.2
In case any provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.

16.0
Survival. The provisions of Sections 3.3, 5, 6, 7 and 8 shall survive the
termination of this Agreement.

17.0
Timing of Reimbursements. All reimbursements made by the Company pursuant to
this Agreement will be made within 30 days from the date the Employee submits
documentation of the expenses. Employee will submit documentation substantiating
expenses within 30 days from the date the expenses are incurred.
 
 
 
 
8

EXECUTION COPY
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal effective as of the day and year set forth above.
 
 
PALATIN TECHNOLOGIES, INC.
 
 
EMPLOYEE
 
/s/ Carl Spana
 
 
/s/ Stephen T. Wills
 
Name: Carl Spana
 
 
Name: Stephen T. Wills
 
Title: Chief Executive Officer and President
 
 
Title: Executive V.P., Chief Financial Office rand Chief Operating Officer
 
Date: June 26, 2019  
 
 
Date: June 26, 2019  
 

 
 
 
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