etothemploymentagreement






    EXECUTIVE EMPLOYMENT AGREEMENT     This Executive Employment Agreement (the “Agreement”) is made and entered into  effective as of June 15, 2021 (the “Effective Date”) by and between Aquestive Therapeutics, Inc.  (the “Company”), and A. Ernest Toth, Jr. (the “Executive”).     WITNESSETH:     WHEREAS, the Executive is currently engaged by the Company as its Interim Chief  Financial Officer pursuant to a consulting agreement between the Company and Danforth  Advisors, LLC dated as of December 16, 2019, as amended; and      WHEREAS, the parties desire that the Executive be employed as a full-time  employee of the Company as its Senior Vice President and Chief Financial Officer upon  the terms and conditions of this Agreement;     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein  set forth, and for other good and valuable consideration (the receipt and sufficiency of which are  hereby acknowledged), the parties hereto, intending to be legally bound, hereby agree as follows:      1.  Employment.  During the Employment Term (as hereinafter defined), the  Executive agrees to be employed by and to serve the Company as its Senior Vice President and  Chief Financial Officer, and the Company agrees to employ and retain Executive in such capacity.  The Executive shall report directly to the Chief Executive Officer of the Company (the  “CEO”).  The Executive shall: (i) devote the Executive’s entire business time, energy and skill  to the affairs of the Company; (ii) faithfully, loyally, and industriously perform all duties  incident to the position of Senior Vice President and Chief Financial Officer, as well as any  other duties consistent with the stature and responsibility of the Executive's position as may from  time to time be assigned by the CEO; and (iii) comply with the Company’s policies in effect  from time to time. Notwithstanding any provision herein to the contrary, Executive shall not be  precluded from devoting reasonable periods of time required for serving as a member of one or  more advisory boards or boards of directors of companies or organizations or engaging in other  minor business activities, so long as such memberships or activities do not interfere with the  performance of Executive's duties hereunder and are not directly or indirectly competitive with,  nor contrary to, the business or other interests of the Company, subject to prior approval by the  CEO.     2.  Employment Term.  The term of this Agreement shall begin on the Effective  Date and continue until terminated in accordance with this Agreement (the “Employment  Term”).      3. Compensation.      A. Base Salary.  The Company shall pay Executive a base salary (the “Base  Salary”) at a rate of $396,000 per annum, payable in accordance with the standard payroll  practices of the Company. The Board of Directors of the Company (the “Board”) and/or the  





 






2    Compensation Committee of the Board (the “Compensation Committee”) will review  Executive's Base Salary at least annually and, with recommendations from the CEO, may  increase but not decrease the then current annual rate.       B. Annual Bonus.  Executive shall be eligible for a target annual  performance bonus (the “Annual Bonus”) of at least fifty percent (50%) of Executive's Base  Salary for each calendar year, provided the Company and Executive each achieves performance  targets established by the Board or the Compensation Committee, with recommendations  from the CEO. The Annual Bonus amount, if any, for a calendar year will be determined by  the Board or the Compensation Committee with recommendations from the CEO and paid by the  Company by March 15th of the following calendar year, unless it is administratively  impracticable to determine and/or make the payment by such date. Except as otherwise provided  by this Agreement, the Executive must be employed by the Company on the day any Annual  Bonus payment is due and payable in order to receive said bonus payment. If the Company  exceeds established performance targets, the Board or the Compensation Committee may,  in its sole discretion, with recommendations from the CEO, increase the amount of the  Annual Bonus. For clarity, Executive shall be eligible for an Annual Bonus for the  calendar year 2021 in accordance with the provisions of this Section 3(C) as if the  Executive's employment had commenced on January 1, 2021.      C. Stock Options. Executive shall receive an award of One Hundred Twenty  Thousand (120,000) stock options granted under the Company’s Equity Incentive Plan or similar  benefit plan, effective as the first day of Executive’s employment. These stock options will have  an exercise price equal to the fair market value of the Company’s stock on the first day of  Executive’s employment and will vest Twenty-five Percent (25%) on the first and second  anniversaries of the grant with the remaining Fifty Percent (50%) vesting on the third  anniversary of the grant. The Executive shall be eligible to participate in other employee  incentive plans and equity-based compensation awards of the Company during the Employment  Term at the times and in the amounts as the Board in its sole discretion, with recommendations  from the CEO, shall determine.     4. Additional Benefits.      A. Executive Benefits.  During the Employment Term, Executive shall  be eligible to participate in such employee benefit plans as are generally available to other  senior executives of the Company.       B. Paid Time Off.  The Executive will be allowed to take up to four weeks  of vacation each year, and shall be eligible for such sick leave and other paid time off in  accordance with the Company’ policies applicable to other executives generally.       C. Expense Reimbursement.  The Company will pay or reimburse  Executive for reasonable expenses incurred by Executive in connection with the performance  of the Executive’s duties and responsibilities under this Agreement, subject to presentation of  vouchers and compliance with generally applicable business expense reimbursement policies  of the Company.  





 






3      5. Termination.      A. Termination for Cause.  The Company may terminate Executive's  employment for “Cause” if Executive:    (i)  is convicted of or pleads nolo contendre to a felony (or its equivalent  under applicable state law);     (ii)  commits fraud or a material act or omission involving dishonesty with  respect to the Company or any of its respective employees, customers or  affiliates;     (iii)  willfully and repeatedly fails or refuses to carry out the material  responsibilities of Executive's employment by the Company (except where  due to physical or mental incapacity);     (iv)  engages in willful misconduct or a pattern of behavior which in either  case has had or is reasonably likely to have a significant adverse effect on  the Company;     (v)  willfully engages in any act or omission which is in material violation  of the Company’s policy, including but not limited to engaging in insider  trading transactions or disseminating inside information; or     (vi) commits a material breach of Executive's material obligations under  this Agreement, including but not limited to Section 8.     A decision to terminate the Executive's employment for Cause shall be made, if at all, by  the CEO, after consultation with the Board, upon reasonable notice to Executive and an  opportunity for Executive, together with counsel, to be heard by the CEO, and the CEO finding  that, in his good faith opinion, Executive engaged in conduct set forth above and specifying the  particulars thereof in reasonable detail.  If the act or omission giving rise to the termination for  Cause is curable by Executive, the Company will provide thirty (30) days’ written notice to  Executive of the Company’s intent to terminate the Executive for Cause, with an explanation  of the reason(s) for the termination for Cause and, if Executive cures the act or omission  within the 30-day notice period, the Company will rescind the notice of termination and  Executive's employment will not be terminated for Cause at the end of the 30-day notice  period. If Executive has previously been afforded the opportunity to cure particular behavior  and successfully cured under this provision, the Company will have no obligation to provide  Executive with notice and an opportunity to cure a recurrence of that behavior prior to a  termination for Cause. For purposes of this Section 5(A), an action or inaction shall not be  treated as “willful misconduct” if authorized by the CEO or the Board, or taken by Executive  in the good faith belief that it was in, or not opposed to, the best interests of the Company.    





 






4    B. Termination by Reason of Permanent Disability.  In a manner  consistent with the Americans with Disabilities Act and the Family and Medical Leave Act, this  Agreement may be terminated at the Company’s option immediately upon notice to Executive  if Executive shall suffer a Permanent Disability. For purposes of this Agreement, the  term “Permanent Disability” shall mean the Executive's inability to perform the essential  functions of the Executive’s job under this Agreement, with or without reasonable  accommodation, for a period of 150 consecutive days or for an aggregate of 180 days,  whether or not consecutive, in any twelve (12) month period, due to illness, accident or other  physical or mental incapacity, as determined by a duly licensed physician mutually agreed to  by both the Executive and the Company.       C. Termination by Reason of Death.  In the event of the Executive's  death, the Executive's employment shall be deemed to have terminated on the date of  Executive's death.      D. Voluntary Resignation.  Executive may terminate this Agreement at  any time, subject to providing thirty (30) days' written notice to the Company. The Company  may waive such notice and/or set an earlier termination date, without pay in lieu of notice.       E. Termination without Cause.  The Company may terminate Executive's  employment under this Agreement at any time without Cause upon ninety (90) days’ prior  written notice to Executive. The Company, at its sole discretion, may relieve Executive of  the Executive’s active duties during the notice period.  Executive's termination without Cause  will be effective upon the expiration of the 90-day notice period. For purposes of this  Agreement,  a termination of employment by the Company that purports to be for Cause, but is  not in full compliance with all of the substantive and procedural requirements relating to a  termination for Cause under this Agreement, shall be treated as a termination of employment  without Cause.       F. Termination for Good Reason.  The Executive may terminate  the Executive’s employment under this Agreement at any time for Good Reason upon the  occurrence (or within 180 days following the occurrence, provided that the Executive furnishes  the Company with written notice of the Executive’s belief that grounds for a Good Reason  termination by the Executive exists no later than sixty (60) days after becoming aware of the  occurrence) of any one or more of the following acts or omissions which, if curable, is not  cured within thirty (30) days after notice of the occurrence is provided by Executive: (1) any  action by the Company which results in a material diminution in Executive's position, authority,  duties or responsibilities as Senior Vice President and Chief Financial Officer of the Company  (including status, offices, titles and reporting requirements contemplated by this Agreement); (2)  a material breach by the Company of its obligations under this Agreement, including, without  limitation, a reduction of Executive's Base Salary or target bonus opportunity in violation of  this Agreement; or (3) the Company requiring the Executive to be based at any office  location that is more than fifty (50) miles from its current headquarters in Warren, New Jersey,  except for travel reasonably required in connection with the performance of the Executive's  responsibilities hereunder.  Notwithstanding the foregoing, if a “Change in Control” (as  hereinafter defined) occurs, the Executive will not have “Good Reason” to terminate the  





 






5    Executive’s employment under this Agreement merely because the Executive reports to a  senior executive officer of a company that acquires the Company.     6. Obligations of the Company Upon Termination.       A. Termination for Cause.  In the event that the Executive's employment  under this Agreement is terminated for Cause, the Company shall have no obligation to pay the  Base Salary or any other compensation provided under this Agreement, to or for the benefit of  the Executive, for any period after the effective date of such termination, or to pay the Target  Annual Bonus or any other bonus or incentive compensation for the fiscal year in  which such termination occurs; provided, however, that the Company shall promptly  provide: (i) all Base Salary earned by the Executive through the effective date of such  termination; (ii) any unpaid Annual Bonus earned by the Executive for the year preceding  the year in which the Executive’s employment terminates; and (iii) any benefits under any  plans of the Company in which the Executive is a participant, consistent with the  Executive's (or the Executive’s beneficiaries’) rights under such plans.      B. Termination by Reason of Death or Permanent Disability.  In the event  that the Executive's employment under this Agreement terminates due to the Executive’s  death or is terminated by the Company due to the Executive's Permanent Disability, the  Company shall, within five (5) business days following such termination, provide to the  Executive (or the Executive’s estate or other beneficiaries, as the case may be): (i) a cash  payment consisting of the sum of any previously unpaid Base Salary earned by the Executive  through the date on which the Executive’s employment terminates, any unpaid Annual Bonus  earned by the Executive for the year preceding the year in which the Executive’s  employment terminates, and any accrued and unused vacation pay for the year in which the  Executive’s employment terminates; (ii) any benefits under any plans of the Company in  which the Executive is a participant, to the full extent of the Executive's (or the Executive’s  beneficiaries') rights under such plans; (iii) a cash payment consisting of the Executive's  Target Annual Bonus for the year of termination, pro-rated for the number of days the  Executive is employed during the calendar year in which the Executive’s employment  terminates (“Pro Rata Bonus”); and (iv) accelerated vesting of all outstanding stock  options, restricted stock units (“RSUs”), stock appreciation rights (“SAR”), restricted  stock (“Restricted Stock”) and other equity-based compensation awards as if the Executive's  employment had continued through the end of the year in which the Executive’s  employment terminates or, in the case of any such award that is subject to “cliff vesting,” on  a pro rata basis determined by a fraction the numerator of which is the number of days during  such vesting period, and the denominator of which is the total number of days in the vesting  period that have elapsed as of the date the Executive’s employment terminates.   Notwithstanding the immediately preceding sentence, with respect to any unvested stock  options, RSUs, SARs, Restricted Stock and other equity-based compensation that are  unvested at the time of termination of employment under this Section 6(B), and which are  subject to a performance condition or performance period that ends at or after the date of  employment termination, such awards will be assumed to have been achieved at “target”,  and the Executive will be entitled to receive a pro rata share of such awards, determined by  a fraction the numerator of which is the number of days during the performance period in  





 






6    which Executive was employed, and the denominator of which is the total number of days  in the performance period.  Stock options, SARs and other equity-based compensation  awards that are or become vested upon termination of the Executive's employment due to  death or Permanent Disability will be exercisable (if applicable) for at least one year  after the date of such termination or, if earlier, until the expiration of the stated term  of the award.      C. Voluntary Resignation.  In the event that the Executive voluntarily  resigns from the Executive’s employment with the Company, the Company may, at its  discretion, continue the Executive's employment with the Company for any part or the full  duration of the 30-day notice period required under Section 5(D). In the event of said  termination, the Company shall have no obligation to pay the Base Salary or any other  compensation provided under this Agreement to or for the benefit of the Executive for any  period after such termination; provided, however, that the Company shall promptly  provide: (i) all Base Salary earned by the Executive through the date of such termination;  and (ii) any benefits under any plans of the Company in which Executive is a participant,  to the full extent of the Executive's (or the Executive’s beneficiaries’) rights under such  plans.       D. Termination by the Company Without Cause or by Executive for  Good Reason—Unrelated to Change in Control. In the event that the Executive's  employment under this Agreement is terminated by the Company without Cause (pursuant to  Section 5(E)) or by the Executive for Good Reason (pursuant to Section 5(F)), the Company  shall provide to the Executive: (i) a cash payment consisting of the sum of any previously  unpaid Base Salary earned by the Executive through the date on which the Executive’s  employment terminates, any unpaid Annual Bonus earned by the Executive for the year  preceding the year in which the Executive’s employment terminates, and any accrued and  unused vacation pay for the year in which the Executive’s employment terminates; (ii)  any benefits under any plans of the Company in which the Executive is a participant, to  the full extent of the Executive's (or the Executive’s beneficiaries') rights under such  plans; (iii) a cash payment consisting of the Executive's Pro Rata Bonus for the year of  termination; (iv) monthly payments for a period of twelve (12) months (the “Severance  Period”) following the termination of Executive's employment equal to 1/12 of the sum of  Executive's Base Salary and Target Annual Bonus (in each case determined without regard to  any reduction prior to the termination of Executive's employment); (v) continuing coverage  under the Company’s group health and life insurance plans in which the Executive is a  participant immediately before the termination of the Executive’s employment (or any successor  plans), at the same levels and on the same terms and conditions as are provided to similarly  situated executives during the Severance Period (or, if such coverage is not permitted by law or  the applicable plan, the cash equivalent of such coverage, grossed up if and to the extent  necessary to negate the tax impact of such payment and to negate the tax impact of the gross-up  payment); and (vi) full and immediate vesting of unvested stock options, RSUs, SARs,  Restricted Stock and other equity-based compensation awards which are outstanding as of  the date of the termination of Executive’s termination and due to become vested during the  Severance Period, with any such stock options, SARs and other equity-based  compensation awards that are vested on the date of such termination or become vested in  





 






7    accordance with this Section 6(D) remaining exercisable, as applicable, for one year  after the date the Executive's employment terminates or, if earlier, until the  expiration of the stated term of the award.  Notwithstanding the immediately  preceding sentence, with respect to any unvested stock options, RSUs, SARs,  Restricted Stock and other equity-based compensation that are unvested at the time of  termination of employment under this Section 6(D), and which are subject to a  performance condition or performance period that ends at or after the date of  employment termination, such awards will be assumed to have been achieved at  “target.”  The payments and benefits described in parts (iv) – (vi) of this subsection  shall be conditioned upon and subject to the Executive's continuing compliance with the  Executive’s obligations under Section 8 of this Agreement, and the Executive's execution  and delivery of a general release substantially in the form annexed hereto as Exhibit A.      E. Termination in Conjunction with a Change in Control.      (1)  Severance Protection Upon Involuntary Termination. In the event that, during  the period beginning one hundred and eighty (180) days before the effective date  of a Change in Control and ending twelve (12) months following the effective  date of a Change in Control, the Executive's employment is terminated by the  Company without Cause (pursuant to Section 5(E)) or by the Executive for Good  Reason (pursuant to Section 5(F)), the Executive shall be entitled to the payments  and benefits described in the preceding Section 6(D) except (i) in lieu of the  severance payments described in Section 6(D)(iv), Executive will be entitled to  receive an immediate cash payment of an amount equal to twelve (12) months of  the Executive's Base Salary and 1.0 times the Target Annual Bonus (in each case  determined without regard to any reduction prior to the termination of Executive's  employment); and (ii) the benefit continuation period described in Section 6(D)(v)  shall commence on the date the Executive's employment terminates and expire  twelve (12) months from such date of termination. The payments and benefits  described in the preceding sentence and in Sections 6(D)(iv) and 6(D)(v) and the  single sum severance payment described in the preceding sentence shall be  conditioned upon and subject to the Executive's continuing compliance with the  Executive’s obligations under Section 8 of this Agreement, and the Executive's  execution and delivery of a general release substantially in the form annexed  hereto as Exhibit A.     (2)  Definition of Change in Control. For the purposes of this Agreement, a  “Change in Control” shall be deemed to have occurred if (a) any person (within the  meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as  amended (“Exchange Act”)), or group (within the meaning of Section 409A of the  Internal Revenue Code of 1986, as amended (the “Code”)), becomes, in any 12- month period ending on the date of the most recent acquisition of the voting  securities of the Company or any successor entity by such person, persons, or  group, directly or indirectly, the beneficial owner (within the meaning of Rule  13d-3 promulgated under the Exchange Act) of 40% or more of the outstanding  voting securities of the Company or successor entity; or (b) there shall have been  





 






8    consummated a consolidation, merger or reorganization of the Company or any  successor entity, unless the holders of the equity interests of the Company or  successor entity, immediately before such consolidation, merger or reorganization  own, directly or indirectly, at least a majority of the outstanding voting securities  or at least a majority of the aggregate fair market value of the corporation or other  entity resulting from such consolidation, merger or reorganization; or (c) a sale,  transfer, liquidation or other disposition of the Company or successor entity’s  assets and properties representing all or substantially all of the aggregate fair  market value of such assets and properties is consummated during any 12-month  period; provided, however, that no “Change in Control” shall be deemed to have  occurred under this Section 6(E)(2) unless such occurrence, event or condition  shall constitute a change in the ownership or effective control of the Company or  any successor entity or a change in the ownership of a substantial portion of the  Company or successor entity’s assets, each as determined under Section  409A(a)(2)(A)(v) of the Code.    F. 409A Compliance. The Company shall take all reasonable actions to  ensure that none of the amounts earned or payable under this Agreement or under any Company  stock purchase, compensation or other equity incentive plan will violate Section 409A of the  Code. To the extent necessary to comply with the restriction in Section  409A(a)(2)(B) of the Code concerning payments to “specified employees,” any  amounts payable on account of the Executive's separation from service shall be paid (or  commence to be paid in the case of any payments to be made in installments) on the first  business day of the seventh month following the Executive's date of termination (or death, if  earlier) and the first such payment shall include the cumulative amount of any payments that  would have been made prior to such date if not for such restriction, together with interest at an  annual rate equal to the minimum rate required by the Code in order to avoid the imputation of  interest on short-term loans between employers and employees.  The date of the Executive’s  termination of employment shall be determined in accordance with Treasury Regulation Section  1.409A-1(h).  Except as otherwise provide herein, any payment required as a result of a  termination of employment will be made (or, with respect to any payments to be made in  installments under this Agreement, commenced) within 45 days following such event.   Notwithstanding anything else herein to the contrary, to the extent that any payments due under  the terms of this Agreement are conditioned upon the delivery and non-revocation of a release,  and if any of those payments are determined to be nonqualified deferred compensation that is  subject to the requirements of Section 409A of the Code, and if the period for consideration and  revocation of such release spans two calendar years, then any such payment shall not be made  until the later of (i) the end of the revocation period following delivery of the release, or (ii) the  first business day of the second calendar year.      G. Value of Insurance Coverage During Severance Period.  To the extent any  medical or dental plan covering any post-employment period is a “self-insured medical  reimbursement plan” under Section 105(h) of the Code, and such coverage would be  discriminatory thereunder, the value of the insurance coverage during the post-termination  coverage period (based upon premium value) shall be reported as taxable income to the  Executive, and the Company shall pay the Executive promptly no later than January 15th of the  





 






9    year of coverage, such additional cash payments as are necessary for the Executive to receive the  same net after-tax benefits (taking into account all federal, state and local income, excise and  employment taxes) that the Executive would have received under such plans if the Executive had  continued to receive such plan benefits while employed with the Company; provided that any  such additional cash payment that would be so immediately paid shall be subject to the  provisions of Section 6(F) in connection with compliance with Section 409A of the Code.  7. Section 280G.  A. Notwithstanding any other provision of this Agreement or any other plan,  arrangement or agreement to the contrary, if any of the payments or benefits provided or to be  provided by the Company or its affiliates or subsidiaries to the Executive or for the Executive's  benefit pursuant to the terms of this Agreement or otherwise, including, without limitation,  payments in connection with a Change in Control or the vesting of shares of Restricted  Stock, Restricted Stock Units, Stock Appreciation Rights, stock options or other equity  awards or other non-cash benefits or property), whether pursuant to the terms of this  Agreement or any other plan, arrangement, or agreement with the Company or any affiliated  company (the “Total Payments”) (“Covered Payments”) constitute parachute payments  (“Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this  Section 7, be subject to the excise tax imposed under Section 4999 of the Code (or any successor  provision thereto) or any similar tax imposed by state or local law or any interest or penalties  with respect to such taxes (collectively, the “Excise Tax”), then prior to making the Covered  Payments, a calculation shall be made comparing (i) the Net Benefit (as defined below) to the  Executive of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit to the  Executive if the Covered Payments are limited to the extent necessary to avoid being subject to  the Excise Tax.  If the amount calculated under (i) above is less than the amount under (ii) above,  then the Covered Payments will be reduced or cut back by the minimum extent necessary to  ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the  “Reduced Amount”).  “Net Benefit” shall mean the present value of the Covered Payments net of  all federal, state, local, foreign income, employment and excise taxes.   B. Any such reduction shall be made in accordance with Section 409A of the  Code and the following:  (i) the Covered Payments which do not constitute nonqualified  deferred compensation subject to Section 409A of the Code shall be reduced first;  and  (ii) all other Covered Payments shall then be reduced as follows: (A)  cash payments shall be reduced before non-cash payments; and (B) payments to  be made on a later payment date shall be reduced before payments to be made on  an earlier payment date.  C. Any determination required under this Section 7 shall be made in writing  in good faith by an independent accounting firm selected by the Company (the “Accountants”).  The Company and the Executive shall provide the Accountants with such information and  documents as the Accountants may reasonably request in order to make a determination under  





 






10    this Section 7. For purposes of making the calculations and determinations required by this  Section 7, the Accountants may rely on reasonable, good faith assumptions and approximations  concerning the application of Section 280G and Section 4999 of the Code. The Accountants'  determinations shall be final and binding on the Company and the Executive. The Company shall  be responsible for all fees and expenses incurred by the Accountants in connection with the  calculations required by this Section 7.  D. It is possible that after the determinations and selections made pursuant to  this Section 7 the Executive will receive Covered Payments that are in the aggregate more than  the amount provided for under this Section 7 (“Overpayment”) or less than the amount provided  for under this Section 7 (“Underpayment”).   (i) In the event that: (A) the Accountants determine, based upon the  assertion of a deficiency by the Internal Revenue Service against either the  Company or the Executive which the Accountants believe has a high probability  of success, that an Overpayment has been made or (B) it is established pursuant to  a final determination of a court or an Internal Revenue Service proceeding that  has been finally and conclusively resolved that an Overpayment has been made,  then the Executive shall pay any such Overpayment to the Company.  (ii) In the event that: (A) the Accountants, based upon controlling  precedent or substantial authority, determine that an Underpayment has occurred  or (B) a court of competent jurisdiction determines that an Underpayment has  occurred, any such Underpayment, together with penalties accruing thereon, if  any, plus interest at the applicable federal rate (as defined in Section  7872(f)(2)(A) of the Code) from the date the amount would have otherwise been  paid to the Executive until the payment date, will be paid promptly by the  Company to or for the benefit of the Executive.  E. The Company shall have the right to control all proceedings with the  Internal Revenue Service that may arise in connection with the determination and assessment of  any Excise Tax and, at its sole option, the Company may pursue or forgo any and all  administrative appeals, proceedings, hearings, and conferences with any taxing authority in  respect of such Excise Tax (including any interest or penalties thereon).  Executive shall  cooperate with the Company in any proceedings relating to the determination and assessment of  any Excise Tax and shall not take any position or action that would materially increase the  amount of any Overpayment or Underpayment.   8. Covenants of the Executive.  In order to induce the Company to enter into  this Agreement and continue to employ the Executive hereunder, the Executive hereby  covenants and agrees as follows. For all purposes under this Section 8 herein, references to  “Company” shall be deemed to include the Company’s wholly-owned subsidiaries, if any, and  the Company’s “business” shall mean film based delivery systems to deliver drug actives,  nutraceuticals, cosmaceuticals or flavors, and soluble film based packaging systems and such  other lines of business in which the Company or its wholly-owned subsidiaries, if any, is  actively engaged or actively pursuing and with respect to which Executive has oversight  responsibility or is otherwise substantively involved.     





 






11    A. Non-Competition.  During the Employment Term, including  any extensions thereof, and for a period of twelve (12) months immediately following the  termination of Executive's employment under this Agreement for any reason other than death  (the “Restrictive Period”), except as provided herein, Executive shall not directly or indirectly:  (a) engage in or in any manner be connected or concerned, whether as an officer, director,  stockholder, partner, owner, employee, advisor, creditor, or otherwise with the development,  operation, management, or conduct of any business in the United States that competes with the  business of the Company being conducted at the time of such termination; (b) solicit or  otherwise attempt to divert business from or interfere in the Company relationship with any  supplier of the Company or any customer served by the Company or and potential customer  identified by the Company during the period of Executive's employment hereunder; or (c)  solicit, hire or otherwise interfere with the Company relationship with any person then or  previously employed by the Company; provided, however, that, after the termination of  Executive's employment, Executive shall not be bound by the Covenant set forth in this  subparagraph following a material breach by the Company of any of its obligations to the  Executive hereunder or in the event of the cessation or dissolution of the Company business.  As used herein, “cessation or dissolution” means total liquidation of the Company and does  not include a cessation of business due to any Change in Control. Nothing contained herein  shall prohibit Executive from owning up to 3% of the stock of a publicly traded company that  competes with the business of the Company or, following the termination of the Executive’s  employment with the Company, prevent the Executive from being employed by or otherwise  affiliated with a line of business of another company that engages in multiple lines of  business so long as the Executive is not employed by, does not provide services with  respect to and is not otherwise involved in the line or lines of business of such other  company that compete with the Company.       B. Confidentiality.  During the Employment Term, and following  the termination of this Agreement for any reason for as long as the information remains  confidential, Executive shall not make any use, for the Executive’s own benefit or for the  benefit of a business or entity other than the Company, of any verbal or written secret  or confidential information. Such confidential information shall include, but not be limited  to, customer lists, trade secrets, sales, marketing or consignment information, vendor lists or  operational resource information, forms, processes or procedures, budget and financial  statements or information, files, records, documents, compilation of data, engineering  drawings, computer print-outs, or any other data of or pertaining to the Company, its  business, customers and financial affairs, or its services not generally known within the  Company’s trade and which was acquired by the Executive during the Executive’s  affiliation with the Company. Executive shall not remove from the Company premises or  retain without the Company’s written consent any of the Company’s confidential  information as defined herein, or copies thereof or extracts therefrom. Executive shall  hold in a fiduciary capacity for the benefit of the Company all secret or confidential  information, knowledge, or data of the Company or its business or production operations  obtained by Executive during the Executive’s employment by the Company, which shall not  be generally known to the public or recognized as standard practice (whether or not developed  by Executive) and shall not, during the Executive’s employment hereunder or after the  termination of such employment, communicate or divulge any such information,  





 






12    knowledge or data to any person, firm or corporation other than the Company or persons,  firms or corporations designated by the Company. Executive acknowledges that this  information is treated as confidential by the Company, that the Company takes meaningful  steps to protect the confidentiality of this information, and that the Company has at all  times directed Executive to maintain the confidentiality of this information. Immediately  upon termination of this Agreement, Executive shall return all of the Company’s property to  it, including any and all copies of said property.  Notwithstanding this provision or any  provision in this Agreement to the contrary, nothing contained in this Agreement is intended to  nor shall it limit or prohibit the Executive, or waive any right on his part, to make any good  faith reports to, initiate or engage in communication with, respond to any inquiry from,  otherwise provide information to, participate in any investigation or proceeding that may be  conducted by, or obtain any monetary recovery from, any federal or state regulatory, self- regulatory, or enforcement agency or authority, as provided for, protected under or warranted  by applicable law, in all events without notice to or consent of the Company.      C. Ownership of Work Product.  Executive agrees that the Company shall  own all intellectual property including trade secrets, patents, patentable inventions,  discoveries and improvements that relate to the Company’s business that Executive  conceives, develops during the period of the Executive’s employment with the Company  or delivers to the Company while performing services pursuant to this Agreement (“Work  Product”). Executive further agrees to deliver to the Company, and that the Company shall  thereafter own for all purposes, all Work Product conceived or developed by the Executive  relating to the business of the Company which does not otherwise belong to Employee's former  employer or to which the former employer has no legal right or claim. Executive hereby  irrevocably extinguishes for the benefit of the Company and its assigns any moral right to the  Work Product recognized by applicable law. All Work Product shall be considered a work  made for hire by Executive and owned by the Company. If any of the Work Product may  not, by operation of law, be considered work made for hire by Executive for the Company, or  if ownership of all right, title and interest of the intellectual property rights therein shall not  otherwise vest exclusively in the Company, Executive agrees to assign, and upon creation  thereof automatically assign, without further consideration, the ownership of all trade  secrets, copyrights, patentable inventions, and other intellectual property rights therein  to the Company, its successors and assigns. The Company, its successors, and assigns, shall  have the right to obtain and hold in its or their own name copyrights, patents, registrations  and any other protection available in the foregoing. For purposes hereof, a “trade secret”  shall mean any information, including, but not limited to, technical or nontechnical data,  formulae, patterns, compilations, programs, devices, methods, techniques, drawings.  processes, financial data, financial plans, product plans or lists of actual or potential  customers or suppliers that derive economic value, actual or potential, from not being  generally known to, and not being readily ascertainable by proper means by, other persons  who can obtain economic value from their disclosure or use and are the subject of efforts  that are reasonable under the circumstances to maintain their secrecy. Executive agrees to  perform, upon the reasonable request of the Company and at no cost to the Company (other  than travel out of pocket costs where applicable), during or after the period(s) that this  Agreement remains in effect, such further acts as may be necessary or desirable to transfer,  perfect and defend the Company’s ownership of Work Product, or to enforce the  





 






13    Company’s Work Product against third parties. When requested, Executive shall promptly  and at no cost to the Company (other than travel out of pocket costs, where applicable): (a)  execute, acknowledge and deliver any requested affidavits and documents of assignment and  conveyance; (b) obtain and aid in the enforcement of copyright and, if applicable, patents  with respect to the Work Product in any countries; (c) provide testimony in connection  with any enforcement proceeding or any proceeding affecting the right, title or interest of the  Company in any Work Product; and (d) perform any other acts deemed necessary or  desirable to carry out the purposes of this Agreement.       D. Inventions. All discoveries, designs, improvements, ideas and  inventions, whether patentable or not, relating to (or suggested by or resulting from)  products, services, or other technology of the Company or relating to (or suggested by or  resulting from) methods or processes used or usable in connection with the business of the  Company that have been, or may be, conceived, developed or made by Executive during the  Employment Term (hereinafter “Inventions”), either solely or jointly with others, shall  automatically become the sole property of the Company. Executive shall immediately  disclose to the Company all such Inventions and shall, without additional compensation,  execute all assignments and other documents deemed necessary by the Company to  perfect the Company’s title thereto, or to the patents issued thereon, or to otherwise secure and  protect the Company’s  property rights therein. These obligations shall continue beyond the  termination of Executive's employment with respect to Inventions conceived,  developed or made by Executive during employment with the Company. The  Company acknowledges and agrees that the provisions of this paragraph shall not apply to  any invention for which no equipment, supplies, facilities or trade secret (or proprietary)  information of the Company is used by Executive and which is developed entirely on  Executive's own time, unless (a) such invention related to the business of the Company or to  the Company’s actual or demonstrably anticipated research or development; or (b) such  invention results from any work performed by Executive for the Company.       E. Acknowledgment.  Executive acknowledges that all of the restrictions  set forth in this Section entitled “Covenants of the Executive” are reasonable in scope,  both individually and in the aggregate, and essential to the preservation of the Company’s  business and proprietary interests and that the enforcement thereof will not in any manner  preclude Executive, in the event of Executive's termination of employment with the  Company for any reason, from becoming gainfully employed in such manner and to such  extent as to provide a standard of living for himself, the members of the Executive’s family,  and those dependent upon the Executive of at least the sort and fashion to which the Executive  and they have become accustomed and may expect. The Company and the Executive further  agree that if any particular provision or portion of this Section 8 shall be adjudicated to be  invalid or unenforceable, such adjudication shall apply only with respect to the operation of  such provision in the particular jurisdiction in which such adjudication is made. The Company  and Executive also agree that in the event that any restriction herein shall be found to be void  or unenforceable if some part or parts thereof were deleted or the period or area of  application reduced, such restriction shall apply with such modification as may be necessary  to make it valid and enforceable to the fullest extent possible consonant with applicable law.   In addition, pursuant to the Defend Trade Secrets Act of 2016, the parties acknowledge that  





 






14    (a) an individual may not be held criminally or civilly liable under any federal or state trade  secret law for the disclosure of a trade secret that: (i) is made in confidence to a federal, state  or local government official, either directly or indirectly, or to an attorney and solely for the  purpose of reporting or investigating a suspected violation of law; or (ii) is made in a  complaint or other document that is filed under seal in a lawsuit or other proceeding; and (b)  an individual who files a lawsuit for retaliation by an employer for reporting a suspected  violation of law may disclose the employer’s trade secrets to the attorney and use the trade  secret information in the court proceeding if the individual: (i) files any document containing  the trade secret under seal; and (ii) does not disclose the trade secret, except pursuant to court  order.      F. Representations and Warranties.  Executive represents and warrants to  the Company as follows: (a) Executive is under no contractual or other restriction or  obligation which may conflict with or be inconsistent with the execution of this  Agreement or with the performing of any duties for the Company, or any other rights of the  Company; and (b) neither the Company nor any of its affiliates nor any of their respective  officers, directors, employees, agents or employees has requested that Executive communicate or  otherwise make available to any such parties at any time any proprietary information, data, trade  secrets, or other confidential information belonging to Executive's former employers or others.       G. Severability.  All of the covenants of Executive contained in this  Section entitled “Covenants of the Executive” shall each be construed as an agreement  independent of any other provision in this Agreement, and the existence of any claim or  cause of action of Executive against the Company, whether predicated on this Agreement  or otherwise, shall not constitute a defense to the enforcement by the Company of such  covenants. Both parties hereby expressly agree that it is not the intention of either party to  violate any public policy, statutory or common law. If any sentence, paragraph, clause or  combination of the same of this Agreement is in violation of the law of any state where  applicable, such sentence, paragraph, clause or combination of the same shall be void in the  jurisdictions where it is unlawful, and the remainder of such paragraph and this Agreement  shall remain binding on the parties to the extent that it may be lawfully done under existing  applicable laws. In the event that any part of any covenant of this Agreement is determined  by a court of law to be overly broad thereby making the covenant unenforceable, the  parties hereto agree, and it is their desire that such court shall substitute a judicially  enforceable limitation in its place, and that as so modified the covenant shall be binding  upon the parties as if originally set forth herein.       H. Remedies.  The Executive agrees that irreparable harm would result  from any breach by Executive of the covenants of this Section 8 in particular, and this  Agreement in general, and that monetary damages alone would not provide the Company  adequate relief for any such breach. Accordingly, if Executive breaches any covenant in this  Section 8, the parties acknowledge that equitable or injunctive relief in favor of the Company is a  proper remedy, and nothing in this Agreement shall be construed as precluding the Company  from seeking such equitable or injunctive relief in a court of competent jurisdiction for  Executive's violations of Section 8. Any award of equitable or injunctive relief shall not  preclude the Company from seeking or recovering any lawful compensatory damages that may  





 






15    have resulted from a breach of the covenants of this Agreement. Any waiver or failure to seek  enforcement or remedy for any breach or suspected breach of any covenant of Executive in this  Agreement shall not be deemed a waiver of such provision in the future. Furthermore, the  existence of any claim of Executive against the Company, whether based upon this Agreement  or otherwise, shall not operate as a defense to the Company enforcement of any provision of  this Agreement. Proceedings seeking equitable and injunctive relief to enforce the terms of this  Section 8 may be brought in any court of competent jurisdiction.      9. Indemnification.  Subject to the Company by-laws, to the fullest extent allowed  or permitted under any provision of applicable law, the Company shall indemnify  Executive against any losses, claims, damages or liabilities, or expenses (including reasonable  attorneys’ fees) incurred by Executive arising out of any claim based upon acts performed or  omitted to be performed by Executive in connection with the Executive’s employment with  the Company.      10. Attorneys' Fees.  In any action brought by any party under this Agreement to  enforce any of its terms, or any appeal therefrom, each party shall bear its own costs and  expenses, including its own attorneys' fees; provided, however, that the Executive (or  the Executive’s estate or other beneficiaries, as the case may be) will be entitled to  reimbursement for reasonable costs and expenses, including reasonable attorneys' fees,  with respect to such action if and to the extent that the Executive (or the Executive’s estate or  other beneficiaries, as the case may be) is the prevailing party.     11.  Cooperation. Executive agrees that, after the termination of the  Executive’s employment, the Executive  shall cooperate on a reasonable basis in the  truthful and honest prosecution and/or defense of any claim in which the Company, its affiliates  and/or its subsidiaries may have an interest (subject to reasonable limitations and the Executive's  other commitments concerning time and place), which may include, without limitation,  making himself available on a reasonable basis to participate in any proceeding involving  the Company, its affiliates and/or its subsidiaries, appearing for depositions and  testimony without requiring a subpoena, and producing and/or providing any documents or  names of other persons with relevant information. The Company agrees to reimburse Executive  for all expenses reasonably incurred by him and to pay reasonable compensation to Executive  for and in connection with services provided by the Executive pursuant to this section.      12.  Travel Restrictions.  As is reasonable, Executive has the right to refuse  travel to destinations deemed politically unstable or otherwise hostile and/or those that  may represent a danger to the Executive's health and well-being.      13. Notices.  Any notices permitted or required under this Agreement shall be  deemed given upon the date of personal delivery or forty-eight (48) hours after deposit in  the United States mail, postage fully paid, certified mail, return receipt requested, addressed  to the Company at its principal headquarters address and to the Executive at the Executive’s  last address on record with the Company.  Either party may change the address to which  notices to such party shall be delivered personally or mailed by giving notice thereof to the  other party hereto in accordance with the terms of this Section 13.  





 






16       14. Venue; Jurisdiction.  The validity, construction, interpretation, and  enforceability of this Agreement shall be determined and governed by the laws (procedural  and substantive) of the State of New Jersey without giving effect to the principles of  conflicts of law. For the purpose of litigating any dispute that arises under this Agreement,  the parties hereby consent to exclusive jurisdiction of, and agree that such litigation shall be  conducted in, any state or federal court located in the State of New Jersey.      15. Binding Effect; Assignment.  Executive shall not, without the prior  written consent of the Company, assign, transfer, or otherwise convey this Agreement, or  any right or interest herein. This Agreement, and all rights and obligations of the Company or  any of its successors, may be assigned or otherwise transferred to any of its successors and  shall be binding upon and inure to the benefit of its successors. As used herein, the term  “successor” shall mean any person, corporation or other entity that, by merger, consolidation,  purchase of stock, assets, liquidation, voluntary or involuntary assignment, or  otherwise, acquires all or a substantial part of the assets of the Company or succeeds to one  or more lines of business of the Company.      16.  Entire Agreement.  This Agreement constitutes the entire agreement  between the parties hereto with respect to the subject matter hereof and supersedes all  prior agreements, understandings and arrangements, both oral and written, between the parties  hereto with respect to such subject matter, it being understood that this Agreement shall  expressly supersede any employment agreement between Executive and the Company,  and any amendments thereto. This Agreement may not be modified, amended, altered or  rescinded in any manner, except by written instrument signed by all of the parties hereto;  provided, however, that any waiver by either party with respect to any provision hereof, or the  breach of any provision hereof by the other party, need be signed only by the party waiving  such provision or breach; and provided, further, that the waiver by either party hereto of a  breach or compliance with any provision of this Agreement shall not operate nor be  construed as a waiver of any subsequent breach or compliance.      17. Severability.  In case any one or more of the provisions of this Agreement shall  be held by any court of competent jurisdiction to be illegal, invalid or unenforceable in any  respect, the remainder of this Agreement, or the application of such provision to persons  or circumstances other than those to which it is held to be illegal, invalid, or unenforceable,  shall not be affected thereby.      18. Section Headings.  The section headings contained in this Agreement are for  reference purposes only and shall not affect in any manner the meaning or interpretation of  this Agreement.     19. Counterparts.  This Agreement may be executed in any number of  counterparts, each of which shall be deemed an original, but all of which taken together  shall constitute one and the same instrument.        





 






17  20. Survival. The provisions of Sections 6-11 and 13-20 of this Agreement shall survive any termination of this Agreement and the termination of Executive's employment  by either party for any reason.   IN WITNESS WHEREOF, the parties hereto have executed and delivered this  Agreement as of the day and year first above written.   AQUESTIVE THERAPEUTICS, INC.  EXECUTIVE  By: __________________________   ____________________________  Keith J. Kendall, President and CEO  A. Ernest Toth, Jr. 





 






18      EXHIBIT A  GENERAL RELEASE     In exchange for certain payments and benefits to be provided to me by Aquestive  Therapeutics, Inc. pursuant to the Employment Agreement dated as of ___________, between  the undersigned executive (the “Executive”) and Aquestive Therapeutics, Inc., the Executive  hereby knowingly and voluntarily waives, releases and discharges Aquestive Therapeutics, Inc.,  its predecessors, successors, parent corporations, subsidiaries, affiliates and each of their  employees, officers and directors, agents, trustees, and fiduciaries (the “Company”) from any  and all claims, liabilities, demands, and causes of action, which the Executive  may have or claim  to have against the Company, including any and all claims arising out of or relating in any way  to the Executive's employment and/or separation of employment from the Company. This  General Release specifically waives and releases all rights, claims, causes of action, demands,  and liabilities which may arise up to and including the date the Executive signs this General  Release. This General Release does not, however, waive or release any rights or claims which  may arise after the date the Executive signs this General Release. This General Release of claims  includes, but is not limited to:       a.. all State and Federal statutory claims including, but not limited to, claims  arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in  Employment Act, the Older Worker Benefit Protection Act, the Americans with Disabilities  Act, the Family and Medical Leave Act, the Sarbanes-Oxley Act, the Employee Retirement  Income Security Act, the Fair Labor Standards Act, the Worker Adjustment and Retraining  Notification Act, the New Jersey Law Against Discrimination, the New Jersey Civil Rights  Act, the New Jersey Civil Union Act, the New Jersey Wage and Hour Law, the New Jersey  Conscientious Employee Protection Act, the New Jersey Domestic Partnership Act, and  the New Jersey Family Leave Act;      b. All claims arising under the United States and New Jersey Constitutions;     c. All claims arising under any Executive Order or derived from or based upon any  State or Federal regulations;      d. All common law claims including, but not limited to, claims for wrongful or  constructive discharge, public policy claims, retaliation claims, claims for breach of an  express or implied contract, claims for breach of an implied covenant of good faith and  fair dealing, intentional infliction of emotional distress, defamation, fraud, conspiracy, loss  of consortium, tortious interference with contract or prospective economic advantage,  promissory estoppel and negligence;      e.  All claims for any compensation including, but not limited to, back wages, front  pay, overtime pay, bonuses or awards, fringe benefits, reinstatement, retroactive seniority,  pension benefits, or any other form of economic loss;        





 






19    f.. All claims for personal injury including, but not limited to, physical injury,  mental anguish, emotional distress, pain and suffering, embarrassment, humiliation,  damage to name or reputation, liquidated damages, and punitive damages; and      g. All claims for costs and attorneys' fees.     The Executive hereby acknowledges that the Company is advising the Executive in  writing that the Executive  should consult with an attorney prior to executing this General  Release. The Executive hereby states that the Executive  has had the opportunity to discuss this  General Release with whomever the Executive wished, including an attorney of the Executive’s  own choosing. The Executive further states that the Executive  has had the opportunity to read,  review, and consider all of the provisions of this General Release; that the Executive understands  its provisions and its binding effect on him; and that the Executive is entering into this General  Release freely, voluntarily, and without duress or coercion. The Executive acknowledges that the  Executive  has not relied upon the Company employees, officers or directors, counsel, agents or  accountants for any legal, tax or other advice, and the Executive has, to the extent the Executive  deems necessary, consulted with the Executive’s own advisors as to these matters. The Executive  represents that the Executive  has not filed any grievance, charge, claim, or complaint of any  kind seeking personal recovery or personal injunctive relief against the Company or any of its  owners, officers, directors, employees or agents, with respect to any matter, including but not  limited to, the Executive’s employment with the Company and/or the separation of that  employment. Nothing contained in this paragraph shall prohibit the Executive from (a) bringing  any action to enforce the terms of this Agreement and General Release; (b) filing a timely charge  or complaint with the Equal Employment Opportunity Commission (“EEOC”) regarding the  validity of this Agreement and General Release; (c) filing a timely charge or complaint with the  EEOC or participating in any investigation or proceeding conducted by the EEOC regarding any  claim of employment discrimination (although the Executive has waived any right to personal  recovery or personal injunctive relief in connection with any such charge or complaint); (d)  initiating or engaging in communication with, responding to any inquiry from, or otherwise  providing information to, any other federal or state regulatory, self-regulatory or enforcement  agency or authority; or (e) seeking or obtaining an award under the whistleblower provisions of  the federal securities laws.     The Executive understands that the Executive  has twenty-one (21) calendar days within  which to consider this General Release before signing it. The Executive also understands that the  Executive  is free to use as much of the twenty-one (21) calendar day period as the Executive   wishes or considers necessary before deciding to sign this General Release. The Executive may  revoke the Executive’s signature of this General Release within seven (7) calendar days of  signing it by delivering written notice of revocation to the Director of Human Resources of the  Company, 30 Technology Drive South, Warren, New Jersey 07059. If Executive has not revoked  the Executive’s signature of this General Release by written notice delivered within the seven (7)  calendar day period, it becomes effective immediately thereafter.      The Executive understands that the Executive’s failure or refusal to execute this General  Release or the Executive’s timely revocation of this General Release will result in forfeiture of  any severance payments and benefits.   





 






20       BY SIGNING THIS GENERAL RELEASE, THE EXECUTIVE  ACKNOWLEDGES THAT:     THE EXECUTIVE HAS READ IT;     THE EXECUTIVE UNDERSTANDS IT AND KNOWS THAT HE/SHE IS  GIVING UP IMPORTANT RIGHTS;     THE EXECUTIVE AGREES WITH EVERYTHING IN IT;     THE EXECUTIVE HAS BEEN ADVISED TO CONSULT WITH AN  ATTORNEY PRIOR TO EXECUTING THIS GENERAL RELEASE; AND     THE EXECUTIVE HAS SIGNED THIS GENERAL RELEASE  KNOWINGLY AND VOLUNTARILY.        EXECUTIVE          ______________________________________  A. Ernest Toth, Jr.      AQUESTIVE THERAPEUTICS, INC.         By:  _________________________________________    Name:  ____________________________________    Title:  _____________________________________