Document:

EXHIBIT 10.14

         

        AQUESTIVE THERAPEUTICS, INC.

        

        

        EMPLOYEE STOCK PURCHASE PLAN

        

        

        Adopted by the Board of Directors effective as of January 1, 2019

         Approved by the Stockholders June 13, 2019

         

        Amended by the Board of Directors on December 5, 2019 effective for the first offering

         Period Commencing on or after January 2, 2020

         

        

        
          
            

        

        
        AQUESTIVE THERAPEUTICS, INC.

         EMPLOYEE STOCK PURCHASE PLAN

         

        SECTION 1.         PURPOSE OF THE PLAN.

         

        The Aquestive Therapeutics, Inc.
            Employee Stock Purchase Plan (the "Plan")is intended to provide Eligible Employees (as defined below) the opportunity to increase
            their proprietary interest in Aquestive Therapeutics, Inc. (the "Company") by conveniently purchasing shares of the Company's common stock, par value $0.001 per share (the "Stock"). The
              Plan is composed of two components: a 423 Component and a Non-423 Component. The 423 Component is intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the provisions of the 423 Component will
              be construed in a manner consistent with the requirements of Section 423 of the Code. The Plan also authorizes participation in the Plan under the Non-423 Component under terms that do not meet the requirements of Section 423 of the Code. The Company shall be permitted to grant rights to purchase Stock under separate offerings not having identical terms (provided that such terms are not inconsistent with the terms of the Plan and, with respect to
              an offering under the 423 Component, the requirements of Section 423 of the Code), and offerings may run concurrently (in whole or in
              part) with each other. Each offering under the Non-423 Component
              shall be separate and distinct from (and shall not be included in
              or be part of) any offering under the 423 Component, and each
              offering to a Participating Company shall be treated as an offering that is separate from any other offering made to another Participating Company, in each case, even if such offerings are running concurrently (in whole or in part) and/or have common terms and
              conditions.

         

        SECTION 2.         DEFINITIONS.

         

        (a)            "423 Component" means the portion of the Plan under which any right to purchase Stock shall be granted in a manner that is intended to satisfy the requirements of Section 423 of the Code.

        

        

        (b)            "Affiliate" means any branch or representative office or other disregarded entity of the Company or a Subsidiary, as
                determined by the Committee, whether now or hereafter existing.

         

      

      
        (c)            "Board" means the Board of Directors of the Company, as constituted from time to time.

         

      

      
        (d)           "Change in Control" shall have the meaning set forth in the Company's most recently adopted equity incentive plan, as in effect from time to time (and shall include a "Change of Control" as defined in any such plan); provided, that until the Aquestive Therapeutics, Inc. 2018 Equity Incentive Plan is replaced with a successor plan that includes a definition of Change in Control or Change of Control, Change in
            Control shall mean an event described in Sections 2.S(a) through 2.S(d) of the Aquestive Therapeutics, Inc. 2018 Equity Incentive Plan.

         

          

      

      
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      (e)            "Committee" means the duly constituted
              committee appointed by the Board to administer the Plan, as described in Section 3. If no such committee is appointed, the Compensation Committee of the Board shall be the Committee.

      

      

      (f)             "Compensation" means all of an Eligible
              Employee's base salary or wages. "Compensation" shall exclude (i)
              commissions, bonuses and special incentive payments, (ii) equity compensation and income attributable to equity-based awards (including, without limitation, amounts realized
            from the exercise of any stock option and any dividends paid with respect to equity awards), (iii) all non-cash items, (iv) pre-tax contributions made by the Participant under Sections 401(k) or 125 of the Code or under any similar arrangements available under laws outside the United States and (v) allowances and other miscellaneous payments, including, without
              limitation, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, and benefits received under employee benefit plans. The Committee shall determine whether a particular item not listed in this Section 2(f) is included in Compensation.

       

      (g)            "Effective Date" means the date as of which the Plan is adopted by the
              Board, subject to approval of the Plan by the stockholders of the
              Company.

       

      (h)            "Eligible Employee" means any individual who (i) is an Employee of a Participating Company, (ii) does not own 5% or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary, including, for purposes of this provision, through application
              of the rules of Section 424(d) of the Code and (iii) is not a "highly compensated employee" (within the meaning of Section
              414(q) of the Code) that is subject to Section 16 of the Securities
              Exchange Act of 1934, as amended. The foregoing notwithstanding, an individual who is a citizen or resident of a jurisdiction other than
              the United States (even if he or she is also a citizen of the United States or a resident alien) shall not be considered an Eligible Employee if, as determined in the sole discretion of the Committee, (i) his or her participation in the Plan is prohibited
              by the laws or regulations of any country which has jurisdiction over him or her or (ii) compliance with the laws and regulations of the foreign country that has jurisdiction over him or her would cause the Plan or an offering under the 423 Component to violate Section 423 of the Code.

       

      (i)             "Employee" means an individual who is a common-law employee of a Participating Company and, if such employee is employed in the United States, whose earnings are reported on a Form W-2. For the avoidance of doubt, the term "Employee" shall not include any consultant, independent contractor or non-employee director of a Participating Company.

       

            

      
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      G) "Fair Market Value" means, on any given date (i) if the Stock is listed on any established U.S. stock exchange or a U.S. national market system, the closing sales price for such Stock (or, if no closing sales price was reported on that date, as applicable, on the last preceding trading date such closing sales price was reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; (ii) if (i) does not apply, then if the Stock is regularly quoted by
          a recognized U.S. securities dealer but selling prices are not reported, the mean between the high bid and low asked prices for the Stock on the day of determination (or, if no bids and asks were
          reported on that date, as applicable, on the last preceding trading date such bids and asks were reported); or (iii) if (i) and (ii) do not apply, such value as the Committee in its discretion may in good faith determine in accordance with Section 423 of the Code.

       

      (k)            "Non-423 Component" means the portion of the Plan under which the right to purchase Stock may be granted in a manner that is not intended to satisfy the requirements of Section 423 of the Code.

       

      (1)            "Offering Period" means a period with respect to which the right to purchase Stock may be granted under the Plan, as determined pursuant to Section 4(a).

       

      (m)           "Parent" has the meaning given to such term under U.S. Treasury Regulation Section 1.424-l(f). As used in this Plan, "Parent" shall mean a Parent of the Company.

      

      

      (n)            "Participant" means an Eligible Employee who elects to participate in the Plan, as provided in Section 4(b).

      

      

      (o)            "Participating423
              Company" means any of the following that is designated by the Committee as participating in the 423 Component: (i) the Company, (ii) any present or future Parent or (iii) any present or future
              Subsidiary.

       

      (p)            "Participating Company"
            means each Participating 423 Company and Participating Non-423 Company.

       

      (q)          "Participating Non-423 Company" means any of the following that is designated by the Committee as participating in the Non-423 Component: (i) the Company, (ii) any present or future Parent, (iii) any present or future Subsidiary or (iv) any present or future Affiliate. Unless
              determined otherwise by the Committee, only entities incorporated or formed outside of the United States shall be Participating Non-423 Companies.

       

      (r)             "Plan Account" means the account established for each Participant pursuant to Section 8(a).

       

            

      
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      (s)             "Purchase Price" means the price at which Participants may purchase Stock under the Plan, as determined pursuant to Section 8(b).

       

      (t)             "Subsidiary" means a subsidiary corporation of the Company as that term is defined in Section 424(f) of the Code.

       

      (u)           "Trading Day" means any day on which the U.S. stock exchange upon which the Stock is listed is open for trading or, if the Stock is not listed on an established U.S. stock exchange or U.S. national market system, a business day, as determined by the Committee
            in good faith.

      

      

      SECTION 3.         ADMINISTRATION
              OF THE PLAN.

       

      (a)            General. The Plan shall be administered by the Committee. To the extent permitted by applicable law, the Committee may delegate some or all of its authority with respect to the Plan to any executive officer of the Company or any other person or persons designated by the Committee, in each case, acting individually or as a committee.

       

      (b)           Committee Authorities. The Committee shall
            have the exclusive power and authority to administer the Plan, including without limitation the right and power to interpret the provisions of the Plan and make all determinations deemed necessary or advisable for the administration of the Plan (including, without limitation, a determination as to whether a Change in Control has occurred, whether to designate the Company,
              a Parent or Subsidiary as a Participating 423 Company or as a Participating Non-423 Company and whether to establish separate offerings). All such actions, interpretations and determinations which are done or made by the Committee shall be final, conclusive and binding on the Company, the Participating
              Companies, the Participants and all other parties and shall not subject the Committee (or its members) to any liability.

       

      SECTION 4.         ENROLLMENT AND PARTICIPATION.

       

      (a)            Offering Periods. Two Offering Periods shall commence in each calendar year, which shall be the periods commencing on January 1 and
              ending on June 30 and commencing on July 1 and ending on December 31; provided, however, that the first Offering
              Period may commence on a different date as determined by the Committee, but shall end on June 30 of the year commenced if commenced prior to June 30 or on December 31 of the year commenced if
              commenced after June 30.

       

      (b)           Enrollment. Any individual who, on the day preceding the first day of an Offering Period, qualifies as an Eligible Employee may elect to become a Participant in the Plan for such Offering Period by executing the enrollment form prescribed for this purpose by the Committee. The enrollment form shall be filed with
            the Company or its designee according to procedures established by the Committee.

       

            

      
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      (c)            Duration of Participation. Once enrolled in the Plan, a Participant shall continue to participate in the Plan (according to the elections made on the Participant's most recently-filed enrollment form) until he or she ceases to be an Eligible Employee, withdraws from the Plan under Section 6(a) or reaches the end of the Offering Period in which his or her contributions were discontinued under Section S(c) or Section 9(b). A Participant who discontinued his or her contributions under Section S(c) or withdrew from the Plan under Section 6(a) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Section 4(b). A Participant whose employee contributions were
              discontinued automatically under Section 9(b) shall automatically
              resume participation at the beginning of the next Offering Period
              in which such Participant's participation would not be limited by Section 9(b), if he or she then is an Eligible Employee.

       

      SECTIONS.          EMPLOYEE CONTRIBUTIONS.

       

      (a)           Frequency of Employee Contributions. A
              Participant may make contributions to the Plan for purchasing shares of Stock by means of payroll deductions (unless payroll deductions are not permitted under applicable laws or regulations or unless the Company determines that another means of making employee contributions is necessary or appropriate for legal or administrative reasons).

       

      (b)           Amount of Employee Contributions. An Eligible Employee shall designate on the enrollment form the portion of his or her Compensation that he or she elects to contribute to the Plan with respect to the applicable Offering Period. Such portion shall be a whole percentage of the Eligible Employee's
              Compensation, on an after-tax basis, but not less than 1% nor more than 25% of the Eligible
              Employee's Compensation with respect to the applicable Offering Period. A Participant may not change the rate of his or her contributions during an Offering Period
              unless the Participant seeks (i) to discontinue
            contributions under Subsection (c) or (ii) to withdraw from the Plan under Section 6(a), and, in either such case, the Company will cease contributions on behalf of the Participant as soon as reasonably practicable (which shall not be until the payroll period following receipt of
              the applicable form or later).

       

      (c)            Discontinuing Employee Contributions. A Participant may discontinue contributions by filing a new enrollment form. Any contributions made from payroll shall cease as soon as reasonably practicable (which shall not be until the payroll period following receipt or later). A Participant who has discontinued employee
              contributions may not resume such contributions until the next Offering Period. If a Participant discontinues contributions , previously made
            contributions shall remain in the Participant's Plan Account (and will be used to purchase shares) unless and until the Participant withdraws from the Plan in accordance with the provisions of Section 6.

       

            

      
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      SECTION 6.         WITHDRAWAL FROM THE PLAN.

      

      (a)            Withdrawal. A Participant may elect to
              withdraw from the Plan by filing the prescribed form with the Company or its designee at any time before the last day of an Offering Period. As soon as reasonably practicable thereafter, contributions shall cease and all employee contributions made by the Participant for the current Offering Period shall be refunded to the Participant in cash, without interest. No partial withdrawals shall be permitted.

       

      (b)            Re-enrollment After Withdrawal. A former Participant who has withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Section 4(b). Re-enrollment shall be effective only at the commencement of an Offering Period.

       

      SECTION 7.         CHANGE IN EMPLOYMENT STATUS.

       

      (a)           Termination of Employment. Termination of employment with a Participating Company, or otherwise ceasing to be an Eligible Employee, for any reason, including death, shall be treated as an automatic withdrawal from the Plan under Section 6(a), unless, with respect to an offering under the Non-423 Component, otherwise required by applicable laws or regulations. A transfer from one Participating Company to another shall not be treated as a termination of employment.

       

      (b)            Leave of Absence. For purposes of the Plan, employment shall not be deemed to terminate when
              the Participant goes on a military leave, a sick leave or another bona fide leave of
              absence, if the leave was approved by a Participating Company in
              writing or if such leave of absence is
              protected under applicable laws or regulations. Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

       

      (c)           Death. In the event of the Participant's death, any amounts then held in the
              Participant's Plan Account and any shares of Stock then held in the Participant's name by the Company or the broker designated by the Company shall be paid or transferred to the Participant's estate or as otherwise required by applicable laws of descent and distribution, or as may be otherwise provided pursuant to
              Section 8(e).

       

      SECTIONS.          PLAN ACCOUNTS AND PURCHASE OF SHARES.

       

      (a)           Plan Accounts. The Company shall maintain a
            Plan Account on its books in the name of each Participant. Whenever
              an amount is contributed to the Plan, such amount shall be
              credited to the Participant's Plan Account. Amounts credited to
              Plan Accounts shall not be trust funds and may be commingled with
              the general assets of the Company or any Parent or Subsidiary and applied to general corporate purposes, unless otherwise required by applicable law or regulation. Unless required by applicable law or regulation, no interest will be paid or credited with respect to any amounts held in a Participant's Plan Account.

       

            

      
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      (b)            Purchase Price. The Purchase Price for each share of Stock purchased at the close of an Offering Period shall be the lesser of:

       

      (i)             85% of the Fair Market Value of such share on the last Trading Day of such Offering Period; or

       

      (ii)            85% of the Fair Market Value of such share on the first Trading Day of such Offering Period.

      

      

      The Committee may round the Purchase Price up (but not down) to a whole cent, and in no event shall the Purchase Price be less than the par value of the shares of Stock being purchased.

       

      (c)            Number of Shares Purchased. As of the last day of each Offering Period, each Participant shall be deemed to
            have elected to purchase the number of shares of
              Stock calculated in accordance with this Subsection (c), unless the Participant has withdrawn from the Plan under Section 6(a) or Section 7. The amount then in the Participant's Plan Account shall be divided by the Purchase
              Price, and the number of shares that results shall be purchased with the funds in the Participant's Plan Account. The foregoing notwithstanding, no Participant shall purchase more than  500 shares of Stock (subject to adjustment pursuant to Section 14(b)) with respect to any Offering Period (or, if the Board determines that a different number of Offering Periods shall commence in each calendar year in accordance with Section 4(a), a proportionate number of shares of Stock (subject to adjustment pursuant to Section 14(b)) with respect to any Offering Period) nor more than the amounts of Stock set forth in Sections 9(b) and 14(a). Unless otherwise determined by the Committee, any fractional share, as
            calculated under this Subsection (c), shall be rounded down to the next lower whole share, with the Purchase Price for such fractional share to be carried over to the next Offering
            Period as provided in Section 8(g). To the extent permitted by law, the Committee may adjust the individual share limit set forth in this
            Section 8(c) from time to time without shareholder approval, provided that any such change shall not apply until the Offering Period commencing after such change is made.

       

      (d)           Available Shares
              Insufficient. In the event that the aggregate number of shares of Stock that all Participants elect to purchase during an Offering Period exceeds the maximum number of shares of Stock remaining available for issuance under Section 14(a), then the number of shares of Stock each Participant shall purchase shall be determined by multiplying the number of shares of Stock available for issuance by a fraction, the numerator of which is the number of shares of Stock that such Participant has elected
              to purchase and the denominator of which is the number of shares of Stock that all Participants have elected to purchase.

       

            

      (e)            Issuance of Shares. Shares of Stock shall be issued either in book entry form or in certificates. Certificates, if any, representing the shares of Stock purchased by a Participant under the Plan shall be issued to the Participant, or book entry in the Participant's name shall be made, as soon as reasonably practicable after the close of the applicable Offering Period, except that the Committee may determine that such certificates shall be held for each Participant's benefit by a broker designated by the Committee.
          Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of
          survivorship or as community
          property or in such other manner of taking title as may be permitted under applicable law or regulation; provided, however, that unless otherwise required by applicable law or specified by the Participant in writing, shares of Stock purchased under the Plan will be registered in the name of the Participant.

       

        

      
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      (f)           Transfer of Shares. If certificates representing shares of Stock are not otherwise issued to the Participant in connection with the purchase of such shares at the end of an Offering Period, a Participant may elect to transfer any number of
            shares of Stock previously purchased under the Plan by providing notification and transfer instructions to
            Company or the broker designated by the Company, in accordance with procedures established under the Plan. As soon as administratively practicable following receipt of a Participant's election to
            transfer shares of Stock, the Company or the designated broker shall cause a transfer of the shares or a certificate representing the number of shares to be transferred to be delivered to the Participant or a broker designated by the Participant.

       

      (g)           Unused Cash Balances. Any amount remaining in the Participant' s Plan Account that represents the Purchase Price for shares that could not be purchased by reason of Subsection (c) above, Section 9(b) or Section 14(a) or otherwise shall be carried forward and
              applied toward the purchase of whole shares for the next following Offering Period, subject to earlier withdrawal by the Participant in accordance with Section 6 or termination of employment or cessation as an Eligible Employee in
              accordance with Section 7.

       

      SECTION 9. LIMITATIONS ON STOCK OWNERSHIP.

       

      (a)            Five Percent Limit. Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any Parent or Subsidiary. For
            purposes of this Subsection (a), the following
              rules shall apply:

       

      (i)             the attribution rules of Section 424(d) of the Code shall be applied in determining ownership of Stock;

       

      (ii)            each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this Plan or any other
              plan or arrangement; and

       

      (iii)           each Participant shall be deemed to have the right to purchase under this Plan with respect to each Offering Period 500 shares of Stock (as adjusted pursuant to Section 8(c)), subject to adjustment pursuant to Section 14(b).

       

            

      
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      (b)           Dollar Limit. Any other provision of the
              Plan notwithstanding, consistent with Treasury Regulation Section
              l.423-2(i), no Participant shall purchase Stock under this Plan and all other employee stock purchase plans of the Company or any Parent or Subsidiary at a rate that exceeds $25,000 in fair market value of the Stock (determined at the time the option is granted) for each calendar year in which any option
              granted to the Participant is outstanding at anytime.

       

      For purposes of this Subsection (b), the Fair Market Value of Stock shall be
          determined as of the beginning of the Offering Period in which such Stock is purchased. Employee stock purchase plans not described in Section 423 of the Code shall be disregarded. If a Participant is precluded by this Subsection (b) from purchasing
          additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued, and shall resume (in accordance
          with the Participant ' s most recently-filed enrollment form) at the beginning of the earliest Offering Period in which this Section 9(b) would
          not prohibit such participation, provided
          that he or she then is an Eligible Employee.

       

      SECTION 10.       RIGHTS NOT TRANSFERABLE.

       

      The rights of any Participant under the
          Plan, or the interest in any Stock or moneys to which any Participant may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any manner other than by beneficiary designation or the laws of descent and distribution. If a Participant attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than as permitted by this Section 10, such act shall be treated as an election by the
          Participant to withdraw from the Plan under Section 6(a).

      

      

      SECTION 11.       NO RIGHTS AS AN EMPLOYEE.

      

      

      Nothing in the Plan or in any right
          granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights
        are hereby expressly reserved by each, to terminate his or her employment at
          any time and for any reason, with or without cause, to the fullest
          extent permitted by applicable laws or regulations.

       

      SECTION 12.       NO RIGHTS AS A STOCKHOLDER.

      

      

      A Participant shall have no rights as a
          stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan
          until such shares have been purchased on the last day of the applicable Offering Period.

       

        

      
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      SECTION 13.       SECURITIES LAW REQUIREMENTS.

      

      Shares of Stock shall not be issued under the Plan unless the issuance and delivery of such shares comply with
          (or are exempt from) all applicable requirements of law, including, without limitation, the U.S. Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, all state securities laws and
          regulations, any applicable non-U.S. securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company's securities
        are then traded.

       

      SECTION 14.       STOCK OFFERED UNDER THE PLAN.

       

      (a)            Authorized Shares. The aggregate number of
              shares of Stock available for purchase under the Plan as of the
              Effective Date shall be 250,000, and on January 1st of each year during which the Plan is in effect, the number of shares available for purchase under the Plan shall be increased by the lesser of (x) 1.0% of the number of shares of Stock outstanding as of the immediately preceding December 31 (calculated on a fully diluted basis), (y) 50,000 shares of Stock and (z) such lesser number of shares of Stock as the Board may determine,
              in each case, as subject to adjustment as provided in this Section
            14. Shares of Stock issued under the Plan may be shares already outstanding or newly issued or treasury shares.

      

      

      (b)          Changes in Capitalization. In the event of a reorganization, recapitalization, stock split,
            spin-off, split-off, split-up, stock or extraordinary cash dividend or other distribution, combination of shares, merger, amalgamation, consolidation or any other change in the corporate structure of the Company, or a sale by the Company of all or part of its assets, the Committee shall make such adjustments to
            the aggregate number of shares of Stock offered under the Plan, the maximum annual increase number in clause (y) of Section 14(a), the share limitation described in Section 8(c) (and the corresponding number of shares specified in clause (iii) of Section 9(a)) and/or the price of shares that any Participant has elected to purchase under the Plan as may be necessary to prevent the dilution or enlargement of Participants' rights. The Plan shall in no event be construed to restrict in any way the Company's right to undertake a dissolution, liquidation, merger,
              amalgamation, consolidation or other reorganization or corporate transaction of any kind or type.

       

      (c)           Change in Control. Any other prov1s10n of the Plan notwithstanding, immediately prior to the effective time of a Change in Control, the Plan shall terminate and shares shall be purchased pursuant to Section 8 as if the Offering Period during which such Change in Control occurs was scheduled to end on the day immediately preceding such Change in Control, unless the Plan is expressly assumed by the surviving corporation, the buyer or an affiliate of the foregoing. In addition, in anticipation of a Change in Control, the Committee may take any action under the Plan as it deems necessary or appropriate, including, without limitation, terminating the Plan and preventing Participants from continuing or increasing their contributions to the
              Plan.

       

            

      
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      SECTION 15.       WITHHOLDING

      

      To the extent any payments or distributions under the Plan are determined by any Participating Company to be subject to U.S. Federal, state or local taxes, or the taxes of a jurisdiction other than the United States, the Participating Company is authorized (but not obligated) to withhold any required taxes. The Participating Company may satisfy any withholding obligation by (i) withholding shares of Stock purchased under the Plan; (ii) withholding from the proceeds from the sale of shares of Stock purchased under the Plan, either through a voluntary sale or through a mandatory sale arranged by the Company; (iii) deducting cash from a Participant's Plan Account; (iv) deducting cash from a Participant's other cash compensation payable to him or her by any Participating Company or (v) any other method deemed appropriate
        by the Participating Company, in each
          case, as approved by the Committee. A Participant's election to participate
        in the Plan authorizes any Participating Company to take any of the actions described in the preceding sentence.

       

      SECTION 16.       GOVERNING LAW

       

      To the extent that U.S. Federal laws do not otherwise control, the validity and construction of the Plan shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.

       

      SECTION 17.       NON-423 COMPONENT AND SUB-PLANS

       

      The Board and/or the Committee may adopt procedures and sub-plans to this Plan that are necessary or appropriate to permit or facilitate participation in the Plan by Eligible Employees who
          are employed or located in a jurisdiction other than the United States or to generally operate the Plan in jurisdictions outside the United States (provided that such would not result in (i) the Plan failing to be eligible to qualify under Section 423 of the Code or (ii) any offering under the 423 Component not complying with Section 423 of the Code). Without limiting the generality of, but consistent with, the foregoing, the Board and/or the Committee are expressly authorized to adopt rules, procedures, and sub-plans, which, for purposes of the Non-423 Component, may be beyond the scope of Section 423 of the Code, regarding, without limitation, eligibility to participate in the Plan, excluding Employees in certain countries under the Non-423 Component (even if employed by a Participating Company), handling and making of employee contributions under the Plan, satisfying payroll taxes, determining beneficiaries, withholding procedures and issuances of Stock, any
        of which may vary from time to time and
          between jurisdictions, as determined by
          the Board and/or the Committee.

       

        

      
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      SECTION 18.       TAX QUALIFICATION.

       

      The 423 Component is intended to be exempt from the application of Section 409A of the Code under Section l.409A- l(b)(5)(ii) of the U.S. Treasury Regulations. Purchases of stock by Participants who are U.S. taxpayers participating in the Non-423 Component are
          intended to be exempt from the application of Section 409A of the Code under the short-term deferral exception and any ambiguities will be construed and interpreted in accordance with such intent. Subject to the provisions of this Section 18, Participants who are U.S. taxpayers participating in the Non-423 Component shall be subject to such terms and conditions as shall permit his or her participation in the Plan to satisfy
          the requirements of the short-term
          deferral exception to Section 409A
          of the Code, including the requirement that the shares subject to the right to purchase Stock under the Plan be delivered within the short-term deferral period. The foregoing notwithstanding, neither the Company nor any Parent or Subsidiary shall have any liability to a Participant or any
          other person if the right to purchase
          Stock under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee, the Board, the Company or any Parent or Subsidiary in relation thereto. Although
          the Company may endeavor to (i)
          qualify the 423 Component or Non- 423 Component for special tax treatment under the laws and regulations of the United States or of a jurisdiction other than the United States or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant
          to maintain special or to avoid unfavorable tax treatment, any other provision of the Plan notwithstanding, including this Section 18. The Company and each Parent and Subsidiary shall be unconstrained in their corporate activities without regard to any potentially negative tax impact on any one or more Participants.

      

      

      SECTION 19.       SEVERABILITY.

       

      If any particular provision of the Plan is found to be invalid or otherwise unenforceable, such provision shall not affect the other provisions of the Plan, and the Plan shall be construed in all respects as if such invalid provision were omitted.

       

      SECTION 20.       AMENDMENT AND TERMINATION.

       

      The Board shall have the right to amend, suspend or terminate the Plan, and to shorten an Offering Period (and refund Participant contributions in the event of any such shortening, suspension or termination) at any time and without notice. Except as provided in Section 14, any increase in the aggregate number of shares of Stock to be issued
          under the Plan shall be subject to approval by a vote of the stockholders of the Company. In addition, any other amendment of the Plan shall be subject to approval by a vote of the stockholders of the Company to the extent required by applicable law, rule or regulation, including, without limitation, Section 423 of the Code.

       

      [End of Document]

       

        

      

      -13-pfnx-ex42_273.htm

Exhibit 4.2

 

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

As of March 11, 2020, Pfenex Inc. (“we,” “us,” or “our”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our Common Stock.

Description of Common Stock

The following description of our Common Stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), and our Amended and Restated Bylaws (the “Bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.2 is a part. We encourage you to read our Certificate of Incorporation, our Bylaws and the applicable provisions of the Delaware General Corporation Law, for additional information.

Authorized Capital Shares

Our authorized capital stock consists of 200,000,000 shares of common stock, $0.001 par value per share (“Common Stock”), and 10,000,000 shares of preferred stock, $0.001 par value per share.

Common Stock

The holders of our Common Stock are entitled to one vote per share on all matters to be voted on by our stockholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of Common Stock are entitled to receive ratably such dividends as may be declared from time to time by our Board of Directors out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, the holders of Common Stock are entitled to share ratably in all assets remaining for distribution to stockholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock. Holders of Common Stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock.

Preferred Stock

Our Board of Directors has the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of Common Stock. The issuance of preferred stock could adversely affect the voting power of holders of Common Stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. In addition, the issuance of preferred stock could have the 

 

Exhibit 4.2

 

effect of delaying, deferring or preventing change in our control or other corporate action. We have no present plan to issue any shares of preferred stock. 

Voting Rights

Each holder of Common Stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Our Certificate of Incorporation and Bylaws do not provide for cumulative voting rights. Because of this, the holders of a plurality of the shares of Common Stock entitled to vote in any election of directors can elect all of the directors standing for election, if they should so choose. With respect to matters other than the election of directors, at any meeting of the stockholders at which a quorum is present or represented, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at such meeting and entitled to vote on the subject matter shall be the act of the stockholders, except as otherwise required by law. The holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders.

Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws

Delaware Law

Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids. These provisions are also designed in part to encourage anyone seeking to acquire control of us to negotiate with our board of directors. We believe that the advantages gained by protecting our ability to negotiate with any unsolicited and potentially unfriendly acquirer outweigh the disadvantages of discouraging such proposals, including those priced above the then-current market value of our Common Stock, because, among other reasons, the negotiation of such proposals could improve their terms.

Certificate of Incorporation and Bylaws

Our Certificate of Incorporation and Bylaws include provisions that:

	
•
	
authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock;

	
•
	
require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

	
•
	
specify that special meetings of our stockholders can be called only by our Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President;

	
•
	
establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors;

 

Exhibit 4.2

 

	
•
	
provide that directors may be removed only for cause;

	
•
	
provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum;

	
•
	
establish that our Board of Directors is divided into three classes, Class I, Class II, and Class III, with each class serving staggered terms;

	
•
	
specify that no stockholder is permitted to cumulate votes at any election of the Board of Directors; and

	
•
	
require a super majority of the stockholders and a majority of the board to amend certain of the above-mentioned provisions, including certain amendments related to our blank check preferred stock, removal of directors solely for cause, the classification of our board of directors, and the prohibition on cumulative voting.

Exclusive Jurisdiction

Under the provisions of our amended and restated certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees or agents to us or our stockholders; (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws; or (iv) any action asserting a claim against us governed by the internal affairs doctrine. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.

Delaware Anti-Takeover Statute

We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers (“Section 203”). In general, Section 203 prohibits a publicly-held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:

	
•
	
prior to the date of the transaction, the Board of Directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

	
•
	
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not for determining the outstanding voting stock owned by the interested stockholder, (i) shares owned by persons who are directors and also officers, and (ii) 

 

Exhibit 4.2

 

		
shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

	
•
	
at or subsequent to the date of the transaction, the business combination is approved by the Board of Directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may discourage business combinations or other attempts that might result in a premium over the market price for the shares of Common Stock held by our stockholders.

The provisions of Delaware law and our Certificate of Incorporation and Bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our Common Stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Transfer Agent and Registrar

The transfer agent and registrar for our Common Stock is American Stock Transfer & Trust Company, LLC. The transfer agent’s address is 6201 15th Avenue, Brooklyn, NY 11219, and its telephone number is (800)-937-5449.

NYSE American LLC Listing

Our Common Stock is traded on the NYSE American LLC under the trading symbol “PFNX.”

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