Document:

EXHIBIT 10.7

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(B)(4) and 230.406

 

EXCLUSIVE LICENSE AGREEMENT

 

between

 

Biohaven Pharmaceutical Holding Co. Ltd

 

and

 

RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY

 

Concerning Rutgers Case Number:  Numerous dockets concerning methods of treating cancer

 

Docket Number (s):  [* * *]

 

Primary Inventor (s):                               Drs Chen, Goydos, Khan

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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TABLE OF CONTENTS

 

	
1.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
GRANT
    	
3
    
	
 
    	
 
    	
 
    
	
3.
    	
SUBLICENSES
    	
3
    
	
 
    	
 
    	
 
    
	
4.
    	
LICENSE ISSUE FEE,   MILESTONE AND OTHER PAYMENTS AND EQUITY
    	
4
    
	
 
    	
 
    	
 
    
	
5.
    	
RUNNING ROYALTIES
    	
5
    
	
 
    	
 
    	
 
    
	
6.
    	
PATENT PROSECUTHON AND   MAINTENANCE
    	
7
    
	
 
    	
 
    	
 
    
	
7.
    	
DILIGENCE
    	
9
    
	
 
    	
 
    	
 
    
	
8.
    	
PROGRESS AND PAYMENT   REPORTS
    	
9
    
	
 
    	
 
    	
 
    
	
9.
    	
BOOKS AND RECORDS
    	
10
    
	
 
    	
 
    	
 
    
	
10.
    	
TERM OF THE AGREEMENT
    	
11
    
	
 
    	
 
    	
 
    
	
11.
    	
TERMINATION FOR CAUSE   BY EITHER PARTY
    	
12
    
	
 
    	
 
    	
 
    
	
12.
    	
VOLUNTARY TERMINATION   BY LICENSEE
    	
12
    
	
 
    	
 
    	
 
    
	
13.
    	
DISPOSITION OF LICENSED   PRODUCTS AND INFORMATION ON HAND UPON TERMINATION OR EXPIRATION
    	
12
    
	
 
    	
 
    	
 
    
	
14.
    	
USE OF NAMES AND   TRADEMARKS
    	
13
    
	
 
    	
 
    	
 
    
	
15.
    	
LIMITED WARRANTY AND   DISCLAIMERS AND LICENSEE REPRESENTATIONS
    	
13
    
	
 
    	
 
    	
 
    
	
16.
    	
INFRINGEMENT AND PATENT   MARKING
    	
14
    
	
 
    	
 
    	
 
    
	
17.
    	
INDEMNIFICATION AND   INSURANCE
    	
14
    
	
 
    	
 
    	
 
    
	
18.
    	
NOTICES
    	
15
    
	
 
    	
 
    	
 
    
	
19.
    	
ASSIGNABILITY
    	
16
    
	
 
    	
 
    	
 
    
	
20.
    	
LATE PAYMENTS
    	
16
    
	
 
    	
 
    	
 
    
	
21.
    	
WAIVER
    	
16
    
	
 
    	
 
    	
 
    
	
22.
    	
GOVERNING LAWS AND   DISPUTE RESOLUTION
    	
16
    
	
 
    	
 
    	
 
    
	
23.
    	
FOREIGN GOVERNMENT APPROVAL   OR REGISTRATION
    	
17
    
	
 
    	
 
    	
 
    
	
24.
    	
EXPORT CONTROL LAWS
    	
17
    
	
 
    	
 
    	
 
    
	
25.
    	
CONFIDENTIALITY
    	
17
    
	
 
    	
 
    	
 
    
	
26.
    	
MISCELLANEOUS
    	
17
    
	
 
    	
 
    	
 
    
	
27.
    	
INFRINGEMENT UNDER DRUG   PRICE COMPETITION ACT
    	
18
    

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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EXCLUSIVE LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (the “Agreement”) is made and is effective as of June 15, 2016, (the “Effective Date”) between Rutgers, The State University of New Jersey, having its statewide Office of Research Commercialization at 33 Knightsbridge Road, Piscataway, NJ 08854, (hereinafter “Rutgers”), and Biohaven Pharmaceutical Holding Co. Ltd, a corporation having a principal place of business at an address of c/o Maples Corporate Services (BVI) Limited, P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands (hereinafter “Licensee”, and together with Rutgers the “Parties”, and each individually a “Party”).

 

RECITALS

 

WHEREAS, Certain invention(s) disclosed under Rutgers Docket Nos. [* * *], generally characterized as or related to “Methods and compositions for treating cancer”, hereinafter the “Invention”, that were made or discovered in the course of research at Rutgers by the following employees and/or students: Drs Chen, Goydos and Khan (hereinafter, the “Inventor(s)”); and

 

WHEREAS, Licensee wishes to obtain certain rights from Rutgers for the commercial development, manufacture, use, and sale of the Invention, and Rutgers is willing to grant such rights on the terms and conditions set forth in this Agreement; and

 

WHEREAS, Rutgers wants the Invention to be developed and utilized to the fullest extent so that the benefits can be enjoyed by the general public; and

 

WHEREAS, Licensee represents that it possesses the relevant experience, resources, and desire to vigorously and diligently commercialize the Invention in the Territory.

 

NOW THEREFORE, the Parties agree as follows:

 

1.  DEFINITIONS

 

1.1                               “Affiliate” means, with respect to Licensee, any Entity (defined below) that controls, is controlled by, or is under common control with Licensee. The term “control” means possession, direct or otherwise, of the power to direct or cause the direction of the management and policies of an Entity, whether through the ownership of voting securities, by contract or otherwise.

 

1.2                               “Entity” means any corporation, partnership, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization, governmental entity (or any department, agency, or political subdivision thereof) or any other legal enterprise.

 

1.3                               “Confidential Information” means (i) all data, information, and/or tangible material, developments, discoveries, trade secrets and physical objects owned or controlled by Rutgers, that is acquired by Licensee, its Affiliates or its sublicensees directly or indirectly from or through Rutgers, its units, its employees, the Inventor(s), or its consultants, relating to the Invention, Licensed Products, or this Agreement to the extent identified as confidential or proprietary at the time delivered to Licensee, (ii) all Rutgers Technology, and (iii) all patent prosecution documents related to the Invention.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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1.4                               “Fair Market Value” means the cash consideration that would have been received by Licensee, an Affiliate or sublicensee from an unaffiliated and unrelated buyer in an arm’s length sale of a substantially equivalent Licensed Product.

 

1.5                               “First Commercial Sale” means the first sale of any Licensed Product hereunder to a non-affiliated third party in exchange for cash or some equivalent to which a value can be assigned.

 

1.6                               “Licensed Field” means therapy for the treatment of a condition or disease covered by a valid claim of the licensed intellectual property.

 

1.7                               “Licensed Product(s)” means any material, compound, product, or kit, or any service, process, or procedure that either (i) is covered in whole or in part by at least one Valid Claim within Rutgers Patent Rights or (ii) is discovered, developed, made, sold, registered, or practiced using Rutgers Technology.

 

1.8                               “Net Sales” means the total of the gross consideration charged for Licensed Products made, used, leased, transferred, distributed, sold, or otherwise disposed of by Licensee, its Affiliates, and its sublicensees, less the sum of the following actual and customary deductions (net of rebates or allowances of such deductions received) included on the invoice and actually paid: [* * *]. In the event Licensee or any of its Affiliates or sublicensees makes a sale or transfer of a Licensed Product to a third party (i) for other than cash or (ii) where there are sales or transfers of Licensed Products as well as other products and/or services to the third party, such sales or transfers shall be considered a sale to be calculated at Fair Market Value for accounting and royalty purposes. Furthermore if Licensee, its Affiliates or sublicensees use Licensed Product for a commercial purpose with no expectation of subsequent royalty bearing transfer of such Licensed Product to an unaffiliated third party, such commercial use shall be considered a sale to be calculated at a Fair Market Value for royalty and accounting purposes.

 

A Licensed Product shall be deemed sold at the earliest date of billing, invoicing, shipping, or receipt of payment.

 

1.9                               “Running Royalties” is defined in Section 5.1 of this Agreement.

 

1.10                        “Rutgers Patent Rights” means (i) all patent applications and issued patents listed in Exhibit A, (ii) all foreign patent application filings selected by Licensee and (iii) any and all patent(s) issuing thereon corresponding to all of the foregoing that are owned by Rutgers, including any reissues, extensions (including governmental equivalents thereto), substitutions, and continuations, but excluding continuations-in-part.

 

1.11                        “Rutgers Technology” means all information, know-how, trade secrets, intellectual property and physical objects to the extent reasonably necessary or useful to practice the Invention in the Licensed Field, (i) owned by Rutgers, (ii) which Rutgers has the right to disclose and license to third parties without incurring obligations, (iii) and which was created and/or discovered by one or more of the Inventors or under the direction of one or more of the Inventors prior to the Effective Date of this Agreement.

 

1.12                        “Territory” means worldwide.

 

1.13                        “Valid Claim” means (i) a claim of an issued and unexpired patent included within Rutgers Patent Rights that has not been held permanently revoked, invalid or unenforceable by a decision of a court or other governmental agency of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal; or (ii) a claim of a pending patent application within the Patent Rights that was filed in good faith, has been pending no more than [* * *] years from the earliest priority date, and which has not been

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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abandoned or finally disallowed without the possibility of appeal or refiling of such application. If a claim that is not a Valid Claim later issues, it then becomes a Valid Claim.

 

2.  GRANT

 

2.1                               Subject to the limitations set forth in this Agreement, Rutgers hereby grants to Licensee an exclusive license under the Rutgers Patent Rights and a non-exclusive license to use the Rutgers Technology in the Licensed Field to make, have made, use, import, put into use, distribute, sell and have sold Licensed Products in the Territory during the term of this Agreement. Licensee may delegate performance of duties and obligations under this Agreement to its Affiliates, but Licensee shall at all times have primary responsibility and liability for the performance of all Licensee duties and obligations arising under this Agreement, whether or not so delegated.

 

2.2                               Should Licensee, an Affiliate or sublicensee bring an action seeking to invalidate any of the Rutgers Patent Rights during the term of this Agreement, Licensee shall reimburse Rutgers for [* * *] percent ([* * *]%) of Rutgers out-of-pocket legal and related costs and expenses to defend such action. All payments shall be made to Rutgers within [* * *] days of submission of each third party invoice to Licensee. Furthermore, (i) neither Licensee or its Affiliates shall have any right to recoup any Running Royalties or other payments paid before or payable during the pendency of the aforementioned action with respect to any payments due to Rutgers under the terms of this Agreement, (ii) any dispute initiated by Licensee or an Affiliate regarding the validity of any Rutgers Patent Rights shall be litigated in the courts located in Newark, New Jersey, and the Parties agree not to challenge personal jurisdiction in that forum, and (iii) Licensee shall pay all such Running Royalties and other payments to Rutgers in a timely manner during the pendency of the action.

 

2.3                               If the Invention was funded by the U.S. Government, the license granted hereunder shall be subject to the overriding obligations to the U.S. Government set forth in 35 U.S.C. §§200-212 and any future amendments thereto, applicable governmental implementing regulations, as well as any other applicable governmental restrictions, including, without limitation (i) to the obligation to manufacture Licensed Product in the U.S. intended for consumption in the U.S. unless a waiver is obtained, and (ii) the royalty-free non-exclusive license thereunder to which the U.S. Government is entitled.

 

2.4                               Rutgers expressly reserves the right (i) to use by itself or with third party collaborators the Invention and associated intellectual property rights exclusively licensed hereunder, provided that such use is for educational, non-commercial research or other non-commercial purposes (ii) and to publish the results thereof. Nothing in this Agreement shall be interpreted to limit in any way the right of Rutgers and its faculty or employees to practice and use such Invention and practice the Rutgers Patent Rights for any purpose outside the Licensed Field or to license or permit such use outside the Licensed Field by third parties.

 

2.5                               All rights not specifically granted herein are reserved to Rutgers. Except as expressly provided under this Article 2, no right or license is granted (expressly or by implication or estoppel) by Rutgers to Licensee, its Affiliates or sublicensees under any tangible or intellectual property, materials, patent, patent application, trademark, copyright, trade secret, know-how, technical information, data or other proprietary right.

 

3.  SUBLICENSES

 

3.1                               Rutgers grants to Licensee the right to grant sublicenses to third parties under any or all of the licenses granted in Article 2, provided Licensee has current exclusive rights thereto under this Agreement at the time it exercises a right of sublicense. To the extent applicable, such sublicense shall include all of the rights of and

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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obligations due to Rutgers (and to the U.S. Government) that are contained in this Agreement. In addition, any sublicense must include the following provisions which will be effective in the event a sublicensee brings an action seeking to invalidate any Rutgers Patent Rights: (i) sublicensee will have no right to recoup any Running Royalties or other payments paid before or payable during the pendency of the aforementioned action, (ii) any dispute regarding the validity of any Rutgers Patent Rights shall be litigated in the courts located in Newark, New Jersey, and sublicensee agrees not to challenge personal jurisdiction in that forum, and (iii) sublicensee shall pay all such Running Royalties or other payments in a timely manner to Licensee during the pendency of the action.

 

3.2                               In each such sublicense, the sublicensee shall be prohibited from further sublicensing without the prior written consent of Rutgers, which consent shall not be unreasonably withheld, and shall further be subject to the applicable terms and conditions of the license granted to Licensee under this Agreement.

 

3.3                               Licensee shall provide Rutgers with a copy of each sublicense at least seven (7) business days prior to execution for review by Rutgers, but Rutgers receipt and review of such document shall not constitute an approval of such sublicense or a waiver of any of Rutgers rights or Licensee’s obligations hereunder. Licensee shall thereafter collect and guarantee payment of all Running Royalties and other obligations and consideration due Rutgers relating to the sublicenses and deliver all reports due Rutgers relating to the sublicenses.

 

3.4                               Licensee shall forward to Rutgers, within thirty (30) days of execution, a complete and accurate copy of each sublicense granted hereunder. Rutgers receipt of such sublicense shall not constitute an approval of such sublicense or a waiver of any of Rutgers rights or Licensee’s obligations hereunder. The legally controlling language of any sublicense shall be English.

 

3.5                               Upon termination of this Agreement for any reason, Rutgers, at its sole discretion, shall determine whether any or all sublicenses shall be terminated, canceled, or assigned to Rutgers.

 

3.6                               Notwithstanding any such sublicense, Licensee shall remain liable to Rutgers for all of Licensee’s duties and obligations contained in this Agreement, and any act or omission of a sublicensee that would be a breach of this Agreement if performed by Licensee shall be deemed to be a breach by Licensee of this Agreement.

 

4.  LICENSE ISSUE FEE, MILESTONE AND OTHER PAYMENTS AND EQUITY

 

4.1                               Licensee does not have a license issue fee.

 

4.2                               Licensee agrees to pay to Rutgers a license maintenance fee of five thousand dollars ($5,000), with the initial payment due on the [* * *] anniversary of the Effective Date, [* * *] dollars ($[* * *]) due on the [* * *] anniversary of the Effective Date, [* * *] dollars ($[* * *]) due on the [* * *] anniversary of the Effective Date, [* * *] dollars ($[* * *]) due on the [* * *] anniversary of the Effective Date, and [* * *] dollars ($[* * *]) due annually on each anniversary date thereafter until the date of the First Commercial Sale. The license maintenance fee shall cease after the instatement of the Minimum Annual Royalty (“MAR”) obligation pursuant to Section 5.4. (i.e., Licensee will not pay both a license maintenance fee and a MAR in the same year.)

 

4.3                               Licensee shall pay to Rutgers milestone payment fees in accordance with the following schedule, and within [* * *] days of the Milestone Event:

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Milestone Event
    	
 
    	
Amount
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    

 

Milestone payment fees are non-refundable nor creditable against any other payments due Rutgers hereunder.

 

4.4                               Licensee shall pay to Rutgers [* * *] percent ([* * *]%) of all non-Running Royalty consideration received by Licensee from sublicensing or transferring the rights licensed to Licensee hereunder if the sublicense or transfer occurs [* * *], [* * *] ([* * *]%) of all non-Running Royalty considerations received by Licensee from sublicenses in consideration for the sublicensing of Patent Rights to sublicensees by Licensee (including options to sublicense and like rights) if the sublicense is entered into [* * *], and [* * *] ([* * *]%) of all non-Running Royalty considerations received by Licensee from sublicenses in consideration for the sublicensing of Patent Rights to sublicensees by Licensee (including options to sublicense and like rights) if the sublicense is entered into [* * *]. If such consideration is received in other-than cash, Rutgers share shall be converted to the fair cash market value of the non-cash consideration at the time of receipt by Licensee as that value is mutually agreed upon by the Parties. In the event the Parties cannot agree on fair market value, that value shall be determined by a reputable appraisal service.

 

4.5                               In the event that more than [* * *] percent ([* * *]%) of Licensee’s shares existing at the Effective Date of this Agreement, or substantially all of its assets, are sold or transferred to a Third Party prior to initiation of a Phase III clinical trial, and such sale or transfer results in a full liquidation of Licensee, Licensee will pay Rutgers upon closing of such transaction a “change of control” fee equal to zero point three percent (0.3%) of the total value of the above transaction but not less than one hundred thousand dollars ($100,000). For purposes of avoiding ambiguity, Licensee’s Sublicense of its rights and obligations hereunder shall not be considered change of control.

 

5.  RUNNING ROYALTIES

 

5.1                               Licensee shall pay to Rutgers a running royalty of [* * *]% of Net Sales for the cumulative Net Sales less than [* * *] dollars ($[* * *]), [* * *]% of Net Sales for the cumulative Net Sales between $[* * *]-$[* * *] and [* * *]% over $[* * *] of Net Sales (hereinafter the “Running Royalties”) during the term of this Agreement. Sales or other transfers among Licensee, its Affiliates and sublicensees which would otherwise be subject to payment of Running Royalties under this Agreement shall be disregarded for purposes of computing Running Royalties, to the extent that Licensed Products subject to such sale or transfer are subsequently sold or transferred to a third party where a payment of Running Royalties by such third party with respect to such sale or transfer will be required. The Parties acknowledge that the foregoing percentage rate of Running Royalties rate reflects a blending of royalty rates for the grant of license rights to both the Rutgers Patent Rights and the Rutgers Technology and takes into consideration that certain Net Sales of Licensed Products may not involve the practice of the Rutgers Patent Rights, but only the use of Rutgers Technology.

 

5.2                               Licensee agrees that it shall not solicit or accept any consideration for the sale of any Licensed Product except as will be accurately reflected in Net Sales. Furthermore, Licensee agrees that it shall not enter into any transaction with an Affiliate that would circumvent its monetary or other obligations under this Agreement.

 

5.3                               Running Royalties payable to Rutgers shall be paid quarterly within [* * *] days of the end of each quarter of any given year, i.e., March 31, June 30, September 30, and December 31. Each such payment will be for unpaid Running Royalties that accrued within Licensee’s most recently completed calendar quarter plus any other unpaid Running Royalties due but not previously paid for any reason.

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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5.4                               Licensee shall pay to Rutgers a Minimum Annual Royalty (“MAR”) payment equal to the amount set forth on the following schedule:

 

	
Year of Commercial Sale
    	
 
    	
Minimum Annual
   Royalty
    	
 
    
	
Year 1(Date of   First Commercial Sale to December 31 of the calendar year) 
    	
 
    	
$
    	
[* * *]
    	
 
    
	
Year 2,3,   (January 1 to December 31 of the 2nd 3rd calendar year)
    	
 
    	
$
    	
 [* * *]
    	
 
    
	
Year 4 and   annually thereafter (January 1 to December 31 of the 4th calendar   year) 
    	
 
    	
$
    	
 [* * *]
    	
 
    

 

The MAR payment shall start accruing beginning with the date of the First Commercial Sale of a Licensed Product. The MAR payment shall be payable to Rutgers by each January 31 of each year following the calendar year for which the MAR is due, and shall be credited against the earned Running Royalties owed for the applicable calendar year. As the First Commercial Sale of a Licensed Product may occur at any point during the calendar year, the first year MAR due may accordingly be pro-rated by the fractional number of full months remaining in that calendar year after the First Commercial Sale of a Licensed Product.

 

In the event the maintenance fee was paid during a calendar year prior to first Commercial Sales, the amount of the paid maintenance fee shall be credited against the MAR owed for that year. Any remaining balance would be credited towards the following year’s MAR.

 

For the purpose of clarity: the pro-rated MAR shall be calculated by multiplying the number of months remaining in the calendar year by the MAR monthly value.

 

As an example only:

 

·                  [* * *]

·                  [* * *]

·                  [* * *]

 

5.5                               All amounts due to Rutgers shall be payable in U.S. dollars. When Licensed Products are sold for monies other than U.S. dollars, the Running Royalties will first be determined in the foreign currency of the country in which such Licensed Products were sold and then converted into equivalent U.S. dollars. The exchange rate for all payments due to Rutgers will be the U.S. dollar buying rate quoted in the Wall Street Journal on the last day of the reporting period.

 

5.6                               Licensee shall be responsible for any and all taxes, fees, or other charges imposed by the government of any country outside the U.S. on any remittance due to Rutgers incurred in any such country. Licensee shall also be responsible for all bank transfer charges.

 

5.7                               If at any time legal restrictions prevent the acquisition or prompt remittance of U.S. dollars by Licensee with respect to any country where a Licensed Product is sold, Licensee shall pay Running Royalties due to Rutgers from Licensee’s other sources of U.S. dollars.

 

5.8                               Net Sales of any Licensed Product shall not be subject to more than one assessment of the scheduled Running Royalties, and such assessment shall be that which yields the highest royalty payment to Rutgers.

 

5.9                               In the event that any patent or any claim thereof included within the Rutgers Patent Rights shall be held invalid in a final decision by a court of competent jurisdiction and last resort in any country and from which no appeal has or can be taken, all obligation to pay Running Royalties based on such patent or claim or any claim patentably indistinct therefrom shall cease as of the date of such final decision with respect to such

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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country. Licensee shall not, however, be relieved from paying any Running Royalties that accrued before such decision or that are based on another patent or claim not involved in such decision or that are based on Rutgers Technology.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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6.  PATENT PROSECUTHON AND MAINTENANCE

 

6.1                               As of the License Effective Date, unless otherwise agreed in writing, Licensee shall assume responsibility to diligently prosecute and maintain the patent applications and patents included in the Rutgers Patent Rights using patent counsel now appointed unless otherwise agreed upon by the Parties. Such counsel shall take instructions from Licensee on matters relating to the prosecution and maintenance of such patent applications and patents within Rutgers Patent Rights. Rutgers shall remain the client of record for such patent counsel. Rutgers and Licensee agree to have the Client and Billing Agreement attached hereto as Exhibit C of the Agreement fully executed by the appropriate parties upon the execution of this Amendment. Licensee shall keep Rutgers fully informed and appraised of the continuing prosecution and maintenance of all patent applications and patents within Rutgers Patent Rights and all matters related thereto in a timely manner. Licensee and Rutgers agree to keep confidential all documentation relating to the prosecution and maintenance of the Rutgers Patent Rights. Licensee shall supply Rutgers with a copy of all patent filings and provide Rutgers with a reasonable opportunity to comment and advise on all communications received from and all submissions to any government patent office with respect to any patent application or patent within Rutgers Patent Rights and Licensee will give all due consideration to such comments and advice received from Rutgers.

 

6.2                               Licensee shall amend any patent application within Rutgers Patent Rights to include claims reasonably requested by Rutgers.

 

6.3                               As of the License Effective Date, all costs of preparing, filing, prosecuting, defending and maintaining all U.S. patent applications and/or patents within Rutgers Patent Rights, including, but not limited to, declaratory judgments, interferences, oppositions, reexaminations, reissues, as well as all corresponding foreign patent applications and patents covered by Rutgers Patent Rights in the Territory and included in the Rutgers Patent Rights during the term of the Agreement shall be borne by Licensee. Furthermore, Licensee agrees to reimburse Rutgers for all past patent-related costs estimated to be seventy one thousand eight hundred fifty five dollars ($71,855) which shall be due within thirty (30) days of the Effective Date.

 

6.4                               Licensee shall, file, prosecute, and maintain all patent applications and patents covered by Rutgers Patent Rights in the U.S. and foreign countries of the Territory so as to fully protect the Rutgers Patent Rights. Subject to Section 6.5, Licensee consents to and accepts the filing of all PCT and foreign patent applications that have already been filed as of the Effective Date. Licensee shall notify Rutgers at least three (3) months before foreign filings are due based on the filing of the corresponding U.S. application of its decision as to which foreign patents, if any, it elects to file. This notice shall be in writing and shall identify the countries selected for filing. The absence of such a notice from Licensee shall be considered by Rutgers to be an election not to request the applicable foreign rights. Licensee shall so notify Rutgers immediately upon making the decision not to file or to continue the prosecution or maintenance of any patent application or patent within Rutgers Patent Rights so that Rutgers has the opportunity to continue prosecution or maintenance of such patent application or patent within Rutgers Patent Rights at Rutgers cost and expense.

 

6.5                               Licensee’s obligation to underwrite and to pay patent costs shall continue for so long as this Agreement remains in effect, provided, however, that Licensee may terminate its obligations with respect to any given patent application or patent, including terminating its obligations on a country-by-country basis, upon three (3) months prior written notice to Rutgers. Licensee shall continue to pay all patent costs during the three (3) month notice period. Commencing on the effective date of such notice, Rutgers may continue prosecution and/or maintenance of such application(s) or patent(s) at its sole discretion and expense, and Licensee shall have no further right or licenses thereunder. Licensee shall promptly provide Rutgers with all documents and files in its possession which would be reasonably necessary to allow Rutgers to continue prosecution and/or maintenance of such application(s) or patent(s).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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6.6                               Rutgers shall have the right to file patent applications and maintain patents at its own expense in any country or countries in which Licensee has not elected to secure patent rights or has terminated its patent obligations, and such applications and patents shall not be subject to this Agreement and may be freely licensed by Rutgers to third parties.

 

6.7                               The failure of Licensee to timely perform all activities relating to the filing, prosecution and maintenance of patent applications and patents under the Rutgers Patent Rights, unless curable, and the timely payment of invoices to the patent counsel of record shall be considered a material breach of this Agreement.

 

6.8                               Rutgers shall cooperate with Licensee in applying for an extension of the term of any patent included within Rutgers Patent Rights if appropriate under the Drug Price Competition and Patent Term Restoration Act of 1984 as amended. Licensee shall prepare all such documents, and Rutgers agrees to execute such documents and to take such additional action as Licensee may reasonably request in connections therewith at no out-of-pocket expense.

 

7.  DILIGENCE

 

7.1                               License shall use its best efforts to develop and obtain any required governmental approvals required to test, register, manufacture, market and sell Licensed Products in all countries of the Territory in the Licensed Field within a reasonable time after the Effective Date and in quantities sufficient to meet market demand.

 

7.2                               Licensee shall be entitled to exercise prudent and reasonable business judgment in meeting its diligence obligations stipulated in this Agreement.

 

7.3                               In addition to the general diligence requirements set forth herein, Licensee shall complete the following diligence milestones within the time specified for each milestone:

 

	
Milestone
    	
 
    	
Completion Date
    
	
[* * *]
    	
 
    	
[* * *]
    
	
[* * *]
    	
 
    	
[* * *]
    
	
 
    	
 
    	
 
    
	
[* * *]
    	
 
    	
[* * *]
    
	
 
    	
 
    	
 
    
	
[* * *]
    	
 
    	
[* * *]
    

 

7.4                               Licensee shall provide its written business plan or a development plan if an existing company, for commercialization of Licensed Products to Rutgers no later than [* * *] days after the Effective Date. The plan shall include, without limitation, a detailed explanation of specific actions to be taken by Licensee in order to meet the diligence milestones included herein as well as such other items as may be reasonably requested by Rutgers.

 

8.  PROGRESS AND PAYMENT REPORTS

 

8.1                               Beginning [* * *] months after the Effective Date, and annually thereafter, Licensee shall submit to Rutgers a progress report covering Licensee’s activities related to the research, development, marketing introduction and testing of all Licensed Products and the obtaining of governmental approvals necessary for

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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marketing, where applicable. These progress reports shall be made for each Licensed Product in each applicable country of the Territory.

 

8.2                               The progress reports submitted shall include sufficient information to enable Rutgers to determine Licensee’s progress in fulfilling its obligations under all pertinent Articles or Sections of this Agreement. A progress report form is provided in Exhibit D for convenience of Licensee.

 

8.3                               Licensee shall have a continuing responsibility to keep Rutgers informed of the large/small entity status (as defined by the U.S. Patent and Trademark Office) of itself and its sublicensees.

 

8.4                               Licensee shall report to Rutgers the date of First Commercial Sale of each Licensed Product in each country within [* * *] days of such First Commercial Sale.

 

8.5                               After the First Commercial Sale of a Licensed Product anywhere in the world, Licensee will make annual Running Royalties reports to Rutgers on or before each February 28, of each year concurrently with Running Royalties payments due on the same date. Each such Running Royalties report will cover Licensee’s most recently completed calendar year and will show (i) unit sales, gross sales and Net Sales of each type of Licensed Product sold by Licensee, its Affiliates and sublicenses listed by country on which Running Royalties have not been paid, including a clear indication of how Net Sales were calculated; (ii) the Running Royalties payable hereunder, including a breakdown, where more than one patent is licensed hereunder, of how Running Royalties income is allocated among the patents; (iii) the method used to calculate the Running Royalties; (iv) the exchange rates used, if any; and (v) any other information relating to the foregoing reasonably requested by Rutgers. Any late payments are subject to interest charges described herein.

 

8.6                               If no sales of Licensed Products have been made during any reporting period, a written statement to this effect shall be made by Licensee.

 

8.7                               With each Running Royalties report, Licensee shall also include a written statement setting forth any additional payment or other consideration due to Rutgers during the applicable calendar quarter pursuant to the terms of this Agreement and setting forth in reasonable detail the basis for the payment and the manner in which the payment was calculated.

 

8.8                               Licensee acknowledges that Rutgers considers the reports required as well as the timely delivery thereof to Rutgers to be of material value and importance to Rutgers, and in the event of a termination of the Agreement, Licensee will provide Rutgers with a final progress report within [* * *] days of the termination date.

 

9.  BOOKS AND RECORDS

 

9.1                               Licensee shall keep and cause its Affiliates and sublicensees to keep books and records in accordance with generally accepted accounting principles, consistently and accurately showing all transactions and information relating to this Agreement. Such books and records shall be preserved for at least [* * *] years from the date of the entry to which they pertain and shall be open to inspection by representatives or agents of Rutgers at reasonable times.

 

9.2                               The fees and expenses of Rutgers’ representatives performing such an examination shall be borne by Rutgers. However, if an error in any payment of more than [* * *] percent ([* * *]%) of such payment due is discovered, or if as a result of the examination it is determined that Licensee is in material breach of any of its

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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obligations under this Agreement, then the fees and expenses of these representatives shall be borne by Licensee, and Licensee shall promptly reimburse Rutgers for reasonably documented audit expenses as well as all overdue payment and interest charges.

 

10.  TERM OF THE AGREEMENT

 

10.1                        Unless otherwise terminated by operation of law or by acts of the Parties in accordance with the provisions of this Agreement, this Agreement shall be in force from the Effective Date and shall remain in effect in each country of the Territory until the expiration of the last-to-expire patent licensed under this Agreement in such country or ten (10) years from the date of First Commercial Sale of a Licensed Product in such country, whichever is later.

 

10.2                        Any termination or expiration of this Agreement shall not affect the rights and obligations set forth in the following Articles and/or Sections:

 

	
Article 5-
    	
RUNNING   ROYALTIES (with the exception of Section 5.4 Minimum Annual (Running)   Royalties payments)
    
	
Article 9-
    	
BOOKS AND RECORDS
    
	
Article 11-
    	
TERMINATION FOR CAUSE   BY EITHER PARTY
    
	
Article 12-
    	
VOLUNTARYTERMINATION BY   LICENSEE
    
	
Article 13-
    	
DISPOSITION   OF LICENSED PRODUCTS AND INFORMATION ON HAND UPON TERMINATION OR EXPIRATION 
    
	
Article 14-
    	
USE OF NAMES AND   TRADEMARKS
    
	
Article 15-
    	
LIMITED WARRANTY,   DISCLAIMERS AND LICENSEE REPRESENTATIONS
    
	
Article 17-
    	
INDEMNIFICATION AND   INSURANCE
    
	
Article 18-
    	
NOTICES
    
	
Article 20
    	
LATE PAYMENTS
    
	
Article 22-
    	
GOVERNING LAW AND   DISPUTE RESOLUTION
    
	
Article 25-
    	
CONFIDENTIALITY
    
	
Section 2.2-
    	
(Licensee effort to   invalidate patent)
    
	
Section 3.5-
    	
(survival of sublicense   after Agreement termination)
    
	
Section 3.6-
    	
(liability of Licensee   for sublicensee breaches)
    
	
Section 8.5-
    	
(quarterly royalty   reports)
    
	
Section 8.7-
    	
(report of other   consideration due Rutgers)
    
	
Section 8.8-
    	
(final progress report   after Agreement termination)
    
	
Section 10.2-
    	
(surviving Agreement   provisions)
    
	
Section 10.3-
    	
(no rescinding of   actions or release of liability upon Agreement termination)
    
	
Section 16.6-
    	
(compliance with patent   marking laws)
    
	
Section 26.6-
    	
(reformation of invalid   Agreement provisions)
    

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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10.3                        Any termination or expiration under this Agreement shall not relieve either Party of any obligation or liability accrued hereunder prior to such termination or expiration or impair any accrued rights of either Party. In addition, any termination or expiration shall not rescind anything done by Licensee or any payments made to Rutgers hereunder prior to the time such termination or expiration becomes effective or affect in any manner any Rights of Rutgers arising prior to such termination or expiration.

 

11.  TERMINATION FOR CAUSE BY EITHER PARTY

 

11.1                        If one Party should breach or fail to perform any provision of this Agreement, then the other Party may give written notice of such default (Notice of Default) to the breaching Party. If the breaching Party should fail to cure such default within [* * *] days of notice thereof, the non-breaching Party shall have the right to terminate this Agreement and the licenses herein by a second written notice (“Notice of Termination”) to the breaching Party unless there is a good faith dispute about whether the other Party is in default. If a Notice of Termination is sent to breaching Party, this Agreement shall automatically terminate on the effective date of such notice. By way of illustration but not limitation, terminable breaches shall include the following: (i) failure to make any payment when due, (ii) breaches of any warranties, (iii) breaches of confidentiality obligations, (iv) breach of diligence obligations, and (v) failure to provide reports in an accurate and timely manner.

 

12.  VOLUNTARY TERMINATION BY LICENSEE

 

12.1                        Licensee shall have the right at any time to terminate this Agreement in its entirety by giving ninety (90) days advance notice thereof in writing to Rutgers. If such termination is within the first two (2) years of this Agreement, Licensee shall pay Rutgers an early termination fee of five thousand dollars ($5,000).

 

13.  DISPOSITION OF LICENSED PRODUCTS AND INFORMATION ON HAND UPON TERMINATION OR EXPIRATION

 

13.1                        Upon termination of this Agreement by either Party (i) Licensee shall have the privilege of disposing of all previously made or partially made Licensed Products (Licensee may complete partially made Licensed Products) within a period of [* * *] days after the initial Notice of Termination given pursuant to paragraph 11.1 or 12.1 hereunder, provided, however, that the disposition of such Licensed Products shall be subject to the terms of this Agreement including, but not limited to, the payment of Running Royalties at the rate and at the time provided herein and the rendering of reports thereon, and (ii) Licensee shall promptly return, and shall cause its Affiliates and sublicensees to return, to Rutgers all property belonging to Rutgers including without limitation Rutgers Technology, if any, that has been provided to Licensee or its Affiliates or sublicensees hereunder, and all copies and facsimiles thereof and derivatives therefrom (except that Licensee may retain one copy of written material for record purposes only, provided such material is not used by Licensee for any other purpose and is not disclosed to others). Upon termination by either Party of this Agreement, Licensee agrees, at the request of Rutgers, to negotiate in good faith and on commercially reasonable terms a grant of license rights in the Licensed Field, with right of sublicense, to Rutgers or Rutgers designee of all information, know-how, trade secrets, patents and invention, relating to License Products, including without limitation, any changes or additions to Licensed Products or new methods for making or new uses for Licensed Products, to the extent that any of the foregoing are owned or controlled by Licensee or its Affiliates.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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14.  USE OF NAMES AND TRADEMARKS

 

14.1                        Nothing contained in this Agreement shall be construed as granting any right to Licensee, its Affiliates or sublicensees to use in advertising, publicity, or other promotional activities or otherwise any name, trade name, trademark, or other designation of Rutgers or any of its units (including contraction, abbreviation or adaption of any of the foregoing). Unless required by law or consented to in advance in writing by Rutgers, the use by Licensee of the name, “Rutgers, The State University of New Jersey” or any campus or unit of Rutgers is expressly prohibited.

 

15.  LIMITED WARRANTY AND DISCLAIMERS AND LICENSEE REPRESENTATIONS

 

15.1                        Rutgers warrants to Licensee that it has the lawful right to grant this license.

 

15.2                        This license and the associated Invention, Patent Rights and Rutgers Technology are provided “AS IS” and, except as provided in Section 15.1 herein, WITHOUT WARRANTY OF PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WITHOUT ANY OTHER WARRANTY WHETHER EXPRESS OR IMPLIED. RUTGERS MAKES NO REPRESENTATION AND DISCLAIMS ANY WARRANTY, WHETHER EXPRESS OR IMPLIED, THAT THE LICENSED PRODUCTS OR ANY OTHER USE OF THE RUTGERS PATENT RIGHTS AND/OR RUTGERS TECHNOLOGY WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.

 

15.3                        IN NO EVENT SHALL RUTGERS BE LIABLE FOR ANY INCIDENTAL, DIRECT, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS, RESULTING FROM EXERCISE OF THIS LICENSE BY OR ON BEHALF OF LICENSEE, ITS AFFILIATES OR SUBLICENSEES OR MANUFACTURE, SALE, OR USE OF THE INVENTION, LICENSED PRODUCTS, RUTGERS PATENT RIGHTS OR RUTGERS TECHNOLOGY LICENSED HEREUNDER.

 

15.4                        Nothing in this Agreement shall be construed as:

 

15.4.1              a warranty or representation by Rutgers as to the validity or scope of any Rutgers Patent Rights; or

 

15.4.2              a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents or other intellectual property rights; or

 

15.4.3              an obligation to bring or prosecute actions or suits against third parties except as provided in Article 16 herein; or

 

15.4.4              conferring by implication, estoppel or otherwise any license or rights under any patents or other intellectual property of Rutgers other than Rutgers Patent Rights and Rutgers Technology, regardless of whether such patents are dominant or subordinate to Rutgers Patent Rights; or

 

15.4.5              an obligation to furnish any know-how not provided in Rutgers Technology licensed hereunder.

 

15.4.6              a warranty or representation of the freedom to operate and the validity, scope and territorial extent of the Rutgers Patent Rights.

 

15.5                        By execution of this Agreement, Licensee represents and covenants that (i) Licensee has been given an opportunity to conduct sufficient due diligence with respect to all items and issues pertaining to this Agreement and (ii) Licensee has adequate knowledge and expertise, or has utilized knowledgeable consultants, to adequately conduct the due diligence. Licensee further represents and covenants that it is a duly organized,

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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valid entity of the form indicated in the preamble to this Agreement, and is in good standing under the laws of its jurisdiction of organization as indicated in the preamble of this Agreement, and has all necessary corporate or other appropriate power and authority to execute and perform its obligations hereunder.

 

16.  INFRINGEMENT AND PATENT MARKING

 

16.1                        Rutgers and Licensee are responsible for notifying each other promptly of any infringement of Rutgers Patent Rights that may come to their attention. The Parties shall consult one another in a timely manner concerning any appropriate response thereto.

 

16.2                        Licensee shall have the right, but not the obligation to prosecute such infringement at its own expense, and, if it elects to prosecute, shall begin such prosecution within a reasonable time after aforesaid consultation between the Parties. Licensee shall not settle or compromise any such suit in a manner that imposes any obligations or restrictions on Rutgers without Rutgers written permission. Financial recoveries from any such litigation will first be applied to reimburse Licensee for its litigation expenditures with the balance being split [* * *] percent ([* * *]%) to Licensee and [* * *] percent ([* * *]%) to Rutgers.

 

16.3                        Licensee’s rights in Section 16.2 shall be subject to the continuing right of Rutgers to intervene at Rutgers own expense and join Licensee in any claim or suit for infringement of the Rutgers Patent Rights. Any consideration received by Licensee in settlement of any claim or suit shall be shared between Rutgers and Licensee in proportion with their share of the litigation expenses in such infringement action, but Rutgers shall in no event receive less than the percentage share it is entitled to under Section 16.2.

 

16.4                        If Licensee fails to prosecute such infringement, Rutgers shall have the right, but not the obligation, to prosecute such infringement at its own expense. In such event, financial recoveries from any such litigation will first be applied to reimburse Rutgers and Licensee for its litigation expenditures with the balance being split [* * *] percent ([* * *]%) to Rutgers and [* * *] percent ([* * *]%) to Licensee.

 

16.5                        Each Party agrees to cooperate with the other in litigation proceedings instituted hereunder but at the expense of the Party on account of whom suit is brought for out-of-pocket expenses.

 

16.6                        Licensee its Affiliates and its sublicensees shall comply with all U.S. and foreign laws with respect to patent marking of Licensed Products.

 

16.7                        If in a suit initiated by Licensee, Rutgers is involuntarily joined other than by Licensee, then Licensee will pay any costs incurred by Rutgers arising out of such suit, including any legal fees of counsel that Rutgers selects and retains to represent it in the suit.

 

16.8                        If Rutgers is subjected to third party discovery related to the Rutgers Patent Rights or Licensed Products licensed to Licensee hereunder arising out of actions by Licensee, Licensee will pay Rutgers’ documented out of pocket expenses with respect to same.

 

17.  INDEMNIFICATION AND INSURANCE

 

17.1                        To the maximum extent permitted by applicable law, none of Rutgers, its governors, trustees, officers, employees, students, agents and the Inventor(s) (each an “Indemnified Person”) shall have any liability or responsibility whatsoever to Licensee and any sublicensee or any other person or Entity for or on account of (and Licensee agrees and covenants, and agrees to cause each of its sublicensees to agree and covenant not to

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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sue any Indemnified Person in connection with) any injury, loss, or damage of any kind or nature, sustained by, or any damage assessed or asserted against, or any other liability incurred by or imposed upon, Licensee, any of its sublicensees or any other person or Entity, whether direct, indirect, special, punitive, incidental, consequential or otherwise arising under any legal theory (and further excluding without limitation any existing or anticipated profits or opportunities for profits lost by Licensee or any sublicensee) arising out of or in connection with or resulting from (i) the production, use or sale of the Licensed Products by Licensee or sublicensees; (ii) the use of any Rutgers Patent Rights or Rutgers Technology by Licensee or any sublicensee; (iii) any advertising or other promotional activities with respect to either of the foregoing; or (iv) the production, use, or sale of any product, process or service, identified, characterized or otherwise developed by Licensee or any sublicensee with the aid or use of the Rutgers Patent Right or Rutgers Technology, unless such liability or responsibility is due to willful misconduct or gross negligence by an Indemnified Person. Licensee shall indemnify and hold each Indemnified Person harmless against all claims, demands, losses, damages or penalties (including, but not limited to, attorneys’ fees) made against any Indemnified Person with respect to items (i) through (iv) above, whether or not such claims are groundless or without merit or basis.

 

17.1                        From and after the earlier date of dosing of Licensed Product in a clinical trial or First Commercial Sale of a Licensed Product, Licensee shall maintain commercially issued policies of insurance, or a program of self-insurance if such program is approved in advance in writing by an authorized representative of Rutgers, which provide coverage and limits as required by statute or as necessary to prudently insure the activities and operations of Licensee, including, but not limited to, its ability to satisfy its obligations pursuant to Section 17.1 herein. The commercial general liability insurance policy, or liability self-insurance program, shall protect the interests of Rutgers and provide coverage limits of not less than [* * *] dollars ($[* * *]) combined single limits as respects premises, operations, contractual liability and, if applicable, liability arising out of products and/or completed operations. Licensee shall provide Rutgers with certificates of insurance for commercially insured policies. Licensee shall ensure that its sublicensees maintain the same insurance coverage as Licensee is required to maintain hereunder.

 

It is expressly agreed that the insurance or self-insurance are minimum requirements which shall not in any way limit the liability of Licensee and shall be primary coverage. Any insurance or self-insurance program maintained by Rutgers shall be excess and noncontributory.

 

17.2                        Rutgers shall promptly notify Licensee in writing of any claim or suit brought against Rutgers in respect of which Rutgers intends to invoke the provisions of Article 17. Licensee shall keep Rutgers informed on a current basis of its defense of any claims pursuant to Article 17.

 

18.  NOTICES

 

18.1                        Any notice or payment required to be given to either Party shall be deemed to have been properly given and to be effective (i) on the date of delivery if delivered in person, (ii) five (5) days after mailing if mailed by first-class certified mail, postage paid and deposited in the U.S. mail, to the respective addresses given below, or to such other address as it shall designate by written notice given to the other Party, (iii) on the date of delivery if delivered by express delivery service or (iv) or as otherwise agreed upon in writing by the Parties.

 

In the case of Licensee:                                                                Biohaven Pharmaceutical Holding Company, Ltd.

c/o Maples Corporate Services (BVI) Limited

P.O. Box 173

Kingston Chambers

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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Road Town

Tortola, British Virgin Islands

Attn: Vladimir Coric, CEO

 

In the case of Rutgers:                                                                      Rutgers, The State University of New Jersey

Office of Research Commercialization

Attention: Executive Director

33 Knightsbridge Road - 2 East, Piscataway, NJ 08854

Email: as at the Rutgers website https://otc.rutgers.edu/about/staff-listing

 

Either Party may change its official address upon written notice to the other Party.

 

19.  ASSIGNABILITY

 

19.1                        This Agreement is binding upon and shall inure to the benefit of Rutgers, its successors and assigns, but shall be personal to Licensee and assignable by Licensee only with the written consent of Rutgers, except a sale of all of the assets of Licensee related to this Agreement shall not be deemed an assignment.

 

20.  LATE PAYMENTS

 

20.1                        In the event any amounts due Rutgers hereunder, including but not limited to Running Royalties payments and patent cost reimbursements, are not received when due, Licensee shall pay to Rutgers interest charges at a rate of [* * *] percent per annum, compounded monthly, or the highest rate permitted by law, if less than [* * *] percent. Such interest shall be calculated from the date payment was due until actually received by Rutgers.

 

21.  WAIVER

 

21.1                        A waiver by a Party of a breach or violation of any provision of this Agreement by the other Party shall not be deemed a waiver of any subsequent breach or default of that provision by the other Party.

 

22.  GOVERNING LAWS AND DISPUTE RESOLUTION

 

22.1                        THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS, but the scope and validity of any patent or patent application shall be governed by the applicable laws of the country of such patent or patent application.

 

22.2                        The Parties to this Agreement agree to work toward resolution of any disputes in a cooperative manner beginning on the earlier of (i) the date of notice of request by one Party to the other for such dispute resolution or (ii) the effective date of the notice of breach of the terms of the Agreement given by one Party to the other Party. In the event that a resolution to a dispute cannot be reached within forty days (40) after the initial notice of request, a mutually agreed upon third party will be asked to review the dispute and recommend a non-binding opinion. In the event the Parties cannot agree on such third party after at least ten (10) days of good faith negotiations, they shall have the right to seek appointment of a neutral and independent third party arbitrator by a nationally-recognized non-profit dispute resolution organization such as the International Institute for Conflict Prevention and Resolution or the American Arbitration Association, or by any court of competent jurisdiction in accordance with the court’s power to appoint arbitrators. Each Party shall pay one

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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half of any arbitrator or court fess. Neither Party shall be bound to accept any recommended non-binding opinion. In addition, neither Party shall be bound under the terms of this section for more than one hundred twenty (120) days after the earlier to occur of the effective date of the initial notice of request for dispute resolution or the effective date of notice of breach of the Agreement by one Party to the other Party, except as may be agreed to in writing by the Parties.

 

22.3                        The Parties hereby submit to the exclusive jurisdiction of and venue in the courts located in the State of New Jersey with respect to any and all disputes concerning the subject of this Agreement that are litigated.

 

23.  FOREIGN GOVERNMENT APPROVAL OR REGISTRATION

 

23.1                        If this Agreement, any associated transaction, or any Licensed Product is required by the law of any nation to be either approved or registered with any governmental agency, Licensee shall assume all legal obligations to do so and the costs in connection therewith.

 

24.  EXPORT CONTROL LAWS

 

24.1                        Licensee shall observe all applicable U.S. and foreign laws with respect to the transfer of Licensed Products and related technical data to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations.

 

25.  CONFIDENTIALITY

 

25.1                        Licensee (i) shall not use any Confidential Information except for the sole purpose of performing this Agreement, (ii) shall safeguard the same against disclosure to others with the same degree of care as it exercises with its own information of a similar nature, and (iii) shall not disclose or permit the disclosure of Confidential Information to others (except to its employees, agents or consultants who are bound to Licensee and Rutgers by a like obligation of confidentiality) without the express written permission of Rutgers, except that Licensee shall not be prevented from using or disclosing any Confidential Information:

 

·                  which Licensee can demonstrate by written records was previously known to it; or

·                  which is now, or becomes in the future, information generally available to the public in the form supplied, other than through acts or omissions of Licensee; or

·                  which is lawfully obtained by Licensee from sources independent of Rutgers who were entitled to provide such information to Licensee; or

·                  which is required by law to be disclosed; or

·                  which is Rutgers Technology and which is necessary or useful in order for Licensee to develop, make, use and sell Licensed Products as intended by the Parties, provided Licensee exercises best efforts to make any such disclosures under a confidentiality agreement to the extent feasible.

 

The obligations of Licensee under this Section 25 shall remain in effect during the term of this Agreement and for [* * *] years from the date of termination or expiration of this Agreement.

 

26.  MISCELLANEOUS

 

26.1                        The headings of the articles are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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26.2                        This Agreement will not be binding upon the Parties until it has been signed below on behalf of each Party by a duly authorized representative.

 

26.3                        No amendment or modification hereof shall be valid or binding upon the Parties unless made in writing and signed on behalf of each Party by a duly authorized representative.

 

26.4                        This Agreement embodies the entire understanding of the Parties and shall supersede all previous and contemporaneous communications, representations or understandings, either oral or written, between the Parties relating to the subject matter hereof.

 

26.5                        Licensee shall not enter into any agreements relating to this Agreement with the Inventors or other Rutgers employees or students in contravention of the legal rights or policies of Rutgers.

 

26.6                        In case any of the provisions contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, (i) such invalidity, illegality or unenforceability shall not affect any other provisions hereof, (ii) the particular provision, to the extent permitted by law, shall be reasonably construed and equitably reformed to be valid and enforceable and if the provision at issue is a commercial term, it shall be equitably reformed so as to maintain the overall economic benefits of the Agreement as originally agreed upon by the Parties, and (iii) this Agreement shall be construed as if such invalid or illegal or unenforceable provisions had never been contained herein.

 

26.7                        Rutgers shall have the right to terminate this Agreement forthwith by giving written notice of termination to Licensee at any time upon or after (i) the filing by Licensee of a petition of bankruptcy or insolvency, or (ii) any adjudication that Licensee is bankrupt or insolvent, or (iii) the filing by Licensee of any petition or answer seeking judicial reorganization, readjustment or arrangement of the business of Licensee under any law relating to bankruptcy or insolvency, or (iv) the appointment of a receiver for all or substantially all of the property of Licensee, or (v) the making of any assignment or attempted assignment for the benefit of creditors, or (vi) the institution of any proceeding or passage of any resolution for the liquidation or winding up of Licensee’s business or for termination of its corporate life.

 

26.8                        Neither Licensee nor its Affiliates or sublicensees shall originate any publicity, news release or other public announcement, written or oral, relating to this Agreement or the existence of an arrangement between the Parties, except as required by law, without the prior written approval of Rutgers, which approval shall not be unreasonably withheld.

 

26.9                        This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Electronic and facsimile versions of this Agreement, including the signatures thereon, are acceptable for execution and record purposes and shall bind the Parties.

 

26.10                 Nothing herein shall be deemed to constitute one Party as the agent or representative of the other Party or both Parties as joint ventures or partners. Each Party is an independent contractor.

 

27.  INFRINGEMENT UNDER DRUG PRICE COMPETITION ACT

 

27.1                        In the event either Party receives notice pertaining to any patent included within Rutgers Patent Rights pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417, hereinafter, “the Act”), as amended, including but not necessarily limited to notices pursuant to Sections 101

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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and 103 of the Act from persons who have filed an Abbreviated New Drug Application (“ANDA”) or a “paper” New Drug Application (“paper NDA”), or in the case of an infringement of Rutgers Patent Rights as defined in Section 271(e) of Title 35 of the United States Code, such Party shall notify the other Party promptly but in no event later than ten (10) days after receipt of such notice.

 

27.2                        If Licensee wishes action to be taken against such infringement, as provided in the Act, Licensee shall request such action by written notice to Rutgers. Within thirty (30) days of receiving said request, Rutgers will give written notice to Licensee of its election to commence suit on its own account or refuse to commence such suit. Licensee may thereafter bring suit for patent infringement as provided by the Act if and only if Rutgers refuses to commence suit and if the infringement occurred during the period that Licensee had exclusive rights in the United States under this Agreement. However, in the event Licensee elects to bring suit in accordance with this paragraph, Rutgers may thereafter join such suit at its own expense.

 

27.3                        The relevant provisions of Article 16 shall likewise apply to any legal action brought under this Article 27.

 

27.4                        Rutgers hereby authorizes Licensee to include in any NDA for a Licensed Product a list of patents included within Rutgers Patent Rights identifying Rutgers as patent owner.

 

IN WITNESS WHEREOF, both Rutgers and Licensee have executed this Agreement by their duly authorized representative effective as of the date written above.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

19

 

	
Biohaven   Pharmaceutical
    	
 
    	
Rutgers, The e   University of New Jersey
    
	
Holding   Company Ltd.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Vladimir Coric
    	
 
    	
By:
    	
/s/ S. David Kimball
    
	
 
    	
 
    	
 
    	
 
    	
(Signature)
    
	
Name
    	
Vladimir Coric
    	
 
    	
Name:
    	
S. David Kimball, Ph.D.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title
    	
Chief Executive Officer
    	
 
    	
Associate Vice   President,
    
	
 
    	
 
    	
 
    	
Office of Research   Commercialization
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date
    	
September 7, 2016
    	
 
    	
Date
    	
September 1, 2016
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Signature   page for:
    	
Exclusive License   Agreement
    	
 
    	
 
    
						

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

20

 

EXHIBIT A

 

1.                                      Rutgers Patent Rights

 

[* * *]

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

21

 

EXHIBIT B

 

Progress Report Template

 

General Progress Report

 

1.              Summary of work completed, including key scientific results, market analysis

 

2.              Summary of work in progress, including product development and testing and progress in obtaining government approvals

 

3.              Current schedule of anticipated key events or milestones.

 

4.              Market plans for introduction of Licensed Products in the Territory

 

5.              Summary of resources (dollar value) spent in the reporting period for research, development, and marketing of Licensed Products

 

6.              Activities in obtaining sublicensees and activities of sublicensees where applicable

 

7.              Financial statements as of the end of the previous calendar quarter

 

8.              Any other information that may be useful to Rutgers and our relationship

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

22

 

Exhibit C

 

Client and Billing Agreement

 

Rutgers, the State University of New Jersey, a specially chartered New Jersey Educational Institution, with offices at 33 Knightsbridge Road - 2 East, Piscataway, NJ 08854 (“RUTGERS”) and Biohaven Pharmaceutical Holding Co. Ltd, a corporation having a principal place of business at an address of c/o Maples Corporate Services (BVI) Limited, P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands, ( “COMPANY”), have agreed to use the law firm of Fox Rothschild, with offices at 997 Lenox Drive Bldg 3, Lawrenceville, NJ 08648 (“FIRM”) to prepare, file and prosecute the patent applications listed in Exhibit A attached hereto and to maintain the Rutgers Patent Rights that issue thereon (“Rutgers Patent Rights”).

 

WHEREAS, COMPANY is the licensee of RUTGERS’ interest in the Rutgers Patent Rights; and

 

WHEREAS, RUTGERS and COMPANY desire to have the FIRM perform the legal services related to obtaining and maintaining the Rutgers Patent Rights in accordance with this Agreement; and

 

WHEREAS, FIRM desires to perform the legal services related to obtaining and maintaining the Rutgers Patent Rights; and

 

NOW THEREFORE, in consideration of the premises and the faithful performance of the covenants herein contained, the parties hereto agree as follows:

 

1.                                      RUTGERS shall, at all times hereunder, remain the client of record of the FIRM. FIRM shall interact directly with COMPANY on all patent prosecution matters related to the Rutgers Patent Rights and will copy RUTGERS on all correspondence. COMPANY or the FIRM shall supply Rutgers with a copy of all patent filings and provide Rutgers with a reasonable opportunity to comment and advise on all communications received from and all submissions to any government patent office with respect to any patent application or patent within the Rutgers Patent Rights and give all due consideration to such comments and advice received from Rutgers. RUTGERS will be notified by the FIRM prior to the FIRM taking any substantive actions with regard to the Rutgers Patent Rights and RUTGERS will have final approval on proceeding with such actions including the right to countermand. RUTGERS shall have [* * *] from the date of receipt of notice from the FIRM to provide or decline its approval of such actions or to provide comments thereon. If RUTGERS does not respond to the FIRM within such [* * *] period, the FIRM may proceed based on comments from the COMPANY. In addition, as prosecution proceeds, FIRM will promptly notify RUTGERS if there is any change in inventorship from the originally filed application. COMPANY shall follow the termination provisions of the license agreement between COMPANY and RUTGERS prior to allowing the abandonment or lapse of any of the Rutgers Patent Rights.

 

2.                                      RUTGERS understands and acknowledges that this agreement allows FIRM to disclose to COMPANY information otherwise protected by the attorney-client and/or work product privileges, which privileges shall be maintained and protected under the “common interest” doctrine. RUTGERS agrees that FIRM may make such disclosures to COMPANY in discharge of its obligations herein.

 

3.                                      In addition, COMPANY agrees that to the extent it decides to terminate or withdraw from this agreement as to any patent within Rutgers Patent Rights, FIRM may continue to represent RUTGERS in the efforts to secure and maintain the Rutgers Patent Rights, including taking positions that may be adverse to COMPANY, without bringing affirmative claims against COMPANY.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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4.                                      COMPANY is responsible for the payment of all charges and fees incurred by FIRM related to the prosecution and maintenance of the Rutgers Patent Rights, including but not limited to, patent maintenance fees. FIRM will invoice COMPANY and COMPANY shall pay FIRM directly for all charges. RUTGERS will be copied on all invoices and payments. COMPANY will be responsible for paying all invoices from the FIRM within [* * *] days of receipt. Failure to pay the FIRM within [* * *] days shall result in the COMPANY being Delinquent on such payments. FIRM must inform RUTGERS within [* * *] days if the licensee is Delinquent on payment. Otherwise, RUTGERS will not be responsible for payment of Delinquent charges and fees for which timely notice was not received.

 

5.                                      This agreement represents the complete understanding of each of the undersigned parties as to the client and billing arrangements defined herein. All additions or deletions of individual Rutgers Patent Rights or applications filed in the U.S. or foreign counterparts thereof are considered to be within the terms of this client and billing agreement.

 

6.                                      Notices and copies of all correspondence should be sent either by e-mail or in writing to the following:

 

To COMPANY:

 

Biohaven Pharmaceutical Holding Company, Ltd.

c/o Maples Corporate Services (BVI) Limited

P.O. Box 173

Kingston Chambers Road Town

Tortola, British Virgin Islands

e-mail address: [* * *]

 

To RUTGERS:

 

Rutgers, the State University of New Jersey

Office of the Vice President for Research and Economic Development

33 Knightsbridge Road - 2 East, Piscataway, NJ 08854

e-mail address: http://orc,rutgers.edu/about/staff-listing

 

To FIRM:

 

Attorney Name: Peter Butch

Law Firm Address: 997 Lenox Dr, Bldg 3, Lawrenceville NJ 08648

e-mail address: Butch, Peter J. (PButch@foxrothschild.com)

 

7.                                      The parties to this document agree that a copy of the original signature (including an electronic copy) may be used for any and all purposes for which the original signature may have been used. The parties further waive any right to challenge the admissibility of authenticity of this document in a court of law based solely on the absence of an original signature.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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ACCEPTED AND AGREED TO:
    	
 
    
	
 
    	
 
    
	
RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
S. David Kimball, Ph.D.
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Assoc. VP, Office of   Research Commercialization
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
COMPANY
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Biohaven Pharmaceutical   Holding Co. Ltd
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Vlad Coric; M.D.
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
CEO
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
LAW FIRM:
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
For Rothschild
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Peter Butch, J.D.
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    

 

Signature page for Client & Billing Exhibit B for Exec. Licenses

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

25Exhibit 10.11

 

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.

 

2017 EQUITY INCENTIVE PLAN

 

ADOPTED BY THE BOARD OF DIRECTORS: April 6, 2017

APPROVED BY THE SHAREHOLDERS:                , 2017

IPO DATE:               , 2017

 

1.                                      GENERAL.

 

(a)                                 Successor to and Continuation of Prior Plan.  The Plan is intended as the successor to and continuation of the Biohaven Pharmaceutical Holding Company Ltd. 2014 Equity Incentive Plan (the “Prior Plan”).  From and after 12:01 a.m. Eastern time on the IPO Date, no additional stock awards will be granted under the Prior Plan.  All Awards granted on or after 12:01 a.m. Eastern Time on the IPO Date will be granted under this Plan.  All share awards granted under the Prior Plan will remain subject to the terms of the Prior Plan.

 

(i)                                    Any shares that would otherwise remain available for future grants under the Prior Plan as of 12:01 a.m. Eastern Time on the IPO Date (the “Prior Plan’s Available Reserve”) will cease to be available under the Prior Plan at such time.  Instead, that number of Common Shares equal to the Prior Plan’s Available Reserve will be added to the Share Reserve (as further described in Section 3(a) below) and will be immediately available for grants and issuance pursuant to Share Awards hereunder, up to the maximum number set forth in Section 3(a) below.

 

(ii)                                In addition, from and after 12:01 a.m. Eastern time on the IPO Date, any shares subject, at such time, to outstanding share awards granted under the Prior Plan that (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company; or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a share award (such shares the “Returning Shares”) will immediately be added to the Share Reserve (as further described in Section 3(a) below) as and when such shares become Returning Shares, up to the maximum number set forth in Section 3(a) below.

 

(b)                                 Eligible Award Recipients.  Employees, Directors and Consultants are eligible to receive Awards.

 

(c)                                  Available Awards.  The Plan provides for the grant of the following Awards: (i) Incentive Share Options, (ii) Nonstatutory Share Options, (iii) Share Appreciation Rights, (iv) Restricted Share Awards, (v) Restricted Share Unit Awards, (vi) Performance Share Awards, (vii) Performance Cash Awards, and (viii) Other Share Awards.

 

(d)                                 Purpose.  The Plan, through the grant of Awards, is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate, and provide

 

1

 

a means by which the eligible recipients may benefit from increases in value of the Common Shares.

 

2.                                      ADMINISTRATION.

 

(a)                                 Administration by Board.  The Board will administer the Plan.  The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

(b)                                 Powers of Board.  The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)                                    To determine: (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted; (D) the provisions of each Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive cash or Common Shares under the Award; (E) the number of Common Shares subject to, or the cash value of, an Award; and (F) the Fair Market Value applicable to a Share Award.

 

(ii)                                To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Awards.  The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it will deem necessary or expedient to make the Plan or Award fully effective.

 

(iii)                            To settle all controversies regarding the Plan and Awards granted under it.

 

(iv)                             To accelerate, in whole or in part, the time at which an Award may be exercised or vest (or the time at which cash or Common Shares may be issued in settlement thereof).

 

(v)                                 To suspend or terminate the Plan at any time.  Except as otherwise provided in the Plan or an Award Agreement, suspension or termination of the Plan will not materially impair a Participant’s rights under the Participant’s then-outstanding Award without the Participant’s written consent, except as provided in subsection (viii) below.

 

(vi)                             To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Share Options and certain nonqualified deferred compensation under Section 409A of the Code and/or bringing the Plan or Awards granted under the Plan into compliance with the requirements for Incentive Share Options or ensuring that they are exempt from, or compliant with, the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law.  If required by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek shareholder approval of any amendment of the Plan that (A) materially increases the number of Common Shares available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which Common

 

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Shares may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Awards available for issuance under the Plan. Except as otherwise provided in the Plan or an Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Award without the Participant’s written consent.

 

(vii)                         To submit any amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of (A) Section 162(m) of the Code regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to Covered Employees, (B) Section 422 of the Code regarding “incentive stock options” or (C) Rule 16b-3.

 

(viii)                     To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided, however, that a Participant’s rights under any Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing.  Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Awards without the affected Participant’s consent (A) to maintain the qualified status of the Award as an Incentive Share Option under Section 422 of the Code; (B) to change the terms of an Incentive Share Option, if such change results in impairment of the Award solely because it impairs the qualified status of the Award as an Incentive Share Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring the Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws or listing requirements.

 

(ix)                             Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards.

 

(x)                                 To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).

 

(xi)                             To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price of any outstanding Share Award; (B) the cancellation of any outstanding Share Award and the grant in substitution therefor of a new (1) Option or SAR, (2) Restricted Share Award, (3) Restricted Share Unit Award, (4) Other Share Award, (5) cash and/or (6) other valuable consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number of Common Shares as the cancelled Share Award and (y) granted under the Plan or another equity

 

3

 

or compensatory plan of the Company; or (C) any other action that is treated as a repricing under generally accepted accounting principles.

 

(c)                                  Delegation to Committee.

 

(i)                                    General.  The Board may delegate some or all of the administration of the Plan to a Committee or Committees.  If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable).  Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable).  The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

 

(ii)                                Section 162(m) and Rule 16b-3 Compliance.  The Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, or solely of two or more Non-Employee Directors in accordance with Rule 16b-3.

 

(d)                                 Delegation to an Officer.  The Board may delegate to one (1) or more Officers the authority to do one or both of the following (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Share Awards) and, to the extent permitted by applicable law, the terms of such Awards, and (ii) determine the number of Common Shares to be subject to such Share Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify the total number of Common Shares that may be subject to the Share Awards granted by such Officer and that such Officer may not grant a Share Award to himself or herself.  Any such Share Awards will be granted on the form of Share Award Agreement most recently approved for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority.  The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the Fair Market Value pursuant to Section 13(x)(iii) below.

 

(e)                                  Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

 

3.                                      SHARES SUBJECT TO THE PLAN.

 

(a)                                 Share Reserve.  Subject to Section 9(a) relating to Capitalization Adjustments, and the following sentence regarding the annual increase, the aggregate number of Common Shares that may be issued pursuant to Share Awards will not exceed 7,611,971 shares (the

 

4

 

“Share Reserve”), which number is the sum of (i) 2,712,741 new shares, plus (ii) the number of shares subject to the Prior Plan’s Available Reserve, plus (iii) the number of shares that are Returning Shares, as such shares become available from time to time.

 

In addition, the Share Reserve may be increased by the Board on January 1st of each year, for a period of not more than ten years, commencing on January 1st of the year following the year in which the IPO Date occurs and ending on (and including) January 1, 2027, by a number of Common Shares determined by the Board in an amount not to exceed 4% of the total number of Capital Shares outstanding on December 31st of the preceding calendar year.  

 

For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of Common Shares that may be issued pursuant to the Plan.  Accordingly, this Section 3(a) does not limit the granting of Share Awards except as provided in Section 7(a).  Shares may be issued in connection with a merger or acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if applicable, NYSE Listed Company Manual Section 303A.08, AMEX Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan.

 

(b)                                 Reversion of Shares to the Share Reserve.  If a Share Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Share Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than shares), such expiration, termination or settlement will not reduce (or otherwise offset) the number of Common Shares that may be available for issuance under the Plan.  If any Common Shares issued pursuant to a Share Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan.  Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Share Award or as consideration for the exercise or purchase price of a Share Award will again become available for issuance under the Plan.

 

(c)                                  Incentive Share Option Limit.  Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of Common Shares that may be issued pursuant to the exercise of Incentive Share Options will be 15,223,942 Common Shares.

 

(d)                                 Section 162(m) Limitations.  Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions of Section 162(m) of the Code, the following limitations shall apply.

 

(i)                                    A maximum of 3,000,000 Common Shares subject to Options, SARs and Other Share Awards whose value is determined by reference to an increase over an exercise or

 

5

 

strike price of at least 100% of the Fair Market Value on the date the Share Award is granted may be granted to any one Participant during any one calendar year.  Notwithstanding the foregoing, if any additional Options, SARs or Other Share Awards whose value is determined by reference to an increase over an exercise or strike price of at least 100% of the Fair Market Value on the date the Share Award are granted to any Participant during any calendar year, compensation attributable to the exercise of such additional Share Awards will not satisfy the requirements to be considered “qualified performance-based compensation” under Section 162(m) of the Code unless such additional Share Award is approved by the Company’s shareholders.

 

(ii)                                A maximum of 3,000,000 Common Shares subject to Performance Share Awards may be granted to any one Participant during any one calendar year (whether the grant, vesting or exercise is contingent upon the attainment during the Performance Period of the Performance Goals).

 

(iii)                            A maximum of $3,000,000 may be granted as a Performance Cash Award to any one Participant during any one calendar year.

 

(e)                                  Limitation on Grants to Non-Employee Directors.  The maximum number of Common Shares subject to Share Awards granted under the Plan or otherwise during any one calendar year to any Non-Employee Director, taken together with any cash fees paid by the Company to such Non-Employee Director during such calendar year for service on the Board, will not exceed $1,000,000 in total value (calculating the value of any such Share Awards based on the grant date fair value of such Share Awards for financial reporting purposes).

 

(f)                                   Source of Shares.  The shares issuable under the Plan will be shares of authorized but unissued or reacquired Common Shares, including shares repurchased by the Company on the open market or otherwise.

 

4.                                      ELIGIBILITY.

 

(a)                                 Eligibility for Specific Share Awards.  Incentive Share Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code).  Share Awards other than Incentive Share Options may be granted to Employees, Directors and Consultants; provided, however, that Share Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405 of the Securities Act, unless (i) the shares underlying such Share Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Share Awards are granted pursuant to a corporate transaction such as a spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that such Share Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has determined that such Share Awards comply with the distribution requirements of Section 409A of the Code.

 

(b)                                 Ten Percent Shareholders.  A Ten Percent Shareholder will not be granted an Incentive Share Option unless the exercise price of such Option is at least 110% of the Fair

 

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Market Value on the date of grant and the Option is not exercisable after the expiration of five years from the date of grant.

 

5.                                      PROVISIONS RELATING TO OPTIONS AND SHARE APPRECIATION RIGHTS.

 

Each Option or SAR will be in such form and will contain such terms and conditions as the Board deems appropriate.  All Options will be separately designated Incentive Share Options or Nonstatutory Share Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for Common Shares purchased on exercise of each type of Option.  If an Option is not specifically designated as an Incentive Share Option, or if an Option is designated as an Incentive Share Option but some portion or all of the Option fails to qualify as an Incentive Share Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Share Option. The provisions of separate Options or SARs need not be identical; provided, however, that each Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following provisions:

 

(a)                                 Term.  Subject to the provisions of Section 4(b) regarding Ten Percent Shareholders, no Option or SAR will be exercisable after the expiration of ten years from the date of its grant or such shorter period specified in the Award Agreement.

 

(b)                                 Exercise Price.  Subject to the provisions of Section 4(b) regarding Ten Percent Shareholders, the exercise or strike price of each Option or SAR will be not less than 100% of the Fair Market Value of the Common Shares subject to the Option or SAR on the date the Award is granted.  Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value of the Common Shares subject to the Award if such Award is granted pursuant to an assumption of or substitution for another option or share appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A of the Code and, if applicable, Section 424(a) of the Code.  Each SAR will be denominated in Common Shares equivalents.

 

(c)                                  Purchase Price for Options.  The purchase price of Common Shares acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below.  The Board will have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment.  The permitted methods of payment are as follows:

 

(i)                                    by cash, check, bank draft or money order payable to the Company;

 

(ii)                                pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the shares subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

 

(iii)                            by delivery to the Company (either by actual delivery or attestation) of Common Shares;

 

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(iv)                             if an Option is a Nonstatutory Share Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of Common Shares issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued.  Common Shares will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or

 

(v)                                 in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement.

 

(d)                                 Exercise and Payment of a SAR.  To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Share Appreciation Right Agreement evidencing such SAR.  The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of Common Shares equal to the number of Common Share equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the aggregate strike price of the number of Common Share equivalents with respect to which the Participant is exercising the SAR on such date.  The appreciation distribution may be paid in Common Shares, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Award Agreement evidencing such SAR.

 

(e)                                  Transferability of Options and SARs.  The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine.  In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options and SARs will apply:

 

(i)                                    Restrictions on Transfer.  An Option or SAR will not be transferable except by will or by the laws of descent and distribution (or pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant.  The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws.  Except as explicitly provided in the Plan, neither an Option nor a SAR may be transferred for consideration.

 

(ii)                                Domestic Relations Orders.  Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulations Section 1.421-1(b)(2).  If an Option is an Incentive Share Option, such Option may be deemed to be a Nonstatutory Share Option as a result of such transfer.

 

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(iii)                            Beneficiary Designation.  Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, on the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Shares or other consideration resulting from such exercise.  In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Shares or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.

 

(f)                                   Vesting Generally.  The total number of Common Shares subject to an Option or SAR may vest and become exercisable in periodic installments that may or may not be equal.  The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board may deem appropriate.  The vesting provisions of individual Options or SARs may vary.  The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of Common Shares as to which an Option or SAR may be exercised.

 

(g)                                 Termination of Continuous Service.  Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date that is three months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement.  If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time frame, the Option or SAR will terminate.

 

(h)                                 Extension of Termination Date.  If the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of Common Shares would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, and (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.  In addition, unless otherwise provided in a Participant’s Award Agreement, if the sale of any Common Shares received on exercise of an Option or SAR following the termination of the Participant’s Continuous Service would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the expiration of a period of months (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Shares received upon exercise of the Option or SAR would not be

 

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in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.

 

(i)                                    Disability of Participant.  Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date 12 months following such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement.  If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(j)                                    Death of Participant.  Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Award Agreement for exercisability after the termination of the Participant’s Continuous Service for a reason other than death, then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i) the date 18 months following the date of death (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the term of such Option or SAR as set forth in the Award Agreement.  If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

(k)                                 Non-Exempt Employees.  If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any Common Shares until at least six months following the date of grant of the Option or SAR (although the Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Award Agreement in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company’s then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six months following the date of grant.  The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay.  To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Share Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(k) will apply to all Share Awards and are hereby incorporated by reference into such Share Award Agreements.

 

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6.                                      PROVISIONS OF SHARE AWARDS OTHER THAN OPTIONS AND SARS.

 

(a)                                 Restricted Share Awards.  Each Restricted Share Award Agreement will be in such form and will contain such terms and conditions as the Board will deem appropriate.  To the extent consistent with the Company’s bylaws, at the Board’s election, Common Shares may be (x) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Share Award lapse; or (y) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board.  The terms and conditions of Restricted Share Award Agreements may change from time to time, and the terms and conditions of separate Restricted Share Award Agreements need not be identical.  Each Restricted Share Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

 

(i)                                    Consideration.  A Restricted Share Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past or future services to the Company or an Affiliate, or (C) any other form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)                                Vesting.  Common Shares awarded under the Restricted Share Award Agreement may be subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the Board.

 

(iii)                            Termination of Participant’s Continuous Service.  If a Participant’s Continuous Service terminates, the Company may receive through a forfeiture condition or a repurchase right any or all of the Common Shares held by the Participant that have not vested as of the date of termination of Continuous Service under the terms of the Restricted Share Award Agreement.

 

(iv)                             Transferability.  Rights to acquire Common Shares under the Restricted Share Award Agreement will be transferable by the Participant only upon such terms and conditions as are set forth in the Restricted Share Award Agreement, as the Board will determine in its sole discretion, so long as Common Shares awarded under the Restricted Share Award Agreement remain subject to the terms of the Restricted Share Award Agreement.

 

(v)                                 Dividends.  A Restricted Share Award Agreement may provide that any dividends paid on Restricted Share will be subject to the same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Share Award to which they relate.

 

(b)                                 Restricted Share Unit Awards.  Each Restricted Share Unit Award Agreement will be in such form and will contain such terms and conditions as the Board will deem appropriate.  The terms and conditions of Restricted Share Unit Award Agreements may change from time to time, and the terms and conditions of separate Restricted Share Unit Award Agreements need not be identical.  Each Restricted Share Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance of each of the following provisions:

 

(i)                                    Consideration.  At the time of grant of a Restricted Share Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of

 

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each Common Share subject to the Restricted Share Unit Award.  The consideration to be paid (if any) by the Participant for each Common Share subject to a Restricted Share Unit Award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

(ii)                                Vesting.  At the time of the grant of a Restricted Share Unit Award, the Board may impose such restrictions on or conditions to the vesting of the Restricted Share Unit Award as it, in its sole discretion, deems appropriate.

 

(iii)                            Payment.  A Restricted Share Unit Award may be settled by the delivery of Common Shares, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Share Unit Award Agreement.

 

(iv)                             Additional Restrictions.  At the time of the grant of a Restricted Share Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the Common Shares (or their cash equivalent) subject to a Restricted Share Unit Award to a time after the vesting of such Restricted Share Unit Award.

 

(v)                                 Dividend Equivalents.  Dividend equivalents may be credited in respect of Common Shares covered by a Restricted Share Unit Award, as determined by the Board and contained in the Restricted Share Unit Award Agreement.  At the sole discretion of the Board, such dividend equivalents may be converted into additional Common Shares covered by the Restricted Share Unit Award in such manner as determined by the Board.  Any additional shares covered by the Restricted Share Unit Award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying Restricted Share Unit Award Agreement to which they relate.

 

(vi)                             Termination of Participant’s Continuous Service.  Except as otherwise provided in the applicable Restricted Share Unit Award Agreement, such portion of the Restricted Share Unit Award that has not vested will be forfeited upon the Participant’s termination of Continuous Service.

 

(c)                                  Performance Awards.

 

(i)                                    Performance Share Awards.  A Performance Share Award is a Share Award (covering a number of shares not in excess of that set forth in Section 3(d) above) that is payable (including that may be granted, may vest or may be exercised) contingent upon the attainment during a Performance Period of certain Performance Goals.  A Performance Share Award may, but need not, require the Participant’s completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined by the Committee (or, if not required for compliance with Section 162(m) of the Code, the Board), in its sole discretion.  In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance Share Awards.

 

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(ii)                                Performance Cash Awards.  A Performance Cash Award is a cash award (for a dollar value not in excess of that set forth in Section 3(d) above) that is payable contingent upon the attainment during a Performance Period of certain Performance Goals.  A Performance Cash Award may also require the completion of a specified period of Continuous Service.  At the time of grant of a Performance Cash Award, the length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined by the Committee (or, if not required for compliance with Section 162(m) of the Code, the Board), in its sole discretion.  The Board may specify the form of payment of Performance Cash Awards, which may be cash or other property, or may provide for a Participant to have the option for his or her Performance Cash Award, or such portion thereof as the Board may specify, to be paid in whole or in part in cash or other property.

 

(iii)                            Board Discretion.  The Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for a Performance Period.  Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Share Award Agreement or the written terms of a Performance Cash Award.

 

(iv)                             Section 162(m) Compliance.  Unless otherwise permitted in compliance with the requirements of Section 162(m) of the Code with respect to an Award intended to qualify as “performance-based compensation” thereunder, the Committee will establish the Performance Goals applicable to, and the formula for calculating the amount payable under, the Award no later than the earlier of (a) the date 90 days after the commencement of the applicable Performance Period, and (b) the date on which 25% of the Performance Period has elapsed, and in any event at a time when the achievement of the applicable Performance Goals remains substantially uncertain.  Prior to the payment of any compensation under an Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee will certify the extent to which any Performance Goals and any other material terms under such Award have been satisfied (other than in cases where such Performance Goals relate solely to the increase in the value of the Common Shares).  Notwithstanding satisfaction of, or completion of any Performance Goals, the number of Common Shares, Options, cash or other benefits granted, issued, retainable and/or vested under an Award on account of satisfaction of such Performance Goals may be reduced by the Committee on the basis of such further considerations as the Committee, in its sole discretion, will determine.

 

(d)                                 Other Share Awards.  Other forms of Share Awards valued in whole or in part by reference to, or otherwise based on, Common Shares, including the appreciation in value thereof (e.g., options or share rights with an exercise price or strike price less than 100% of the Fair Market Value of the Common Shares at the time of grant) may be granted either alone or in addition to Share Awards provided for under Section 5 and the preceding provisions of this Section 6.  Subject to the provisions of the Plan, the Board will have sole and complete authority to determine the persons to whom and the time or times at which such Other Share Awards will be granted, the number of Common Shares (or the cash equivalent thereof) to be granted pursuant to such Other Share Awards and all other terms and conditions of such Other Share Awards.

 

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7.                                      COVENANTS OF THE COMPANY.

 

(a)                                 Availability of Shares.  The Company will keep available at all times the number of Common Shares reasonably required to satisfy then-outstanding Awards.

 

(b)                                 Securities Law Compliance.  The Company will seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Share Awards and to issue and sell Common Shares upon exercise or vesting of the Share Awards; provided, however, that this undertaking will not require the Company to register under the Securities Act or other securities or applicable laws, the Plan, any Share Award or any Common Shares issued or issuable pursuant to any such Share Award.  If, after reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Shares under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Shares upon exercise or vesting of such Share Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of an Award or the subsequent issuance of cash or Common Shares pursuant to the Award if such grant or issuance would be in violation of any applicable law.

 

(c)                                  No Obligation to Notify or Minimize Taxes.  The Company will have no duty or obligation to any Participant to advise such holder as to the tax treatment or time or manner of exercising such Share Award.  Furthermore, the Company will have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised.  The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.

 

8.                                      MISCELLANEOUS.

 

(a)                                 Use of Proceeds from Sales of Common Shares.  Proceeds from the sale of Common Shares pursuant to Awards will constitute general funds of the Company.

 

(b)                                 Corporate Action Constituting Grant of Awards.  Corporate action constituting a grant by the Company of an Award to any Participant will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant.  In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.

 

(c)                                  Shareholder Rights.  No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Common Shares subject to an Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the issuance

 

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of Common Shares under, the Award pursuant to its terms, and (ii) the issuance of the Common Shares subject to such Award has been entered into the books and records of the Company.

 

(d)                                 No Employment or Other Service Rights.  Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction in which the Company or the Affiliate is domiciled or incorporated, as the case may be.

 

(e)                                  Change in Time Commitment.  In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award.  In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.

 

(f)                                   Incentive Share Option Limitations.  To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Shares with respect to which Incentive Share Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing Incentive Share Options, the Options or portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Share Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(g)                                 Investment Assurances.  The Company may require a Participant, as a condition of exercising or acquiring Common Shares under any Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that such Participant is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Shares subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Shares.  The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative if (A) the issuance of the shares upon the exercise or

 

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acquisition of Common Shares under the Award has been registered under a then currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to the Company, place legends on share certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Shares.

 

(h)                                 Withholding Obligations.  Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding Common Shares from the Common Shares issued or otherwise issuable to the Participant in connection with the Award; provided, however, that no Common Shares are withheld with a value exceeding the maximum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification of the Share Award as a liability for financial accounting purposes); (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Award Agreement.

 

(i)                                    Electronic Delivery.  Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access).

 

(j)                                    Deferrals.  To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Shares or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants.  Deferrals by Participants will be made in accordance with Section 409A of the Code.  Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee or otherwise providing services to the Company.  The Board is authorized to make deferrals of Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

 

(k)                                 Compliance with Section 409A of the Code.  Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code.  If the Board determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement.  Notwithstanding anything to the contrary in this Plan (and

 

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unless the Award Agreement specifically provides otherwise), if the Common Shares are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation” under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment of any amount that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six months following the date of such Participant’s “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule.

 

(l)                                    Clawback/Recovery.  All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.

 

9.                                      ADJUSTMENTS UPON CHANGES IN COMMON SHARES; OTHER CORPORATE EVENTS.

 

(a)                                 Capitalization Adjustments.  In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities by which the share reserve is to increase automatically each year pursuant to Section 3(a), (iii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Share Options pursuant to Section 3(c), (iv) the class(es) and maximum number of securities that may be awarded to any person pursuant to Sections 3(d), and (v) the class(es) and number of securities and price per share of share subject to outstanding Share Awards.  The Board will make such adjustments, and its determination will be final, binding and conclusive.

 

(b)                                 Dissolution.  Except as otherwise provided in the Share Award Agreement, in the event of a Dissolution of the Company, all outstanding Share Awards (other than Share Awards consisting of vested and outstanding Common Shares not subject to a forfeiture condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such Dissolution, and the Common Shares subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Share Award is providing Continuous Service; provided, however, that the Board may, in its sole discretion, cause some or all Share Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Share Awards have not previously expired or terminated) before the Dissolution is completed but contingent on its completion.

 

(c)                                  Transaction.  The following provisions shall apply to Share Awards in the event of a Transaction unless otherwise provided in the instrument evidencing the Share Award or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Board at the time of grant of a Share Award.  In the event of

 

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a Transaction, then, notwithstanding any other provision of the Plan, the Board shall take one or more of the following actions with respect to Share Awards, contingent upon the closing or completion of the Transaction:

 

(i)                                    arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) to assume or continue the Share Award or to substitute a similar share award for the Share Award (including, but not limited to, an award to acquire the same consideration paid to the shareholders of the Company pursuant to the Transaction);

 

(ii)                                arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Shares issued pursuant to the Share Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);

 

(iii)                            accelerate the vesting, in whole or in part, of the Share Award (and, if applicable, the time at which the Share Award may be exercised) to a date prior to the effective time of such Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five days prior to the effective date of the Transaction) and communicate such date in writing or electronically to affected Participants, with such Share Award terminating if not exercised (if applicable) at or prior to the effective time of the Transaction;

 

(iv)                             arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Share Award;

 

(v)                                 cancel or arrange for the cancellation of the Share Award, to the extent not vested or not exercised prior to the effective time of the Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and

 

(vi)                             make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise of the Share Award immediately prior to the effective time of the Transaction, over (B) any exercise price payable by such holder in connection with such exercise.  For clarity, this payment may be zero ($0) if the value of the property is equal to or less than the exercise price.  Payments under this provision may be delayed to the same extent that payment of consideration to the holders of Common Shares in connection with the Transaction is delayed as a result of escrows, earn outs, holdbacks or other contingencies.

 

The Board need not take the same action or actions with respect to all Share Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of a Share Award.

 

(d)                                 Change in Control.  In the event that the surviving corporation or successor corporation (or its parent company) in a Change in Control does not assume or substitute for any outstanding Share Award (or portion thereof) held by any Participant whose Continuous Service has not terminated prior to the effective time of the Change in Control, then contingent upon the effectiveness of the Change in Control, such Participant will fully vest in and, to the extent applicable, have the right to exercise all of his or her outstanding Share Awards, including

 

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Common Shares as to which such Share Awards would not otherwise be vested or exercisable, all restrictions on Share Awards will lapse, and, with respect to any Share Award with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met and, unless otherwise determined by the Board, the Company will notify the Participant in writing or electronically that any such Share Award held by the Participant that is an Option or SAR will be exercisable for a period of time determined by the Board in its sole discretion, and the Option or SAR will terminate upon the expiration of such period, unless otherwise determined by the Board.  A Share Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Share Award Agreement for such Share Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.

 

10.                               PLAN TERM; EARLIER TERMINATION OR SUSPENSION OF THE PLAN.

 

The Board may suspend or terminate the Plan at any time.  No Incentive Share Options may be granted after the tenth anniversary of the earlier of (i) the date the Plan is adopted by the Board (the “Adoption Date”), or (ii) the date the Plan is approved by the shareholders of the Company.  No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.  Suspension or termination of the Plan will not impair rights and obligations under any Award granted while the Plan is in effect, except with the written consent of the affected Participant or as otherwise permitted in the Plan.

 

11.                               EXISTENCE OF THE PLAN; TIMING OF FIRST GRANT OR EXERCISE.

 

The Plan will come into existence on the Adoption Date; provided, however, that no Share Award may be granted prior to the IPO Date.  In addition, no Share Award will be exercised (or, in the case of a Restricted Share Award, Restricted Share Unit Award, Performance Share Award, or Other Share Award, no Share Award will be granted) and no Performance Cash Award will be settled unless and until the Plan has been approved by the shareholders of the Company, which approval will be within 12 months after the date the Plan is adopted by the Board.

 

12.                               CHOICE OF LAW.

 

The law of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.

 

13.                               DEFINITIONS.  As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

 

(a)                                 “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 of the Securities Act.  The Board will have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.

 

(b)                                 “Award” means a Share Award or a Performance Cash Award.

 

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(c)                                  “Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of an Award.

 

(d)                                 “Board” means the Board of Directors of the Company.

 

(e)                                  “Capital Shares” means each and every class of common shares of the Company, regardless of the number of votes per share.

 

(f)                                   “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Shares subject to the Plan or subject to any Share Award after the Adoption Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, share dividend, dividend in property other than cash, large nonrecurring cash dividend, share split, reverse share split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto).  Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

(g)                                 “Cause” shall have the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events:  (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company or of any statutory duty owed to the Company; (iv) such Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause shall be made by the Company, in its sole discretion.  Any determination by the Company that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.

 

(h)                                 “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                    any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, (C) on account of the acquisition of securities

 

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of the Company by any individual who is, on the IPO Date, either an executive officer or a Director (either, an “IPO Investor”) and/or any entity in which an IPO Investor has a direct or indirect interest (whether in the form of voting rights or participation in profits or capital contributions) of more than 50% (collectively, the “IPO Entities”) or on account of the IPO Entities continuing to hold shares that come to represent more than 50% of the combined voting power of the Company’s then outstanding securities as a result of the conversion of any class of the Company’s securities into another class of the Company’s securities having a different number of votes per share pursuant to the conversion provisions set forth in the Company’s Amended and Restated Certificate of Incorporation; or (D) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to occur;

 

(ii)                                there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the shareholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; provided, however, that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the surviving Entity or its parent are owned by the IPO Entities;

 

(iii)                            there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than 50% of the combined voting power of the voting securities of which are Owned by shareholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; provided, however, that a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the acquiring Entity or its parent are owned by the IPO Entities;

 

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(iv)                             the shareholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company will otherwise occur, except for a liquidation into a parent corporation; or

 

(v)                                 individuals who, on the date the Plan is adopted by the Board, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board;  provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.

 

Notwithstanding the foregoing definition or any other provision of the Plan, the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company and the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition will apply.

 

(i)                                    “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(j)                                    “Committee” means a committee of one or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

 

(k)                                 “Common Share” means, as of the IPO Date, the common shares of the Company, having one vote per share.

 

(l)                                    “Company” means Biohaven Pharmaceutical Holding Company Ltd., a BVI business company.

 

(m)                             “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services.  However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan.  Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the Company’s securities to such person.

 

(n)                                 “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated.  A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering services ceases to

 

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qualify as an Affiliate, as determined by the Board, in its sole discretion, such Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate.  To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors.  Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

 

(o)                                 “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                    a sale or other disposition of all or substantially all, as determined by the Board, in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)                                a sale or other disposition of more than 50% of the outstanding securities of the Company;

 

(iii)                            a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)                             a merger, consolidation or similar transaction following which the Company is the surviving corporation but the Common Shares outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(p)                                 “Covered Employee” will have the meaning provided in Section 162(m)(3) of the Code.

 

(q)                                 “Director” means a member of the Board.

 

(r)                                  “Disability” means, with respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.

 

(s)                                   “Dissolution” means when the Company, after having executed a certificate of dissolution with the State of Delaware (or other applicable state), has completely wound up its affairs.  Conversion of the Company into a Limited Liability Company (or any other pass-through entity) will not be considered a “Dissolution” for purposes of the Plan.

 

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(t)                                    “Employee” means any person employed by the Company or an Affiliate.  However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.

 

(u)                                 “Entity” means a corporation, partnership, limited liability company or other entity.

 

(v)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(w)                               “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their Ownership of shares of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the IPO Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities.

 

(x)                                 “Fair Market Value” means, as of any date, the value of the a Common Share determined as follows:

 

(i)                                    If the Common Share is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of Common Share will be, unless otherwise determined by the Board, the closing sales price for such share as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Shares) on the date of determination, as reported in a source the Board deems reliable.

 

(ii)                                Unless otherwise provided by the Board, if there is no closing sales price for a Common Share on the date of determination, then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists.

 

(iii)                            In the absence of such markets for the Common Shares, the Fair Market Value will be determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.

 

(y)                                 “Incentive Share Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.

 

(z)                                  “IPO Date” means the date of the underwriting agreement between the Company and the underwriter(s) managing the initial public offering of the Common Shares, pursuant to which a Common Share is priced for the initial public offering.

 

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(aa)                          “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(bb)                          “Nonstatutory Share Option” means any Option granted pursuant to Section 5 of the Plan that does not qualify as an Incentive Share Option.

 

(cc)                            “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.

 

(dd)                          “Option” means an Incentive Share Option or a Nonstatutory Share Option to purchase Common Shares granted pursuant to the Plan.

 

(ee)                            “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant.  Each Option Agreement will be subject to the terms and conditions of the Plan.

 

(ff)                              “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

 

(gg)                          “Other Share Award” means an award based in whole or in part by reference to Common Shares which is granted pursuant to the terms and conditions of Section 6(d).

 

(hh)                          “Other Share Award Agreement” means a written agreement between the Company and a holder of an Other Share Award evidencing the terms and conditions of an Other Share Award grant.  Each Other Share Award Agreement will be subject to the terms and conditions of the Plan.

 

(ii)                                “Outside Director” means a Director who either (i) is not a current employee of the Company or an “affiliated corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated corporation” who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or an “affiliated corporation,” and does not receive remuneration from the Company or an “affiliated corporation,” either directly or indirectly, in any capacity other than as a Director, or (ii) is otherwise considered an “outside director” for purposes of Section 162(m) of the Code.

 

(jj)                                “Own,” “Owned,” “Owner,” “Ownership” means a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

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(kk)                          “Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Share Award.

 

(ll)                                “Performance Cash Award” means an award of cash granted pursuant to the terms and conditions of Section 6(c)(ii).

 

(mm)                  “Performance Criteria” means the one or more criteria that the Board will select for purposes of establishing the Performance Goals for a Performance Period.  The Performance Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: (i) earnings (including earnings per share and net earnings); (ii) earnings before interest and taxes; (iii) earnings before interest, taxes and depreciation; (iv) earnings before interest, taxes, depreciation and/or amortization; (v) earnings before interest, taxes, depreciation, amortization and legal settlements; (vi) earnings before interest, taxes, depreciation, amortization, legal settlements and other income (expense); (vii) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense) and share-based compensation; (viii) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense), share-based compensation and changes in deferred revenue; (ix) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense), share-based compensation, other non-cash expenses and changes in deferred revenue; (x) total shareholder return; (xi) return on equity or average shareholder’s equity; (xii) return on assets, investment, or capital employed; (xiii) return on operating revenue; (xiv) margin (including gross margin); (xv) income (before or after taxes); (xvi) operating income (before or after taxes); (xvii) operating income after taxes; (xviii) operating income before interest and taxes;  (xix) operating income before interest, taxes, depreciation and amortization; (xx) pre-tax profit; (xxi) operating cash flow; (xxii) sales or revenue targets; (xxiii) increases in revenue or product revenue; (xxiv) improvement in or attainment of working capital levels; (xxv) economic value added (or an equivalent metric); (xxvi) cash flow; (xxvii) cash flow per share; (xxviii) cash balance; (xxix) cash burn; (xxx) cash collections; (xxxi) debt reduction; (xxxii) implementation or completion of projects or processes (including, without limitation, clinical trial initiation, clinical trial enrollment and dates, clinical trial results, regulatory filing submissions, regulatory filing acceptances, regulatory or advisory committee interactions, regulatory approvals, and product supply); (xxxiii) shareholders’ equity; (xxxiv) capital expenditures; (xxxv) debt levels; (xxxvi) operating profit or net operating profit; (xxxvii) workforce diversity; (xxxviii) net income or growth of net income or operating income; (xxxix) billings; (xl) bookings; (xli) employee retention; (xlii) initiation of studies by specific dates; (xliii) budget management; (xliv) submission to, or approval by, a regulatory body (including, but not limited to the U.S. Food and Drug Administration) of an applicable filing or a product; (xlv) regulatory milestones; (xlvi) safety performance; (xlvii) sustainability or environmental performance; (xlviii) progress of internal research or development programs; (xlix) acquisition of new customers; (l) customer retention and/or repeat order rate; (li) improvements in sample and test processing times; (lii) progress of partnered programs; (liii) partner satisfaction; (liv) timely completion of clinical trials; (lv) submission of 510(k)s or pre-market approvals and other regulatory achievements; (lvi) milestones related to research development (including, but not limited to, preclinical and clinical studies), product development and manufacturing or new product innovation; (lvii) expansion of sales in additional geographies or markets; (lviii) research progress, including the development of programs; (lix) strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property; (lx)

 

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strategic corporate objectives relating to: increase in revenue with certain customers, customer groups, or customer types; (lxi) financings; (lxii) brand recognition or acceptance; (lxiii) share price; (lxiv) share price performance; (lxv) market share; (lxvi) expenses and cost reduction goals and (lxvii) to the extent that an Award is not intended to comply with Section 162(m) of the Code, other measures of performance selected by the Board.

 

(nn)                          “Performance Goals” means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon the Performance Criteria.  Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices.  Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of any items that are unusual in nature or occur infrequently as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common share of the Company by reason of any share dividend or split, share repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common shareholders other than regular cash dividends; (9) to exclude the effects of share based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles; (12) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item; and (13) to exclude the effects of the timing of acceptance for review and/or approval of submissions to the U.S. Food and Drug Administration or any other regulatory body.  In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the Share Award Agreement or the written terms of a Performance Cash Award.

 

(oo)                          “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Share Award or a Performance Cash Award.  Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.

 

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(pp)                          “Performance Share Award” means a Share Award granted under the terms and conditions of Section 6(c)(i).

 

(qq)                          “Plan” means this Biohaven Pharmaceutical Holding Company Ltd. 2017 Equity Incentive Plan.

 

(rr)                            “Restricted Share Award” means an award of Common Shares which is granted pursuant to the terms and conditions of Section 6(a).

 

(ss)                              “Restricted Share Award Agreement” means a written agreement between the Company and a holder of a Restricted Share Award evidencing the terms and conditions of a Restricted Share Award grant.  Each Restricted Share Award Agreement will be subject to the terms and conditions of the Plan.

 

(tt)                                “Restricted Share Unit Award” means a right to receive Common Shares which is granted pursuant to the terms and conditions of Section 6(b).

 

(uu)                          “Restricted Share Unit Award Agreement” means a written agreement between the Company and a holder of a Restricted Share Unit Award evidencing the terms and conditions of a Restricted Share Unit Award grant.  Each Restricted Share Unit Award Agreement will be subject to the terms and conditions of the Plan.

 

(vv)                          “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

 

(ww)                      “Securities Act” means the Securities Act of 1933, as amended.

 

(xx)                          “Share Appreciation Right” or “SAR” means a right to receive the appreciation on Common Shares that is granted pursuant to the terms and conditions of Section 5.

 

(yy)                          “Share Appreciation Right Agreement” means a written agreement between the Company and a holder of a Share Appreciation Right evidencing the terms and conditions of a Share Appreciation Right grant.  Each Share Appreciation Right Agreement will be subject to the terms and conditions of the Plan.

 

(zz)                            “Share Award” means any right to receive Common Shares granted under the Plan, including an Incentive Share Option, a Nonstatutory Share Option, a Restricted Share Award, a Restricted Share Unit Award, a Share Appreciation Right, a Performance Share Award or any Other Share Award.

 

(aaa)                   “Share Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Share Award grant.  Each Share Award Agreement will be subject to the terms and conditions of the Plan.

 

(bbb)                   “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the outstanding capital shares having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, shares of any other class or classes of such corporation will have or might have voting power by reason of the

 

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happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%.

 

(ccc)                      “Ten Percent Shareholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) shares possessing more than 10% of the total combined voting power of all classes of shares of the Company or any Affiliate.

 

(ddd)                   “Transaction” means a Corporate Transaction or a Change in Control.

 

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