Document:

dxlg-ex101_6.htm

 

Exhibit 10.1

 

 

DESTINATION XL GROUP, INC.

2016 INCENTIVE COMPENSATION PLAN

(as amended and restated effective AUGUST 12, 2020)

 

 

 

 

 

DESTINATION XL GROUP, INC.

2016 INCENTIVE COMPENSATION PLAN, as amended and restated August 12, 2020

 

	
1.
	
Purpose
	
1

	
2.
	
Definitions
	
1

	
3.
	
Administration
	
4

	
4.
	
Shares Subject to Plan
	
5

	
5.
	
Eligibility; Per-Participation Limitations
	
6

	
6.
	
Award Vesting Limitations
	
6

	
7.
	
Specific Terms of Awards
	
6

	
8.
	
Certain Provisions Applicable to Awards
	
10

	
9.
	
Code Section 162(m) Provisions
	
12

	
10.
	
Change in Control
	
12

	
11.
	
General Provisions
	
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DESTINATION XL GROUP, INC.

2016 INCENTIVE COMPENSATION PLAN

1.Purpose.  The purpose of this DESTINATION XL GROUP, INC. 2016 INCENTIVE COMPENSATION PLAN (the “Plan”) is to assist DESTINATION XL GROUP, INC., a Delaware corporation (the “Company”) and its Related Entities (as hereinafter defined) in attracting, motivating, retaining and rewarding high-quality executives and other employees, officers, directors, consultants and other persons who provide services to the Company or its Related Entities by enabling such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company’s shareholders, and providing such persons with performance incentives to expend their maximum efforts in the creation of shareholder value.  The Plan replaces the 2006 Incentive Compensation Plan which was last amended effective as of August 1, 2013. The Plan was originally adopted effective as of August 4, 2016 and was amended effective as of August 8, 2019 and August 12, 2020.

2.Definitions.  For purposes of the Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof and elsewhere herein.

(a)“Award” means any Option, Stock Appreciation Right, Restricted Stock Award, Deferred Award, Share granted as a bonus or in lieu of another Award, Dividend Equivalent, Other Stock-Based Award or Performance Award, together with any other right or interest relating to Shares or other property (including cash), granted to a Participant under the Plan.

(b)“Award Agreement” means any written agreement, contract or other instrument or document evidencing any Award granted by the Committee hereunder.

(c)“Beneficiary” means the person, persons, trust or trusts that have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under the Plan upon such Participant’s death or to which Awards or other rights are transferred if and to the extent permitted under Section 11(b) hereof.  If, upon a Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the Participant’s estate.

(d)“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d‐3 under the Exchange Act and any successor to such Rule.

(e)“Board” means the Company’s Board of Directors.

(f)“Change in Control” means a Change in Control as defined in Section 10(b) of the Plan.

(g)“Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.

(h)“Committee” means a committee designated by the Board to administer the Plan; provided, however, that if the Board fails to designate a committee or if there are no longer any members on the committee so designated by the Board, or for any other reason determined by the Board, then the Board shall serve as the Committee.  The Committee shall consist of at least two directors, and each member of the Committee shall be (i) a “non-employee director” within the meaning of Rule 16b-3 (or any successor rule) under the Exchange Act, unless administration of the Plan by “non-employee directors” is not then required in order for exemptions under Rule 16b-3 to apply to transactions under the Plan, (ii) an “outside director” within the meaning of Section 162(m) of the Code, and (iii) “Independent”; provided, however, the failure of the Committee to be so comprised shall not invalidate any Award that otherwise satisfies the terms of the Plan.

(i)“Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.

(j)“Continuous Service” means the uninterrupted provision of services to the Company or any Related Entity in any capacity of Employee, Director, Consultant or other service provider.  Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in any capacity of Employee, Director, Consultant or other service provider, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director, Consultant or other service provider (except 

 

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as otherwise provided in the Award Agreement).  An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.

(k)“Covered Employee” means an Eligible Person who is a “covered employee” within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.

(l)“Deferred Stock” means a right to receive Shares, cash measured based upon the value of Shares or a combination thereof, at the end of a specified deferral period, which right is not subject to a substantial risk of forfeiture (other than the potential clawback of benefits under Section 8(f) hereof).

(m)“Deferred Award” means an Award of Deferred Stock or Restricted Stock Units granted to a Participant under Section 7(e) hereof.

(n)“Director” means a member of the Board or the board of directors of any Related Entity.

(o)“Disability” means a permanent and total disability (within the meaning of Section 22(e) of the Code), as determined by a medical doctor satisfactory to the Committee.

(p)“Dividend Equivalent” means a right, granted to a Participant under Section 7(g) hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect to a specified number of Shares, or other periodic payments.

(q)“Effective Date” means the effective date of the Plan, which shall be the Shareholder Approval Date.

(r)“Eligible Person” means each officer, Director, Employee, Consultant and other person who provides services to the Company or any Related Entity.  The foregoing notwithstanding, only employees of the Company, or any parent corporation or subsidiary corporation of the Company (as those terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible Persons for purposes of receiving any Incentive Stock Options.  An Employee on leave of absence may, in the discretion of the Committee, be considered as still in the employ of the Company or a Related Entity for purposes of eligibility for participation in the Plan.  Notwithstanding the foregoing, a Person shall not be an Eligible Person if the identity of such person would preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on registration on a Form S-8 Registration Statement under the Securities Act of 1933.

(s)“Employee” means any person, including an officer or Director, who is an employee of the Company or any Related Entity, or is a prospective employee of the Company or any Related Entity (conditioned upon and effective not earlier than, such person becoming an employee of the Company or any Related Entity).  The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.

(t)“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.

(u)“Fair Market Value” means the fair market value of Shares, Awards or other property on the date as of which the value is being determined, as determined by the Committee, or under procedures established by the Committee.  Unless otherwise determined by the Committee, the Fair Market Value of a Share as of any given date shall be the closing sale price per Share reported on the principal stock exchange or market on which Shares are traded on the date immediately preceding the date as of which such value is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported.

(v)“Full Value Award” means any Award other than an option or a Stock Appreciation Right and that is settled in Shares.

(w)“Good Reason” means the same definition of Good Reason, or any substantially similar term, in the Participant’s employment agreement with the Company, if any, that is in effect at the time the determination is being made.  If the Participant does not have an employment agreement with the Company at that time, or there is no definition of Good Reason, or any substantially similar term, in the Participant’s employment agreement at that time, or the Committee determines, in its sole and absolute discretion, that the right to any payment or benefit under this Plan that is subject to Section 409A of the Code pursuant to a termination of Continuous Service by a Participant for Good Reason would not be treated as a right to a payment or benefit pursuant to an involuntary separation from service for purposes of Section 409A of the Code if the definition of Good Reason, or any substantially similar term, in the Participant’s employment agreement at that time is applied to the Participant’s termination of Continuous Service, then Good Reason 

 

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means the occurrence of any of the following in the absence of Justifiable Cause by the Company:  (i) a material diminution in the Participant’s base salary, unless such material diminution in the Participant’s base salary is made pursuant to a reduction in base salary that affects all similarly situated employees in a similar manner and is made at least six months prior to a Change in Control, in which case such material diminution in the Participant’s base salary shall not constitute Good Reason; (ii) a material change in the geographic location at which the Participant must perform his or her job functions to which the Participant does not agree; or (iii) solely in the case of a Section 16 Officer, a material diminution in the Participant’s authority, duties, or responsibilities.  For purposes of this Plan, Good Reason shall not be deemed to exist unless the termination of Continuous Service by a Participant for Good Reason occurs within 180 days following the initial existence of one of the conditions specified in clauses (i) through (iii) above, the Participant provides the Company with written notice of the existence of such condition within 90 days after the initial existence of the condition, and the Company fails to remedy the condition within 30 days after its receipt of such notice.

(x)“Incentive Stock Option” means any Option intended to be designated as an incentive stock option within the meaning of Section 422 of the Code or any successor provision thereto.

(y)“Independent”, when referring to either the Board or members of the Committee, shall have the same meaning as used in the rules of the Nasdaq Stock Market or any national securities exchange on which any securities of the Company are listed for trading, and if not listed for trading, by the rules of the Nasdaq Stock Market.

(z)“Incumbent Board” means the Incumbent Board as defined in Section 10(b)(ii) of the Plan.

(aa)“Justifiable Cause” means the same definition as used in the Participant’s employment agreement, if any, that is in effect at the time the determination is being made.  If the Participant does not have an employment agreement at that time, or there is no definition of Justifiable Cause, or any substantially similar term, in the Participant’s employment agreement at that time, then Justifiable Cause means any material failure by the Participant in performing his or her necessary job functions; any breach of any material written policies, rules or regulations which have been adopted by the Company; the Participant’s performance of any act or failure to act, as to which if the Participant was prosecuted and convicted, a crime or offense involving money or property of the Company or any Related Entity, or a crime or offense constituting a felony in the jurisdiction involved, would have occurred; the Participant’s embezzlement of funds or assets of the Company or any of its Subsidiaries or Affiliates; the Participant’s conviction of, please of guilty to, or please of nolo contendere to any felony; the Participant’s unauthorized disclosure to any person, firm or corporation of any confidential information of the Company or any Related Entity; the Participant’s usurpation of a corporate opportunity of the Company or any of its Related Entity; or the Participant’s engaging in any business other than the business of the Company or any Related Entity which materially interferes with the performance of his or her duties.

(bb)“Listing Market” means the Nasdaq Stock Market or any national securities exchange on which the Company’s securities are listed for trading and, if not listed for trading on the Nasdaq Stock Market or a national securities exchange, then the Nasdaq Stock Market.

(cc)“Option” means a right granted to a Participant under Section 7(b) hereof, to purchase Shares or other Awards at a specified price during specified time periods.

(dd)“Optionee” means a person to whom an Option is granted under this Plan or any person who succeeds to the rights of such person under this Plan.

(ee)“Other Stock-Based Awards” means Awards granted to a Participant under Section 7(i) hereof.

(ff)“Participant” means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.

(gg)“Performance Award” means any Award of Performance Shares or Performance Units granted pursuant to Section 7(h).

(hh)“Performance Period” means that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.

(ii)“Performance Share” means any grant pursuant to Section 7(h) of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including 

 

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cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

(jj)“Performance Unit” means any grant pursuant to Section 7(h) of a unit valued by reference to a designated amount of property (including cash) other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

(kk)“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section 13(d) thereof.

(ll)“Prior Plan” means the Company’s 2006 Incentive Compensation Plan.

(mm)“Related Entity” means any Subsidiary, and any business, corporation, partnership, limited liability company or other entity designated by the Committee in which the Company, or a Subsidiary holds a substantial ownership interest, directly or indirectly and with respect to which the Company may offer or sell securities pursuant to the Plan in reliance upon either Rule 701 under the Securities Act of 1933 or, if the Company is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act of 1933.

(nn)“Restricted Stock” means any Share issued with such risks of forfeiture and other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to receive any dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

(oo)“Restricted Stock Award” means an Award of Restricted Stock granted to a Participant under Section 7(d) hereof.

(pp)“Restricted Stock Unit” means a right to receive Shares, including Restricted Stock, cash measured based upon the value of Shares or a combination thereof, at the end of a specified deferral period, which right is subject to a risk of forfeiture.

(qq)“Restricted Stock Unit Award” means an Award of Restricted Stock Unit granted to a Participant under Section 7(e) hereof.

(rr)“Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

(ss)“Shareholder Approval Date” means the date on which this Plan is approved by shareholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the requirements Sections 162(m) and 422 of the Code, Rule 16b-3 under the Exchange Act and applicable requirements under the rules of the Listing Market.

(tt)“Shares” means the shares of common stock of the Company, par value $.01 per share, and such other securities as may be substituted (or resubstituted) for Shares pursuant to Section 11(c) hereof.

(uu)“Stock Appreciation Right” means a right granted to a Participant under Section 7(c) hereof.

(vv)“Subsidiary” means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or in which the Company has the right to receive 50% or more of the distribution of profits or 50% or more of the assets on liquidation or dissolution.

(ww)“Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, Awards previously granted, or the right or obligation to make future Awards, by a company acquired by the Company or any Related Entity or with which the Company or any Related Entity combines.

3.Administration.

 

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(a)Authority of the Committee.  The Plan shall be administered by the Committee, except to the extent the Board elects to administer the Plan, in which case the Plan shall be administered by only those directors who are Independent Directors, in which case references herein to the “Committee” shall be deemed to include references to the Independent members of the Board.  The Committee shall have full and final authority, subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants, grant Awards, determine the type, number and other terms and conditions of, and all other matters relating to, Awards, prescribe Award Agreements (which need not be identical for each Participant) and rules and regulations for the administration of the Plan, construe and interpret the Plan and Award Agreements and correct defects, supply omissions or reconcile inconsistencies therein, and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan.  In exercising any discretion granted to the Committee under the Plan or pursuant to any Award, the Committee shall not be required to follow past practices, act in a manner consistent with past practices, or treat any Eligible Person or Participant in a manner consistent with the treatment of other Eligible Persons or Participants.

(b)Manner of Exercise of Committee Authority.  The Committee, and not the Board, shall exercise sole and exclusive discretion (i) on any matter relating to a Participant then subject to Section 16 of the Exchange Act with respect to the Company to the extent necessary in order that transactions by such Participant shall be exempt under Rule 16b-3 under the Exchange Act, (ii) with respect to any Award that is intended to qualify as “performance-based compensation” under Section 162(m), to the extent necessary in order for such Award to so qualify; and (iii) with respect to any Award to an Independent Director.  Any action of the Committee shall be final, conclusive and binding on all persons, including the Company, its Related Entities, Eligible Persons, Participants, Beneficiaries, transferees under Section 11(b) hereof or other persons claiming rights from or through a Participant, and shareholders.  The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee.  The Committee may delegate to members of the Board, or officers or managers of the Company or any Related Entity, or committees thereof, the authority, subject to such terms and limitations as the Committee shall determine, to perform such functions, including administrative functions as the Committee may determine to the extent that such delegation will not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company and will not cause Awards intended to qualify as “performance-based compensation” under Code Section 162(m) to fail to so qualify.  The Committee may appoint agents to assist it in administering the Plan.

(c)Limitation of Liability.  The Committee and the Board, and each member thereof, shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or Employee, the Company’s independent auditors, Consultants or any other agents assisting in the administration of the Plan.  Members of the Committee and the Board, and any officer or Employee acting at the direction or on behalf of the Committee or the Board, shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.

4.Shares Subject to Plan.

(a)Limitation on Overall Number of Shares Available for Delivery Under Plan.  Subject to adjustment as provided in Section 11(c) hereof, the aggregate number of Shares reserved and available for delivery under the Plan shall be equal to the sum of (i) 9,740,000 Shares plus (ii) the number of Shares available for issuance but not granted under the Prior Plan, and (iii) the number of Shares that are credited back to the maximum Share limitation under Section 4(c)(i) hereof.  Shares issued in respect of any Full Value Award granted under the Plan shall be counted against the share limit as 1.9 Shares of stock for every one Share actually issued in connection with the such Full Value Award.  Each Share issued in respect of Options and SARs shall be counted against the share limit as one Share.  Any Shares delivered under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares.

(b)Application of Limitation to Grants of Award.  No Award may be granted if the number of Shares that would be counted against the Share limit in Section 4(a) hereof as a result of such an Award exceeds the number of Shares remaining available for Award under the Plan.  The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of Shares actually delivered differs from the number of Shares previously counted in connection with an Award.

(c)Availability of Shares Not Delivered under Awards and Adjustments to Limits.

(i)If any Shares subject to an Option or SAR granted under the Plan or the Prior Plan are forfeited or such Option or SAR is settled in cash or otherwise expires or terminates without the delivery of such Shares, the maximum Share limitation of Section 4(a) hereof shall be credited with one Share for each Share subject to such Option or SAR and such number of credited Shares may again be made available for Awards under the Plan, subject to Section 4(c)(iv) below.  If any Shares subject to a Full Value Award granted under the Plan or the Prior Plan are forfeited or such Full Value Award is settled in cash or otherwise expires 

 

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or terminates without the delivery of such Shares, the maximum share limitation of Section 4(a) hereof shall be credited with 1.9 Shares for each Share subject to such Full Value Award, and such number of credited Shares may again be made available for Awards under the Plan, subject to Section 4(c)(iv) below.

(ii)Awards that are settled or exercised through the payment of Shares shall be counted against the number of Shares available for award under the Plan in accordance with Section 4(a) hereof, regardless of the number of Shares actually issued upon settlement or exercise of any such Award. Awards that are settled in cash shall not be counted against the number of Shares available for Award under this Plan.

(iii)Substitute Awards shall not reduce the Shares authorized for grant under the Plan or authorized for grant to a Participant in any period.  Additionally, in the event that a company acquired by the Company or any Related Entity or with which the Company or any Related Entity combines has shares available under a pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares available for delivery pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for delivery under the Plan if and to the extent that the use of such Shares would not require approval of the Company’s shareholders under the rules of the Listing Market.  Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or combination.

(iv)Notwithstanding anything in this Section 4(c) to the contrary but subject to adjustment as provided in Section 11(c) hereof, the maximum aggregate number of Shares that may be delivered under the Plan as a result of the exercise of the Incentive Stock Options shall be 9,740,000 Shares.  In no event shall any Incentive Stock Options be granted under the Plan after the tenth anniversary of the date on which the Board adopts the Plan.

(v)Notwithstanding anything in this Section 4 to the contrary, but subject to adjustment as provided in Section 11(c) hereof, in any fiscal year of the Company during any part of which the Plan is in effect, no Participant who is a Director but is not also an Employee or Consultant may be granted any Awards that have a “fair value” as of the date of grant, as determined in accordance with FASB ASC Topic 718 (or any other applicable accounting guidance), that exceed $300,000 in the aggregate.

(d)No Further Awards Under Prior Plan.  No further awards shall be made under the Prior Plan after July 31, 2016.

5.Eligibility; Per-Participant Limitations.  Awards may be granted under the Plan only to Eligible Persons.  Subject to adjustment as provided in Section 11(c) of this Plan, in any fiscal year of the Company during any part of which the Plan is in effect, no Participant may be granted (i) Options and/or Stock Appreciation Rights with respect to more than 1,000,000 Shares or (ii) Performance Shares that are subject to Section 9 hereof, with respect to more than 1,000,000 Shares.  In addition, the maximum dollar value payable to any one Participant with respect to Performance Units that are subject to Section 9 hereof is (x) $3,000,000 with respect to any 12 month Performance Period (pro-rated for any Performance Period that is less than 12 months based upon the ratio of the number of days in the Performance Period as compared to 365), and (y) with respect to any Performance Period that is more than 12 months, $3,000,000 multiplied by the number of full 12 months periods that are in the Performance Period.

6.Award Vesting Limitations.  Notwithstanding any other provision of the Plan to the contrary, but subject to Section 10 of the Plan, Awards granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted; provided, however, that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to 5% of the Shares available pursuant to Section 4(a) may be granted to any one or more Eligible Persons without respect to such minimum vesting provisions.  Nothing in this Section 6 shall preclude the Committee from taking action, in its sole discretion, to accelerate the vesting of any Award in connection with or following a Participant’s death, disability, termination of Continuous Service or the consummation of a Change in Control.

7.Specific Terms of Awards.

(a)General.  Awards may be granted on the terms and conditions set forth in this Section 7.  In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 11(e)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of the Participant’s Continuous Service and terms permitting a Participant to make elections relating to his or her Award.  Except as otherwise expressly provided herein, the Committee shall retain full power and 

 

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discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under the Plan.  Except in cases in which the Committee is authorized to require other forms of consideration under the Plan, or to the extent other forms of consideration must be paid to satisfy the requirements of Delaware law, no consideration other than services may be required for the grant (but not the exercise) of any Award.

(b)Options.  The Committee is authorized to grant Options to any Eligible Person on the following terms and conditions:

(i)Exercise Price.  Other than in connection with Substitute Awards, the exercise price per Share purchasable under an Option shall be determined by the Committee, provided that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of the Option and shall not, in any event, be less than the par value of a Share on the date of grant of the Option.  If an Employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company (or any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and an Incentive Stock Option is granted to such employee, the exercise price of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no less than 110% of the Fair Market Value a Share on the date such Incentive Stock Option is granted.  Other than pursuant to Section 11(c), (A) the terms of outstanding Options may not be amended to reduce the exercise price per Share of such Options, (B) an outstanding Option may not be cancelled, exchanged, substituted, bought out or surrendered in exchange for (i) cash or other Awards, in each case, having a Fair Market Value in excess of the amount by which the Fair Market Value of the Shares underlying such Option exceeds the aggregate exercise price of such Option or (ii) Options with an exercise price per Share that is less than the exercise price per Share of the original Option and (C) the Committee shall not be permitted to take any other action with respect to an Option that may be treated as a repricing, in each case, without approval of the Company’s shareholders.

(ii)Time and Method of Exercise.  Subject to the maximum term of any Option set forth in Section 7(b), the Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the method by which notice of exercise is to be given and the form of exercise notice to be used, the time or times at which Options shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the methods by which the exercise price may be paid or deemed to be paid (including in the discretion of the Committee a cashless exercise procedure), the form of such payment, including, without limitation, cash, Shares (including without limitation the withholding of Shares otherwise deliverable pursuant to the Award), other Awards or Awards granted under other plans of the Company or a Related Entity, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis provided that such deferred payments are not in violation of Section 13(k) of the Exchange Act, or any rule or regulation adopted thereunder or any other applicable law), and the methods by or forms in which Shares will be delivered or deemed to be delivered to Participants.

(iii)Form of Settlement.  The Committee may, in its sole discretion, provide that the Shares to be issued upon exercise of an Option shall be in the form of Restricted Stock or other similar securities.

(iv)Incentive Stock Options.  The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code.  Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including any Stock Appreciation Right issued in tandem therewith) shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participant has first requested, or consents to, the change that will result in such disqualification.  Thus, if and to the extent required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall be subject to the following special terms and conditions:

(A)the Option shall not be exercisable for more than ten years after the date such Incentive Stock Option is granted; provided, however, that if a Participant owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company (or any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and the Incentive Stock Option is granted to such Participant, the term of the Incentive Stock Option shall be (to the extent required by the Code at the time of the grant) for no more than five years from the date of grant; and

(B)the aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options granted under the Plan and all other option plans of the Company (and any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) that become exercisable for the first time by the Participant during any calendar year shall not (to the extent required by the Code at the time of the grant) exceed $100,000; and

 

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(C)if shares acquired by exercise of an Incentive Stock Option are disposed of within two years following the date the Incentive Stock Option is granted or one year following the transfer of such Shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Committee may reasonably require.

(c)Stock Appreciation Rights.  The Committee may grant Stock Appreciation Rights to any Eligible Person (a “Freestanding Stock Appreciation Right”), upon such terms and conditions as the Committee may establish in its sole discretion, not inconsistent with the provisions of the Plan, including the following:

(i)Right to Payment.  A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise over (B) the grant price of the Stock Appreciation Right as determined by the Committee.  The grant price of a Stock Appreciation Right shall not be less than 100% of the Fair Market Value of a Share on the date of grant, in the case of a Freestanding Stock Appreciation Right, or less than the associated Option exercise price, in the case of a tandem Stock Appreciation Right.  Other than pursuant to Section 11(c), (A) the terms of outstanding Stock Appreciation Rights may not be amended to reduce the grant price per Share of such Stock Appreciation Rights, (B) an outstanding Stock Appreciation Right may not be cancelled, exchanged, substituted, bought out or surrendered in exchange for (i) cash or other Awards, in each case, having a Fair Market Value in excess of the amount by which the Fair Market Value of the Shares underlying such Stock Appreciation Right exceeds the aggregate grant price of such Stock Appreciation Right or (ii) Stock Appreciation Rights with a grant price per Share that is less than the grant price per Share of the original Stock Appreciation Right and (C) the Committee shall not be permitted to take any other action with respect to a Stock Appreciation Right that may be treated as a repricing, in each case, without approval of the Company’s shareholders.

(ii)Other Terms.  Subject to the maximum term of any Stock Appreciation Right set forth in Section 7(c), the Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which Stock Appreciation Rights shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Shares will be delivered or deemed to be delivered to Participants, whether or not a Stock Appreciation Right shall be in tandem or in combination with any other Award, and any other terms and conditions of any Stock Appreciation Right.

(d)Restricted Stock Awards.  The Committee is authorized to grant Restricted Stock Awards to any Eligible Person on the following terms and conditions:

(i)Grant and Restrictions.  Restricted Stock Awards shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, or as otherwise provided in this Plan, covering a period of time specified by the Committee (the “Restriction Period”).  The terms of any Restricted Stock Award granted under the Plan shall be set forth in a written Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan.  The restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the date of grant or thereafter.  Except to the extent restricted under the terms of the Plan and any Award Agreement relating to a Restricted Stock Award, a Participant granted Restricted Stock shall have all of the rights of a shareholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee).  During the period that the Restricted Stock Award is subject to a risk of forfeiture, subject to Section 11(b) below and except as otherwise provided in the Award Agreement, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant or Beneficiary.

(ii)Forfeiture.  Except as otherwise determined by the Committee, upon termination of a Participant’s Continuous Service during the applicable Restriction Period, the Participant’s Restricted Stock that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall be forfeited and reacquired by the Company; provided that, subject to the limitations set forth in Section 6 hereof, the Committee may provide, by resolution or other action or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to Restricted Stock Awards shall be waived in whole or in part in the event of terminations resulting from specified causes, and subject to the limitations in Section 6 hereof, the Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock.

(iii)Certificates for Stock.  Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine.  If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to 

 

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such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.

(iv)Dividends and Splits.  As a condition to the grant of a Restricted Stock Award, the Committee may require or permit a Participant to elect that any cash dividends paid on a Share of Restricted Stock be automatically reinvested in additional Shares of Restricted Stock or applied to the purchase of additional Awards under the Plan, or except as otherwise provided in the last sentence of Section 7(h) hereof, may require that payment be delayed (with or without interest at such rate, if any, as the Committee shall determine) and remain subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such cash dividend is payable, in each case in a manner that does not violate the requirements of Section 409A of the Code.  Unless otherwise determined by the Committee, Shares distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Shares or other property have been distributed.

(e)Deferred Award.  The Committee is authorized to grant “Deferred Awards,” which include Deferred Stock and Restricted Stock Unit Awards, to any Eligible Person on the following terms and conditions.

(i)Award and Restrictions.  Satisfaction of a Deferred Award shall occur upon expiration of the deferral period specified for such Deferred Award by the Committee (or, if permitted by the Committee, as elected by the Participant in a manner that does not violate the requirements of Section 409A of the Code).  In addition, a Restricted Stock Unit Award shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, as the Committee may determine.  A Deferred Award may be satisfied by delivery of Shares, cash equal to the Fair Market Value of the specified number of Shares covered by the Deferred Award, or a combination thereof, as determined by the Committee at the date of grant or thereafter.  Prior to satisfaction of a Deferred Award, a Deferred Award carries no voting or dividend or other rights associated with Share ownership.  Prior to satisfaction of a Deferred Award, except as otherwise provided in an Award Agreement and as permitted under Section 409A of the Code, a Deferred Award may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant or any Beneficiary.

(ii)Forfeiture.  Except as otherwise determined by the Committee, upon termination of a Participant’s Continuous Service during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Stock Unit Award), the Participant’s Restricted Stock Unit Award that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall be forfeited; provided that, subject to the limitations set forth in Section 7 hereof, the Committee may provide, by resolution or other action or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to a Restricted Stock Unit Award shall be waived in whole or in part in the event of terminations resulting from specified causes, and, subject to the limitations in Section 6 hereof, the Committee may in other cases waive in whole or in part the forfeiture of any Restricted Stock Unit Award.

(iii)Dividend Equivalents.  Unless otherwise determined by the Committee at the date of grant, and except as otherwise provided in the last sentence of Section 7(h) hereof, any Dividend Equivalents that are granted with respect to any Deferred Award shall be either (A) paid with respect to such Deferred Award at the dividend payment date in cash or in Shares of unrestricted stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Deferred Award and the amount or value thereof automatically deemed reinvested in additional Deferred Award, other Awards or other investment vehicles, as the Committee shall determine or permit the Participant to elect.  The applicable Award Agreement shall specify whether any Dividend Equivalents shall be paid at the dividend payment date, deferred or deferred at the election of the Participant.  If the Participant may elect to defer the Dividend Equivalents, such election shall be made within 30 days after the grant date of the Deferred Award, but in no event later than 12 months before the first date on which any portion of such Deferred Award vests (or at such other times prescribed by the Committee as shall not result in a violation of Section 409A of the Code).

(f)Bonus Stock and Awards in Lieu of Obligations.  The Committee is authorized to grant Shares to any Eligible Persons as a bonus, or to grant Shares or other Awards in lieu of obligations to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, provided that, in the case of Eligible Persons subject to Section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of Shares or other Awards are exempt from liability under Section 16(b) of the Exchange Act.  Shares or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee.

(g)Dividend Equivalents.  The Committee is authorized to grant Dividend Equivalents to any Eligible Person entitling the Eligible Person to receive cash, Shares, other Awards, or other property equal in value to the dividends paid with respect to a specified number of Shares, or other periodic payments.  Dividend Equivalents may be awarded on a free-standing basis or in 

 

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connection with another Award.  Except as otherwise provided in the last sentence of Section 7(h) hereof, the Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or at some later date, or whether such Dividend Equivalents shall be deemed to have been reinvested in additional Shares, Awards, or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify.  Any such determination by the Committee shall be made at the grant date of the applicable Award.  Notwithstanding the foregoing, Dividend Equivalents credited in connection with an Award that vests based on the achievement of performance goals shall be subject to restrictions and risk of forfeiture to the same extent as the Award with respect to which such Dividend Equivalents have been credited.

(h)Performance Awards.  The Committee is authorized to grant Performance Awards to any Eligible Person payable in cash, Shares, or other Awards, on terms and conditions established by the Committee, subject to the provisions of Section 9 if and to the extent that the Committee shall, in its sole discretion, determine that an Award shall be subject to those provisions.  The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award.  Except as provided in Section 10 or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period.  The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in Section 9(b), or in the case of an Award that the Committee determines shall not be subject to Section 9 hereof, any other criteria that the Committee, in its sole discretion, shall determine should be used for that purpose.  The amount of the Award to be distributed shall be conclusively determined by the Committee.  Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis in a manner that does not violate the requirements of Section 409A of the Code.

(i)Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to any Eligible Person such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan.  Other Stock-Based Awards may be granted to Participants either alone or in addition to other Awards granted under the Plan, and such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan.  Except as otherwise provided in the last sentence of Section 7(h) hereof, the Committee shall determine the terms and conditions of such Awards.  Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 7(i) shall be purchased for such consideration, (including without limitation loans from the Company or a Related Entity provided that such loans are not in violation of the Sarbanes Oxley Act of 2002, or any rule or regulation adopted thereunder or any other applicable law) paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, other Awards or other property, as the Committee shall determine.

8.Certain Provisions Applicable to Awards.

(a)Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Related Entity, or any business entity to be acquired by the Company or a Related Entity, or any other right of a Participant to receive payment from the Company or any Related Entity.  Such additional, tandem, and substitute or exchange Awards may be granted at any time.  If an Award is granted in substitution or exchange for another Award or award, the Committee shall require the surrender of such other Award or award in consideration for the grant of the new Award.  In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company or any Related Entity, in which the value of Stock subject to the Award is equivalent in value to the cash compensation (for example, Deferred Stock or Restricted Stock), or in which the exercise price, grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Shares minus the value of the cash compensation surrendered (for example, Options or Stock Appreciation Right granted with an exercise price or grant price “discounted” by the amount of the cash compensation surrendered), provided that any such determination to grant an Award in lieu of cash compensation must be made in a manner intended to be exempt from or comply with Section 409A of the Code.

(b)Term of Awards.  The term of each Award shall be for such period as may be determined by the Committee; provided that in no event shall the term of any Option or Stock Appreciation Right exceed a period of ten years (or in the case of an Incentive Stock Option such shorter term as may be required under Section 422 of the Code).

(c)Form and Timing of Payment Under Awards; Deferrals.  Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Related Entity upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Shares, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis, provided that any determination to pay in installments or on a deferred basis shall be made by the Committee at the date of grant.  Any installment or deferral provided for in the preceding sentence shall, however, subject to the terms of the Plan, be subject to the Company’s compliance with the provisions 

 

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of the Sarbanes-Oxley Act of 2002, as amended, the rules and regulations adopted by the Securities and Exchange Commission thereunder, all applicable rules of the Listing Market and any other applicable law, and in a manner intended to be exempt from or otherwise satisfy the requirements of Section 409A of the Code.  Any such settlement shall be at a value determined by the Committee in its sole discretion, which, without limitation, may in the case of an Option or Stock Appreciation Right be limited to the amount if any by which the Fair Market Value of a Share on the settlement date exceeds the exercise or grant price.  Installment or deferred payments may be required by the Committee (subject to Section 11(e) of this Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award Agreement) or permitted at the election of the Participant on terms and conditions established by the Committee.  Payments may include, without limitation, provisions for the payment or crediting of a reasonable interest rate on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Shares.

(d)Exemptions from Section 16(b) Liability.  It is the intent of the Company that the grant of any Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange Act shall be exempt from Section 16 pursuant to an applicable exemption (except for transactions acknowledged in writing to be non-exempt by such Participant).  Accordingly, if any provision of this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b).

(e)Code Section 409A.  The following provisions shall apply to any Award that is or may potentially be subject to the requirements of Section 409A of the Code.

(i)The Award Agreement for any Award that the Committee reasonably determines to constitute a “non-qualified deferred compensation plan” under Section 409A of the Code (a “Section 409A Plan”), and the provisions of the Plan applicable to that Award, shall be construed in a manner consistent with, the applicable requirements of Section 409A of the Code, and the Committee, in its sole discretion and without the consent of any Participant, may amend any Award Agreement (and the provisions of the Plan applicable thereto) if and to the extent that the Committee determines that such amendment is necessary or appropriate to comply with the requirements of Section 409A of the Code.

(ii)If any Award constitutes a Section 409A Plan, then the Award shall be subject to the following additional requirements, if and to the extent required to comply with Section 409A of the Code:

(A)Payments under the Section 409A Plan may be made only upon (u) the Participant’s “separation from service”, (v) the date the Participant becomes “disabled”, (w) the Participant’s death, (x) a “specified time (or pursuant to a fixed schedule)” specified in the Award Agreement at the date of the deferral of such compensation, (y) a “change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets” of the Company, or (z) the occurrence of an “unforeseeable emergency”;

(B)The time or schedule for any payment of the deferred compensation may not be accelerated, except to the extent provided in applicable Treasury Regulations or other applicable guidance issued by the Internal Revenue Service;

(C)Any elections with respect to the deferral of such compensation or the time and form of distribution of such deferred compensation shall comply with the requirements of Section 409A(a)(4) of the Code; and

(D)In the case of any Participant who is “specified employee”, a distribution on account of a “separation from service” may not be made before the date which is six months after the date of the Participant’s “separation from service” (or, if earlier, the date of the Participant’s death).

For purposes of the foregoing, the terms in quotations shall have the same meanings as those terms have for purposes of Section 409A of the Code, and the limitations set forth herein shall be applied in such manner (and only to the extent) as shall be necessary to comply with any requirements of Section 409A of the Code that are applicable to the Award.

(iii)Notwithstanding the foregoing, or any provision of this Plan or any Award Agreement, the Company does not make any representation to any Participant or Beneficiary that any Awards made pursuant to this Plan are exempt from, or satisfy, the requirements of Section 409A of the Code, and the Company shall have no liability or other obligation to indemnify or hold harmless the Participant or any Beneficiary for any tax, additional tax, interest or penalties that the Participant or any Beneficiary may incur in the event that any provision of this Plan, or any Award Agreement, or any amendment or modification thereof, or any other action taken with respect thereto, is deemed to violate any of the requirements of Section 409A of the Code.

 

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(f)Clawback of Certain Compensation and Benefits.

(i) The Company may (A) cause the cancellation of any Award, (B) require reimbursement of any Award by a Participant or Beneficiary, and (C) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise in accordance with any Company policies that currently exist or that may from time to time be adopted or modified in the future by the Company and/or applicable law (each, a “Clawback Policy”).  In addition, a Participant may be required to repay to the Company certain previously paid compensation, whether provided under this Plan or an Award Agreement or otherwise, in accordance with any Clawback Policy.  By accepting an Award, a Participant is also agreeing to be bound by any existing or future Clawback Policy adopted by the Company, or any amendments that may from time to time be made to the Clawback Policy in the future by the Company in its discretion (including without limitation any Clawback Policy adopted or amended to comply with applicable laws or stock exchange requirements) and is further agreeing that all of the Participant’s Award Agreements (and/or awards issued under the Prior Plans) may be unilaterally amended by the Company, without the Participant’s consent, to the extent that the Company in its discretion determines to be necessary or appropriate to comply with any Clawback Policy.

(ii)If the Participant, without the consent of the Company, while employed by or providing services to the Company or any Subsidiary or after termination of such employment or service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise engages in activity that is in conflict with or adverse to the interest of the Company or any Subsidiary, as determined by the Committee in its sole discretion, then (i) any outstanding, vested or unvested, earned or unearned portion of the Award may, at the Committee’s discretion, be canceled and (ii) the Committee, in its discretion, may require the Participant or other person to whom any payment has been made or Shares or other property have been transferred in connection with the Award to forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value realized (whether or not taxable) on the vesting or payment of any other Award during the time period specified in the Award Agreement or otherwise specified by the Committee.

9.Code Section 162(m) Provisions.

(a)Covered Employees.  The Committee, in its discretion, may determine at the time an Award is granted to an Eligible Person who is, or is likely to be, as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, that the provisions of this Section 9 shall be applicable to such Award.

(b)Performance Criteria.  If an Award is subject to this Section 9, then the payment or distribution thereof or lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be contingent upon achievement of one or more objective performance goals.  Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) of the Code and regulations thereunder including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain.”  One or more of the following business criteria for the Company, on a consolidated basis, and/or for Related Entities, or for business or geographical units of the Company and/or a Related Entity (except with respect to the total shareholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for such Awards:  (1) earnings per share; (2) revenues or margins; (3) cash flow; (4) operating margin; (5) return on net assets, investment, capital, or equity; (6) economic value added; (7) direct contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings after interest expense and before extraordinary or special items; operating income or income from operations; income before interest income or expense, unusual items and income taxes, local, state or federal and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (9) working capital; (10) management of fixed costs or variable costs; (11) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures; (12) total shareholder return; (13) debt reduction; and/or (14) the Fair Market Value of a Share.  Any of the above goals may be determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to the Company.  Except as otherwise specified by the Committee at the time the goals are set, the Committee shall exclude the impact of:  (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, (iii) a change in accounting standards required by generally accepted accounting principles, or (iv) any other item or event specified by the Committee at the time the goals are set.

(c)Performance Period; Timing For Establishing Performance Goals.  Achievement of performance goals in respect of such Performance Awards subject to this Section 9 shall be measured over a Performance Period no shorter than 12 months and no longer than 5 years, as specified by the Committee.  Performance goals shall be established not later than 90 days after the beginning of any Performance Period applicable to Performance Awards, subject to this Section 9, or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m) of the Code.

 

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(d)Adjustments.  The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with Awards subject to this Section 9, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of an Award subject to this Section 9.  The Committee shall specify the circumstances in which such Awards shall be paid or forfeited in the event of termination of Continuous Service by the Participant prior to the end of a Performance Period or settlement of Awards.

(e)Committee Certification.  No Participant shall receive any payment under the Plan that is subject to this Section 9 unless the Committee has certified, by resolution or other appropriate action in writing, that the performance criteria and any other material terms previously established by the Committee or set forth in the Plan, have been satisfied to the extent necessary to qualify as “performance based compensation” under Section 162(m) of the Code.

10.Change in Control.

(a)Effect of “Change in Control”.  Unless otherwise provided in any employment or other agreement between the Participant and the Company or any Related Entity, or in any Award Agreement, or to the extent otherwise determined by the Committee in effect immediately preceding the Change in Control, in its sole discretion and without any requirement that each Participant be treated consistently, in the event of a Change in Control and within 6 months before or 18 months after the Change in Control, the Participant’s Continuous Service is terminated by the Company or any Related Entity without Justifiable Cause or by the Participant for Good Reason, or there is a termination of Continuous Service because of the Participant’s death or Disability, the following shall occur:  (i) if the portion of the Participant’s Award(s) or any award(s) that is substituted therefor that is subject only to time-based vesting has not previously been vested or paid to the Participant, then such portion shall immediately vest (in the case of any Award or substitute therefor that is subject to vesting) and any cash payable as a result of such vesting shall be paid to the Participant, as soon as practicable (but in no event more than 5 business days) after the later of the Change in Control or the termination of the Participant’s Continuous Service; and (ii) if the portion of the Participant’s Award(s) or any award(s) that is substituted therefor that is subject to performance-based vesting has not previously been vested or paid to the Participant, then the pro-rata portion for the time elapsed in the ongoing performance period(s) of the Award or substitute therefor, shall immediately vest and any cash payable as a result of such vesting shall be paid to the Participant, as soon as practicable (but in no event more than 5 business days) after the later of the Change in Control or the termination of the Participant’s Continuous Service.  Each Share that is received upon the exercise, vesting or settlement of an Award or substitute therefor that vests pursuant to this Section 10(b) shall be immediately redeemed by the Company  (or its successor) for cash payable by the Company (or its successor) in an amount (the “Redemption Price Per Share”) equal to, as applicable, (x) if the Shares have not been cancelled, exchanged or converted into other securities or property as a result of the Change in Control and are publicly-traded, the Fair Market Value of a Share on the date of the termination of the Participant’s Continuous Service, or (y) if the Shares have been cancelled, exchanged or converted into other securities or property as a result of the Change in Control, the greater of (i) the fair market value per Share of the consideration received pursuant to the Change in Control by the holders of Shares on the date of the Change in Control and (ii)  if the consideration received by the holders of Shares pursuant to the Change in Control consisted, in whole or in part, of other securities which are publicly traded, the sum of  (A) the fair market value of the number of such securities received for each Share pursuant to the Change in Control on the date of the termination of the Participant’s Continuous Service and (B) the fair market value of any other consideration received for each Share pursuant to the Change of Control.  Each Option that vests pursuant to this Section 10(b) shall be immediately cancelled in exchange for cash payable by the Company for each Share subject to the cancelled Option equal to the amount, if any, by which the Redemption Price Per Share exceeds the exercise price per Share of the Option.

(b)Definition of “Change in Control”.  Unless otherwise specified in any employment or other agreement for services between the Participant and the Company or any Subsidiary, or in an Award Agreement, a “Change in Control” shall mean the occurrence of any of the following:

(i)The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the value of then outstanding equity securities of the Company (the “Outstanding Company Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities) (the foregoing Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this Section 10(b), the following acquisitions shall not constitute or result in a Change in Control:  (v) any acquisition directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; or (z) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) below; or

(ii)During any period of two (2) consecutive years (not including any period prior to the Effective Date) individuals who constitute the Board on the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority 

 

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of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii)Consummation of (A) a reorganization, merger, statutory share exchange or consolidation or similar transaction involving (x) the Company or (y) or any of its Subsidiaries, or (B) a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or equity securities of another entity by the Company or any of its Subsidiaries (each an “Asset Sale”), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the value of the then outstanding equity securities and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of members of the board of directors (or comparable governing body of an entity that does not have such a board), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Stock and Outstanding Company Voting Securities, as the case may be (2) no Person (excluding any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination or any Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest) beneficially owns, directly or indirectly, fifty percent (50%) or more of the value of the then outstanding equity securities of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity resulting from such Business Combination except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the Board of Directors or other governing body of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv)Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

11.General Provisions.

(a)Compliance With Legal and Other Requirements.  The Company may, to the extent deemed necessary or advisable by the Committee, postpone the issuance or delivery of Shares or payment of other benefits under any Award until completion of such registration or qualification of such Shares or other required action under any federal or state law, rule or regulation, listing or other required action with respect to the Listing Market, or compliance with any other obligation of the Company, as the Committee, may consider appropriate, and may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Shares or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations.

(b)Limits on Transferability; Beneficiaries.  No Award or other right or interest granted under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party, or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may be transferred to one or more Beneficiaries or other transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Committee pursuant to the express terms of an Award Agreement (subject to any terms and conditions which the Committee may impose thereon), are by gift or pursuant to a domestic relations order, and are to a “Permitted Assignee” that is a permissible transferee under the applicable rules of the Securities and Exchange Commission for registration of shares of stock on a Form S-8 registration statement.  For this purpose, a Permitted Assignee shall mean (i) the Participant’s spouse, children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings, (ii) a trust for the benefit of one or more of the Participant or the persons referred to in clause (i), (iii) a partnership, limited liability company or corporation in which the Participant or the persons referred to in clause (i) are the only partners, members or shareholders, or (iv) a foundation in which any person or entity designated in clauses (i), (ii) or (iii) above control the management of assets.  A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee.

 

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(c)Adjustments.

(i)Adjustments to Awards.  In the event that any extraordinary dividend or other distribution (whether in the form of cash, Shares, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the Shares and/or such other securities of the Company or any other issuer, then the Committee shall, in such manner as it may deem appropriate and equitable, substitute, exchange or adjust any or all of (A) the number and kind of Shares which may be delivered in connection with Awards granted thereafter, (B) the number and kind of Shares by which annual per-person Award limitations are measured under Section 5 hereof, (C) the number and kind of Shares subject to or deliverable in respect of outstanding Awards, (D) the exercise price, grant price or purchase price relating to any Award and/or make provision for payment of cash or other property in respect of any outstanding Award, and (E) any other aspect of any Award that the Committee determines to be appropriate in order to prevent the reduction or enlargement of benefits under any Award.  Notwithstanding the foregoing, in the case of any “equity restructuring” (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation, formerly known as Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004) or any other applicable accounting standard), the Committee shall make such adjustments to Awards on account of such equity restructuring as shall be necessary in order that the “fair value” of the adjusted Award immediately following the equity restructuring shall be equal to the “fair value” of the original Award immediately prior to the equity restructuring, based on the Share price and other pertinent factors on the effective date of the equity restructuring.  For purposes of the preceding sentence, “fair value” shall be determined in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation or any other applicable accounting standard.

(ii)Adjustments in Case of Certain Transactions.

(A)In the event of any merger, consolidation or other reorganization in which the Company does not survive, or in the event of any Change in Control (and subject to the provisions of Section 10 of this Plan relating to the vesting of Awards in the event of any Change in Control), any outstanding Awards may be dealt with in accordance with any of the following approaches, without the requirement of obtaining any consent or agreement of a Participant as such, as determined by the agreement effectuating the transaction or, if and to the extent not so determined, as determined by the Committee: (1) the continuation of the outstanding Awards by the Company, if the Company is a surviving entity, (2) the assumption or substitution for, as those terms are defined below, the outstanding Awards by the surviving entity or its parent or subsidiary, (3) full exercisability or vesting and accelerated expiration of the outstanding Awards, or (4) settlement of the value of the outstanding Awards in cash or cash equivalents or other property followed by cancellation of such Awards (which value, in the case of Options or Stock Appreciation Rights, shall be measured by the amount, if any, by which the Fair Market Value of a Share exceeds the exercise or grant price of the Option or Stock Appreciation Right as of the effective date of the transaction).  The Committee shall give written notice of any proposed transaction referred to in this Section 11(c)(ii) a reasonable period of time prior to the closing date for such transaction (which notice may be given either before or after the approval of such transaction), in order that Participants may have a reasonable period of time prior to the closing date of such transaction within which to exercise any Awards that are then exercisable (including any Awards that may become exercisable upon the closing date of such transaction).  A Participant may condition his exercise of any Awards upon the consummation of the transaction.

(B)For purposes of this Section 11(c)(ii), an Option, Stock Appreciation Right, Restricted Stock Award, Deferred Award or Other Stock-Based Award shall be considered assumed or substituted for if following the Change in Control the Award confers the right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted Stock Award, Deferred Award or Other Stock-Based Award immediately prior to the Change in Control, on substantially the same vesting and other terms and conditions as were applicable to the Award immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Deferred Award or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company or its parent or subsidiary substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control.  The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.

(iii)Other Adjustments.  The Committee (and the Board if and only to the extent such authority is not required to be exercised by the Committee to comply with Section 162(m) of the Code) is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Performance Awards, or performance goals relating thereto) in 

 

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recognition of unusual or nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and assets) affecting the Company, any Related Entity or any business unit, or the financial statements of the Company or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or in view of the Committee’s assessment of the business strategy of the Company, any Related Entity or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and any other circumstances deemed relevant, provided that no such adjustment shall be authorized or made if and to the extent that such authority or the making of such adjustment would cause Options, Stock Appreciation Rights, Performance Awards granted pursuant to Section 9(b) hereof to Participants designated by the Committee as Covered Employees and intended to qualify as “performance-based compensation” under Code Section 162(m) and the regulations thereunder to otherwise fail to qualify as “performance-based compensation” under Code Section 162(m) and regulations thereunder.

(d)Award Agreements.  Each Award Agreement shall either be (i) in writing in a form approved by the Committee and executed by the Company by an officer duly authorized to act on its behalf, or (ii) an electronic notice in a form approved by the Committee and recorded by the Company (or its designee) in an electronic recordkeeping system used for the purpose of tracking one or more types of Awards as the Committee may provide; in each case and if required by the Committee, the Award Agreement shall be executed or otherwise electronically accepted by the recipient of the Award in such form and manner as the Committee may require.  The Committee may authorize any officer of the Company to execute any or all Award Agreements on behalf of the Company.  The Award Agreement shall set forth the material terms and conditions of the Award as established by the Committee consistent with the provisions of the Plan.

(e)Taxes.  The Company and any Related Entity are authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company or any Related Entity and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award.  This authority shall include authority to withhold or receive Shares or other property and to make cash payments equal in value to the Shares withheld or received from the Participant in satisfaction of a Participant’s tax obligations, either on a mandatory or elective basis in the discretion of the Committee.  The amount of withholding tax paid with respect to an Award by the withholding of Shares otherwise deliverable pursuant to the Award or by delivering Shares already owned shall not exceed the minimum statutory withholding required with respect to that Award.

(f)Changes to the Plan and Awards.  The Board may amend, alter, suspend, discontinue or terminate the Plan, or the Committee’s authority to grant Awards under the Plan, without the consent of shareholders or Participants, except that any amendment or alteration to the Plan shall be subject to the approval of the Company’s shareholders not later than the annual meeting next following such Board action if such shareholder approval is required by any federal or state law or regulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules of the Listing Market, and the Board may otherwise, in its discretion, determine to submit other such changes to the Plan to shareholders for approval; provided that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award.  The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award Agreement relating thereto, except as otherwise provided in the Plan; provided that, without the consent of an affected Participant, no such Committee or the Board action may materially and adversely affect the rights of such Participant under such Award.

(g)Limitation on Rights Conferred Under Plan.  Neither the Plan nor any action taken hereunder or under any Award shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a Related Entity; (ii) interfering in any way with the right of the Company or a Related Entity to terminate any Eligible Person’s or Participant’s Continuous Service at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and Employees, or (iv) conferring on a Participant any of the rights of a shareholder of the Company or any Related Entity including, without limitation, any right to receive dividends or distributions, any right to vote or act by written consent, any right to attend meetings of shareholders or any right to receive any information concerning the Company’s or any Related Entity’s business, financial condition, results of operation or prospects, unless and until such time as the Participant is duly issued Shares on the stock books of the Company or any Related Entity’s in accordance with the terms of an Award.  None of the Company, its officers or its directors shall have any fiduciary obligation to the Participant with respect to any Shares awarded pursuant to this Plan unless and until the Participant is duly issued Shares pursuant to the Award on the stock books of the Company in accordance with the terms of an Award.  Neither the Company, nor any Related Entity, nor any of their respective officers, directors, representatives or agents are granting any rights under the Plan to the Participant whatsoever, oral or written, express or implied, other than those rights expressly set forth in this Plan or the Award Agreement.

 

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(h)Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made to a Participant or obligation to deliver Shares pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Shares, other Awards or other property, or make other arrangements to meet the Company’s obligations under the Plan.  Such trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.  The trustee of such trusts may be authorized to dispose of trust assets and reinvest the proceeds in alternative investments, subject to such terms and conditions as the Committee may specify and in accordance with applicable law.

(i)Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable including incentive arrangements and awards which do not qualify under Section 162(m) of the Code.

(j)Payments in the Event of Forfeitures; Fractional Shares.  Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash or other consideration, the Participant shall be repaid the amount of such cash or other consideration.  No fractional Shares shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

(k)Governing Law.  Except as otherwise provided in any Award Agreement, the validity, construction and effect of the Plan, any rules and regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to principles of conflict of laws, and applicable federal law.

(l)Non-U.S. Laws.  The Committee shall have the authority to adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan.

(m)Plan Effective Date and Shareholder Approval; Termination of Plan.  The Plan shall become effective on the Effective Date which is the date the Plan was approved by shareholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable  requirements under the rules of any stock exchange or automated quotation system on which the Shares may be listed or quoted, and other laws, regulations, and obligations of the Company applicable to the Plan.  Awards may be granted subject to shareholder approval, but may not be exercised or otherwise settled in the event the shareholder approval is not obtained.  The Plan shall terminate at the earliest of (a) such time as no Shares remain available for issuance under the Plan, (b) termination of this Plan by the Board, or (c) the tenth anniversary of the Effective Date.  Awards outstanding upon expiration of the Plan shall remain in effect until they have been exercised or terminated, or have expired.

(n)Construction and Interpretation.  Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. Headings of Articles and Sections hereof are inserted for convenience and reference and constitute no part of the Plan.

(o)Severability.  If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

 

17urov-ex101_234.htm

Exhibit 10.1

 

CERTAIN identified information has been excluded from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

MARKET ACCESS SERVICES AGREEMENT

 

This Market Access Services Agreement (this “Agreement”) is entered into as of June 17, 2020 (the “Effective Date”) by and between Sunovion Pharmaceuticals Inc., a Delaware corporation, having a principle place of business at 84 Waterford Drive, Marlborough, MA 01752 (“Sunovion”) and Urovant Sciences GmbH, a Swiss corporation, having a principle place of business at Aeschenvorstadt 4, CH-4010, Viaduktstrasse 8, 4051 Basel, Switzerland (“Urovant”).  Sunovion and Urovant may individually be referred to as a “Party” and collectively as the “Parties”.

 

A.Sunovion has certain capabilities with regards to the marketing of pharmaceutical products and Urovant is a pharmaceutical company; and

 

B.Sunovion and Urovant desire to enter into this Agreement in which Urovant would engage Sunovion to provide the Services (as defined below) for the Products (as defined below) to Urovant.

 

THEREFORE, in consideration of the mutual covenants and promises contained herein, and for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, it is understood and agreed upon by and between the Parties as follows:

 

1.DEFINITIONS

The capitalized terms used in this Agreement shall have the meanings as defined below: 

1.1“3PL Contract” means the contract by and between Sunovion and a 3PL Provider to which a Product has been added by written agreement between Sunovion and such 3PL Provider.

1.2“3PL Provider” means a Third Party that provides logistics services.

1.3“3PL Services” mean the activities required in connection with Sunovion’s facilitation of Urovant’s use of Sunovion’s 3PL Provider, as further described on Exhibit A.

1.4“AAA” has the meaning set forth in Section 15.12.2.

1.5“Affiliate” means, with respect to either Urovant or Sunovion, any corporation, company, partnership, joint venture or firm which controls, is controlled by or is under common control with Sunovion or Urovant, as the case may be.  As used in the definition of Affiliate, “control” means (i) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors (or such lesser percentage that is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction), and (ii) in the case of non-corporate entities, the direct or indirect power to manage, direct or cause the direction of the management and policies of the non-corporate entity or the power to elect at least fifty percent (50%) of the members of the governing body of such non-corporate entity.  Notwithstanding the foregoing, for purposes of this Agreement, Urovant shall not be an Affiliate of Sunovion and Sunovion shall not be an Affiliate of Urovant.

1.6“Agreement” has the meaning set forth in the introductory paragraph.

1.7“Alliance Manager” has the meaning set forth in Section 2.10.

 

Confidential & Proprietary

 

1.8“AMP” means the average manufacturer price, as defined in 42 U.S.C. § 1396r-8(k)(1) and any regulations and guidance promulgated thereunder, including 42 C.F.R. § 447.500 et seq.

1.9“Applicable Law” means any federal, state, or local law, rule or regulation that may exist from time to time that applies to the obligations of the Parties under this Agreement.  Applicable Law includes (i) the Prescription Drug Marketing Act of 1987, (ii) the federal health care program Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and related implementing regulations, and any similar state law; (iii) the federal False Claims Act (31 U.S.C. §§ 3729 et seq.); (iv) the Federal Civil Monetary Penalty statute and any similar state law; (v) the Foreign Corrupt Practices Act, (vi) anti-corruption and improper payments regulations; (vii) the Federal Food, Drug and Cosmetic Act; (viii) the DSCSA, and any associated implementing FDA regulations and guidance; and (ix) state product distribution licensing and pedigree laws (to the extent not preempted by federal law).

1.10“ASP” means the manufacturer’s average sales price as defined in 42 U.S.C. § 1395w-3a(c) and 42 C.F.R. § 414.800, et seq.

1.11“Best Price” means the “best price” as defined in 42 U.S.C. § 1396r-8(c)(1)(C) and any regulations and guidance promulgated thereunder, including 42 C.F.R. § 447.500 et seq.

1.12“Break-Up Fee” has the meaning set forth in Section 14.6.2.

1.13“Business Day” means a day (other than a Saturday, Sunday or a public holiday) on which the banks are generally open for the transaction of general banking in Marlborough, Massachusetts, USA.

1.14“cGMP” means the applicable regulatory standards and requirements for current good manufacturing practices promulgated by the FDA under and in accordance with the Food Drug & Cosmetic Act, Title 21, Parts 210, 211 and 600 of the U.S. Code of Federal Regulations, including any applicable and binding guidance documents published, as all such standards, requirements and guidance may be updated or amended from time to time.

1.15“Change of Control” means any of the following events: (a) any Third Party (or group of Third Parties acting in concert) becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the total voting power of the stock then outstanding of a Party normally entitled to vote in elections of directors; (b) a Party consolidates with or merges into another corporation or entity, or any corporation or entity consolidates with or merges into such Party, in either event pursuant to a transaction (or series of transactions) in which more than fifty percent (50%) of the total voting power of the stock outstanding of the surviving entity normally entitled to vote in elections of directors is not held by the same parties as held at least fifty percent (50%) of the outstanding shares of voting stock of the Party immediately preceding such consolidation or merger; or (c) such Party conveys, transfers, assigns or leases to any Third Party, or otherwise disposes of, all or substantially all of its assets.

1.16 “Chargeback Offsets” has the meaning set forth in Section 3 of Exhibit D.

1.17“Claims” means any complaints, charges, demands, claims, hearings, investigations, actions, inquiries, proceedings, arbitrations or suits.

 

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Confidential & Proprietary

 

1.18“Commercially Reasonable Efforts” means, with respect to the efforts to be expended by a Party with respect to its performance of its obligations under this Agreement, including the Services, reasonable, diligent, good-faith efforts to perform such obligations as a similarly situated pharmaceutical company would normally use to accomplish activities that are similar to such obligations, but not less than the efforts a Party would perform on behalf of itself under similar circumstances while exercising reasonable business judgment.  With respect to a Party’s obligations, Commercially Reasonable Efforts requires that the Party: (i) promptly assign responsibility for such obligations to specific employee(s) who are held accountable for progress and monitor such progress on an on-going basis; (ii) set and consistently seek to achieve specific and meaningful objectives for carrying out such obligations; and (iii) consistently make and implement decisions and allocate resources designed to advance progress with respect to such objectives.  Notwithstanding the foregoing, if the performance of a Party’s obligations hereunder is impaired by the other Party’s failure to perform its obligations hereunder, the determination of whether such first Party has used Commercially Reasonable Efforts in performing a given obligation will be determined in the context of such other Party’s failure.  

1.19“Confidential Information” means all non-public business financial, scientific or technical information in whatever form (oral, visual or written) furnished or made available to, or otherwise acquired by, a Party from the other Party in connection with this Agreement.  Confidential Information shall also include (i) subject to Section 9.7, the terms and conditions of this Agreement, (ii) all derivative information prepared by or on behalf of Receiving Party (such as notes, drawings, plans, projections, analyses, records and materials) that incorporates or reflects Confidential Information, and (iii) with respect to Urovant, the Government Pricing Report.  

1.20“Contracting Services” mean the activities required in connection with supporting new and existing Urovant Market Access Contracts, as further described on Exhibit C.

1.21“Disclosing Party” means the Party that receives Confidential Information from the other Party.

1.22“Dispute” has the meaning set forth in Section 15.12.1.

1.23“DS Fees” has the meaning set forth in Section 3 of Exhibit D.

1.24“DSCSA” means the Drug Supply Chain Security Act.

1.25“DSP” means Sumitomo Dainippon Pharma Ltd., a Japanese company with its principal place of business at 6-8 Doshomachi 2-Chome, Chuo-ku, Osaka, 541-0045, Japan.

1.26“Effective Date” has the meaning set forth in the introductory paragraph.

1.27“Escrow Fund” means the escrow fund established by the Parties, which shall be funded by Urovant, to provide Sunovion with the necessary funds to fulfil Sunovion’s payment obligations that are required in connection with the Services.

1.28“Escrow Fund Minimum Amount” has the meaning set forth in Section 8.1.3.

1.29“FDA” means the United States Food and Drug Administration and any successor entity thereto

1.30“FSS” means the Federal Supply Schedule administered by the VA.

 

Page 3

Confidential & Proprietary

 

1.31“FTE” means full time employee equivalent over a twelve (12) month period (including normal vacations, sick days and holidays).  The portion of an FTE year devoted by an employee to a particular activity or Service shall be determined by dividing the number of full working days during any twelve (12) month period devoted by such employee to such activity or Service by the total number of working days during such twelve (12) month period.

1.32“FTE Rate for Regulatory Services” means fully burdened cost of a Sunovion FTE dedicated to performing the Regulatory Services as needed, and as agreed upon by the Parties from time to time.

1.33“Government Contracts” means the following contracts between Urovant and Government Entities: (i) any Medicaid Rebate Program agreement, PHS 340B Program agreement, or VA Master Agreement (including the pharmaceutical pricing agreement attached thereto), in each case, as described in Section 1927(a) of the Social Security Act, (ii) any Medicare Part D Coverage Gap Discount Program agreement as described in Section 1860D-43(a) of the Social Security Act, (iii) any FSS contract with the Secretary of Veterans Affairs, and any TriCare Rebate Program agreement with the Secretary of Defense, (iv) state supplemental Medicaid rebate agreements, and (v) to the extent mutually agreed by the Parties, other agreements comparable to the agreements described in (i) or (ii) that are with state or local government agencies or authorities.

1.34“Government Entities” mean the government entities that are a party to a Urovant Government Contract.

1.35“Government Pricing Programs” has the meaning set forth in Section 1 of Exhibit E.

1.36“Government Pricing Report” has the meaning set forth in Section 1 of Exhibit E.

1.37“Governmental Contact” has the meaning set forth in Section 15.2.

1.38“GPO” means a group purchasing organization.

1.39“GPO/IDN Contract” means contracts by and between Sunovion and a GPO or IDN to which a Product has been added by written agreement between Sunovion and such GPO or IDN.

1.40“GPO/IDN Fees” has the meaning set forth in Section 3 of Exhibit D.

1.41“GPR Services” mean the activities required in connection government price reporting, as further described on Exhibit E.

1.42“IDN” means an integrated delivery network.

1.43“Initial Term” has the meaning set forth in Section 14.1.

1.44“JGC” has the meaning set forth in Section 2.1.

1.45“Losses” means liabilities, losses, damages, awards, settlements, judgments, interest, costs, fines and expenses (including all reasonable attorneys’ fees and expenses).

1.46“Market Access Customers” means any Payor or other Third Party as agreed upon by the Parties in writing.

 

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Confidential & Proprietary

 

1.47“Material Wholesaler Contracts” mean certain contracts by and between Sunovion and the Material Wholesalers.

1.48“Material Wholesalers” mean those certain Wholesalers, comprising of the contracts to which AmerisourceBergen Corporation, Cardinal Health, Inc., or McKesson Corporation, or their respective Affiliates.

1.49“Medicaid Rebate Program” means the rebate program established pursuant to 42 U.S.C. §1396r-8.

1.50“Medicare Program” means the program established pursuant to 42 U.S.C. 1395 et seq (title XVIII of the Social Security Act).

1.51“Monthly Flat Service Charge” means, subject to Section 8.2.2, (i) [* * *] per calendar month for the first year of the Term, (ii) [* * *] for the second year of the Term, and (iii) an adjusted amount for each year after the second year of the Term consistent with Section 8.2.2; provided that, (i) if the Term begins after the first day of a calendar month, such amount shall be multiplied by a fraction where the numerator is the number of days in such calendar month that are on or after the Effective Date and the denominator is the number of days in such calendar month, and (ii) if the Term ends before the last day of a calendar month, such amount shall be multiplied by a fraction where the numerator is the number of days in such calendar month that are on or before the effective date of the termination or expiration of this Agreement and the denominator is the number of days in such calendar month.

1.52“NDA” means new drug application filed with the FDA for authorization to market any and each of the Products.

1.53“Non-FAMP” means the non-federal average manufacturer price as defined in 38 U.S.C. § 8126, the VA Master Agreement, and any regulations and guidance promulgated thereunder.

1.54“Party” and “Parties” the meaning set forth in the introductory paragraph.

1.55“Pass-Through Expenses” means (a) the Payor Fees, (b) the DS Fees, (c) the GPO/IDN Fees, (d) the out-of-pocket costs and expenses incurred by or on behalf of Sunovion in connection with Sunovion’s provision to Urovant of the Sunovion Reports that are specific to the Products, (e) the costs and expenses owed to a third-party recall vendor that arise in connection with the Regulatory Services, (f) reasonable travel expenses that are incurred by Sunovion, its Affiliates or a third-party service provider in connection with the performance of the Services that are incurred in accordance with a travel policy to be agreed upon in writing by the Parties, (g) software license fees, costs and expenses reasonably incurred by Sunovion or its Affiliates in connection with modification of the information technology systems reasonable necessary or useful for Sunovion to perform the Services and that have been pre-approved by Urovant in writing; provided that any costs set forth in herein shall be deemed to be approved by Urovant, and (h) any additional costs and expenses incurred by Sunovion in connection with the Services as agreed by the Parties in writing.

1.56“Payor” means any health maintenance organization, preferred provider organization, self-insured employer, employee group, exclusive provider or similarly funded (directly or indirectly) health benefits program, administrator, managed care organization, pharmacy benefit manager, or other health organization.

 

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1.57“Payor Fees” has the meaning set forth in Section 2 of Exhibit D.

1.58“Pedigree Information” means, with respect to a Product, at least the information (which includes the Product Identifiers, Transaction History and Transaction Information (as such terms are defined in the DSCSA)) that Sunovion is required to provide to its down-stream authorized trading partners pursuant to the DSCSA.

1.59“Person” means any individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity.

1.60“PHS 340B Program” means the drug discount program, available to “covered entities”, that is administered by the Health Resources and Services Administration pursuant to 42 U.S.C. § 256b.

1.61“Product Contracts” means any Wholesaler Contracts, 3PL Contracts, and GPO/IDN Contracts, and any other contracts to which Sunovion is a party, in each case, that is a contract to which a Product has been added in fulfillment of Sunovion’s obligations under this Agreement.

1.62“Product Inventions” has the meaning set forth in Section 10.1.

1.63“Products” means pharmaceutical products owned by Urovant, consisting of Vibegron.

1.64“RCP Payments” means Rebate Payments, Payor Fees, Chargeback Offsets, DS Fees, and GPO/IDN Fees.

1.65“RCP Services” mean the activities required in connection with the validation, processing and payment of the RCP Payments, as further described on Exhibit D.

1.66 “Rebate Payment” has the meaning set forth in Section 2 of Exhibit D.

1.67“Receiving Party” means the Party that receives Confidential Information from the other Party.

1.68“Records” has the meaning set forth in Section 6.5.

1.69“Regulatory Service Charge” has the meaning set forth in Section 4.7.

1.70“Regulatory Services” mean regulatory-related activities, as further described on Exhibit F.

1.71“Renewal Term” has the meaning set forth in Section 14.1.

1.72“Service Charge” has the meaning set forth in Section 8.2.1.

1.73“Services” means the 3PL Services, Wholesaler, GPO, and IDN Services, Contracting Services, GPR Services, RCP Services, and Regulatory Services.

1.74“Subcommittee” has the meaning set forth in Section 2.7.

1.75“Sunovion” has the meaning set forth in the introductory paragraph.

1.76“Sunovion GPOs” means any GPO that is a party to a GPO/IDN Contract.

1.77“Sunovion IDNs” means any IDN that is a party to a GPO/IDN Contract.

 

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1.78“Sunovion Indemnitees” has the meaning set forth in Section 12.2.

1.79“Sunovion Property” has the meaning set forth in Section 10.3.

1.80“Sunovion Reports” has the meaning set forth in Section 6.3.

1.81“Term” has the meaning set forth in Section 14.1.

1.82“Territory” means the United States, the District of Columbia, and all of the United States’ territories and possessions.

1.83“Third Party” means any Person other than a Party or an Affiliate of a Party.

1.84“TriCare Rebate Program” means the rebate program described in the final rule published by the Department of Defense at 74 Fed. Reg. 11,279 to implement Section 703 of the National Defense Authorization Act of 2008, and includes rebates pursuant to any voluntary rebate agreement described therein.

1.85“Urovant” has the meaning set forth in the introductory paragraph.

1.86“Urovant Government Contract” means a Government Contract covering a Product to which Urovant is a party.

1.87“Urovant GPO/IDN Contract” means a contract covering a Product between Urovant and a GPO or IDN that is not a Sunovion GPO or Sunovion IDN.

1.88“Urovant Indemnitees” has the meaning set forth in Section 12.1.

1.89“Urovant Market Access Contract” means a contract by and between Urovant and a Market Access Customer covering a Product.

1.90“VA” means the United States Department of Veterans Affairs.

1.91“VA Master Agreement” means an agreement between a pharmaceutical manufacturer and the VA to implement the provisions of the Veterans Health Care Act of 1992, 38 U.S.C. § 8126.

1.92“Wholesaler” means any wholesaler of pharmaceutical products or similar trade partner.

1.93“Wholesaler Contract” means contracts by and between Sunovion and a Wholesaler to which a Product has been added by written agreement between Sunovion and such Wholesaler.

1.94“Wholesaler, GPO, and IDN Services” mean the activities required in connection with the performance of Sunovion’s obligations under the Wholesaler Contracts and GPO/IDN Contracts, as further described on Exhibit B.

1.95“Work Product” has the meaning set forth in Section 10.1.

 

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2.JOINT GOVERNANCE COMMITTEE

2.1Joint Governance Committee.  Within thirty (30) days after the Effective Date, the Parties shall establish a joint governance committee (the “JGC”), which shall consist of three (3) representatives from each Party, each with the requisite experience and seniority to enable such representative to make decisions on behalf of the Party it represents with respect to the issues falling within the jurisdiction of the JGC.  From time to time, each Party may substitute one (1) or more of its representatives to the JGC on written notice to the other Party.  Each individual appointed by a Party as a representative to the JGC shall be an employee of such Party or of such Party’s Affiliate.  The Parties shall each select a chairperson for the JGC which shall serve as joint-chairpersons during the Term unless a Party determines to replace its chairperson.  

2.2Responsibilities.  The JGC shall:

2.2.1review disputes escalated to the JGC pursuant to Section 7.1;

2.2.2review and approve changes to the Escrow Fund Minimum Amount in accordance with Section 8.1.2;

2.2.3establish an efficient and secure method of transmission for the Records, including the Government Pricing Report;

2.2.4review and suggest any amendments to the Services; provided that any such amendments or updates shall be memorialized in a separate writing signed by each Party;

2.2.5review the activities of any Subcommittees established by the JGC, and resolve any disagreement between the designees of Sunovion and Urovant on any Subcommittee;

2.2.6provide a forum for discussing and recommending consensus resolution of any disputes within the jurisdiction of the JGC; and

2.2.7perform such other functions as are set forth herein, if and as applicable, or as the Parties may mutually agree in writing.

2.3Meetings.  The JGC shall meet quarterly until its disbandment, or as otherwise agreed to by the Parties, with the location of in-person meetings alternating between a location designated by Sunovion and a location designated by Urovant, with Sunovion designating the place of the first meeting.  The chairpersons of the JGC shall be responsible for calling meetings of the JGC on no less than ten (10) days’ notice unless exigent circumstances require shorter notice.  Each Party shall make all proposals for agenda items at least ten (10) days in advance of the applicable meeting and shall provide all appropriate information with respect to such proposed items at least five (5) days in advance of the applicable meeting; provided, that under exigent circumstances requiring input by the JGC, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting or may propose that there not be a specific agenda for a particular meeting, so long as the other Party consents to such later addition of such agenda items or the absence of a specific agenda for such meeting (which consent shall not be unreasonably conditioned, withheld or delayed).  The chairpersons of the JGC shall prepare and circulate, or cause to be prepared and circulated, for review and approval of the Parties minutes of each meeting within thirty (30) days after the meeting.  The Parties shall agree on the minutes of each meeting promptly, but in no event later than the next meeting of the JGC. 

 

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2.4Procedural Rules.  Within sixty (60) days after the Effective Date, the JGC shall adopt standing rules as shall be necessary for the JGC to conduct business; provided that that such rules are not inconsistent with this Agreement.  A quorum of the JGC shall exist whenever there is present at a meeting at least one (1) representative appointed by each Party.  Representatives of the Parties on the JGC may attend a meeting either in person or by telephone, video conference or similar means in which each participant can hear what is said by and be heard by, the other participants; provided, that each Calendar Year at least one (1) meeting of the JGC will be in-person.  Representation by proxy shall be allowed.  

2.5Decision-Making.  The JGC shall take action by consensus of the representatives present at a meeting at which a quorum exists, with each Party having a single vote irrespective of the number of representatives of such Party in attendance, or by a written resolution signed by at least one (1) representative of each Party.  Except for matters outside the jurisdiction and authority of the JGC, as applicable (including as set forth in Section 2.6), if the JGC cannot, or does not, reach consensus on an issue within fifteen (15) Business Days after such issue is first presented to the JGC for consideration, then either Party shall have the right to refer such issue to the Chief Executive Officers of the Parties for attempted resolution by good faith negotiations during a period of at least thirty (30) days in accordance with Section 15.12.  Any final decision mutually agreed to by the Chief Executive Officers of the Parties in writing shall be conclusive and binding on the Parties.

2.6Limitations on Authority.  Without limitation to the foregoing, the Parties hereby agree that matters explicitly reserved to the consent, approval, discretion or other decision-making authority of one or both Parties, as expressly provided in this Agreement, are outside the jurisdiction and decision-making authority of the JGC or any Subcommittee, including: (i) amendment, modification or waiver of compliance with this Agreement; (ii) requiring a Party to breach any obligation or agreement that such other Party may have with or to a Third Party prior to the Effective Date; or (iii) require the other Party to perform any activities that are materially different or greater in scope than those expressly set forth under the Agreement.  Furthermore, no decision of the JGC or any Subcommittee shall be in contravention of any terms and conditions of this Agreement.  It is understood and agreed that issues to be decided by the JGC or any Subcommittee, as applicable, are only those specific issues within such committee’s duties.

2.7Subcommittees.  From time to time, the JGC may establish and delegate duties to sub-committees or directed teams (each, a “Subcommittee”) on an “as-needed” basis to oversee specific Services.  Each such Subcommittee shall be constituted and shall operate as the JGC determines; provided that each Subcommittee shall have equal representation from each Party, unless otherwise mutually agreed.  Subcommittees may be established on an ad hoc basis for purposes of a specific Service or on such other basis as the JGC may determine.  Each Subcommittee and its activities shall be subject to the oversight, review and approval of, and shall report to, the JGC.  In no event shall the authority of the Subcommittee exceed that specified for the JGC.  All decisions of a Subcommittee shall be by consensus.  Any disagreement between the designees of Sunovion and Urovant on a Subcommittee shall be referred to the JGC for resolution.

2.8Expenses.  Each Party shall be responsible for all travel and related costs and expenses for its members and other representatives to attend meetings of, and otherwise participate on, the JGC or any Subcommittee.  For purposes of clarity, the foregoing travel and related costs and expenses shall not be Pass-Through Expenses.

2.9Disbandment.  Unless otherwise agreed to in writing by the Parties, the JGC shall disband three (3) months after the launch of the first Product.

 

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2.10Alliance Manager.  Each Party shall appoint a person(s) who shall oversee contact between the Parties for all matters between meetings of the JGC and shall have such other responsibilities as the Parties may agree in writing after the Effective Date (each, an “Alliance Manager”).  Each Party shall be responsible for all travel and related costs and expenses for its Alliance Manager.  For purposes of clarity, the foregoing travel and related costs and expenses shall not be Pass-Through Expenses.  Each Party may replace its Alliance Manager at any time by notice in writing to the other Party. 

3.APPOINTMENT

Subject to the terms and conditions of this Agreement, Urovant hereby appoints Sunovion, and Sunovion hereby accepts such appointment, to be Urovant’s: (a) co-licensed partner (for the purposes of the DSCSA) with regard to the Products; and (b) an exclusive distributor of the Products in the Territory.

4.Sunovion Obligations

4.1Generally; Efforts; Product Contracts.  

4.1.1During the Term, Sunovion shall use Commercially Reasonable Efforts to perform, or cause to be performed by an Affiliate of Sunovion (as applicable), its obligations under this Agreement, including those in Sections 4.2 through 4.7.  

4.1.2Sunovion shall provide copies of Product Contracts to support Urovant’s compliance with Applicable Law, Government Contracts, and for Urovant’s review and validation of Sunovion’s Government Pricing Report and underlying government pricing calculation methodologies (including ensuring that such methodologies align with Urovant’s reasonable assumptions).  Sunovion may redact certain provisions of the Product Contracts that (i) are related to a Sunovion product, or (ii) are required to maintain an obligation of confidentiality to the counterparty to such Product Contract and are not related to the applicable Product.

4.23PL Services.   

4.2.1Sunovion shall: (i) add the Products to the contract(s) by and between Sunovion and its 3PL Provider(s), (ii) negotiate rates under the applicable 3PL Contract [* * *] and (iii) provide reasonable evidence to Urovant that the obligations under (i) and (ii) have been fulfilled.

4.2.2After Sunovion’s fulfilment of Sunovion’s obligations pursuant to Section 4.2.1, unless this Agreement is earlier terminated by Urovant pursuant to Section 14.5.1, Sunovion shall provide the 3PL Services.  In the performance of the 3PL Services, Sunovion shall ensure that neither Sunovion nor a 3PL Provider takes title to the Products.

4.3Wholesaler, GPO, and IDN Services.

4.3.1Sunovion shall: (i) add the Products to the contracts by and between Sunovion and its Wholesalers, the Sunovion GPOs, and the Sunovion IDNs, (ii) negotiate rates under such contracts [* * *]; provided that, subject to Section 5.3.2, [* * *], and (iii) provide reasonable evidence to Urovant that the obligations under (i) and (ii) have been fulfilled.

4.3.2After Sunovion’s fulfilment of Sunovion’s obligations pursuant to Section 4.3.1, unless this Agreement is earlier terminated by Urovant pursuant to Section 14.5.2, Sunovion shall provide the Wholesaler, GPO, and IDN Services.

 

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4.4Contracting Services.  

4.4.1At least ninety (90) days prior to the anticipated date on which FDA will complete its review of the NDA for the first Product to be approved by FDA, which is currently anticipated to be December 26, 2020, Sunovion shall configure, or cause to be configured, the Model N software to enable Sunovion to perform its obligations under this Agreement; provided that the costs and expenses incurred by or on behalf of Sunovion in connection therewith shall be deemed to be a Pass-Through Expense.

4.4.2Sunovion shall provide the Contracting Services.

4.5RCP Services.  Sunovion shall provide the RCP Services.

4.6GPR Services.  Sunovion shall provide the GPR Services.

4.7Regulatory Services.   

4.7.1In connection with the Regulatory Services, Sunovion shall provide the necessary number of FTEs as agreed upon by the Parties from time to time at the FTE Rate for Regulatory Services (the “Regulatory Service Charge”).

4.7.2Sunovion shall provide the Regulatory Services.

5.Urovant Obligations

	
5.1
	
Generally; Efforts.  During the Term, Urovant shall use Commercially Reasonable Efforts to perform its obligations under this Agreement, including those in Sections 5.2 through 5.6.

5.23PL Services.  

5.2.1In connection with the 3PL Services, Urovant shall provide to Sunovion in writing information necessary or reasonably useful for Sunovion to perform the 3PL Services within thirty (30) days after the Effective Date.

5.2.2Prior to consignment of the Product to a 3PL Provider pursuant to the terms of a 3PL Contract: (i) Urovant shall: (a) release the Products in accordance with (1) cGMP, and (2) any serialization requirements under the DSCSA and policies and procedures to be agreed upon by the Parties in writing, and (b) transmit all Pedigree Information related to the Products to Sunovion; and (ii) Sunovion shall have received and verified such Pedigree Information.

5.2.3In connection with the 3PL Services, Urovant shall: (i) coordinate shipment of the Products, at Urovant’s cost and expense, to the 3PL Provider designated by Sunovion; (ii) cause the Products to be consigned to Sunovion; (iii) enter into a quality agreement with each 3PL Provider and Sunovion prior to consignment of any Product to Sunovion; (iv) refrain from actions which would cause Sunovion to be in material breach of any covenant, representation, or warranty contained in any agreement by and between Sunovion and a 3PL Provider to which a Product has been consigned; and (v) ensure that the Products do not include any hazardous materials.

 

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5.3Wholesaler, GPO, and IDN Services.  

5.3.1In connection with the Wholesaler, GPO, and IDN Services, Urovant shall: (i) provide to Sunovion in writing information that is reasonably necessary for Sunovion to perform the Wholesaler, GPO, and IDN Services within fifteen (15) days after the Effective Date; (ii) comply with the terms and conditions of the applicable Wholesaler Contract or GPO/IDN Contract as if Urovant were a party, including with regard to any dispute resolution mechanisms set forth therein, and any policies and procedures agreed upon in writing by the Parties regarding returns of Products, (iii) promptly provide Sunovion with any information requested by Sunovion that is necessary for Sunovion to properly complete returns of Products, and (iv) upon the reasonable request by Sunovion, cooperate with Sunovion in the conduct of any investigation regarding orders of the Products by a Wholesaler, GPO, or IDN.

5.3.2Urovant shall ensure that (i) its directors, officers, employees, contractors and agents, as applicable, use best efforts to confer with Sunovion at least five (5) Business Days in advance of any first-time communication with a Sunovion GPO or Sunovion IDN relating to a GPO/IDN Contract to align on a meeting strategy to employ in connection with the Wholesaler, GPO and IDN Services, and (ii) a Sunovion representative participates in any such communication with such Sunovion GPO or Sunovion IDN in connection with the Contracting Services unless Sunovion elects in writing not to participate.

5.4Contracting Services.

5.4.1In connection with the Contracting Services, Urovant shall: (i) provide un-redacted copies of each Urovant Market Access Contract, Urovant Government Contract and Urovant GPO/IDN Contract entered into by Urovant to Sunovion to the extent not already provided, provided that Sunovion shall not use such Urovant Market Access Contracts, Urovant Government Contracts or Urovant GPO/IDN Contracts for any purpose other than in furtherance of Sunovion’s obligations under this Agreement, and (ii) identify a Urovant employee to be a dedicated liaison that will communicate with Sunovion from time to time as reasonably requested by Sunovion to complete the Contracting Services.

5.4.2Urovant shall be responsible for ensuring that the Urovant Market Access Contracts, Urovant Government Contract, and Urovant GPO/IDN Contracts permit Sunovion to perform the RCP Services and the GPR Services.

5.5GPR Services.  Urovant hereby acknowledges and agrees that it will: (i) [* * *], (ii) [* * *], and (iii) be solely responsible for: (a) entering the information contained in the Government Pricing Report into the Centers for Medicare & Medicaid Services Drug Data Reporting System (or other applicable system), and (b) certifying and submitting such government pricing data to the applicable government authority in accordance with Applicable Laws, in each case (a) and (b), as required under Applicable Law, including under the Government Pricing Programs, and applicable state laws, rules and regulations.

5.6Regulatory Services.  

5.6.1Upon written notice from Sunovion to Urovant, Urovant shall permit Sunovion to conduct a for-cause audit of Urovant’s quality systems that in any way relate to Sunovion’s performance of the Services.

5.6.2Urovant shall promptly, but in no event less than two (2) Business Days, notify Sunovion in the event that a recall is issued for any Product.

 

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5.7Training Services.  Urovant shall, upon a reasonable request by Sunovion, provide to Sunovion’s account directors certain training the enable Sunovion to perform the Services.  Such training may, to the extent feasible, be administered virtually or as otherwise agreed upon by the Parties.

6.OPERATIONs

6.1Title and Risk of Loss.  At no time during the Term shall Sunovion have title to the Products.  At all times during the Term, title to the Products shall either be with Urovant or an applicable Wholesaler, and, as between Urovant and Sunovion, risk of loss of Products shall be with Urovant at all times; provided that to the extent the risk of loss of the Products are contractually assigned to a Wholesaler pursuant to Wholesaler Contract, Sunovion shall, subject to Section 4.1, enforce any rights of such contractual assignment of risk of loss for the benefit of Urovant.

6.2Regulatory Responsibility.  Except as expressly set forth in this Agreement or where required by Applicable Law for Sunovion to fulfill its obligations under this Agreement, Urovant (as the owner and applicant of the NDA for each Product) shall be solely responsible, at Urovant’s sole cost and expense, for all regulatory obligations related to the Products, including annual product reports, drug listing updates, serious adverse event reports, field alerts, and DSCSA reporting and recordkeeping.  Subject to Section 6.4 and Applicable Law, Urovant, not Sunovion, shall have the sole right to interact with FDA regarding the Products.

6.3Sunovion Reporting Obligations.  Sunovion shall provide the reports set forth on Exhibit G (the “Sunovion Reports”) to Urovant at the frequency that corresponds to each such report.

6.4Urovant Reporting Obligations.  Urovant shall: (i) submit a report to Sunovion: (a) within thirty (30) days after the end of each calendar year describing the projected annual sales volume for the Products for the current calendar year, (b) within one hundred twenty (120) days prior to launch of a Product describing the volume requirements for such launch, and (c) within sixty (60) days prior to launch of a Product describing the volume requirements for a safety stock of such Product, (ii) within a reasonable period of time, provide to Sunovion any report or Product-related information that is reasonably requested by Sunovion or reasonably necessary for Sunovion to perform the Services, (iii) provide Sunovion with copies of all submissions to any regulatory authority that are reasonably requested by Sunovion or are reasonably necessary for Sunovion to perform the Services, and (iv) on a quarterly basis, prepare in good faith a forecast that projects sales demand for the Products for the following twelve (12) month period to enable Sunovion to adequately prepare for performance of the Services.

6.5Records; Record Retention; Records Audits.  Sunovion will maintain all Work Product generated by Sunovion in connection with the Services (collectively, the “Records”) for a period of three (3) years.  Following completion of the Services, Sunovion will, at the direction and written request of Urovant, promptly deliver Records to Urovant or its designee, or dispose of the Records.    

7.Decision-Making Authority; Discretion; Review Rights.

7.1Wholesaler, GPO, and IDN Disputes.  With regard to disputes under a Wholesaler Contract or GPO/IDN Contract that relate: (i) solely to a Sunovion product (and does not relate to a Product), Sunovion shall have final decision-making authority, (ii) to a Sunovion product and a Product, the JGC shall have final decision-making authority if the Parties cannot agree on a resolution to such dispute; and (iii) solely to a Product (and does not relate to a Sunovion product), Urovant shall have final decision-making authority.

 

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7.2Product Price Increases.  [* * *]. Any dispute that arises in connection with the foregoing shall be escalated to the respective Chief Executive Officers of Urovant and Sunovion.  If the Parties respective Chief Executive Officers are not able to resolve the dispute then the Parties’ agree that the dispute shall be raised to the Parties’ ultimate parent company, DSP, for further discussion.  For clarity, if DSP is unable to resolve the dispute, Urovant will have final decision-making authority with respect to all pricing decisions relating to the Products.

8.FINANCIAL TERMS

8.1Escrow Fund.  

8.1.1At least thirty (30) days prior to the launch of a Product, (i) the Parties shall establish the Escrow Fund at a reputable banking institution agreed upon by the Parties, and (ii) Urovant shall place [* * *] into the Escrow Fund for the first year of the Term.  Any agreement by and among such banking institution, Sunovion and Urovant shall (a) not require Sunovion to seek approval from Urovant to withdraw funds from the Escrow Fund if such withdrawal is in connection with Sunovion’s performance of the RCP Services, and (b) permit Sunovion to transfer funds from the Escrow Fund to an intermediate Sunovion bank account to enable Sunovion to complete RSP Payments in connection with Sunovion’s performance of the RCP Services. 

8.1.2Notwithstanding the foregoing, during the first year of the Term, Urovant shall ensure that the Escrow Fund shall not have less than [* * *] (the “Escrow Fund Minimum Amount”) for any period of time that is longer than ten (10) Business Days.  The JGC shall discuss in good faith an adjustment to the Escrow Fund Minimum Amount six (6) months after the launch of such Product and every six (6) months thereafter.  In the event that Urovant fails to timely fund the Escrow Fund, Sunovion may terminate this Agreement if such failure to fund the Escrow Fund is not cured within five (5) Business Days of receipt of notice of such failure from Sunovion.

8.1.3Within ninety (90) days after the end of each calendar year in which there is an Escrow Fund, the Parties shall reconcile the amount remaining in Escrow Fund against all of the RCP Payments and other withdrawals initiated by Sunovion.  After such completion reconciliation, in the event that the Escrow Fund has an amount that is less than the Escrow Fund Minimum Amount, or such other amount as determined by the JGC from time to time, Urovant shall reconcile any shortfall within five (5) Business Days.

8.2Fees; Invoices; Payments.  

8.2.1In consideration for performance of the Services by Sunovion, Urovant shall: (i) pay to Sunovion an amount equal to the sum of: (a) the Monthly Flat Service Charge, and (b) any agreed to Regulatory Service Charge (the sum of (a) and (b), the “Service Charge”), and (ii) reimburse Sunovion for any Pass-Through Expenses.  

8.2.2Subject to the remainder of this Section 8.2.2, Sunovion reserves the right to adjust all fees on an annual basis beginning with the third (3rd) year of the Term, including the Monthly Flat Service Charge and Regulatory Service Charge, upon reasonable prior written approval of Urovant, such approval not to be unreasonably withheld, conditioned or delayed.  Determination of the Monthly Flat Service Charge for the third (3rd) year of the Term and each year thereafter shall be subject to good faith negotiation between the Parties that will take into consideration any evidence that Sunovion provides in connection with cost increases by any vendor engaged by Sunovion on Urovant’s behalf.  All fees owed by a Party to the other Party under this Agreement shall comply with the federal health care program Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), all applicable statutory “exceptions” and regulatory “safe harbors” related thereto, and related implementing regulations, and any similar state law, and shall comply with any bona fide service fee requirements.

 

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8.2.3At the end of each calendar month, Sunovion shall submit an invoice to Urovant for an amount equal to the sum of: (i) the Service Charges, and (ii) the Pass-Through Expenses incurred by Sunovion in connection with the Services during the prior calendar month.  Urovant shall pay Sunovion all undisputed invoice amounts within thirty (30) days after receipt thereof.  If payment of an undisputed invoice is not made by Urovant within thirty (30) days, then, upon five (5) days’ written notice to Urovant, Sunovion may withdraw a certain amount from the Escrow Fund in lieu of a payment by Urovant of such invoice; provided that such payment has still not been made by Urovant.

8.3Taxes.  Urovant shall be responsible for all sales, use and excise taxes, and any other similar taxes, duties and charges of any kind imposed by any federal, state or local governmental entity: (i) on any amounts payable by Urovant hereunder, and (ii) related to the Products, including the branded prescription drug fee pursuant to 26 C.F.R. Parts 51 and 602; provided, that, in no event shall Urovant pay or be responsible for any taxes imposed on, or with respect to, Sunovion’s income, revenues, gross receipts, personnel or real or personal property or other assets.

8.4Financial Records; Financial Audits.  Sunovion will keep reasonable financial records relating to its performance of the Services for a period of three (3) years after the end of performing such Services.  Urovant, or its independent auditors or representatives, may, during normal business hours, and upon reasonable notice, review and inspect Sunovion’s financial records of the Service Charges paid by Urovant and Pass-Through Expenses invoiced to Urovant for the purpose of determining if invoices submitted by Sunovion reflect the financial terms agreed to under this Agreement.  Urovant or its representatives may conduct such financial audit no more than one time per calendar year during the Term and for a period of twelve (12) months thereafter.  Urovant shall be responsible for the cost of any such audit, except that, if the auditor determines that Urovant has overpaid any amounts owed to Sunovion hereunder by five percent (5%) or more, Sunovion shall pay the costs and expenses of such audit, and any overpaid amounts that are discovered, together with reasonable interest on such overpaid amounts.  The results of such audit shall be final and binding, absent manifest error.

8.5Regulatory/Compliance Records; Regulatory/Compliance Audits.  Sunovion shall keep reasonable regulatory and compliance records relating to its performance of the Services for a period of three (3) years after the end of performing such Services.  Urovant, or its independent auditors or representatives, may, no more than one (1) time per calendar year, during normal business hours, and upon reasonable notice, review and inspect Sunovion’s regulatory and compliance records relating to Sunovion’s performance of the Services.

9.Confidentiality

9.1Obligations of Confidentiality.  During the Term and thereafter, Receiving Party agrees to: (i) hold all Confidential Information in confidence and not, directly or indirectly, publish, disseminate or otherwise disclose, deliver or make available to any Third Party any Confidential Information, except as expressly permitted in this Agreement; (ii) use Confidential Information solely in furtherance of the purpose of this Agreement (i.e., the performance of a Party’s obligations, or the exercise of a Party’s rights, under this Agreement), (iii) treat Confidential Information with the same degree of care that Receiving Party uses to protect its own confidential information, but in no event with less than a reasonable degree of care, (iv) reproduce Confidential Information solely as necessary to further the purpose of this Agreement, and (v) notify Disclosing Party upon discovery of any unauthorized use or disclosure of any Confidential Information or any other breach of this Section 9 by Receiving Party and to cooperate with Disclosing Party in every reasonable way to help Disclosing Party regain possession of the Confidential Information and prevent its further unauthorized use.

 

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9.2Exceptions.  Receiving Party shall have no obligations of confidentiality and non-use with respect to any Confidential Information which:

9.2.1is, or later becomes, generally available to the public or trade by the use, publication or the like, through no fault of, or act, or failure to act on the part of Receiving Party, as evidenced by the then existing publication or other public dissemination of such information in written or other documentary form;

9.2.2is obtained, after the Effective Date, by Receiving Party from a Third Party on a non-confidential basis and such Third Party had the legal right to disclose such Confidential Information to Receiving Party;

9.2.3is independently developed by the Receiving Party without reliance on Disclosing Party’s Confidential Information, as evidenced by the contemporaneous written records of Receiving Party that are maintained in the ordinary course of business; or

9.2.4Receiving Party already knows prior to the date of any disclosure by Disclosing Party, as evidenced by the contemporaneous written records of Receiving Party that are maintained in the ordinary course of business. 

9.3Disclosures Required by Law.  In the event that Receiving Party is: (i) requested in any judicial or administrative proceeding or by any governmental or regulatory authority to disclose any Confidential Information, Receiving Party shall give Sunovion prompt notice of such request so that Disclosing Party may seek an appropriate protective order; or (ii) compelled by a judicial or administrative proceeding or by any governmental or regulatory authority to disclose any Confidential Information, Receiving Party shall give Disclosing Party prompt prior written notice of such event and shall furnish only that portion of such Confidential Information that is legally required and shall exercise all reasonable efforts to obtain reliable assurance that confidential treatment will be afforded to such Confidential Information.

9.4Work Product.  Notwithstanding that Sunovion will be the Disclosing Party with respect to the Work Product or Product Inventions: (i) the Work Product (including the Government Pricing Reports) and Product Inventions shall be deemed to be the Confidential Information of Urovant, and (ii) Urovant shall be deemed to be the “Disclosing Party” and Sunovion shall be deemed to be the “Receiving Party” with respect thereto.

9.5Ownership. All Confidential Information is and will remain the sole and exclusive property of Disclosing Party.  Except for the limited right to use Confidential Information solely in accordance with this Agreement, no ownership interests, rights or licenses whatsoever, either express or implied, are granted hereunder by Disclosing Party to Receiving Party under any patents or patent applications, copyrights, trademarks, trade secrets, or other intellectual property rights now or hereafter acquired, developed, or controlled by Disclosing Party.  Disclosing Party retains all rights and remedies afforded under all patent, copyright, trade secret, and other Applicable Law for protecting confidential, proprietary, or trade secret information.

9.6Use of Name. Except as expressly provided herein, neither Party shall mention or otherwise use the name, logo, or trademark of the other Party or any of its Affiliates (or any abbreviation or adaptation thereof) in any publication, press release, marketing and promotional material, or other form of publicity without the prior written approval of such other Party in each instance.  The restrictions imposed by this Section 9.6 shall not prohibit either Party from making any disclosure identifying the other Party that, in the opinion of the disclosing Party’s counsel, is required by Applicable Law; provided, that such Party shall submit the proposed disclosure identifying the other Party in writing to the other Party as far in advance as reasonably practicable (and in no event less than three (3) Business Days prior to the anticipated date of disclosure) so as to provide a reasonable opportunity to comment thereon.

 

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9.7Publicity.  Neither Party shall issue any other public announcement, press release, or other public disclosure regarding this Agreement or its subject matter without the other Party’s prior written consent, except for any such disclosure that is, in the opinion of the disclosing Party’s counsel, required by Applicable Law or the rules of a stock exchange on which the securities of the disclosing Party are listed.  In the event a Party is, in the opinion of its counsel, required by Applicable Law or the rules of a stock exchange on which its securities are listed to make such a public disclosure, such Party shall submit the proposed disclosure in writing to the other Party as far in advance as reasonably practicable so as to provide a reasonable opportunity to comment thereon.

9.8Injunctive Relief.  Each Party agrees that (a) the Disclosing Party may be irreparably injured by an impending or existing breach of this Section 9; (b) money damages would not be an adequate remedy for any such breach; and (c) the Disclosing Party will be entitled to seek equitable relief, including injunctive relief and specific performance, without proof of damages or having to post a bond, as a remedy for any such breach.  Such injunctive relief shall be in addition to any other rights or remedies the Disclosing Party may otherwise be entitled to. 

10.OWNERSHIP; INVENTIONS; License Grant

10.1Ownership.  Urovant shall own all: (i) materials, data, analyses, reports and other work product related solely to a Product generated by Sunovion in connection with the Services, including the Government Price Report (“Work Product”); and (ii) all inventions (whether patentable or not), improvements, developments and intellectual property rights related thereto, that in each case: (a) are conceived, reduced to practice, made or authored by Sunovion (whether solely or jointly) under this Agreement, and (b) relate solely to a Product (“Product Inventions”).  All other ownership rights shall be determined in accordance with United States patent laws.

10.2Disclosure and Assignment.  Sunovion shall disclose all Work Product and Product Inventions to Urovant promptly after they are conceived, reduced to practice, made or authored.  Sunovion hereby assigns to Urovant all of Sunovion’s right, title and interest in any and all Work Product and Product Inventions without any additional consideration, and Sunovion shall reasonably assist Urovant in the prosecution, maintenance and enforcement of such IP, at Urovant’s sole expense.

10.3Sunovion Property.  Notwithstanding Section 10.1, Sunovion will retain all right, title and interest in and to: (i) all materials, data, analyses, reports and work product (other than Work Product) that do not solely relate to the Products and are generated by or on behalf of Sunovion (whether alone or jointly with others) under this Agreement without use of, or reliance upon, Urovant’s Confidential Information or Work Product, (ii) all programs, methodologies, policies, processes, platforms, technologies and other materials developed or licensed by Sunovion prior to or apart from performing the Services or its obligations under this Agreement and without use of, or reliance upon, Urovant’s Confidential Information or Work Product ((i) and (ii) collectively, the “Sunovion Property”), regardless of whether such Sunovion Property is used in connection with Sunovion’s performance of the Services or its obligations under this Agreement, and (iii) any improvements and modifications made by Sunovion to Sunovion Property without use of, or reliance upon, Urovant’s Confidential Information or Work Product.

10.4License Grant.  Urovant hereby grants to Sunovion a non-exclusive license, with the right to grant sublicenses, under any intellectual property rights owned or controlled by Urovant, including with respect to the Work Product, solely to enable Sunovion to perform the Services.  Except as otherwise expressly provided herein, nothing in this Agreement is intended to grant to either Party any rights under any intellectual property right of the other Party.

 

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11.Representations, warranties and covenants 

11.1Mutual.  Each of the Parties hereby represent, warrant and covenant to the other Party that:

11.1.1it is and will remain a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.

11.1.2the execution and delivery of this Agreement has been authorized by all requisite corporate action;

11.1.3this Agreement is and will remain a valid and binding obligation of it, enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors;

11.1.4it is under no contractual or other obligation or restriction that is inconsistent with its execution or performance of this Agreement;

11.1.5during the Term, it will not, directly or indirectly, enter into any agreement, either written or oral, or take part in any activity, that would cause an actual or potential conflict with its responsibilities under this Agreement; and

11.1.6it, its Affiliates, and each of their respective officers, directors, employees and subcontractors, as applicable: (i) have not been debarred and are not subject to a pending debarment, and will not use in any capacity in connection with the Services, any person who has been debarred or is subject to a pending debarment, pursuant to section 306 of the United States Food, Drug and Cosmetic Act, 21 U.S.C. §335a, (ii) are not ineligible to participate in any federal and/or state healthcare programs or federal procurement or non-procurement programs (as that term is defined in 42 U.S.C. 1320a-7b(f)), including Medicare, Medicaid and Civilian Health and Medical Program of the Uniformed Services, (iii) are not disqualified by any government or regulatory agencies from performing specific services, and are not subject to a pending disqualification proceeding, and (iv) have not been convicted of a criminal offense related to the provision of healthcare items or services, and are not subject to any such pending action.  

Each Party will promptly notify the other Party if it, its Affiliates or any of their respective officers, directors, employees and subcontractors, as applicable, are or become subject to the foregoing, or if any Claim relating to the foregoing is pending, or to the best of such Party’s knowledge, is threatened.  The non-breaching Party shall have the right to immediately terminate this Agreement if the representation and warranties in Section 11.1.6 is or becomes untrue.

11.2Sunovion.  Sunovion hereby represents, warrants and covenants to Urovant that:

11.2.1it will perform the Services in accordance with Applicable Law; and

11.2.2it will ensure that any Product Contracts include obligations with respect to compliance with laws (or a right to indemnification for a counterparty’s failure to comply with laws) and obligations of confidentiality no less restrictive than those included in this Agreement, subject to any customary qualifications ordinarily applied to such obligations;

11.2.3it has obtained and will maintain, at all times during the Term, the required licenses, permits and authorizations necessary to provide the Services and commercialize the Products in the Territory; and 

 

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11.2.4it will not employ or contract with any individual or entity to perform any of the Services under this Agreement who is debarred, disqualified, excluded, or otherwise sanctioned by any local, state, federal, or international governmental body, or is subject to an administrative, civil, or criminal proceeding which could result in such sanctions by a governmental body.

11.3Urovant.  Urovant hereby represents, warrants, and covenants to Sunovion that:

11.3.1it will perform its obligations in furtherance of the Services in accordance with Applicable Law;

11.3.2it will provide current, accurate and complete sales and pricing data under the Urovant Government Contracts, Urovant Market Access Contracts, or otherwise to Sunovion for purposes of Sunovion’s performance of the Services;

11.3.3it will obtain and maintain, at all times during the Term, the required licenses, permits and authorizations necessary to commercialize the Products in the Territory;

11.3.4the Products (i) are free from defect in design, material and workmanship, (ii) manufactured and commercialized in compliance with Applicable Law, including in accordance with cGMP, (iii) have been approved by FDA prior to sale, (iv) are not articles which may not be introduced into interstate commerce, (v) are not infringing upon the patents, trademarks or other intellectual property rights of any Third Party, and (vi) comply with all traceability aspects of the DSCSA;

11.3.5it will not, directly or indirectly, claim any payment in any form from a government program for any Product utilization for which rebates or chargebacks are payable under an existing Urovant Market Access Contract;

11.3.6it will not, directly or indirectly, enter into any discount arrangement with any Market Access Customer or any other arrangement that could impact the Government Pricing Report without providing prior notice to Sunovion;

11.3.7it will not during the Term, begin any negotiations with, engage, or enter into any agreement with, directly or indirectly, any Wholesaler that is a party to a Wholesaler Contract, Sunovion GPO or Sunovion IDN without the prior written consent of Sunovion;

11.3.8except as expressly permitted by this Agreement, it will not, during the Term and or a period of two (2) years thereafter, meet, communicate or correspond with any Wholesaler that is a party to a Wholesaler Contract, Sunovion GPO or Sunovion IDN regarding any subject that relates to the Services without (i) a representative of Sunovion present at such meeting or as a participant in such communication, or (ii) Sunovion’s prior written approval of such communication; and

11.3.9it will not, during the Term and for a period of two (2) years thereafter, actively solicit, directly or indirectly, the employment of any employee of a 3PL Provider, subject to customary exceptions for general solicitations not directly targeted at such employees.

For clarity, nothing in Section 11.3.7 shall restrict Urovant from negotiating with, engaging or entering into any agreement with a GPO or IDN that is not a Sunovion GPO or Sunovion IDN.

 

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12.INDEMNIFICATION; LIMITATION OF LIABILITY

12.1Indemnification by Sunovion.  Sunovion agrees to indemnify, defend and hold Urovant, its Affiliates, and its and their respective officers, directors, employees, subcontractors, and agents (collectively, the “Urovant Indemnitees”) harmless from and against any and all Losses resulting from any Claims by a Third Party to the extent such Claim results from, arises from or out of, relates to, is in the nature of, or is caused by: (i) any non-compliance of any federal, state or local governmental laws, rules, regulations or statutes by a 3PL Provider that is a party to a 3PL Contract, where such non-compliance relates to such 3PL Provider’s failure to hold all necessary licenses, permits, and authorizations necessary to provide the 3PL Services or otherwise damages Urovant, (ii) a breach of any representation, warranty or covenant of Sunovion set forth in this Agreement, and (iii) the negligence, gross negligence or willful misconduct of Sunovion in connection with this Agreement; except, in each case, to the extent that such Losses (or part thereof) results from a Claim that is an indemnifiable event pursuant to Section 12.2, in which case Urovant shall indemnify the Sunovion Indemnitees for such Losses (or part thereof) in accordance with Section 12.2.

12.2Indemnification by Urovant.  Urovant agrees to indemnify, defend and hold Sunovion, its Affiliates, and its and their respective officers, directors, employees, permitted subcontractors and permitted agents (collectively, the “Sunovion Indemnitees”) harmless from and against any and all Losses resulting from any Claims by a Third Party to the extent such Claim results from, arises from or out of, relates to, is in the nature of, or is caused by: (i) death of, or bodily injury to, any person on account of the use of any Product, (ii) disputes that arise between Urovant and a Market Access Customer, Government Entity, or a GPO or IDN that is not a Sunovion GPO or Sunovion IDN that relate to a Urovant Market Access Contract, Urovant Government Contract, or a Urovant GPO/IDN Contract, respectively, (iii) disputes that arise between Sunovion or Urovant and a Wholesaler, Sunovion GPO, or Sunovion IDN that relate directly to a Product; provided that if such dispute does not solely relate to a Product, then the Parties shall negotiate in good faith an appropriate allocation of responsibility under the circumstances; (iv) any recall, quarantine, warning or withdrawal of any Product, (v) government pricing calculations performed by Sunovion on behalf of Urovant in connection with the GPR Services; provided that such calculations were performed by Sunovion in accordance with Sunovion’s government price calculation methodologies approved by Urovant pursuant to Section 5.5, (vi) a breach of any representation, warranty or covenant of Urovant set forth in this Agreement, and (vii) the negligence, gross negligence or willful misconduct of Urovant in connection with this Agreement; except, in each case, to the extent that such Losses (or part thereof) results from a Claim that is an indemnifiable event pursuant to Section 12.1, in which case Urovant shall indemnify the Sunovion Indemnitees for such Losses (or part thereof) in accordance with Section 12.1. 

12.3Indemnification Procedure.  The indemnifying party’s agreement and obligation to indemnify, defend and hold the other harmless is conditioned on the indemnified party: 

12.3.1promptly providing written notice to the indemnifying party of any Claim resulting from, arising from or out of, relating to, in the nature of, or caused by the indemnified activities set forth in Section 12.1 and Section 12.2, at most within thirty (30) days after becoming aware of such Claim; provided that failure to provide prompt notice will relieve the indemnifying party of its indemnification obligations only to the extent that indemnifying party has been materially prejudiced as a result of such failure;

12.3.2permitting the indemnifying party to assume full responsibility to select its choice of counsel, investigate, prepare for and defend against any such Claim; provided that the indemnified party shall have the right to retain separate legal counsel and participate in any defense of any Claim at its own expense;

 

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12.3.3reasonably assisting the indemnifying party, at the indemnifying party’s reasonable expense, in the investigation of, preparation for, and defense of any such Claim; and

12.3.4not compromising or settling such Claim without the indemnifying party’s written consent.  

The indemnifying party may not, without the indemnified party’s written consent, compromise or settle any Claim resulting from, arising from or out of, relating to, in the nature of, or caused by the indemnified activities set forth in Section 12.1 and Section 12.2 if such compromise or settlement admits liability on behalf of or imposes any restrictions or obligations on the indemnified party.  The indemnifying party shall make quarterly payments to the indemnified parties for any documented Losses resulting from such Claim.

12.4Limitations of Liability. 

12.4.1EXCEPT WITH REGARD TO (A) OBLIGATIONS UNDER SECTION 12.1 AND SECTION 12.2 (INDEMNIFICATION), AND (B) DAMAGES ARISING FROM A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD, IN NO EVENT SHALL A PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, EXEMPLARY, PUNITIVE, AND SPECIAL DAMAGES.

12.4.2EXCEPT WITH REGARD TO LOSSES ARISING FROM A PARTY’S (A) A BREACH OF SECTION 9 (CONFIDENTIALITY), (B) OBLIGATIONS UNDER SECTION 12.1 AND SECTION 12.2 (INDEMNIFICATION), (C) FAILURE TO COMPLY WITH APPLICABLE LAW, (D) GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AND (E) FRAUD, IN NO EVENT SHALL SUNOVION’S LIABILITY FOR LOSSES IN CONNECTION WITH THIS AGREEMENT EXCEED THREE (3) TIMES THE SERVICE CHARGES ACTUALLY PAID BY UROVANT TO SUNOVION UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTH PERIOD PRECEDING THE EVENT GIVING RISE TO SUCH LOSSES.

12.4.3 Notwithstanding anything to the contrary in this Agreement, (i) Sunovion shall have no liability for third party claims SOLELY arising out of government pricing calculations performed by Sunovion on behalf of UROVANT under THIS Agreement; provided that such calculations were performed by Sunovion in accordance with Sunovion’s government price calculation methodologies approved by UROVANT PURSUANT TO SECTION 5.5, and (ii) to the extent any Products are lost or damaged while in the custody of a 3PL Provider, UROVANT hereby agrees to the loss and damage limitations set forth in the applicable contract between Sunovion and such 3PL Provider and Sunovion shall have no liability with respect thereto OTHER THAN TO USE COMMERCIALLY REASONABLE EFFORTS TO ENFORCE SUCH CONTRACT.

13.INSURANCE

13.1Urovant Insurance.  Urovant shall (a) maintain (i) general liability insurance including premises and operations, broad form property damage, independent contractors, and contractual liability covering its obligations under this Agreement, with a combined single limit of not less than $2,000,000 on a per occurrence and aggregate basis, and (ii) product liability insurance including contractual liability for all products and completed operations and any work supplied pursuant to the terms and conditions of this Agreement, not less than $10,000,000 on a per occurrence and aggregate basis, and (b) add Sunovion as an additional insured to all of the above stated policies.

 

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13.2Sunovion Insurance.  Sunovion shall (a) maintain (i) general liability insurance including premises and operations, broad form property damage, independent contractors, and contractual liability covering its obligations under this Agreement, with a combined single limit of not less than $2,000,000 on a per occurrence and aggregate basis, and (ii) product liability insurance including contractual liability for all products and completed operations and any work supplied pursuant to the terms and conditions of the Agreement, not less than $10,000,000 on a per occurrence and aggregate basis, and (b) add Urovant as an additional insured to all of the above stated policies.  

13.3Claims-Made Policies.  If any of the above stated policies are on a claims-made basis, then the insured party shall maintain such policy in effect through a period of not less than one (1) year following the termination or expiration of this Agreement.

14.TERM; TERMINATION

14.1Term.  This Agreement shall become effective as of the Effective Date and, unless earlier terminated pursuant to the terms of this Agreement, shall continue in full force and effect for three (3) years (the “Initial Term”).  Thereafter, this Agreement will automatically extend for additional one (1) year periods (each, a “Renewal Term”, each Renewal Term collectively with the Initial Term, the “Term”), unless either Party provides the other Party written notice of termination of this Agreement not later than nine (9) months prior to the expiration of the Initial Term or any Renewal Term, in which case this Agreement shall terminate upon the expiration of the Initial Term or then current Renewal Term. 

14.2Termination by for Material Breach.  Either Party may terminate this Agreement upon sixty (60) days prior written notice to the other Party if the other Party materially breaches this Agreement and fails to cure the breach during such notice period.

14.3Termination for Insolvency.  Subject to applicable bankruptcy laws, either Party may terminate this Agreement effective immediately in the event that the other Party: (i) has become insolvent (defined as such Party being subject to a voluntary or involuntary bankruptcy petition which is not dismissed ) or has been dissolved or liquidated, has filed itself a petition, case or other proceeding under the applicable bankruptcy laws relating to bankruptcy, dissolution, liquidation, winding up or reorganization; (ii) makes a general assignment for the benefit of creditors; or (iii) has a receiver, custodian, trustee or other person exercising similar functions appointed for all or substantially all of its assets.

14.4Termination by Sunovion.  In the event of a Change of Control of Urovant, Sunovion may terminate this Agreement upon ten (10) days prior written notice to Urovant (or its successor).

14.5Termination by Urovant.

14.5.1Upon written notice to Sunovion, Urovant may terminate this Agreement if Sunovion has failed [* * *]; provided that prior to any such termination by Urovant, the Parties will cooperate in good faith to identify and negotiate in good faith the execution of alternative services that may be provided to Urovant by Sunovion in lieu of such termination; provided further that if Sunovion fulfils all of its obligations pursuant to Section 4.2.1 before Urovant terminates this Agreement pursuant to this Section 14.5.1, then Urovant shall no longer have the right to terminate this Agreement pursuant to this Section 14.5.1.

14.5.2Urovant may terminate this Agreement if Sunovion has failed [* * *]; provided that prior to any such termination by Urovant, the Parties will cooperate in good faith to identify and negotiate in good faith the execution of alternative services that may be provided to Urovant by Sunovion in lieu of such termination; [* * *].

 

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14.5.3In the event of a Change of Control of Sunovion, Urovant may terminate this Agreement upon ten (10) days prior written notice to Sunovion (or its successor).

14.5.4Urovant may terminate this Agreement for any reason upon ninety (90) days’ prior written notice, provided that such termination shall only be effective upon the expiration of such ninety (90) day period if Sunovion has received the Break-Up Fee.

14.6Effect of Termination or Expiration.  

14.6.1Upon expiration of this Agreement or termination of this Agreement for any reason, neither Urovant nor Sunovion will have any further obligations under this Agreement, except that:

(a)any liabilities that relate to the Services and that arise before, on, or after the termination or expiration this Agreement shall be the responsibility of Urovant even if claims for such liabilities are first made after the termination or expiration this Agreement;

(b)each Party will promptly return to the other Party all Confidential Information and all copies of Confidential Information associated with this Agreement, provided that each Party may retain one copy of Confidential Information to determine its obligations hereunder; and

(c)the terms and conditions under Sections 1 (Definitions), 8.2 (Fees; Invoices; Payments), 8.3 (Taxes), 9 (Confidentiality), 10 (Ownership; Inventions), 12 (Indemnification; Limitation of Liability), 14.6 (Effect of Termination or Expiration) and 15 (Miscellaneous) will survive any such termination or expiration of this Agreement.

14.6.2Upon notice of termination of this Agreement pursuant to Section 14.5.4, Urovant shall pay to Sunovion, prior to the effective date of such termination, a break-up fee of (a) [* * *], if this Agreement is terminated within one (1) year of the Effective Date; and (b) [* * *], if this Agreement is terminated within two (2) years of the Effective Date (each, (a) and (b), a “Break-Up Fee”).

15.MISCELLANEOUS

15.1Publicity.  Neither party may use the other Party’s name or company artwork (for example, logo) on a website or in any form of advertising, promotion or publicity, including press releases, without the prior written consent of the other Party.  This term does not restrict a Party’s ability to use the other party’s name in filings with the United States Securities and Exchange Commission or foreign equivalent, the United States Food and Drug Administration, or other governmental agencies, or when required by law to make a public disclosure.

15.2Inspections; Other Proceedings.  Each Party shall promptly notify the other Party upon receiving notice of an inspection, audit, enforcement action, or request for information by any regulatory or enforcement authority concerning this Agreement, the Services, or the Products (“Governmental Contact”).  The Party in receipt of the Governmental Contact shall provide copies of any regulatory filings or formal communications concerning the other Party, this Agreement, the Services, or the Products to such other Party.

 

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15.3Notices.  All notices must be in writing and sent to the address for the recipient set forth below or at such other address as the recipient may specify in writing under this procedure.  All notices must be given (a) by personal delivery, with receipt acknowledged, or (b) by first class, prepaid certified or registered mail, return receipt requested, or (c) by prepaid national express delivery service.  Notices will be effective upon receipt or at a later date stated in the notice.

 

		
	
If to SUNOVION:
	
If to UROVANT:

	
 

Sunovion Pharmaceuticals Inc.

84 Waterford Drive

Marlborough, MA 01752

Attn: President and CEO
	
 

Urovant Sciences, Inc.

Urovant Sciences GmbH 

5281 California Avenue, Suite 100

Irvine, CA 92617

Attn: President and CEO

	
 
	
 

	
With a copy to:

 

Sunovion Pharmaceuticals Inc.

84 Waterford Drive

Marlborough, MA 01752

Attn: General Counsel
	
With a copy to:

 

Urovant Sciences, Inc.

5281 California Avenue, Suite 100

Irvine, CA 92617

Attn: General Counsel

 

	
With a copy to (which shall not constitute notice):

 

Reed Smith LLP

506 Carnegie Center, Suite 300

Princeton, NJ 08540-7839

Attn: Diane Frenier
	
With a copy to (which shall not constitute notice):

 

O’Melveny & Myers LLP

610 Newport Center Drive, Suite 1700

Newport Beach, CA 92648

Attn: Mark Peterson

 

 

15.4Assignment.  Neither Party will assign, transfer or otherwise dispose of this Agreement in whole or in part to any Third Party without the prior written consent of the other Party; provided that each Party may assign this Agreement, in whole or in part, to any Affiliate; provided that such Affiliate remains an Affiliate of the initial Party during the Term.  Any assignment in violation of this Section 15.4 shall be null and void.  No assignment will relieve either Party of the performance of any accrued obligation that such Party may then have under this Agreement.  This Agreement shall be binding upon, and inure to the benefit of the Parties and their respective legal representatives, heirs, successors and permitted assigns.

15.5Change of Control.  

15.5.1Each Party (or its successor) shall provide the other Party with written notice of any Change of Control within five (5) days following the closing date of such transaction.

15.5.2If: (a) Urovant undergoes a Change of Control and Sunovion does not terminate this Agreement pursuant to Section 14.4, or (b) Sunovion undergoes a Change of Control and Urovant does not terminate this Agreement pursuant to Section 14.5.4, then, in each case, the Party that undergoes a Change of Control shall: (x) ensure that all activities performed by or on behalf of such Party for the benefit of its successor are kept separate from the activities performed under or in connection with this Agreement; and (y) establish and cause its applicable Affiliates to establish reasonable internal safeguards that prevent any Confidential Information of the other Party from being utilized for the benefit of successor of the Party that undergoes a Change of Control.

 

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15.6Independent Contractor.  All Services will be rendered by Sunovion as an independent contractor of Urovant for federal, state and local income tax purposes and for all other purposes.  Neither Party will represent itself to be a partner or joint venturer of or with the other Party. 

15.7Severability; Reformation.  If for any reason a court of competent jurisdiction finds any provision of this Agreement or any portion of such a provision to be invalid or unenforceable, such provision will be reformed to the extent required to make the provision valid and enforceable to the maximum extent permitted by Applicable Law.

15.8Entire Agreement.  This Agreement, including the attached Exhibits, each of which is incorporated herein, constitutes the entire agreement between the Parties with respect to the specific subject matter of this Agreement, and supersedes all negotiations, prior discussions, agreements or understandings, whether written or oral, with respect to the subject matter hereof.

15.9Force Majeure.  Nonperformance of either Party shall be excused to the extent that such performance is rendered impossible by fire, flood, earthquake, mass disaster, governmental acts, orders or restrictions (including shelter-in-place orders, quarantine orders or curfews), terrorism, epidemic, pandemic (including COVID-19) or any other reason where failure to perform is beyond the reasonable control of the non-performing Party and is not caused by the non-performing Party’s negligence.  If any condition contemplated by this Section 15.9 shall continue for a period of sixty (60) days, the non-breaching Party shall have the option of terminating this Agreement and, in such event, neither Party shall incur any liability for performance or payment other than for the Services satisfactorily provided up to and including the date of termination.

15.10Waiver.  No waiver of any term, provision or condition of this Agreement in any one or more instances will be deemed to be or construed as a further or continuing waiver or a waiver of any other term, provision or condition of this Agreement.  Any such waiver must be evidenced by an instrument in writing executed by an officer authorized to execute such waivers.

15.11Governing Law. The validity, interpretation and enforcement of this Agreement, matters arising out of or related to this Agreement or its making, performance or breach, and related matters shall be governed by the laws of the State of Delaware without reference to choice of law doctrine.  The Parties expressly reject any application to this Agreement of (a) the United Nations Convention on Contracts for the International Sale of Goods, and (b) the 1974 Convention on the Limitation Period in the International Sale of Goods, as amended by that certain Protocol, done at Vienna on April 11, 1980.

15.12Dispute Resolution.  

15.12.1Subject to Section 7.1 and 7.2, if a dispute arises between the Parties in connection with or relating to this Agreement, including disputes that arise within the scope of the JGC, or any document or instrument delivered in connection herewith (a “Dispute”), it shall be resolved pursuant to this Section 15.12.  Any Dispute shall first be referred to the Chief Executive Officers of the Parties, who shall confer in good faith on the resolution of the issue.  Any final decision mutually agreed to by the Chief Executive Officers shall be conclusive and binding on the Parties.  If the Chief Executive Officers are not able to agree on the resolution of any such issue within thirty (30) days (or such other period of time as mutually agreed by the Chief Executive Officers) after such issue was first referred to them, then, either Party may, by written notice to the other Party, elect to escalate the Dispute to DSP.  In the event that DSP is unable to resolve a Dispute, a Party may submit such Dispute to non-binding mediation.  In the even that non-binding mediation is unable to resolve such Dispute, a Party shall submit such Dispute to binding arbitration in accordance with Section 15.12.2.

 

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15.12.2If any Dispute has not been resolved by good faith negotiations between the Parties pursuant to Section 15.12.1, then the Parties shall endeavor to settle the dispute by submitting the matter to binding arbitration by the American Arbitration Association (“AAA”) in New York, New York.  Such arbitration may be conducted under the commercial rules then in effect for the AAA except as provided herein.  All such proceedings shall be held in English and a transcribed record prepared in English.  Each Party shall choose one (1) arbitrator within thirty (30) days of receipt of notice of the intent to arbitrate.  Such arbitrators shall thereafter choose a third arbitrator within thirty (30) days of their appointment.  Any arbitrator chosen by the Parties or arbitrators will not have a material financial interest in any Party and will have significant experience with the arbitration of similar large, complex, commercial disputes between pharmaceutical companies.  Each Party in any arbitration proceeding commenced hereunder shall bear such Party’s own costs and expenses (including expert witness and attorneys’ fees) of investigating, preparing and pursuing such arbitration claim.  Nothing in this Agreement shall be deemed as preventing either Party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over the Parties and the subject matter of the dispute as necessary to protect either Party’s name, intellectual property or Confidential Information.  If the Dispute involves scientific or technical matters, any arbitrator chosen hereunder shall have educational training and/or experience sufficient to demonstrate a reasonable level of knowledge in the applicable field.  The award rendered by the arbitrators with respect to such Dispute shall be written, final and non-appealable, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The existence and contents of the arbitration shall be kept confidential by each Party except to the extent that disclosure may be required to fulfil a legal duty, protect or pursue a legal right, or enforce or challenge an award in legal proceedings.

15.13Headings; Interpretation.  This Agreement contains headings only for convenience and the headings do not constitute a form or part of this Agreement, and should not be used in the construction of this Agreement.  Except where the context expressly requires otherwise: (i) the use of any gender herein shall be deemed to encompass references to either or both genders, and the use of the singular shall be deemed to include the plural (and vice versa); (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (iii) the word “will” shall be construed to have the same meaning and effect as the word “shall”; (iv) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); (v) any reference herein to any Person shall be construed to include the Person’s successors and assigns; (vi) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof; (vii) all references herein to Sections, or Exhibits shall be construed to refer to Sections, or Exhibits of this Agreement, and references to this Agreement include all Schedules hereto; (viii) the word “notice” means notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement; (ix) provisions that require that a Party, the Parties or any committee hereunder “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise, including by e-mail; (x) unless stated otherwise, references to any specific law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof; (xi) the term “or” shall be interpreted in the inclusive sense commonly associated with the term “and/or”; and (xii) each Party has used its legal counsel in the negotiation of this Agreement, and the Agreement will not be construed against either Party as the drafter.

15.14Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original, and all of which together will constitute one and the same instrument.

[Signature Page to Follow]

 

 

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in duplicate by their duly authorized representatives, effective as of the Effective Date.

 

	
Sunovion Pharmaceuticals Inc.
	
 
	
Urovant Sciences GmbH

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
/s/ Thomas Gibbs
	
 
	
By:
	
 
	
/s/ Sascha Bucher

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Name:
	
 
	
Thomas E. Gibbs
	
 
	
Name:
	
 
	
Sascha Bucher

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Title:
	
 
	
SVP, Chief Commercial Officer
	
 
	
Title:
	
 
	
Director

 

 

 

 

Confidential & Proprietary

[Signature Page to Market Access Services Agreement]

 

EXHIBIT A

3PL Services

	
 
	
1.
	
Upon request by a 3PL Provider, Sunovion shall facilitate communication between Urovant and such 3PL Provider to which a Product has been consigned; and

	
 
	
2.
	
Any other services (which may result in additional fees being added to this Agreement, subject to customary, good faith negotiation) that are agreed upon in writing by the Parties from time to time.

 

 

 

Confidential & Proprietary

 

Exhibit B

Wholesaler, gpo, and idn services

	
 
	
1.
	
Sunovion shall manage and process all orders (and adjustments thereto) for Products from Wholesalers and GPO/IDNs in accordance with the terms and conditions of the applicable Wholesaler Contract or GPO/IDN Contract, which shall consist of: (i) the necessary interaction with the applicable Wholesaler, GPO, or IDN to process orders of the Products, (ii) causing the shipment of the Products to the applicable Wholesaler via a 3PL Provider, and (iii) submission of invoices to an applicable Wholesaler or GPO/IDN for such Products;

	
 
	
2.
	
Upon Sunovion’s receipt of payment from a Wholesaler for an applicable invoice, Sunovion shall transfer such amount to the Escrow Fund, or a separate fund as agreed upon by the Parties in writing;

	
 
	
3.
	
Sunovion shall process returns of the Products from Wholesalers in accordance with the terms and conditions of the applicable Wholesaler Contract;

	
 
	
4.
	
Sunovion shall communicate all quality complaints and adverse event reports related to a Product received by Sunovion in connection with a Wholesaler Contract to Urovant or Urovant’s designee in a timely manner consistent with Applicable Law and the policies and procedures agreed upon by the Parties; and

	
 
	
5.
	
Any other services (which may result in additional fees being added to this Agreement, subject to customary, good faith negotiation) that are agreed upon in writing by the Parties from time to time.

 

 

Confidential & Proprietary

 

EXHIBIT C

CONTRACTING SERVICES

	
 
	
1.
	
Sunovion shall incorporate the necessary information from each of the Urovant Market Access Contracts, Urovant Government Contracts, and Urovant GPO/IDN Contracts into the necessary Sunovion systems to facilitate performance of the RCP Services and GPR Services; and

	
 
	
2.
	
Any other services (which may result in additional fees being added to this Agreement, subject to customary, good faith negotiation) that are agreed upon in writing by the Parties from time to time.

 

 

Confidential & Proprietary

 

EXHIBIT D

RCP SERVICES

	
 
	
1.
	
Sunovion shall validate all invoices received from Market Access Customers, Sunovion GPOs, GPOs that are not Sunovion GPOs, Sunovion IDNs, IDNs that are not Sunovion IDNs, Wholesalers, 3PL Providers, or others for RCP Payments to ensure such invoices apply to eligible utilization of the applicable Products only, using a validation process agreed upon by the Parties;

	
 
	
2.
	
Sunovion shall process and pay, using funds from the Escrow Fund, all: (i) validated rebate invoices and claim submissions received from a Payor or a Government Entity related to the applicable Products (such payment, the “Rebate Payment”), and (ii) applicable administrative fees on eligible utilization owed to the applicable Payor related to the applicable Products (such fees, the “Payor Fees”), in each case, pursuant to the terms of an applicable Urovant Market Access Contract or Urovant Government Contract;

	
 
	
3.
	
Sunovion shall: (i) account for all chargeback submissions received from Wholesalers and Government Entities, in each case, for the Products (such amount, the “Chargeback Offsets”), and (ii) process and pay, using funds from the Escrow Fund: (a) all valid distribution fees or similar service fee claims received from a Wholesaler pursuant to an applicable Wholesaler Contract related to the Products (such fees, the “DS Fees”), and (b) applicable administrative fees owed to the applicable Sunovion GPO, GPOs that are not Sunovion GPOs, Sunovion IDNs, and IDNs that are not Sunovion IDNs related to the Products (such fees, the “GPO/IDN Fees”), in each case, pursuant to the terms of the Wholesaler Contract, GPO/IDN Contract or Urovant GPO/IDN Contract, as applicable;

	
 
	
4.
	
Sunovion shall: (i) process adjustments to RCP Payments consistent with the applicable contract, and (ii) subject to Section 7.1, escalate contracts disputes related to the applicable Product that arise under the Wholesaler Contracts, GPO/IDN Contracts, Urovant GPO/IDN Contracts, Urovant Market Access Contracts and Urovant Government Contracts to Urovant; and

	
 
	
5.
	
Any other services (which may result in additional fees being added to this Agreement, subject to customary, good faith negotiation) that are agreed upon in writing by the Parties from time to time.

 

 

 

Confidential & Proprietary

 

EXHIBIT E

GPR SERVICES

	
 
	
1.
	
Sunovion shall, solely with respect to the Products and to enable Urovant to comply with its submission requirements to Centers for Medicare and Medicaid Services, the Health Resources and Services Administration, and the VA, provide to Urovant the applicable price reporting metrics required under the Medicaid Rebate Program, the PHS 340B Program, Medicare Part B, the VA Federal Supply Schedule contract, and the VA Master Agreement (“Government Pricing Programs”), including : (i) the monthly AMP within twenty five (25) days after the end of each calendar month, and (ii) the ASP, Best Price, quarterly AMP, 340B Ceiling Price, the Non-FAMP, and other metrics required under the Government Pricing Programs within twenty five (25) days after the end of each calendar quarter or other applicable reporting period, in each case (i) and (ii), such metrics shall be determined in accordance with Applicable Law and [* * *] and shall be reported to Urovant in a form and format agreed to by the Parties (each, a “Government Pricing Report”).  Sunovion acknowledges and agrees that each Government Pricing Report shall be delivered timely to Urovant. 

	
 
	
2.
	
Sunovion shall certify to Urovant that each such Government Pricing Report provided by Sunovion to Urovant is accurate and consistent with Sunovion’s methodologies, policies and procedures.

	
 
	
3.
	
[* * *].

	
 
	
4.
	
Any other services, including any services related to state supplemental Medicaid rebate agreements (which may result in additional fees being added to this Agreement, subject to customary, good faith negotiation) that are agreed upon in writing by the Parties from time to time.

 

 

 

Confidential & Proprietary

 

EXHIBIT F

REGULATORY SERVICES

	
 
	
1.
	
Sunovion shall: (i) interface with the applicable Wholesalers, and (ii) cooperate with Urovant, in each case, in the event that a Product is recalled or is subject to an investigation under DSCSA for being a suspect or illegitimate product, or is otherwise subject to a product hold; and (iii) not, except as required by Applicable Law, provide any communication to any regulatory or other Third Party, including customers of the Products, without prior written consent of Urovant; and

	
 
	
2.
	
Any other services (which may result in additional fees being added to this Agreement, subject to customary, good faith negotiation) that are agreed upon in writing by the Parties from time to time.

 

 

Confidential & Proprietary

 

EXHIBIT G

SUNOVION REPORTS

	
 
	
•
	
[* * *]:

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]:

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *]:

	
 
	
•
	
[* * *]

	
 
	
•
	
[* * *] 

 

 

Confidential & Proprietary

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