Document:

Exhibit 10.1

 

Confidential
materials omitted and filed separately with the Securities and Exchange Commission. Asterisks (***) denote omissions.

 

LICENSE AGREEMENT

 

This License Agreement made and entered
into this 23rd day of June, 2017 (the “Effective Date’) by and between;

 

Himatsingka America, Inc., a Delaware
corporation having its principal place of business at 261 Fifth Avenue, Suite 1400, New York, New York (“HAI”), which
expression shall, where the context admits, include its successors and permitted assigns, of the ONE PART

 

AND

 

Applied DNA Sciences, Inc., a Delaware
corporation, having its principal place of business at 50 Health Sciences Drive, Stony Brook, New York 11790 (“ADNAS”),
and APDN (B.V.I.) Inc., a British Virgin Islands corporation, having an address at 50 Health Sciences Drive, Stony Brook, New York
11790 (“APDN”), which expressions shall, where the context admits, include their successors and permitted assigns,
of the OTHER PART

 

HAI, ADNAS and APDN are hereinafter collectively
referred to as the “Parties” and individually, as a “Party”.

 

WHEREAS, ADNAS and Divatex Home Fashion,
Inc., a predecessor to HAI, entered into a Mutual License Agreement dated March 25, 2015 (the “MLA”) relating to intellectual
property owned by the Parties;

 

WHEREAS, the Parties are desirous of
entering into a new Agreement dealing with the intellectual property of the Parties as well as certain related matters; and

 

WHEREAS, upon execution of this Agreement
the MLA shall be deemed mutually terminated by the Parties, and this Agreement shall be the only agreement between the parties
with regards to the subject matter set forth herein.

 

NOW WHEREFORE, the Parties agree as
follows:

 

		1.	DEFINITIONS

 

		(a)	“ADNAS Marks” shall mean the applieddnasciences®, Signature® T, FiberTyping®,
geotyping trademarks and all variations thereof and logos associated therewith, and shall also include all future trademarks developed
by ADNAS which are used to identify any technology licensed by HAI hereunder.

 

		(b)	“Affiliate” shall mean with respect to a Party, any entity or person that, directly
or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Party. For purposes
of their definition, “control” (a) means ownership, directly or through Affiliates of (i) more than fifty percent (50%)
of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or (ii) more than fifty percent
(50%) of the equity interests in the case of any other type of legal entity or status as a general partner in any partnership,
or (b) any other arrangement whereby an entity or person has the right to elect a majority of the Board of Directors or equivalent
governing body of a corporation or other entity or the right to direct the management and policies of a corporation or other entity.

 

     

     

    

  

		(c)	“Agreement” shall mean this License Agreement.

 

		(d)	“Backup License” shall mean a worldwide, sub-licensable, non-transferable, royalty-
bearing license to the Signature T Technology and the Typing Technologies for use solely on cotton Products and which shall be
exclusive to HAI and its Affiliates with respect to cotton Products.

 

		(e)	“Backup License Event” means the events as described in section 6(v).

 

		(f)	“BL Exercise” shall mean written notice to ADNAS of HAI’s intention to
exercise its rights under the Backup License.

 

		(g)	“Blended Products” shall mean any Products comprised of both synthetic and cotton
fibers.

 

		(h)	“FiberTyping” shall mean the analysis of cotton chloroplast DNA to detect specific
known length and/or sequence polymorphisms for the purpose of identifying the extent of Gossypium barbadense and/or gossypium hirsutum
present in cotton fabric, including Licensor’s patented technology for such analysis.

 

		(i)	“GeoTyping” shall mean the analysis of cotton chloroplast DNA to detect specific
known length and/or sequence polymorphisms for the purpose of identifying the different cultivars and/or regionality in mature
cotton fiber, including Licensor know-how associated therewith and any future patented technology of Licensor for such analysis.

 

		(j)	“HAI Marks” shall mean the PIMACOTT® brand and logo, GizaCott, AmeriCott
and HomeGrown trademarks of HAI and all variations thereof, and shall also include all future trademarks developed by HAI which
connote the use of the Licensed Patents or Licensed Know-How with respect to Products.

 

		(k)	“Home Products” shall mean finished home textile products made from cotton,
including without limitation, sheets, pillowcases, duvets, shams, quilts, comforters, blankets, pillows, towels, window coverings,
upholstery, draperies and rugs.

 

		(l)	“Licensed Know-How” shall mean unpublished research and development, unpatented
inventions (including inventions for which patent protection has expired), trade secrets and technical data and information which
is now or hereafter owned by or in the possession of Licensor and which are related to or directed to or used in connection with
the Signature T Technology and/or the Typing Technologies or useable in connection with the application of the Signature T Technology
or the Typing Technologies to Products.

 

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		(m)	“Licensed Patents” shall mean all patents and patent applications of Licensor,
whether owned, currently filed or filed after the Effective Date of this Agreement, including all divisional, continuations, continuations-in-part,
re-examination, re-issues and extensions thereof, utilizing models, designs, innovation patents or any equivalent right, which
are related to or directed to or used in connection with the Signature T Technology and/or the Typing Technologies or useable in
connection with the application of the Signature T Technology or the Typing Technologies to Products. A list of certain specific
current Licensed Patents is attached as Exhibit A.

 

		(n)	“Licensing Revenue” shall mean royalties and fees received by HAI or its Affiliates
in connection with the licensing for use in Non-Home Products of those of HAI’s trademarks which connote use of the Licensed
Patents or Licensed Know-How and/or in connection with the sub-licensing of the Licensed Patents or Licensed Know-How (and shall
not, for the avoidance of doubt, include the sale price of any Products).

 

		(o)	“Licensor” shall mean, collectively, ADNAS, APDN and all other Affiliates of
ADNAS.

 

		(p)	“Net Sales” shall mean gross invoiced sales by HAI and its Affiliates of DNA
tagged yarn to Non-Home Customers less all statutory deductions, shipping and handling, taxes, discounts and allowances.

 

		(q)	“Non-Home Customers” shall mean all customers of HAI and its Affiliates in respect
of Non-Home Products.

 

		(r)	“Non-Home Products” shall mean finished products made from cotton which are
not Home Products.

 

		(s)	“Products” shall mean Unfinished Cotton, Home Products and Non-Home Products.

 

		(t)	“Referred Non-Home Customer” shall mean potential customer opportunities identified
and referred by ADNAS to HAI in respect of Non-Home Products.

 

		(u)	“Signature T Technology” shall mean (a) the technology platform for marking
materials with a Deoxyribonucleic Acid (“DNA”) molecular tag; (b) subsequent authentication of the DNA tags at various
points in the supply chain; (c) reporting the authentication; and (d) includes applicable Licensed Patents and Licensed Know-How.

 

		(v)	“Taggant” shall mean the DNA concentrates used for the marking/tagging of cotton
fiber as part of the Signature T Technology.

 

		(w)	“Territory” shall mean worldwide.

 

		(x)	“Test Report” shall mean a report indicating the results of testing conducted
by ADNAS which shall include the Signature T Technology and/or the Typing Technologies.

 

		(y)	“Third Party” shall mean any entity or person other than ADNAS, APDN,
HAI, or any of their Affiliates.

 

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		(z)	“Transfer Devices” shall mean machines/devices used for the purpose of
applying Taggant on cotton fiber.

 

		(aa)	“Typing Technologies” shall mean FibreTyping and GeoTyping.

 

		(bb)	“Unfinished Cotton” shall mean cotton fiber and all materials and items made
from cotton, including yarn and greige, which is not a finished product.

 

		2.	GRANT OF TECHNOLOGY LICENSE

 

		i.	Licensor hereby grants to HAI and its Affiliates, for the term described in Section 9 worldwide,
exclusive, sub-licensable, royalty-free (except for the royalties specified in Section 5 below) license to all Licensed Patents
and any Licensed Know-How for use in connection with Products in the Territory.

 

		ii.	Notwithstanding the above grant of exclusivity:

 

		a.	ADNAS shall retain a limited right, during the term of this Agreement, to use its FiberTyping technology
for Blended Products for the sole purposes of market surveys and to screen for species compliance. Such market surveys shall be
used only for ADNAS’ internal purposes. In no event shall this limited right be construed as consent by HAI for ADNAS to
use its FiberTyping technology to provide testing or verification of any Blended Products for any third party customers. ADNAS
covenants and agrees that it will make no public claims and that it will not permit any other party to make any public claims relating
to ADNAS’ use of the FiberTyping technology in relation to any Blended Product or that the cotton component of any Blended
Product has been authenticated or verified by ADNAS without HAI’s prior written consent; and

 

		b.	ADNAS shall retain a limited right, during the term of this Agreement, to use in respect of cotton
any of its GeoTyping technologies in connection with only the following: (1) governmental and quasi-governmental entities; (2)
non-governmental (NGO) not-for-profit organizations; (3) non-commercial trade entities and associations; (4) compliance with
commercial seed manufacturer’s seed licensing programs; and (5) the search for human trafficking.

 

		iii.	HAI and/or its Affiliates have no rights to any other intellectual property of Licensor other than
the license granted hereunder to the Licensed Patents, Licensed Know-How, Signature T, and Typing Technologies, as well as the
Backup License, for use in connection with Products in the Territory.

 

		3.	RIGHTS & OBLIGATIONS OF LICENSOR & ADNAS

 

		i.	ADNAS confirms that it will test the Product samples sent by HAI and/or its Affiliates and/or HAI’s
sub-licensees within thirty (30) days of receipt of the Product samples and promptly send the Test Reports to HAI. In no event
shall ADNAS withhold such Test Reports.

 

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		ii.	ADNAS shall provide reasonable technical assistance and reasonably required content to assist and
further the marketing efforts of HAI. ADNAS will continue to use reasonable efforts to develop or identify new technological innovations
to keep pace with the marketplace and provide HAI with prompt information regarding technology advances it may make regarding the
Signature T Technology and the Typing Technologies in order to keep HAI and its personnel updated in support of HAI’s marketing
endeavors.

 

		iii.	ADNAS shall manufacture, supply and provide adequate maintenance support for the Transfer Devices,
as required by HAI, for tagging cotton fiber. The lead time for delivery of a Transfer Device shall be four (4) months, provided
however that at all times ADNAS shall have on hand and available for prompt delivery at least one Transfer Device.

 

		iv.	ADNAS shall ensure that it will supply the Taggant and meet the requirements of HAI and/or its
Affiliates, within six (6) weeks of receiving any orders from HAI and/or its Affiliates. ADNAS shall be responsible for the clear
and proper application of the Taggant on cotton fiber, including the timely monitoring of such application.

 

		v.	ADNAS shall promptly establish and equip an independent testing laboratory in Ahmedabad, India,
to test Products and provide Test Reports for samples sent by HAI and/or its Affiliates and/or HAI’s sub-licensees.

 

		vi.	ADNAS will bear all labor and travel costs of its personnel.

 

		vii.	APDN covenants and agrees not to (and ADNAS covenants and agrees to cause APDN not to), at any
time during the term of this Agreement, commerce, file, petition, enter into, consent to, make or permit any bankruptcy, liquidation,
reorganization, administration or other insolvency proceeding or process, or the appointment of any receiver or trustee for its
assets or business or assignment for the benefit of creditors or other winding up or settlement of affairs with respect to APDN
or its assets or business other than a bankruptcy filing in an appropriate court located in the United States under Title 11 of
the United States Code, as amended.

 

		4.	RIGHTS & OBLIGATIONS OF HAI AND/OR ITS AFFILIATES

 

		i.	HAI and/or its Affiliates shall be solely responsible for promoting, marketing and selling of the
Signature T Technology and the Typing Technologies for use with Products in the Territory and ADNAS will promptly direct any trade
enquiries to HAI.

 

		ii.	HAI and/or its Affiliates shall be solely responsible for maintaining and monitoring the supply
chain management process for Products.

 

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		iii.	HAI will be responsible and shall bear all costs of creating trademarks in furtherance of its marketing
efforts (which trademarks shall be owned by HAI and/or its Affiliates and if any such trademark is used to connote the use of the
Signature T Technology or the Typing Technologies with respect to Products then such trademark shall be deemed included in the
definition of HAI Marks for purposes hereof).

 

		iv.	HAI and/or its Affiliates will pay for the tagging and testing which it requires from time to time
during the entire supply chain process for Products.

 

		v.	Subject to client/customer requirements, during the term of this Agreement: (a) HAI shall
exclusively use ADNAS pursuant to the terms of this Agreement to provide all of its requirements for cotton supply chain security
technologies which use molecular science or genotyping to track, trace and verify cotton purity, and (b) HAI and its Affiliates
shall tag with the Signature T Technology and test with the Typing Technologies, all Products to be sold by HAI or its Affiliates
under any program whereby HAI or its Affiliates commit to any customer that cotton purity will be scientifically tracked, traced
and verified by the tagging of cotton. The foregoing exclusivity covenants shall cease to apply if the Signature T Technology and/or
the Typing Technologies become obsolete or commercially non-viable. If HAI elects to deem the Signature T Technology and/or the
Typing Technologies obsolete or commercially non-viable pursuant to the foregoing, then all technology licenses granted in Section
2 above in respect to such obsolete or commercially non-viable technology shall thereafter be non-exclusive to HAI.

 

		vi.	During the term of this Agreement, HAI agrees to promptly and in good faith consider all legitimate
potential customer opportunities identified by ADNAS to HAI in writing in respect of Non-Home Products. If HAI determines that
it is not commercially reasonable or is under the circumstances not viable to proceed with a business relationship with any such
Referred Non-Home Customer, HAI shall promptly notify ADNAS in writing of its basis for rejecting the opportunity with such Referred
Non-Home Customer and the action or actions such Referred Non-Home Customer would need to take (if any would be possible) for HAI
to reverse such rejection and proceed with the business opportunity. In any case, the decision to accept or reject an opportunity
shall be made in the sole discretion of HAI.

 

		vii.	HAI will bear all labor and travel costs of its personnel.

 

		5.	FINANCIAL MATTERS

 

		i.	Taggant Price: During the term of this Agreement (other than as provided in Section 6),
HAI shall purchase Taggant from ADNAS, with the price of such Taggant to be as follows:

 

		a.	*** *** (US $***) for each pound of pima cotton fiber or organic cotton fiber which can be tagged
with the ordered Taggant; and

 

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		b.	*** *** (US ***) for each pound of upland cotton fiber which can be tagged with the ordered Taggant,
as applicable.

 

		ii.	Ordering, Delivery and Payment for Taggant: HAI shall deliver written orders for such Taggant
to ADNAS indicating the type of cotton to be tagged and other relevant terms, and HAI shall pay ADNAS for such Taggant net 60 days
after the later of (a) the date of delivery thereof, or (b) the date when delivery thereof was requested by HAI in its applicable
order. Shipping of Taggant shall be FOB Stony Brook, New York.

 

		iii.	Transfer Device Costs: The Parties agree to continue their current practice that the cost
of equipment and installation of DNA Transfer Devices will be borne by the individual gins where such Transfer Devices are installed
(and not by HAI or its Affiliates).

 

		iv.	Testing Charges: During the term of this Agreement (other than as provided in Section 6),
HAI will pay for Test Reports as follows:

 

		a.	It is agreed that all cotton fiber testing at the gins will be carried out by ADNAS at no additional
testing charge to HAI, given that raw cotton testing costs are included in the Taggant price. The cotton fiber testing at the gin
will be done at the same level of frequency as is ADNAS’ past practice prior to the Effective Date.

 

		b.	Test Reports from the United States laboratory for testing Unfinished Cotton (excluding raw cotton
fiber), Home Products and Non-Home Products shall be charged to HAI as follows:

 

		(1)	*** to *** Test Reports per year: US $***;

 

		(2)	*** to *** Test Reports per year: US $***; and

 

		(3)	*** to *** Test Reports per year: US $***.

 

		c.	Test Reports from the India laboratory for testing Unfinished Cotton (excluding raw cotton fiber),
Home Products and Non-Home Products shall be charged to HAI as follows:

 

		(1)	*** to *** Test Reports per year: US $***;

 

		(2)	*** to *** Test Reports per year: US $***; and

 

		(3)	*** to *** Test Reports per year: US $***.

 

		d.	ADNAS will invoice monthly for the Test Reports that were uploaded on the ADNAS web portal or the
HAI and/or HAI Affiliate’s web portal, as required by HAI during that month. Unless otherwise agreed, payment for each Test
Report shall be made within sixty (60) days after receipt of such ADNAS invoices.

 

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		v.	Price Adjustment. The pricing for Taggant and Testing Charges set forth in Sections 5(i)
and 5(iv), respectively, shall be increased ***% from the then current pricing every five (5) years from the Effective Date, with
the first such adjustment to occur on the fifth anniversary of the Effective Date.

 

		vi.	Royalty payment: In addition, during the term of this Agreement (other than during a period
when the BL Exercise has occurred and is continuing, in which event Section 6(iv)(d) shall instead apply), ADNAS shall receive
from HAI a royalty equal to the greater of: (A) *** percent (***%) of all Licensing Revenue received by HAI or its Affiliates consisting
of license fees on Non-Home Products, or (B) *** percent (***%) of Net Sales. Such royalty will be payable quarterly in arrears
by HAI after HAI has completed or received financial reports reflecting the relevant revenues for each calendar quarter. For each
calendar quarter, said reports shall be issued to ADNAS within 10 days of the close of the quarter. For the avoidance of doubt,
no licensing royalty shall be payable by HAI with respect to revenues relating to Home Products or Unfinished Cotton for Home Products.

 

		vii.	Audit Rights: Upon the written request of ADNAS, HAI shall permit a qualified accountant
or a person possessing similar professional status, in each case associated with an independent accounting firm acceptable to the
Parties, to inspect during regular business hours and no more than once a year and going back no more than three (3) years preceding
the current year, all or any part of HAI’s records and books necessary to check the accuracy of the royalties paid hereunder.
The accounting firm shall enter into appropriate obligations with HAI to treat as confidential all information it receives during
its inspection. The accounting firm shall disclose to ADNAS and HAI only whether the royalty reports are correct and details concerning
any discrepancies, but no other information shall be disclosed to ADNAS. The fees of the accounting firm shall be paid by ADNAS.
Any failure by ADNAS to exercise its audit rights hereunder with respect to a calendar year within the time period allotted above
shall constitute a waiver by ADNAS of its right to later object to any payments made to ADNAS under this Agreement during such
calendar year. Notwithstanding the foregoing, if the accounting firm conducting an audit determines that there was a deficiency
of at least ten percent (10%) in the amount of royalties which should have been paid to ADNAS, then ADNAS shall be entitled to
have an audit twice per year until such time as the accounting firm determines that any deficiency is less than ten percent (after
which, audit frequency shall revert to once per year).

 

		6.	BACKUP LICENSE

 

		i.	Subject to the terms and conditions of this Agreement upon the occurrence of a Backup License Event,
ADNAS agrees to grant, and hereby grants, to HAI and its Affiliates, with the exceptions set forth below, the Backup License solely
to enable HAI to manufacture Taggant, or have Taggant manufactured, to apply Taggant and to perform the Typing Technologies, to
the extent required to ensure compliance with HAI’s quality assurance protocols. The Backup License shall become effective
only upon the occurrence of a Backup License Event and receipt by ADNAS of the BL Exercise from HAI.

 

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		ii.	In the event of a BL Exercise, HAI shall have the right to grant sublicenses under the Backup License
only to (A) its Affiliates; and/or (B) Third Parties, but only to the extent such sublicense is necessary to perform the contemplated
tagging and testing by using the Signature T Technology and/or the Typing Technologies, upon the terms and conditions of this Agreement.

 

		iii.	The granting by HAI of sublicenses under the Signature T Technology and/or the Typing Technologies
as permitted herein, shall be at the discretion of HAI, and HAI shall have the sole power to determine whether or not to grant
such sublicenses.

 

		iv.	A BL Exercise may occur only while a Backup License Event is continuing. From and after ADNAS’
receipt of the BL Exercise, ADNAS shall have no obligation to perform tagging and testing for HAI. In the event of a BL Exercise,
ADNAS shall cooperate with HAI in effecting the transfer of such technology as is necessary or useful, and shall provide such technical
assistance as may reasonable required, including, without limitation, upon the request of HAI, promptly disclosing all of the Licensed
Know-How in writing to HAI and recommending suitably qualified and experienced personnel for undertaking the responsibilities described
above.

 

		v.	HAI shall not exercise the Backup License granted above unless and until the occurrence of any
one of the following events:

 

		a.	ADNAS ceases its business operations generally or is the subject of a petition in bankruptcy or
for reorganization or receivership, or ceases to function as a going concern or to conduct its operations in the normal course
of business as previously conducted;

 

		b.	ADNAS ceases the manufacture of Taggant, or informs HAI of ADNAS’ intention to cease using
the Signature T Technology; or

 

		c.	subject to Section 23 below, within any period of two (2) consecutive calendar months, ADNAS fails
to perform tagging and/or provide Test Reports as requested by HAI and/or its Affiliates.

 

		vi.	In consideration of the Backup License granted above, HAI shall pay ADNAS a royalty of *** (***%)
of the fees that would otherwise be payable to ADNAS under section 5 with respect to tagging and testing performed during the period
of the BL Exercise.

 

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		7.	LIMITED TRADEMARK LICENSES

 

		i.	ADNAS specifically agrees that all rights in the HAI Marks are the sole property of HAI and except
as provided in this Section 7 are not licensed to ADNAS hereunder, and that ADNAS shall not use such trademarks or any other trademarks
owned by HAI or its Affiliates other than as permitted by this Section 7 or pursuant to a license granted hereafter by HAI. HAI
specifically agrees that all rights in the ADNAS Marks are the sole property of ADNAS and except as provided in this Section 7
are not licensed to HAI hereunder, and that HAI shall not use such trademarks or any other trademarks owned by ADNAS or its Affiliates
other than as permitted by this Section 7 or pursuant to a license granted hereafter by ADNAS.

 

		ii.	During the term of this Agreement, HAI grants to ADNAS a non-exclusive, non-assignable, non-transferable,
royalty-free license to use the HAI Marks solely for the purpose of promoting, marketing and disclosing to its customers, potential
customers and investors the commercialization by HAI and its customers and licensees of the technology of ADNAS (and, for the avoidance
of doubt, not for use on any products of any kind).

 

		iii.	During the term of this Agreement, ADNAS and its Affiliates grant to HAI and its Affiliates a non-exclusive,
non-assignable, non-transferable, royalty-free license to use the ADNAS Marks solely for the purpose of promoting, marketing and
disclosing to customers, potential customers and investors the technology of Licensor licensed hereunder and used by HAI and its
Affiliates, licensees and customers pursuant hereto (and, for the avoidance of doubt, not for use on any products of any kind).

 

		iv.	The Parties confirm and agree that with respect to any use of the marks licensed pursuant to this
Section 7, the Party which owns the marks (the “Owning Party”) has the authority to and shall exercise the following
monitoring and quality control rights: (i) each press release, advertisement, promotional material, web site content, disclosure
document or other material or document (“Materials”) on which the licensee under this Section 7 (the “Mark Licensee”)
proposes to display any of the licensed marks shall be submitted to the Owning Party for its prior written approval before such
Materials are used, (ii) all such Materials shall be of high quality so as to support and enhance the reputation of the Parties,
(iii) all permitted advertising, marketing and promotion using the marks shall be conducted in compliance with all applicable laws
and regulations, (iv) the Mark Licensee agrees to use such trademark notices as the Owning Party may reasonably require in connection
with its use of any of the marks, and (v) in order for the Owning Party to verify the Mark Licensee’s compliance herewith,
the Mark Licensee shall provide the Owning Party with such samples of, and shall allow the Owning Party such access for inspection
of, any Materials bearing any of the marks as the Owning Party may reasonably request from time to time.

 

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		8.	INFRINGEMENT ENFORCEMENT

 

ADNAS shall contest and defend any
Third Party infringement actions relating to any Licensed Patents or Licensed Know-How, and shall take all steps necessary to eliminate
any infringement or interference. Any costs associated with an action brought by ADNAS shall be borne by ADNAS and ADNAS shall
be solely entitled to receive and retain any recovery from any such action. If ADNAS does not file suit against any infringer and
the infringement involves subject matter which is the subject of an exclusive license to HAI, then HAI shall the right, but not
the obligation, to an enforcement action to eliminate such infringement or interference. ADNAS agrees to cooperate as necessary
to enable such action. Any costs associated with an action brought by HAI shall be borne by HAI and HAI shall be solely entitled
to receive and retain any recovery from any such action.

 

		9.	TERM AND TERMINATION

 

		i.	Subject to Section 9(ii): (a) the term of the license granted hereunder with respect to any patent
included in the Licensed Patents shall continue until such patent is no longer in effect, and (b) the term of the license granted
hereunder with respect to the Licensed Know-How and the term with respect to all other covenants and obligations of the Parties
hereunder shall continue until June 23, 2042.

 

		ii.	This Agreement may be terminated by either HAI or ADNAS (on behalf of Licensor) upon or after the
occurrence of a material breach by the other Party of any of the terms or conditions of this Agreement which is not cured within
thirty (30) days after the receipt of written notification thereof.

 

		10.	REPRESENTATIONS AND WARRANTIES

 

Each Party represents and warrants
to the other Parties that:

 

		i.	ADNAS represents and warrants that ADNAS or APDN owns (and covenants that at all times during the
term of this Agreement ADNAS or APDN will own) all rights to the Licensed Patents and the Licensed Know-How and that the use of
the Licensed Patents and the Licensed Know-How by HAI and its Affiliates and sub-licensees contemplated hereby will not infringe
any intellectual property rights of any Third Party;

 

		ii.	ADNAS represents and warrants that: (a) the Signature T Technology platform and the Typing Technologies,
when coupled with adequate supply chain security protocols enforced by HAI, shall enable HAI to authenticate and effectively monitor
the supply chain; and (b) its Licensed Patents do not contain any intellectual property, confidential information or trade secrets
of any Third Party;

 

		iii.	the execution, delivery and performance of this Agreement has been duly authorized by all necessary
corporate or other organizational actions of the Party and its Affiliates, and this Agreement constitutes a valid and binding obligation
of the Party enforceable against the Party in accordance with its terms;

 

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		iv.	the execution and delivery of this Agreement and the performance by the Party of any of its obligations
hereunder do not and will not conflict with or result in a breach of any judgment of any court or governmental body applicable
to the Party or, to the Party’s knowledge, any statute, decree, order, rule or regulation of any court or governmental authority
applicable to the Party.

 

		11.	CONFIDENTIALITY

 

		i.	Except as (a) required by statute, ordinance or regulation, (b) required pursuant to compulsory
legal process, (c) necessary for the exercise of the rights granted to the Parties under this Agreement, or (d) as expressly permitted
under this Section 10, neither the Parties nor their Affiliates shall publicly announce or otherwise disclose to any Third Parties
any of the terms of this Agreement or any confidential, proprietary, technical information, business plans, licensed Know-How,
forecasts, products, strategies, trade secrets, supply chain protocols, client data, marketing strategies, know-how, current, future
and proposed products, research & development, methods, procedures, discoveries, intellectual property, formulas, testing systems,
manufacturing machines, marketing, finance or any other business information, whether disclosed in written or graphic form of the
other Party (“Confidential Information”), without the prior written approval of the other Party. Except as otherwise
provided in this Section, the Parties shall only release public announcements of the execution of this Agreement or any business
arrangement in forms to be mutually agreed by the Parties.

 

		ii.	If a Party is disclosing any Confidential Information because it is required to do so to comply
with a statute, ordinance or regulation or compulsory legal process, including, without limitation, its reporting requirements
under the Securities Exchange Act of 1934, as amended, such Party intending to make such disclosure shall give the other Party
at least five business days’ prior notice in writing of the text of the intended disclosure, unless such statute, ordinance,
regulation or compulsory legal process would require earlier disclosure, in which event the notice shall be provided as early as
practicable. A Party that determines it is required to file this Agreement with the Securities and Exchange Commission or any other
governmental authority, shall request confidential treatment with respect to the terms of this Agreement, shall consult in good
faith with the other Parties regarding such confidential treatment and shall use commercially reasonable efforts to have redacted
from any publicly available version such provisions as the Parties may agree from any copies filed pursuant to such statute, ordinance,
regulation or compulsory legal process.

 

		iii.	If disclosure of Confidential Information is being made in response to a valid order of a court
of competent jurisdiction or other competent authority, the disclosing Party shall give the other Party a reasonable opportunity
to quash any such order or obtain a protective order requiring that the terms of this Agreement and any associated documents be
held in confidence by such court or authority or, if disclosed, be used only for the purpose for which the order was issued; and
provided further that if such order is not quashed or a protective order is not obtained, such information disclosed in response
to the order of a court or other competent authority shall be limited to that information that is legally required to be disclosed
in response to such order.

 

    	 	-12-	 

     

    

  

		iv.	Notwithstanding anything to the contrary above, each Party may disclose the Confidential Information
to its respective Affiliates, and its and their respective, employees, directors, partners, representatives, agents, Third Party
service providers, contractors, insurers, lenders, attorneys and accountants, or other persons or entities who have a need to know,
subject to such receivers of Confidential Information, being bound by confidentiality obligations at least as restrictive as those
mentioned herein.

 

		v.	The above provisions of confidentiality shall not apply to that part of disclosing party’s
Confidential Information if the receiving party is able to demonstrate by documentary evidence that such Confidential Information:
(i) was in the receiving party’s possession prior to receipt from the disclosing party or is independently developed by the
receiving party; (ii) was in the public domain at the time of receipt from disclosing party; (iii) subsequently becomes a part
of the public domain through no fault of the receiving party; or (iv) is lawfully received by the receiving party from a Third
Party having a right of further disclosure.

 

		12.	INDEMNITY

 

		i.	ADNAS shall indemnify and hold harmless HAI and its Affiliates and their respective directors,
officers, employees, clients and agents and their respective successors, heirs and assigns (the “HAI Indemnitees”),
against any allegations, liability, damage or loss incurred by, or imposed upon the HAI Indemnitees or any one of them in connection
with (i) any claims, suits, actions, demands or judgments brought against such HAI Indemnitee(s) by any Third Party alleging intellectual
property infringement associated with the license granted herein of the Licensed Patents or the Licensed Know-How or the use thereof
by HAI, its Affiliates or its sub-licensees pursuant to the terms of this Agreement, (ii) any claims, suits, actions, demands or
judgments brought against such HAI Indemnitee(s) by a Third Party based on the belief that the Signature T Technology platform
and/or the Typing Technologies is incapable of or inadequate for DNA authentication or to identify the extent of gossypium barbadense
and/or gossypium hirsutum present in cotton fabric, or (iii) any claims, suits, actions, demands or judgments brought against such
HAI Indemnitee(s) by a Third Party that SignatureT technology and the Typing Technologies does not meet ADNAS claims with respect
to efficacy.

 

		ii.	ADNAS agrees, at its own expense, to provide attorneys to defend against any actions brought or
filed against the HAI Indemnitees with respect to the subject of the foregoing indemnity contained herein, whether or not such
actions are rightfully brought; provided, however, that any HAI Indemnitee shall have the right to retain its own counsel, at its
expense. If representation of such HAI Indemnitee by counsel retained by ADNAS would be inappropriate because of conflict of interests
of such HAI Indemnitee and any other party represented by such counsel, HAI shall inform ADNAS of such conflict and the Parties
shall discuss the retention of alternative counsel. ADNAS agrees to keep HAI informed of the progress in the defense and disposition
of such claim and to consult with HAI prior to any proposed settlement and/or any admission of wrongdoing. ADNAS shall have the
sole right to settle any such claim, provided, however that HAI shall have the right to approve any settlement that contains an
express admission of liability or has a material adverse impact on HAI’s business.

 

    	 	-13-	 

     

    

  

		iii.	HAI shall indemnify and hold harmless Licensor and its Affiliates and their respective directors,
officers, employees, clients and agents and their respective successors, heirs and assigns (the “Licensor Indemnitees”),
against any allegations, liability, damage or loss incurred by, or imposed upon the Licensor Indemnitees or any one of them in
connection with any claims, suits, actions, demands or judgments brought against such Licensor Indemnitee(s) by any Third Party
in connection with any alleged defects or false claims relating to the Products (including but not limited to, actions founded
in product liability and consumer fraud/false advertising) unless caused by any action or inaction of ADNAS or any failure of the
Licensed Patents or the Licensed Know-How or by any breach of any representation, warranty or covenant of ADNAS contained in this
Agreement.

 

		iv.	HAI agrees, at its own expense, to provide attorneys to defend against any actions brought or filed
against the Licensor Indemnitees with respect to the subject of the foregoing indemnity contained herein, whether or not such actions
are rightfully brought; provided, however, that any Licensor Indemnitee shall have the right to retain its own counsel, at its
expense. If representation of such Licensor Indemnitee by counsel retained by HAI would be inappropriate because of conflict of
interests of such Licensor Indemnitee and any other party represented by such counsel, ADNAS shall inform HAI of such conflict
and the Parties shall discuss the retention of alternative counsel. HAI agrees to keep ADNAS informed of the progress in the defense
and disposition of such claim and to consult with HAI prior to any proposed settlement and/or any admission of wrongdoing. HAI
shall have the sole right to settle any such claim, provided, however that ADNAS shall have the right to approve any settlement
that contains an express admission of liability or has a material adverse impact on ADNAS’ business.

 

		v.	Insurance: During the term of this Agreement and so long as Products produced under the
license granted hereunder are being sold or used, the Parties will maintain comprehensive general liability, property damage, and
product liability insurance, through insurance carriers with an A.M. Best Rating of A-VII or better in an amount of five million
dollars ($5,000,000.00). Such insurance coverage will be maintained with policy limits to reasonably cover the obligations and
the scope of activities contemplated herein, and will name the other Party as an additional insured. Either Party will, at the
reasonable request of the other Party, provide the other Party with evidence of such insurance coverage.

 

    	 	-14-	 

     

    

  

		13.	NOTICES

 

All notices, requests, demands, or
other communications under this Agreement shall be in writing. Notice shall be sufficiently given (and shall be deemed to be duly
given upon receipt) by delivery in person or by overnight delivery service maintaining records of receipt to the respective Parties
at the addresses specified below, or in each case such other address as such Party may hereafter specify by notice to the other
Party.

 

Addresses for purpose of giving notice
are as follows:

 

If to ADNAS, APDN or Licensor:

 

Applied DNA Sciences, Inc.

50 Health Sciences Drive

Stony Brook, New York 11790

Attention: James Hayward

 

With a copy to:

 

Campolo, Middleton & McCormick,
LLP

4175 Veterans Memorial Highway, Suite 400

Ronkonkoma, New York 11779

Attention: Joseph Campolo

 

If to HAI:

 

Himatsingka America, Inc.

261 Fifth Avenue, Suite 1400

New York, New York 10016

Attention: David Greenstein & Ashutosh Halbe

 

With a copy to:

 

Himatsingka Seide Limited

10/24 Kumara Krupa Road

High Grounds, Bangalore 560001

India

Attention: C. B. Ganapathy

 

And to:

 

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

Attention: James Abbott

 

    	 	-15-	 

     

    

  

		14.	GOVERNING LAW, JURISDICTION& ENFORCEMENT

 

		i.	This Agreement and the rights and obligations of the parties under this Agreement shall be governed
and construed in accordance with the laws of the State of New York, without regard to its choice of law or conflicts of law principles
that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. Any
disputes arising under this Agreement, or otherwise relating in any way to the relationship or affairs of the Parties as a result
of this Agreement, shall be properly resolved by the US Federal District Court of New York. The Parties agree that the US Federal
District Court of New York has personal and subject matter jurisdiction over each of the Parties for the purpose of enforcing the
terms of this Agreement. The Parties shall attempt in good faith to resolve any dispute, controversy or claim arising out of or
relating to the Parties’ performance under this Agreement, including disputes relating to the alleged breach or termination
of this Agreement, promptly by good faith negotiations between the Parties and their representatives. No action shall be commenced
by either Party until such negotiations to resolve the claim have occurred, provided that if the Parties are unable to resolve
any such disputes within thirty (30) days of notice from a Party requesting that they do so, either Party may then commence legal
action in the manner contemplated by this Section 14.

 

		ii.	Notwithstanding any other provision of this Agreement, it is agreed by the Parties that any failure
to comply with the provisions of any of Section 3(v), Section 3(vii) or Section 11 will result in irreparable and continuing harm
for which there will be no adequate remedy at law. The Parties agree that in the event of any such breach of any of such Sections,
the aggrieved Party shall be entitled, in addition to such other relief as may be proper, to all types of equitable relief (including,
but not limited to, the issuance of an injunction and/or temporary orders to prevent violations or to compel performance).

 

		15.	ASSIGNMENT

 

This Agreement shall be binding upon
and shall inure to the benefit of each Party hereto, and each of its successors and permitted assigns. Except as otherwise provided
herein, none of the Parties shall have the power to assign or otherwise transfer this Agreement or any interest herein or right
hereunder without the prior written consent of the other Party (other than an assignment to an Affiliate, which may be made without
any such consent), and any such purported assignment, transfer or attempt to assign or transfer any interest herein or right hereunder
shall be void and of no effect. To the extent any permitted assignment occurs, the assigning Party must unconditionally guarantee
the assignee’s performance of this Agreement and no assignee may be a competitor of the non-assigning Party. Any permitted
assignee’s acceptance of a permitted assignment of this Agreement constitutes such assignee’s promise to perform the
assigning Party’s duties and obligations under this Agreement (and the non-assigning Party may enforce such promise against
such assignee).

 

    	 	-16-	 

     

    

  

		16.	ENTIRE AGREEMENT

 

This Agreement constitutes the final,
complete, and exclusive statement of the terms of the agreement between the Parties pertaining to the subject matter of this Agreement
and supersedes the MLA (which shall have no further force or effect) and all other prior and contemporaneous understandings or
agreements of the Parties (other than those referenced in this Agreement). No Party has been induced to enter into this Agreement
by, nor is any Party in connection with this Agreement relying on, any representation or warranty other than those expressly set
forth in this Agreement.

 

		17.	SUCCESSOR AND ASSIGNS; SURVIVAL

 

This Agreement shall be binding on
ADNAS, APDN and HAI and their respective successors and permitted assigns. Expiration, termination or cancellation of this Agreement
shall not affect any right or obligation which expressly or by its nature survives such expiration, termination or cancellation
including, without limitation, the representations, warranties, indemnification and confidentiality obligations contained within.

 

		18.	WAIVER

 

Except as otherwise provided herein,
no waiver of a breach, failure of any condition, or any right or remedy, contained in or granted by the provisions of this Agreement
shall be effective unless it is in writing and signed by the Party waiving the breach, failure, right or remedy. No waiver of any
breach, failure, right or remedy shall be deemed a waiver of any other breach, failure, right or remedy, whether or not similar,
nor shall any waiver constitute a continuing waiver unless the writing so specifies.

 

		19.	LEGAL ADVICE

 

Each Party and its counsel have participated
fully in the review and revision of this Agreement. Any rule of construction to the effect that ambiguities are to be resolved
against the drafting Party shall not apply in interpreting this Agreement.

 

		20.	ENFORCEABILITY

 

If a court of competent jurisdiction
holds any provision of this Agreement to be illegal, unenforceable, or invalid, in whole or in part for any reason, the Parties
agree to use commercially reasonable efforts to negotiate a provision, in replacement of the provision held illegal, unenforceable,
or invalid, that is consistent with applicable law and accomplishes, as nearly as possible, the original intention of the Parties
with respect thereto.

 

		21.	MODIFICATION

 

No terms or conditions of this Agreement
will be varied or modified by any prior or subsequent statement, conduct or act of either Party, except that the Parties may supplement,
amend, or modify’ this Agreement by a subsequent written agreement executed by the Parties through their authorized representatives.

 

    	 	-17-	 

     

    

  

		22.	COUNTERPARTS

 

This Agreement may be executed in
any number of counterparts, and each counterpart shall be deemed an original instrument, but all counterparts together shall constitute
but one agreement, representatives.

 

		23.	FORCE MAJEURE

 

In the event that either Party is
unable to perform any of its obligations under this Agreement as a result of natural disasters, actions or decrees of governmental
bodies, communication line failures not the fault of the affected Party, or any other delay or failure which arises from causes
beyond a Party’s reasonable control (hereafter referred to as a “Force Majeure Event”), the Party whose performance
has been so affected shall immediately give notice to the other Party and shall do everything reasonably possible to resume performance
as soon as feasible. Upon receipt of such notice, those obligations that cannot be performed through commercially reasonable diligence
shall be suspended. If the period of nonperformance by ADNAS as a result of a Force Majeure event exceeds four (4) months, it may
give rise to a Backup License Event hereunder.

 

IN WITNESS THEREOF, the Parties, through
their authorized officers, have executed this Agreement as of the Effective Date.

 

Applied DNA Sciences, Inc.

 

	By:	/s/James A. Hayward	 
	 	 	 
	Name:	James A. Hayward	 
	 	 	 
	Title:	President, Chairman & CEO	 
	 	 	 
	Date:	23 June 2017	 
	 	 	 
	APDN (B.V.I.) Inc.	 
	 	 	 
	By:	/s/James A. Hayward	 
	 	 	 
	Name:	James A. Hayward	 
	 	 	 
	Title:	President	 
	 	 	 
	Date:	23 June 2017	 

 

    	 	-18-	 

     

    

 

	Himatsingka America, Inc.	 
	 	 	 
	By:	 	 
	 	 	 
	Name:	Shrikant Himatsingka	 
	 	 	 
	Title:	Vice Chairman	 
	 	 	 
	Date:	 	 
	 	 	 
	By:	 	 
	 	 	 
	Name:	David Greenstein	 
	 	 	 
	Title:	Chief Executive Officer	 
	 	 	 
	Date:	 	 

 

    	 	-19-	 

     

    

  

EXHIBIT A

 

ADNAS Licensed Patents

 

US 8,669,079 — METHODS FOR GENETIC ANALYSIS
OF TEXTILES MADE OF GOSSYPIUM BARBADENSE AND GOSSYPIUM HIRSUTUM COTTON

 

US 8,940,485 — METHODS FOR GENOTYPING
MATURE COTTON FIBERS AND TEXTILES

 

US 9,290,819 — METHODS FOR GENOTYPING
MATURE COTTON FIBERS AND TEXTILES

 

US 9,266,370 — DNA MARKING OF PREVIOUSLY
UNDISTINGUISHED ITEMS FOR TRACEABILITY

 

US 14/631,992 — QUANTITATIVE GENETIC
ANALYSIS OF ARTICLES INCLUDING GOSSYPIUM BARBADENSE AND GOSSYPIUM HIRSUTUM COTTON

 

PCT/US2016/019478 — QUANTITATIVE GENETIC
ANALYSIS OF ARTICLES INCLUDING GOSSYPIUM BARBADENSE AND GOSSYPIUM HIRSUTUM COTTON

 

US 14/191,947 — METHODS FOR GENETIC ANALYSIS
OF TEXTILES MADE OF GOSSYPIUM BARBADENSE AND GOSSYPIUM HIRSUTUM COTTON

 

US 13/789,093 - ALKALINE ACTIVATION FOR IMMOBILIZATION
OF DNA TAGGANTS

 

PCT/US2014/021207 — ALKALINE ACTIVATION
FOR IMMOBILIZATION OF DNA TAGGANTS

 

US 15/049,170 — DNA MARKING OF PREVIOUSLY
UNDISTINGUISHED ITEMS FOR TRACEABILITY

 

PCT/US2014/023928 — DNA MARKING OF PREVIOUSLY
UNDISTINGUISHED ITEMS FOR TRACEABILITYapvo-ex41_104.htm

Exhibit 4.1

APTEVO THERAPEUTICS INC.

2016 STOCK INCENTIVE PLAN

1.Purpose

The purpose of this 2016 Stock Incentive Plan (the “Plan”) of Aptevo Therapeutics Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders.  Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).

2.Eligibility

All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as the terms consultants and advisors are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), or any successor form) are eligible to be granted Awards (as defined below) under the Plan.  Each person who is granted an Award under the Plan is deemed a “Participant.”  The Plan provides for the following types of awards, each of which is referred to as an “Award”:  Options (as defined in Section 5), SARs (as defined in Section 6), Restricted Stock (as defined in Section 7), RSUs (as defined in Section 7), Other Stock-Based Awards (as defined in Section 8) and Cash-Based Awards (as defined in Section 8).  Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award.  The terms of each Award need not be identical, and the Board need not treat Participants uniformly.  

3.Administration and Delegation

(a)Administration by Board of Directors.  The Plan will be administered by the Board.  The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable.  The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan.  The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award.  All actions and decisions by the Board with respect to the Plan and any Awards shall be made in the Board’s discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.

 

 

(b)Appointment of Committees.  To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”).  All references in the Plan to the “Board” shall mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.   

(c)Delegation to Officers.  Subject to any requirements of applicable law (including as applicable Sections 152 and 157(c) of the General Corporation Law of the State of Delaware), the Board may delegate to one or more officers of the Company the power to grant Awards (subject to any limitations under the Plan) to employees or officers of the Company and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of Awards to be granted by such officers, the maximum number of shares subject to Awards that the officers may grant, and the time period in which such Awards may be granted; and provided further, that no officer shall be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1(f) under the Exchange Act).

(d)Awards to Non-Employee Directors.  Awards to non-employee directors will be granted and administered by a Committee, all of the members of which are independent directors as defined by Section 5605(a)(2) of the NASDAQ Marketplace Rules. 

(e)Minimum Vesting Requirements.  Notwithstanding any other provision of the Plan, no Award granted on or after May 31, 2017 may vest (or, if applicable, be exercisable) until at least twelve (12) months following the date of grant of the Award; provided, however, that up to 5% of the share reserve set forth in Section 4(a)(1) below may be subject to Awards granted on or after May 31, 2017 that do not meet such vesting (and, if applicable, exercisability) requirements.

(f)Dividends and Dividend Equivalents.  Notwithstanding any other provision of the Plan, dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares of Common Stock subject to an Award other than Options or Stock Appreciation Rights, as determined by the Board and contained in the applicable Award agreement; provided, however, with respect to an Award granted on or after May 31, 2017  (i) no dividends or dividend equivalents may be paid with respect to any such shares before the date such shares have vested under the terms of such Award agreement, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of such Award agreement (including, but not limited to, any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to the Company on the date, if any, such shares are forfeited to or repurchased by the Company due to a failure to meet any vesting conditions under the terms of such Award agreement.

 

-2-

 

 

4.Stock Available for Awards

(a)Authorized Number of Shares.  Subject to adjustment under Section 10, Awards may be made under the Plan for up to such number of shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”) as is equal to the sum of: 

(1)4,341,500 shares of Common Stock (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)); plus

(2)such additional number of shares of Common Stock as is equal to the number of shares of Common Stock subject to Awards to be granted under the Company’s Converted Equity Awards Incentive Plan which awards expire, terminate or are otherwise surrendered, canceled or forfeited (subject, however, in the case of Incentive Stock Options to any limitations of the Code). 

(b)Share Counting.  For purposes of counting the number of shares available for the grant of Awards under the Plan under this Section 4(a) and under the sublimits contained in Section 4(c): 

(1)all shares of Common Stock covered by SARs shall be counted against the number of shares available for the grant of Awards under the Plan and against the sublimits referenced in the first clause of this Section 4(b); provided, however, that (i) SARs that may be settled only in cash shall not be so counted and (ii) if the Company grants an SAR in tandem with an Option for the same number of shares of Common Stock and provides that only one such Award may be exercised (a “Tandem SAR”), only the shares covered by the Option, and not the shares covered by the Tandem SAR, shall be so counted, and the expiration of one in connection with the other’s exercise will not restore shares to the Plan; 

(2)if any Award (i) expires or is terminated, surrendered or cancelled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or (ii) results in any Common Stock not being issued (including as a result of an SAR that was settleable either in cash or in stock actually being settled in cash), the unused Common Stock covered by such Award shall again be available for the grant of Awards; provided, however, that (A) in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code, (B) in the case of the exercise of an SAR, the number of shares counted against the shares available under the Plan and against the sublimits referenced in the first clause of this Section 4(b) shall be the full number of shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR upon exercise and (C) the shares covered by a Tandem SAR shall not again become available for grant upon the expiration or termination of such Tandem SAR; 

(3)shares of Common Stock delivered (either by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase shares of Common Stock upon the exercise of an Award or (ii) satisfy tax withholding obligations with respect to Awards 

-3-

 

 

(including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards; and 

(4)shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards.

(c)Sublimits.  Subject to adjustment under Section 10, the following sublimits on the number of shares subject to Awards shall apply:

(1)Section 162(m) Per-Participant Limit.  The maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 1,000,000 shares per calendar year.  For purposes of the foregoing limit, the combination of an Option in tandem with an SAR shall be treated as a single Award.  The per-Participant limit described in this Section 4(c)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).

(2) Limit on Awards to Non-Employee Directors.  In any calendar year, the sum of the cash compensation paid to any non-employee director for service as a director and the value of Awards under the Plan made to such non-employee director (calculated based on grant date fair value for financial reporting purposes) shall not exceed $1,000,000. 

(d)Substitute Awards.  In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof.  Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.  Substitute Awards shall not count against the overall share limit set forth in Section 4(a) or any sublimits contained in the Plan, except as may be required by reason of Section 422 and related provisions of the Code.

5.Stock Options 

(a)General.  The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as the Board considers necessary or advisable.  

(b)Incentive Stock Options.  An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of Aptevo Therapeutics Inc., any of Aptevo Therapeutics Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code.  An Option that is not intended to be an Incentive Stock Option shall be designated a “Nonstatutory Stock Option.”  The Company shall have no liability to a Participant, 

-4-

 

 

or any other person, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.

(c)Exercise Price.  The Board shall establish the exercise price of each Option or the formula by which such exercise price will be determined.  The exercise price shall be specified in the applicable Option agreement.  The exercise price shall be not less than 100% of the Grant Date Fair Market Value (as defined below) on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Grant Date Fair Market Value on such future date.  “Grant Date Fair Market Value” of a share of Common Stock for purposes of the Plan will be determined as follows:

(1)if the Common Stock trades on a national securities exchange, the closing sale price (for the primary trading session) on the date of grant; or

(2)if the Common Stock does not trade on any such exchange, the average of the closing bid and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB website (otcbb.com) on the date of grant; or

(3)if the Common Stock is not publicly traded, the Board will determine the Grant Date Fair Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Code Section 409A, except as the Board may expressly determine otherwise.

For any date that is not a trading day, the Grant Date Fair Market Value of a share of Common Stock for such date will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the immediately preceding trading day and with the timing in the formulas above adjusted accordingly.  The Board can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either on a daily basis or such longer period as complies with Code Section 409A.

The Board has sole discretion to determine the Grant Date Fair Market Value for purposes of the Plan, and all Awards are conditioned on the participants’ agreement that the Administrator’s determination is conclusive and binding even though others might make a different determination.

(d)Duration of Options.  Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable Option agreement; provided, however, that no Option will be granted with a term in excess of 10 years.

(e)Exercise of Options.  Options may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with payment in full (in the manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised.  Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

-5-

 

 

(f)Payment Upon Exercise.  Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1)in cash or by check, payable to the order of the Company;

(2)except as may otherwise be provided in the applicable Option agreement or approved by the Board, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3)to the extent provided for in the applicable Option agreement or approved by the Board, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value (valued in the manner determined by (or in a manner approved by) the Board), provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4)to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (i) the number of shares underlying the portion of the Option being exercised, less (ii) such number of shares as is equal to (A) the aggregate exercise price for the portion of the Option being exercised divided by (B) the fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board) on the date of exercise;

(5)to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, by payment of such other lawful consideration as the Board may determine; provided, however, that in no event may a promissory note of the Participant be used to pay the Option exercise price; or

(6)by any combination of the above permitted forms of payment.

(g)Limitation on Repricing.  Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 10):  (1) amend any outstanding Option granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(d)) covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled option, (3) cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-current fair market value of the Common Stock (valued in the manner determined by (or in a manner 

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approved by) the Board), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the NASDAQ Stock Market (“NASDAQ”). 

(h)No Reload Options.  No Option granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional Options in connection with any exercise of the original Option.

(i)No Dividend Equivalents.  No Option shall provide for the payment or accrual of dividend equivalents.

6.Stock Appreciation Rights

(a)General.  The Board may grant Awards consisting of stock appreciation rights (“SARs”) entitling the holder, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of Common Stock (valued in the manner determined by (or in a manner approved by) the Board) over the measurement price established pursuant to Section 6(b).  The date as of which such appreciation is determined shall be the exercise date.  

(b)Measurement Price.  The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement.  The measurement price shall not be less than 100% of the Grant Date Fair Market Value of the Common Stock on the date the SAR is granted; provided that if the Board approves the grant of an SAR effective as of a future date, the measurement price shall be not less than 100% of the Grant Date Fair Market Value on such future date.

(c)Duration of SARs.  Each SAR shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years.

(d)Exercise of SARs.  SARs may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with any other documents required by the Board.

(e)Limitation on Repricing.  Unless such action is approved by the Company’s stockholders, the Company may not (except as provided for under Section 10):  (1) amend any outstanding SAR granted under the Plan to provide a measurement price per share that is lower than the then-current measurement price per share of such outstanding SAR, (2) cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(d)) covering the same or a different number of shares of Common Stock and having an exercise or measurement price per share lower than the then-current measurement price per share of the cancelled SAR, (3) cancel in exchange for a cash payment any outstanding SAR with a measurement price per share above the then-current fair market value of the Common Stock (valued in the manner determined by (or in a manner approved by) the Board), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the NASDAQ.

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(f)No Reload SARs.  No SAR granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional SARs in connection with any exercise of the original SAR.

(g)No Dividend Equivalents.  No SAR shall provide for the payment or accrual of dividend equivalents.

7.Restricted Stock; RSUs

(a)General.  The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award.  The Board may also grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“RSUs”).

(b)Terms and Conditions for Restricted Stock and RSUs.  The Board shall determine the terms and conditions of Restricted Stock and RSUs, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.  

(c)Additional Provisions Relating to Restricted Stock.  

(1)Dividends.  Any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“Unvested Dividends”) shall be paid to the Participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares.  Each payment of Unvested Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock.  No interest will be paid on Unvested Dividends.

(2)Stock Certificates.  The Company may require that any stock certificates issued in respect of shares of Restricted Stock, as well as dividends or distributions paid on such Restricted Stock, shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee).  At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated Beneficiary.  “Designated Beneficiary” means (i) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (ii) in the absence of an effective designation by a Participant, the Participant’s estate.

(d)Additional Provisions Relating to RSUs.

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(1)Settlement.  Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each RSU, the Participant shall be entitled to receive from the Company the number of shares of Common Stock specified in the Award agreement or (if so provided in the applicable Award agreement or otherwise determined by the Board) an amount of cash equal to the fair market value (valued in the manner determined by (or in a manner approved by) the Board) of such number of shares or a combination thereof.  The Board may provide that settlement of RSUs shall be deferred, on a mandatory basis or at the election of the Participant, in a manner that complies with Section 409A of the Code or any successor provision thereto, and the regulations thereunder (“Section 409A”).

(2)Voting Rights.  A Participant shall have no voting rights with respect to any RSUs.

(3)Dividend Equivalents.  The Award agreement for RSUs may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“Dividend Equivalents”).  Dividend Equivalents shall be credited to an account for the Participant, may be settled in cash and/or shares of Common Stock and shall be subject to the same restrictions on transfer and forfeitability as the RSUs with respect to which paid, in each case to the extent provided in the Award agreement.  No interest will be paid on Dividend Equivalents.

8.Other Stock-Based and Cash-Based Awards

(a)General.  The Board may grant other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property (“Other Stock-Based Awards”).  Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled.  Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine.  The Company may also grant Awards denominated in cash rather than shares of Common Stock (“Cash-Based Awards”).  

(b)Terms and Conditions.  Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award or Cash-Based Award, including any purchase price applicable thereto.  

(c)Dividend Equivalents.  The Award agreement for an Other Stock-Based Award may provide Participants with the right to receive Dividend Equivalents.  Dividend Equivalents shall be credited to an account for the Participant, may be settled in cash and/or shares of Common Stock and shall be subject to the same restrictions on transfer and forfeitability as the Other Stock-Based Award with respect to which paid, in each case to the extent provided in the Award agreement.  No interest will be paid on Dividend Equivalents.

9.Performance Awards

(a)Grants.  Restricted Stock, RSUs and Other Stock-Based Awards and Cash-Based Awards under the Plan may be made subject to the achievement of performance goals pursuant 

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to this Section 9 (“Performance Awards”).  Performance Awards can also provide for cash payments of up to $2,000,000 per calendar year per individual.

(b)Committee.  Grants of Performance Awards to any Covered Employee (as defined below) intended to qualify as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”) shall be made only by a Committee (or a subcommittee of a Committee) comprised solely of two or more directors eligible to serve on a committee making Awards qualifying as “performance-based compensation” under Section 162(m).  In the case of such Awards granted to Covered Employees, references to the Board or to a Committee shall be treated as referring to such Committee (or subcommittee).  “Covered Employee” shall mean any person who is, or whom the Committee, in its discretion, determines may be, a “covered employee” under Section 162(m)(3) of the Code.

(c)Performance Measures.  For any Award that is intended to qualify as Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting and/or payout shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be based on the relative or absolute attainment of specified levels of one or any combination of the following, which may be determined pursuant to generally accepted accounting principles (“GAAP”) or on a non-GAAP basis, as determined by the Committee:    

(1)Earnings or Profitability Measures, including but not limited to: (i) revenue (gross, operating or net); (ii) revenue growth; (iii) income (gross, operating, net or adjusted); (iv) earnings before interest and taxes (“EBIT”); (v) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (vi) earnings growth, (vii) profit margins or contributions; and (viii) expense levels or ratios; 

(2)Return Measures, including, but not limited to: return on (i) investment; (ii) assets; (iii) equity; or (iv) capital (total or invested); 

(3)Cash Flow Measures, including but not limited to: (i) operating cash flow; (ii) cash flow sufficient to achieve financial ratios or a specified cash balance; (iii) free cash flow; (iv) cash flow return on capital; (v) net cash provided by operating activities; (vi) cash flow per share; and (vii) working capital or adjusted working capital; 

(4)Stock Price and Equity Measures, including, but not limited to: (i) return on stockholders’ equity; (ii) total stockholder return; (iii) stock price; (iv) stock price appreciation; (v) market capitalization; (vi) earnings per share (basic or diluted) (before or after taxes); and (vii) price-to-earnings ratio; 

(5)Strategic Metrics, including, but not limited to: (i) acquisitions or divestitures; (ii) collaborations, licensing or joint ventures; (iii) product research and development; (iv) clinical trials; (v) regulatory filings or approvals; (vi) patent application or issuance; (vii) manufacturing or process development; (viii) sales or net sales; (ix) sales growth, (x) market share; (xi) market penetration; (xii) inventory control; (xiii) growth in assets; (xiv) key hires; (xv) business expansion; (xvi) achievement of milestones under a third-party agreement; (xvii) financing; (xviii) resolution of significant litigation; (xix) legal compliance or 

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risk reduction; (xx) improvement of financial ratings; or (xxi) achievement of balance sheet or income statement objectives; 

(6)In each case such performance measures may be adjusted to exclude any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects of changes in accounting principles, (iv) the impairment or writedown of any asset or assets, (v) charges for restructuring and rationalization programs or (vi) other extraordinary or non-recurring items, as specified by the Committee when establishing the performance measures. Such performance measures: (i) may vary by Participant and may be different for different Awards; (ii) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (iii) shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine. 

(d)Adjustments.  Notwithstanding any provision of the Plan, with respect to any Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may adjust downwards, but not upwards, the cash or number of shares payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance measures except in the case of the death or disability of the Participant or a change in control of the Company.

(e)Other.  The Committee shall have the power to impose such other restrictions on Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Performance-Based Compensation.

10.Adjustments for Changes in Common Stock and Certain Other Events

(a)Changes in Capitalization.  In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan set forth in Section 4(a), (ii) the share counting rules and sublimits set forth in Sections 4(b) and 4(c), (iii) the number and class of securities and exercise price per share of each outstanding Option, (iv) the share and per-share provisions and the measurement price of each outstanding SAR, (v) the number of shares subject to and the repurchase price per share subject to each outstanding award of Restricted Stock and (vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding RSU and each Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board.  Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, 

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notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(b)Reorganization and Change in Control Events.

(1)Definitions.

	
 
	
(i)
	
A “Reorganization Event” shall mean:

	
 
	
(A)
	
any merger or consolidation of the Company with or into another entity as a result of which the Common Stock is converted into or exchanged for the right to receive cash, securities or other property or is canceled; or

	
 
	
(B)
	
any exchange of shares of Common Stock of the Company for cash, securities or other property pursuant to a share exchange or other transaction.

	
 
	
(ii)
	
A “Change in Control Event” shall mean:

	
 
	
(A)
	
the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d 3 promulgated under the Exchange Act) 50% or more of either (x) the aggregate number of shares of Common Stock then-outstanding (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control Event: (I) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (II) any acquisition by any employee benefit plan (or related trust) sponsored 

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or maintained by the Company or any corporation controlled by the Company, or (III) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (C) of this definition;

	
 
	
(B)
	
such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred 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

	
 
	
(C)
	
the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business 

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Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

	
 
	
(D)
	
the complete liquidation or dissolution of the Company.

	
 
	
(iii)
	
“Cause” shall, unless otherwise specified in the applicable Award agreement or another agreement between the Participant and the Company, mean any (A) willful failure by the Participant, which failure is not cured within 30 days of written notice to the Participant from the Company, to perform his or her material responsibilities to the Company, (B) willful misconduct by the Participant which affects the business reputation of the Company, (C) material breach by the Participant of any employment, consulting, confidentiality, non-competition or non-solicitation agreement with the Company, (D) conviction or plea of nolo contendere (no contest) by the Participant to a felony, or (E) commission by the Participant of any act involving fraud, theft or dishonesty with respect to the Company’s business or affairs. The Participant shall be considered to have been discharged for “Cause” if the Company determines, within 30 days after the Participant’s resignation, that discharge for Cause was warranted. 

	
 
	
(iv)
	
“Good Reason” shall, unless otherwise specified in the applicable  Award agreement or another agreement between the Participant and the Company, mean any significant diminution in the Participant’s authority, or responsibilities from and after such 

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Reorganization Event or Change in Control Event, as the case may be, or any material reduction in the annual cash compensation payable to the Participant from and after such Reorganization Event or Change in Control Event, as the case may be, or the relocation of the place of business at which the Participant is principally located to a location that is greater than 50 miles from its location immediately prior to such Reorganization Event or Change in Control Event.   

(2)Effect on Awards other than Restricted Stock.

	
 
	
(i)
	
Reorganization Event.  Upon the occurrence of a Reorganization Event (regardless of whether such event also constitutes a Change in Control Event), the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as the Board determines (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between the Company and the Participant):  (A) provide that such Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (B) upon written notice to a Participant, provide that all of the Participant’s unexercised and/or unvested Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, (C) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (D) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to Participants with respect to each Award held by a Participant equal to (X) the number of shares of Common Stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (Y) the excess, if any, of (I) the Acquisition Price over (II) the exercise, grant or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, and (E) any combination of the foregoing.  In taking any of the actions permitted under this Section 10(b)(2)(i), the Board shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.  

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(ii)
	
Notwithstanding the terms of Section 10(b)(2)(i)(A), in the case of outstanding Restricted Stock Units that are subject to Section 409A of the Code: (A) if the applicable Restricted Stock Unit agreement provides that the Restricted Stock Units shall be settled upon a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i), and the Reorganization Event constitutes such a “change in control event”, then no assumption or substitution shall be permitted pursuant to Section 10(b)(2)(i)(A) and the Restricted Stock Units shall instead be settled in accordance with the terms of the applicable Restricted Stock Unit agreement; and (B) the Board may only undertake the actions set forth in clauses (C), (D) or (E) of Section 10(b)(2)(i) if the Reorganization Event constitutes a “change in control event” as defined under Treasury Regulation Section 1.409A-3(i)(5)(i) and such action is permitted or required by Section 409A of the Code; if the Reorganization Event is not a “change in control event” as so defined or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding corporation does not assume or substitute the Restricted Stock Units pursuant to clause (A) of Section 10(b)(2)(i), then the unvested Restricted Stock Units shall terminate immediately prior to the consummation of the Reorganization Event without any payment in exchange therefor.

	
 
	
(iii)
	
 For purposes of Section 10(b)(2)(i)(A), an Award (other than Restricted Stock) shall be considered assumed if, following consummation of the Reorganization Event, such Award confers the right to purchase or receive pursuant to the terms of such Award, for each share of Common Stock subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of such number of shares of common stock of the acquiring or succeeding corporation (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such determination or another date specified by the Board) to 

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the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

	
 
	
(iv)
	
Change in Control Event.  Notwithstanding the provisions of Section 10(b)(2)(i), except to the extent specifically provided to the contrary in the instrument evidencing the Award or any other agreement between the Participant and the Company, each Award (other than Restricted Stock) shall become immediately vested, exercisable, or free from forfeiture, as applicable, if on or prior to the first anniversary of the date of the consummation of a Change in Control Event, the Participant’s service with the Company or a successor corporation is terminated without Cause by the Company or the successor corporation or is terminated for Good Reason by the Participant.  

(3)Effect on Restricted Stock. 

	
 
	
(i)
	
Reorganization Event.  Upon the occurrence of a Reorganization Event (regardless of whether such event also constitutes a Change in Control Event), the repurchase and other rights of the Company with respect to outstanding Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to such Restricted Stock; provided, however, that the Board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, either initially or by amendment.

	
 
	
(ii)
	
Change in Control Event.  Upon the occurrence of a Change in Control Event (regardless of whether such event also constitutes a Reorganization Event), except to the extent specifically provided to the contrary in the instrument evidencing the Award or any other agreement between the Participant and the Company, each Award of Restricted Stock shall become immediately vested and free from forfeiture if on or prior to the first anniversary of the date of the consummation of a Change in Control Event, the Participant’s service with the Company or a successor corporation is terminated without Cause by the Company or the successor corporation or is terminated for Good Reason by the Participant.

(4)Effect on Other Awards.

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(i)
	
Reorganization Event that is not a Change in Control Event.  The Board shall specify at the time of grant or thereafter the effect of a Reorganization Event that is not a Change in Control Event on any Other Stock-Based Award or Cash-Based Award granted under the Plan.

	
 
	
(ii)
	
Change in Control Event.  The Board shall specify at the time of grant or thereafter the effect of a Change in Control Event (regardless of whether such event also constitutes a Reorganization Event) on any Other Stock-Based Award or Cash-Based Award granted under the Plan.

(5)Treatment of Performance-Based Awards.  Notwithstanding any other provision of this Plan, with respect to an Award granted on or after May 31, 2017 that vests based on the attainment of performance goals, any acceleration of vesting and/or exercisability pursuant to this Section 10 shall be calculated (i) based on actual performance or, if such actual performance cannot be determined, target performance; and (ii) on a pro rata basis based on the fractional performance period.

11.General Provisions Applicable to Awards

(a)Transferability of Awards.  Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by a Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of the Participant, shall be exercisable only by the Participant; provided, however, that, except with respect to Awards subject to Section 409A, the Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for the benefit of any immediate family member, family trust or other entity established for the benefit of the Participant and/or an immediate family member thereof if the Company would be eligible to use a Form S-8 under the Securities Act for the registration of the sale of the Common Stock subject to such Award to such proposed transferee; provided further, that the Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award.  References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.  For the avoidance of doubt, nothing contained in this Section 11(a) shall be deemed to restrict a transfer to the Company.

(b)Documentation.  Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine.  Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c)Termination of Status.  The Board shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, 

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guardian or Designated Beneficiary, may exercise rights, or receive any benefits, under an Award.

(d)Withholding.  The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award.  The Company may elect to satisfy the withholding obligations through additional withholding on salary or wages.  If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations.  Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price, unless the Company determines otherwise.  If provided for in an Award or approved by the Board, a Participant may satisfy the tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their fair market value (determined by (or in a manner approved by) the Company; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), except that, to the extent that the Company is able to retain shares of Common Stock having a fair market value (determined by (or in a manner approved by) the Company) that exceeds the statutory minimum applicable withholding tax without financial accounting implications or the Company is withholding in a jurisdiction that does not have a statutory minimum withholding tax, the Company may retain such number of shares of Common Stock (up to the number of shares having a fair market value equal to the maximum individual statutory rate of tax (determined by (or in a manner approved by) the Company)) as the Company shall determine in its sole discretion to satisfy the tax liability associated with any Award.  Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

(e)Amendment of Award.  Except as otherwise provided in Sections 5(g) and 6(e), the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option.  The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 10.

(f)Conditions on Delivery of Stock.  The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously issued or delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and 

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delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

(g)Limits on Acceleration of Vesting.   The Board may at any time provide that any Award shall become immediately exercisable in full or in part, free from some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be (become “Accelerated”); provided, however, that, notwithstanding any other provision of the Plan, an Award granted on or after May 31, 2017 may be Accelerated only (i) upon a Participant’s death or disability or (ii) as set forth in Section 10 hereof.

12.Miscellaneous

(a)No Right To Employment or Other Status.  No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

(b)No Rights As Stockholder; Clawback.  Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be issued with respect to an Award until becoming the record holder of such shares.  In accepting an Award under the Plan, a Participant shall agree to be bound by any clawback policy the Company may adopt in future.

(c)Effective Date and Term of Plan.  The Plan shall become effective on the date the Plan is approved by the Company’s stockholders (the “Effective Date”).  No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.

(d)Amendment of Plan.  The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and until the Company’s stockholders approve such amendment in the manner required by Section 162(m); (ii) no amendment that would require stockholder approval under the rules of the national securities exchange on which the Company then maintains its primary listing may be made effective unless and until the Company’s stockholders approve such amendment; and (iii) if the national securities exchange on which the Company then maintains its primary listing  does not have rules regarding when stockholder approval of amendments to equity compensation plans is required (or if the Company’s Common Stock is not then listed on any national securities exchange), then no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Sections 4(d) or 10), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless and until the Company’s stockholders approve such amendment.  In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the 

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Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval.  Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 12(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of Participants under the Plan.  No Award shall be made that is conditioned upon stockholder approval of any amendment to the Plan unless the Award provides that (i) it will terminate or be forfeited if stockholder approval of such amendment is not obtained within no more than 12 months from the date of grant and (2) it may not be exercised or settled (or otherwise result in the issuance of Common Stock) prior to such stockholder approval. 

(e)Authorization of Sub-Plans (including for Grants to non-U.S. Employees).  The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions.  The Board shall establish such sub-plans by adopting supplements to the Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable.  All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement.  

(f)Compliance with Section 409A of the Code. Except as provided in individual Award agreements initially or by amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A) (the “New Payment Date”), except as Section 409A may then permit.  The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.

The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A but do not to satisfy the conditions of that section.

(g)Limitations on Liability.  Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally 

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liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, employee or agent of the Company.  The Company will indemnify and hold harmless each director, officer, employee or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.

(h)Governing Law.  The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the State of Delaware.

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