Document:

Exhibit 10.2

 

BLUEROCK
RESIDENTIAL GROWTH REIT, INC.

 

AMENDED AND RESTATED 2014 EQUITY
INCENTIVE PLAN FOR ENTITIES

Effective May 28, 2015

 

Article
I

DEFINITIONS

 

1.01.        Affiliate

 

“Affiliate”
means, with respect to any entity, any other entity, whether now or hereafter existing, which controls, is controlled by, or is
under common control with, the first entity (including, but not limited to, joint ventures, limited liability companies and partnerships).
For this purpose, the term “control” (including the correlative meanings of the terms “controlled by” and
“under common control with”) shall mean ownership, directly or indirectly, of 50% or more of the total combined voting
power of all classes of voting securities issued by such entity, or the possession, directly or indirectly, of the power to direct
the management and policies of such entity, by contract or otherwise.

 

1.02.        Agreement

 

“Agreement”
means a written agreement (including any amendment or supplement thereto) between the Company and a Participant specifying the
terms and conditions of a Stock Award, an award of Performance Units, an Incentive Award, an Option, SAR or Other Equity-Based
Award (including an LTIP Unit) granted to such Participant.

 

1.03.        Board

 

“Board”
means the Board of Directors of the Company.

 

1.04.        Change
in Control

 

“Change in
Control” means and includes each of the following:

 

(a)           The acquisition,
either directly or indirectly, by any individual, entity or group (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act), of more than 50% of either (i) the then
outstanding shares of Common Stock, taking into account as outstanding for this purpose such shares of Common Stock issuable upon
the exercise of options or warrants, the conversion of convertible shares or debt, and the exercise of any similar right to acquire
such Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control (i) any
acquisition by the Company or any of its subsidiaries or by the Manager or any of its Affiliates, (ii) any acquisition by a trustee
or other fiduciary holding the Company’s securities under an employee benefit plan sponsored or maintained by the Company
or any of its Affiliates, (iii) any acquisition by an underwriter, initial purchaser or placement agent temporarily holding the
Company’s securities pursuant to an offering of such securities or (iv) any acquisition by an entity owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as their ownership of the then Outstanding Company Common
Stock.

 

    	 

    	 

    

 

(b)           Individuals
who constitute Incumbent Directors at the beginning of any consecutive twelve month period, together with any new Incumbent Directors
who become members of the Board during such twelve month period, cease to be a majority of the Board at the end of such twelve
month period.

 

(c)          The
consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving
the Company that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities
in the transaction (a “Business Combination”), in each case, unless following such Business Combination:

 

(i)         the
individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such
Business Combination, beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of members of the board of directors (or the analogous governing body)
of the entity resulting from such Business Combination (the “Successor Entity”) (or, if applicable, the ultimate parent
entity that directly or indirectly has beneficial ownership of sufficient voting securities to elect a majority of the members
of the board of directors (or the analogous governing body) of the Successor Entity (the “Parent Company”));

 

(ii)         no
Person (other than any employee benefit plan sponsored or maintained by the Successor Entity or the Parent Company) beneficially
owns (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, more than 50% of the combined voting power
of the then outstanding voting securities entitled to vote generally in the election of members of the board of directors (or the
analogous governing body) of the Parent Company (or, if there is no Parent Company, the Successor Entity); and

 

(iii)        at
least a majority of the members of the board of directors (or the analogous governing body) of the Parent Company (or, if there
is no Parent Company, the Successor Entity) following the consummation of the Business Combination were Incumbent Directors at
the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination;

 

(d)          The
direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries, taken
as a whole, to any Person that is not a subsidiary of the Company.

 

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In addition, if a Change
in Control (as defined in clauses (a) through (d) above) constitutes a payment event with respect to any Option, SAR, Stock Award,
Performance Unit, Incentive Award or Other Equity-Based Award that provides for the deferral of compensation and is subject to
Section 409A of the Code, no payment will be made under that award on account of a Change in Control unless the event described
in subsection (a), (b), (c) or (d) above, as applicable, constitutes a “change in control event” as defined in Treasury
Regulation Section 1.409A-3(i)(5).

 

1.05.        Code

 

“Code”
means the Internal Revenue Code of 1986, and any amendments thereto.

 

1.06.        Committee

 

“Committee”
means the Compensation Committee of the Board. Unless otherwise determined by the Board, the Committee shall consist solely of
two or more non-employee members of the Board, each of whom is intended to qualify as a “non-employee director” as
defined by Rule 16b-3 of the Exchange Act or any successor rule, an “outside director” for purposes of Section 162(m)
of the Code (if awards under this Plan are subject to the deduction limitation of Section 162(m) of the Code) and an “independent
director” under the rules of any exchange or automated quotation system on which the Common Stock is listed, traded or quoted;
provided, however, that any action taken by the Committee shall be valid and effective, whether or not the members of the
Committee at the time of such action are later determined not to have satisfied the foregoing requirements or otherwise provided
in any charter of the Committee. If there is no Compensation Committee, then “Committee” means the Board.

 

1.07.        Common
Stock

 

“Common Stock”
means the Class A common stock of the Company.

 

1.08.        Company

 

“Company”
means Bluerock Residential Growth REIT, Inc., a Maryland corporation.

 

1.09.        Control
Change Date

 

“Control Change
Date” means the date on which a Change in Control occurs. If a Change in Control occurs on account of a series of transactions,
the “Control Change Date” is the date of the last of such transactions on which the Change in Control occurs.

 

1.10.        Corresponding
SAR

 

“Corresponding
SAR” means an SAR that is granted in relation to a particular Option and that can be exercised only upon the surrender
to the Company, unexercised, of that portion of the Option to which the SAR relates.

 

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1.11.        Dividend
Equivalent Right

 

“Dividend
Equivalent Right” means the right, subject to the terms and conditions prescribed by the Committee, of a Participant
to receive (or have credited) cash, securities or other property in amounts equivalent to the cash, securities or other property
dividends declared on shares of Common Stock with respect to specified Performance Units, an Other Equity-Based Award or Incentive
Award of units denominated in shares of Common Stock or other Company securities, as determined by the Committee, in its sole discretion.
The Committee shall provide that Dividend Equivalent Rights payable with respect to any such award that does not become nonforfeitable
solely on the basis of continued service shall be accumulated and distributed only when, and to the extent that, the underlying
award is vested or earned. The Committee may provide that Dividend Equivalent Rights (if any) shall be deemed to have been reinvested
in additional shares of Common Stock or otherwise reinvested.

 

1.12.        Effective
Date

 

“Effective
Date” means the date this Plan, as amended and restated herein, is approved by the Company’s shareholders in accordance
with Article XVIII.

 

1.13.        Exchange
Act

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

1.14.        Fair
Market Value

 

“Fair Market
Value” means, on any given date, the reported “closing” price of a share of Common Stock on the New York
Stock Exchange for such date or, if there is no closing price for a share of Common Stock on the date in question, the closing
price for a share of Common Stock on the last preceding date for which a quotation exists. If, on any given date, the Common Stock
is not listed for trading on the New York Stock Exchange, then Fair Market Value shall be the “closing” price of a
share of Common Stock on such other exchange on which the Common Stock is listed for trading for such date (or, if there is no
closing price for a share of Common Stock on the date in question, the closing price for a share of Common Stock on the last preceding
date for which such quotation exists) or, if the Common Stock is not listed on any exchange, the amount determined by the Committee
using any reasonable method in good faith and in accordance with the regulations under Section 409A of the Code.

 

1.15.        Incentive
Award

 

“Incentive
Award” means an award awarded under Article XI which, subject to the terms and conditions prescribed by the Committee,
entitles the Participant to receive a payment from the Company or an Affiliate of the Company.

 

1.16.        Incumbent
Directors

 

“Incumbent Directors”
means individuals elected to the Board (either by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for Director without objection to such nomination) and whose election or nomination for election
to the Board was approved by a vote of at least two-thirds of the directors serving on the Board at the time of the election or
nomination, as applicable, shall be an Incumbent Director. No individual designated to serve as a director by a person who shall
have entered into an agreement with the Company to effect a transaction described in Section 1.04(a) or Section 1.04(c) and no
individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest
with respect to directors shall be an Incumbent Director.

 

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1.17.        Individuals
Plan

 

“Individuals
Plan” means the Bluerock Residential Growth, Inc. 2014 Equity Incentive Plan for Individuals, as amended and restated
effective May 28, 2015, and as further amended from time to time.

 

1.18.        Initial
Value

 

“Initial Value”
means, with respect to a Corresponding SAR, the option price per share of the related Option and, with respect to an SAR granted
independently of an Option, the price per share of Common Stock as determined by the Committee on the date of grant; provided,
however, that the price shall not be less than the Fair Market Value on the date of grant. Except as provided in Article XII,
without the approval of stockholders (a) the Initial Value of an outstanding SAR may not be reduced (by amendment, cancellation
and new grant or otherwise) and (b) no payment shall be made in cancellation of an SAR if, on the date of such amendment, cancellation,
new grant or payment the Initial Value exceeds Fair Market Value.

 

1.19.        LTIP
Unit

 

“LTIP Unit”
means an “LTIP Unit” as defined in the Operating Partnership’s partnership agreement. An LTIP Unit granted under
this Plan represents the right to receive the benefits, payments or other rights in respect of an LTIP Unit set forth in that partnership
agreement, subject to the terms and conditions of the applicable Agreement and that partnership agreement.

 

1.20.        Manager

 

“Manager”
means BRG Manager, LLC, a Delaware limited liability company and the Company’s external manager.

 

1.21.        Offering

 

“Offering”
means the initial public offering of Common Stock registered under the Securities Act of 1933, as amended.

 

1.22.        OP
Units

 

“OP Units”
means units of limited partnership interest of the Operating Partnership.

 

1.23.        Operating
Partnership

 

“Operating
Partnership” means Bluerock Residential Holdings, L.P., a Delaware limited partnership and the Company’s operating
partnership.

 

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1.24.        Option

 

“Option”
means a stock option that entitles the holder to purchase from the Company a stated number of shares of Common Stock at the price
set forth in an Agreement.

 

1.25.        Other
Equity-Based Award

 

“Other Equity-Based
Award” means any award other than an Incentive Award, an Option, SAR, a Performance Unit award or a Stock Award which,
subject to such terms and conditions as may be prescribed by the Committee, entitles a Participant to receive shares of Common
Stock or rights or units valued in whole or in part by reference to, or otherwise based on, shares of Common Stock (including securities
convertible into Common Stock) or other equity interests, including LTIP Units.

 

1.26.        Participant

 

“Participant”
means the Manager and any other entity that provides services to the Company or an Affiliate of the Company (including an entity
that provides services to the Company or an Affiliate of the Company by virtue of its providing services to the Manager or an Affiliate
of the Manager), and that satisfies the requirements of Article IV and is selected by the Committee to receive an award of Performance
Units or a Stock Award, an Incentive Award, Option, SAR, Other Equity-Based Award or a combination thereof.

 

1.27.        Performance
Units

 

“Performance
Units” means an award, in the amount determined by the Committee, stated with reference to a specified or determinable
number of shares of Common Stock, that in accordance with the terms of an Agreement entitles the holder to receive a payment for
each specified unit equal to the value of an equal number of shares of Common Stock on the date of payment.

 

1.28.        Plan

 

“Plan”
means this Bluerock Residential Growth REIT, Inc. 2014 Equity Incentive Plan for Entities, as amended and restated herein and as
further amended from time to time.

 

1.29.        REIT

 

“REIT”
means a real estate investment trust within the meaning of Sections 856 through 860 of the Code.

 

1.30.        SAR

 

“SAR”
means a stock appreciation right that in accordance with the terms of an Agreement entitles the holder to receive, with respect
to each share of Common Stock encompassed by the exercise of the SAR, the excess, if any, of the Fair Market Value at the time
of exercise over the Initial Value. References to “SARs” include both Corresponding SARs and SARs granted independently
of Options, unless the context requires otherwise.

 

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1.31.       Stock
Award

 

“Stock Award”
means shares of Common Stock awarded to a Participant under Article VIII.

 

Article
II

PURPOSES

 

This Plan is intended
to assist the Company and its Affiliates in securing and retaining the services of entities that provide services to the Company
or an Affiliate of the Company with ability and initiative by enabling such entities to participate in the future success of the
Company and its Affiliates and to associate their interests with those of the Company and its stockholders. This Plan is intended
to permit the grant of Options, SARs, Stock Awards, Performance Units, Incentive Awards and Other Equity-Based Awards in accordance
with this Plan and any procedures that may be established by the Committee.

 

Article
III

ADMINISTRATION

 

This Plan shall be
administered by the Committee. The Committee shall have authority to grant SARs, Stock Awards, Performance Units, Incentive Awards,
Options and Other Equity-Based Awards upon such terms (not inconsistent with the provisions of this Plan), as the Committee may
consider appropriate. Such terms may include conditions (in addition to those contained in this Plan), on the exercisability of
all or any part of an Option or SAR or on the transferability or forfeitability of a Stock Award, an award of Performance Units,
an Incentive Award or an Other Equity-Based Award. Notwithstanding any such conditions, or any provision of the Plan (i) the Committee
may, in its discretion, accelerate the time at which any Option or SAR may be exercised, or the time at which a Stock Award or
Other Equity-Based Award may become transferable or nonforfeitable or the time at which an Other Equity-Based Award, an Incentive
Award or an award of Performance Units may be settled (a) in connection with a termination of service or (b) if the award has been
outstanding for at least one year and (ii) up to 475,000 shares of Common Stock may be issued under the Plan and the Individuals
Plan without regard to the preceding clause (i) or the minimum vesting requirements of Sections 6.06, 7.04, 8.02, 9.02, 10.02 and
11.02 (either pursuant to the original terms of the award or acceleration). In addition, the Committee shall have complete authority
to interpret all provisions of this Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of this Plan (including rules and regulations that require or allow Participants to defer the
payment of benefits under this Plan); and to make all other determinations necessary or advisable for the administration of this
Plan.

 

The Committee’s
determinations under this Plan (including without limitation, determinations of the entities to receive awards under this Plan,
the form, amount and timing of such awards, the terms and provisions of such awards and the Agreements) need not be uniform and
may be made by the Committee selectively among entities who receive, or are eligible to receive, awards under this Plan, whether
or not such entities are similarly situated. The express grant in this Plan of any specific power to the Committee with respect
to the administration or interpretation of this Plan shall not be construed as limiting any power or authority of the Committee
with respect to the administration or interpretation of this Plan. Any decision made, or action taken, by the Committee in connection
with the administration of this Plan shall be final and conclusive. The members of the Committee shall not be liable for any act
done in good faith with respect to this Plan or any Agreement, Option, SAR, Incentive Award, Stock Award, Other Equity-Based Award
or award of Performance Units. All expenses of administering this Plan shall be borne by the Company.

 

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Article
IV

ELIGIBILITY

 

The Manager and any
entity that provides significant services to the Company or an Affiliate of the Company (including an entity that provides services
to the Company or an Affiliate of the Company by virtue of its providing services to the Manager or an Affiliate of the Manager)
is eligible to participate in this Plan if the Committee, in its sole reasonable discretion, determines that the participation
of such entity is in the best interest of the Company.

 

Article
V

COMMON
SHARES SUBJECT TO PLAN

 

5.01.       Common
Shares Issued

 

Upon the award of Common
Stock pursuant to a Stock Award, an Other Equity-Based Award or in settlement of an Incentive Award or an award of Performance
Units, the Company may deliver (and shall deliver if required under an Agreement) to the Participant shares of Common Stock from
its authorized but unissued Common Shares. Upon the exercise of any Option or SAR, the Company may deliver, to the Participant
(or the Participant’s broker if the Participant so directs), shares of Common Stock from its authorized but unissued Common
Shares.

 

5.02.       Aggregate
Limit

 

(a)          The
maximum aggregate number of shares of Common Stock that may be issued under this Plan (pursuant to Options and SARs, Stock Awards
or Other Equity-Based Awards and the settlement of Incentive Awards and Performance Units granted on or after the Effective Date)
together with the number of shares of Common Stock issued under the Individuals Plan (pursuant to Options and SARs, Stock Awards
or Other Equity-Based Awards and the settlement of Incentive Awards and Performance Units granted under the Individuals Plan on
or after the Effective Date) is equal to 475,000 shares. Other Equity-Based Awards that are LTIP Units shall reduce the maximum
aggregate number of Common Shares that may be issued under this Plan and the Individuals Plan on a one-for-one basis, i.e., the
grant of each LTIP Unit shall be treated as an award of a share of Common Stock.

 

(b)          The
maximum number of shares of Common Stock that may be issued under this Plan and the Individuals Plan in accordance with Section
5.02(a) shall be subject to adjustment as provided in Article XII.

 

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5.03.       Reallocation
of Shares

 

If any award or grant
under this Plan or the Individuals Plan (including LTIP Units) expires, is forfeited or is terminated without having been exercised
or is paid in cash without a requirement for the delivery of Common Stock, then any shares of Common Stock covered by such lapsed,
cancelled, expired, unexercised or cash-settled portion of such award or grant and any forfeited, lapsed, cancelled or expired
LTIP Units shall be available for the grant of other Options, SARs, Stock Awards, Other Equity-Based Awards and settlement of Incentive
Awards and Performance Units under this Plan or the Individuals Plan. Any shares of Common Stock tendered or withheld to satisfy
the grant or exercise price or tax withholding obligation pursuant to any award under this Plan or the Individuals Plan shall not
be available for future grants or awards. If shares of Common Stock are issued in settlement of an SAR granted under this Plan
or the Individuals Plan, the number of shares of Common Stock available under this Plan and the Individuals Plan shall be reduced
by the number of shares of Common Stock for which the SAR was exercised rather than the number of shares of Common Stock issued
in settlement of the SAR. To the extent permitted by applicable law or the rules of any exchange on which the Common Stock is listed
for trading, shares of Common Stock issued in assumption of, or in substitution for, any outstanding awards of any entity acquired
in any form of combination by the Company or any Affiliate of the Company shall not reduce the number of shares of Common Stock
available for issuance under this Plan and the Individuals Plan.

 

Article
VI

OPTIONS

 

6.01.       Award

 

In accordance with
the provisions of Articles III and IV, the Committee will designate each entity to whom an Option is to be granted and will specify
the number of shares of Common Stock covered by such awards and the terms and conditions of such awards.

 

6.02.       Option
Price

 

The price per share
of Common Stock purchased on the exercise of an Option shall be determined by the Committee on the date of grant, but shall not
be less than the Fair Market Value on the date the Option is granted. Except as provided in Article XII, without the approval of
stockholders (a) the price per share of Common Stock of an outstanding Option may not be reduced (by amendment, cancellation and
new grant or otherwise) and (b) no payment shall be made in cancellation of an Option if, on the date of such amendment, cancellation,
replacement grant or payment the Option Price exceeds Fair Market Value.

 

6.03.       Maximum
Option Period

 

The maximum period
in which an Option may be exercised shall be determined by the Committee on the date of grant except that no Option shall be exercisable
after the expiration of ten years from the date such Option was granted. The terms of any Option may provide that it is exercisable
for a period less than such maximum period.

 

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6.04.       Transferability

 

Any rights or restrictions
with respect to the ability of the holder of any Option granted under this Plan to transfer such Option shall be set forth in the
Agreement relating to such grant.

 

6.05.       Service
Provider Status

 

In the event that the
terms of any Option provide that it may be exercised only during continued service or within a specified period of time after termination
of continued service, the Committee may decide to what extent temporary interruptions of continuous service shall affect the Option.

 

6.06.       Exercise

 

Subject to the provisions
of this Plan and the applicable Agreement, an Option may be exercised in whole at any time or in part from time to time at such
times and in compliance with such requirements as the Committee shall determine; provided, however, that no Option may become
exercisable before the first anniversary of its grant or the date of the Participant’s termination of service or as provided
in Section 15.01. An Option granted under this Plan may be exercised with respect to any number of whole shares of Common Stock
less than the full number for which the Option could be exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares
of Common Stock subject to the Option. The exercise of an Option shall result in the termination of any Corresponding SAR to the
extent of the number of shares of Common Stock with respect to which the Option is exercised.

 

6.07.       Payment

 

Subject to rules established
by the Committee and unless otherwise provided in an Agreement, payment of all or part of the Option price may be made in cash,
certified check, by tendering shares of Common Stock, by attestation of ownership of shares of Common Stock, by a broker-assisted
cashless exercise or in such other form or manner acceptable to the Committee. If shares of Common Stock are used to pay all or
part of the Option price, the sum of the cash and cash equivalent and the Fair Market Value (determined on the date of exercise)
of the Common Stock so surrendered or other consideration paid must not be less than the Option price of the shares for which the
Option is being exercised.

 

6.08.       Stockholder
Rights

 

No Participant shall
have any rights as a stockholder with respect to shares of Common Stock subject to an Option until the date of exercise of such
Option.

 

6.09.       Disposition
of Shares

 

A Participant may not
sell or dispose of more than fifty percent of the shares of Common Stock acquired pursuant to an Option before the earlier of (i)
the first anniversary of the exercise of the Option or (ii) the date the Participant is no longer providing services to the Company,
an Affiliate of the Company, the Manager and the Operating Partnership.

 

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Article
VII

SARS

 

7.01.       Award

 

In accordance with
the provisions of Articles III and IV, the Committee will designate each entity to whom SARs are to be granted and will specify
the number of shares of Common Stock covered by such awards and the terms and conditions of such awards.

 

7.02.       Maximum
SAR Period

 

The term of each SAR
shall be determined by the Committee on the date of grant, except that no SAR shall have a term of more than ten years from the
date of grant. The terms of any SAR may provide that it has a term that is less than such maximum period.

 

7.03.       Transferability

 

Any rights or restrictions
with respect to the ability of the holder of any SAR granted under this Plan to transfer such SAR shall be set forth in the Agreement
relating to such grant.

 

7.04.       Exercise

 

Subject to the provisions
of this Plan and the applicable Agreement, an SAR may be exercised in whole at any time or in part from time to time at such times
and in compliance with such requirements as the Committee shall determine; provided, however, that no SAR may become exercisable
before the first anniversary of its grant or the date of the Participant’s termination of service or as provided in Section
15.01. An SAR granted under this Plan may be exercised with respect to any number of whole shares less than the full number for
which the SAR could be exercised. A partial exercise of an SAR shall not affect the right to exercise the SAR from time to time
in accordance with this Plan and the applicable Agreement with respect to the remaining shares of Common Stock subject to the SAR.
The exercise of a Corresponding SAR shall result in the termination of the related Option to the extent of the number of shares
of Common Stock with respect to which the SAR is exercised.

 

7.05.       Service
Provider Status

 

If the terms of any
SAR provide that it may be exercised only during continued service or within a specified period of time after termination of continued
service, the Committee may decide to what extent temporary interruptions of continuous service shall affect the SAR.

 

7.06.       Settlement

 

At the Committee’s
discretion, the amount payable as a result of the exercise of an SAR may be settled in cash, shares of Common Stock, or a combination
of cash and Common Stock. No fractional share of Common Stock will be deliverable upon the exercise of an SAR but a cash payment
will be made in lieu thereof.

 

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7.07.       Stockholder
Rights

 

No Participant shall,
as a result of receiving an SAR, have any rights as a stockholder of the Company or any Affiliate of the Company until the date
that the SAR is exercised and then only to the extent that the SAR is settled by the issuance of Common Stock.

 

7.08.       Disposition
of Shares

 

A Participant may not
sell or dispose of more than fifty percent of the shares of Common Stock acquired pursuant to an SAR before the earlier of (i)
the first anniversary of the exercise of the SAR or (ii) the date the Participant is no longer providing services to the Company,
an Affiliate of the Company, the Manager or the Operating Partnership.

 

Article
VIII

STOCK
AWARDS

 

8.01.       Award

 

In accordance with
the provisions of Articles III and IV, the Committee will designate each entity to whom a Stock Award is to be made and will specify
the number of shares of Common Stock covered by such awards and the terms and conditions of such awards.

 

8.02.       Vesting

 

The Committee, on the
date of the award, shall prescribe that a Participant’s rights in a Stock Award shall be forfeitable or otherwise restricted
for a period of time or subject to such conditions as may be set forth in the Agreement. The period in which the shares of Common
Stock covered by a Stock Award are forfeitable or otherwise restricted shall not end before the first anniversary of the grant
of the Stock Award, the date of the Participant’s termination of service or as provided in Section 15.01. By way of example
and not of limitation, the Committee may prescribe that a Participant’s rights in a Stock Award shall be forfeitable or otherwise
restricted subject to the attainment of objectives stated with reference to the business of the Company or an Affiliate of the
Company or a business unit’s attainment of objectives stated with respect to performance criteria established by the Committee.

 

8.03.       Service
Provider Status

 

In the event that the
terms of any Stock Award provide that shares may become transferable and nonforfeitable thereunder only after completion of a specified
period of employment or continuous service, the Committee may decide in each case to what extent temporary interruptions of continuous
service shall affect the Stock Award.

 

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8.04.       Stockholder
Rights

 

Unless otherwise specified
in accordance with the applicable Agreement, while the shares of Common Stock granted pursuant to the Stock Award may be forfeited
or are nontransferable, a Participant will have all rights of a stockholder with respect to a Stock Award, including the right
to receive dividends and vote the shares of Common Stock; provided, however, that (i) dividends payable on shares of Common
Stock subject to a Stock Award that does not become nonforfeitable solely on the basis of continued service shall be accumulated
and paid, without interest, when and to the extent that the underlying Stock Award becomes nonforfeitable; (ii) a Participant may
not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to a Stock Award,
(iii) the Company shall retain custody of any certificates representing shares of Common Stock granted pursuant to a Stock Award,
and (iv) the Participant will deliver to the Company a stock power, endorsed in blank, with respect to each Stock Award. The limitations
set forth in the preceding sentence shall not apply after the shares of Common Stock granted under the Stock Award are transferable
and are no longer forfeitable.

 

8.05.       Disposition
of Shares

 

A Participant may not
sell or dispose of more than fifty percent of the shares of Common Stock acquired under a Stock Award before the earlier of (i)
the first anniversary of the date that the Stock Award became nonforfeitable and (ii) the date the Participant is no longer providing
services to the Company, an Affiliate of the Company, the Manager or the Operating Partnership.

 

Article
IX

PERFORMANCE
UNIT AWARDS

 

9.01.       Award

 

In accordance with
the provisions of Articles III and IV, the Committee will designate each entity to whom an award of Performance Units is to be
made and will specify the number of shares of Common Stock or other securities or property covered by such awards and the terms
and conditions of such awards. The Committee also will specify whether Dividend Equivalent Rights are granted in conjunction with
the Performance Units.

 

9.02.       Earning
the Award

 

The Committee, on the
date of the grant of an award, shall prescribe that the Performance Units will be earned, and the Participant will be entitled
to receive payment pursuant to the award of Performance Units, only upon the satisfaction of performance objectives or such other
criteria as may be prescribed by the Committee. The period in which Performance Units will be earned shall not end before the first
anniversary of the grant of the Performance Units, the date of the Participant’s termination of service or as provided in
Section 15.01.

 

9.03.       Payment

 

In the discretion of
the Committee, the amount payable when an award of Performance Units is earned may be settled in cash, by the issuance of shares
of Common Stock, by the delivery of other securities or property or a combination thereof. A fractional share of Common Stock shall
not be deliverable when an award of Performance Units is earned, but a cash payment will be made in lieu thereof. The amount payable
when an award of Performance Units is earned shall be paid in a lump sum.

 

    	-13-

    	 

    

 

9.04.       Stockholder
Rights

 

A Participant, as a
result of receiving an award of Performance Units, shall not have any rights as a stockholder until, and then only to the extent
that, the award of Performance Units is earned and settled in shares of Common Stock. After an award of Performance Units is earned
and settled in Common Stock, a Participant will have all the rights of a stockholder of the Company.

 

9.05.       Transferability

 

Any rights or restrictions
with respect to the ability of the holder of any Performance Unit granted under this Plan to transfer such Performance Unit shall
be set forth in the Agreement relating to such grant.

 

9.06.       Service
Provider Status

 

In the event that the
terms of any Performance Unit award provide that no payment will be made unless the Participant completes a stated period of continued
service, the Committee may decide to what extent temporary interruptions of continuous service shall effect the Performance Unit
award.

 

9.07.       Disposition
of Shares

 

A Participant may not
sell or dispose of more than fifty percent of the shares of Common Stock issued in settlement of Performance Units before the earlier
of (i) the first anniversary of the date the shares were issued to the Participant or (ii) the date the Participant is no longer
providing services to the Company, an Affiliate of the Company, the Manager or the Operating Partnership.

 

Article
X

OTHER
EQUITY–BASED AWARDS

 

10.01.     Award

 

In accordance with
the provisions of Articles III and IV, the Committee will designate each entity to whom an Other Equity-Based Award is to be made
and will specify the number of shares of Common Stock or other equity interests (including LTIP Units) covered by such awards and
the terms and conditions of such awards; provided, however, that the grant of LTIP Units must satisfy the requirements of
the partnership agreement of the Operating Partnership as in effect on the date of grant. The Committee also will specify whether
Dividend Equivalent Rights are granted in conjunction with the Other Equity-Based Award.

 

    	-14-

    	 

    

 

10.02.     Terms
and Conditions

 

The Committee, at the
time an Other Equity-Based Award is made, shall specify the terms and conditions which govern the award. The terms and conditions
of an Other Equity-Based Award may prescribe that a Participant’s rights in the Other Equity-Based Award shall be forfeitable,
nontransferable or otherwise restricted for a period of time or subject to such other conditions as may be determined by the Committee,
in its discretion and set forth in the Agreement. The period in which such award shall be forfeitable, nontransferable or otherwise
restricted shall not end before the first anniversary of the grant of the Other Equity-Based Award, the date of the Participant’s
termination of service or as provided in Section 15.01. Other Equity-Based Awards may be granted to Participants, either alone
or in addition to other awards granted under this Plan, and Other Equity-Based Awards may be granted in the settlement of other
Awards granted under this Plan.

 

10.03.     Payment
or Settlement

 

Other Equity-Based
Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, shall be payable or settled in shares of
Common Stock, cash or a combination of Common Stock and cash, as determined by the Committee in its discretion; provided, however,
that any shares of Common Stock that are issued on account of the conversion of LTIP Units into shares of Common Stock shall not
be issued under this Plan, i.e., the conversion shall not reduce the number of shares of Common Stock available for issuance
under the Plan or the Entities Plan. Other Equity-Based Awards denominated as equity interests other than shares of Common Stock
may be paid or settled in shares or units of such equity interests or cash or a combination of both as determined by the Committee
in its discretion.

 

10.04.     Service
Provider Status

 

If the terms of any
Other Equity-Based Award provides that it may be earned or exercised only during continued service or within a specified period
of time after termination of continued service, the Committee may decide to what extent temporary interruptions of continuous service
shall affect the Other Equity-Based Award.

 

10.05.     Stockholder
Rights

 

A Participant, as a
result of receiving an Other Equity-Based Award, shall not have any rights as a stockholder until, and then only to the extent
that, the Other Equity-Based Award is earned and settled in shares of Common Stock.

 

10.06.     Disposition
of Shares

 

A Participant may not
sell or dispose of more than fifty percent of the shares of Common Stock or other equity interests (including LTIP units) covered
by an Other Equity-Based Award before the earlier of (i) the first anniversary of the date that such shares or interests become
nonforfeitable and (ii) the date the Participant is no longer providing services to the Company, an Affiliate of the Company, the
Manager or the Operating Partnership.

 

Article
XI

INCENTIVE
AWARDS

 

11.01.     Award

 

In accordance with
the provisions of Articles III and IV, the Committee will designate each entity to whom an Incentive Award is to be made and will
specify the terms and conditions of such award. The Committee also will specify whether Dividend Equivalent Rights are granted
in conjunction with the Incentive Award.

 

    	-15-

    	 

    

 

11.02.     Terms
and Conditions

 

The Committee, at the
time an Incentive Award is made, shall specify the terms and conditions that govern the award.  Such terms and conditions
may prescribe that the Incentive Award shall be earned only to the extent that the Participant, the Company or an Affiliate of
the Company, during a performance period of at least one year, achieves objectives stated
with reference to one or more performance measures or criteria prescribed by the Committee. A goal or objective may be expressed
on an absolute basis or relative to the performance of one or more similarly situated companies or a published index. When establishing
goals and objectives, the Committee may exclude any or all special, unusual, and/or extraordinary items as determined under U.S.
generally accepted accounting principles including, without limitation, the charges or costs associated with restructurings of
the Company, discontinued operations, other unusual or non-recurring items, and the cumulative effects of accounting changes. The
Committee may also adjust the performance goals for any Incentive Award as it deems equitable in recognition of unusual or non-recurring
events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may
determine. Such terms and conditions also may include other limitations on the payment of Incentive Awards including, by
way of example and not of limitation, requirements that the Participant complete a specified period of service with the Company
or an Affiliate of the Company or that the Company, an Affiliate of the Company, or the Participant attain stated objectives or
goals (in addition to those prescribed in accordance with the preceding sentence) as a prerequisite to payment under an Incentive
Award.  

 

11.03.     Nontransferability

 

Except to the extent
otherwise provided in the applicable Agreement, Incentive Awards granted under this Plan shall, so long as such Incentive Awards
are subject to vesting or forfeiture restrictions, be nontransferable except by will or by the laws of descent and distribution.  No
right or interest of a Participant in an Incentive Award shall be liable for, or subject to, any lien, obligation, or liability
of such Participant.

 

11.04.     Service
Provider Status

 

If the terms of an
Incentive Award provide that a payment will be made thereunder only if the Participant completes a stated period of continued service,
the Committee may decide to what extent temporary interruptions of continuous service shall affect the Incentive Award.

 

11.05.     Settlement

 

An Incentive Award
that is earned shall be settled with a single lump sum payment which may be in cash, shares of Common Stock or a combination of
cash and Common Stock, as determined by the Committee.

 

    	-16-

    	 

    

 

11.06.     Stockholder
Rights

 

No Participant shall,
as a result of receiving an Incentive Award, have any rights as a stockholder of the Company or an Affiliate of the Company until
the date that the Incentive Award is settled and then only to the extent that the Incentive Award is settled by the issuance of
shares of Common Stock.

 

11.07.     Disposition
of Shares

 

A Participant may not
sell or dispose of more than fifty percent of the shares of Common Stock issued in settlement of an Incentive Award until the earlier
of (i) the first anniversary of the date the shares were issued to the Participant or (ii) the date the Participant is no longer
providing services to the Company, an Affiliate of the Company, the Manager or the Operating Partnership.

 

Article
XII

ADJUSTMENT
UPON CHANGE IN COMMON SHARES

 

The maximum number
of shares of Common Stock as to which Options, SARs, Performance Units, Incentive Awards, Stock Awards and Other Equity-Based Awards
may be granted under this Plan and the Entities Plan, and the terms of outstanding Stock Awards, Options, SARs, Incentive Awards,
Performance Units and Other Equity-Based Awards granted under this Plan and the Entities Plan, shall be adjusted as the Board determines
is equitably required in the event that (i) the Company (a) effects one or more nonreciprocal transactions between the Company
and its shareholders such as a share dividend, extra-ordinary cash dividend, share split-up, subdivision or consolidation of Common
Stock that affects the number or kind of shares of Common Stock (or other securities of the Company) or the Fair Market Value (or
the value of other Company securities) and causes a change in the Fair Market Value of the shares of Common Stock subject to outstanding
awards or (b) engages in a transaction to which Section 424 of the Code applies or (ii) there occurs any other event which, in
the judgment of the Board necessitates such action. Any determination made under this Article XII by the Board shall be nondiscretionary,
final and conclusive.

 

The issuance by the
Company of any class of Common Stock, or securities convertible into any class of Common Stock, for cash or property, or for labor
or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of Common
Stock or obligations of the Company convertible into such Common Stock or other securities, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the maximum number of shares of Common Stock as to which Options, SARs, Performance
Units, Incentive Awards, Stock Awards and Other Equity-Based Awards may be granted under this Plan and the Entities Plan, or the
terms of outstanding Stock Awards, Incentive Awards, Options, SARs, Performance Units or Other Equity-Based Awards under this Plan
and the Entities Plan.

 

    	-17-

    	 

    

 

The Committee may make
Stock Awards and may grant Options, SARs, Performance Units, Incentive Awards or Other Equity-Based Awards under this Plan and
under the Entities Plan in substitution for performance shares, phantom shares, share awards, stock options, share appreciation
rights, or similar awards held by an individual who becomes an employee of the Company or an Affiliate of the Company in connection
with a transaction described in the first paragraph of this Article XII. Notwithstanding any provision of this Plan and the
Entities Plan, the terms of such substituted Stock Awards, SARs, Other Equity-Based Awards, Options or Performance Units granted
under this Plan or the Entities Plan shall be as the Committee, in its discretion, determines is appropriate.

 

Article
XIII

COMPLIANCE
WITH LAW AND APPROVAL OF REGULATORY BODIES

 

No Option or SAR shall
be exercisable, no Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal, state and foreign laws and regulations (including,
without limitation, withholding tax requirements), any listing agreement to which the Company is a party, and the rules of all
stock exchanges on which the Common Stock may be listed. The Company shall have the right to rely on an opinion of its counsel
as to such compliance. Any certificate issued to represent Common Stock when a Stock Award is granted, a Performance Unit, Incentive
Award or Other Equity-Based Award is settled or for which an Option or SAR is exercised may bear such legends and statements as
the Committee may deem advisable to assure compliance with federal, state and foreign laws and regulations. No Option or SAR shall
be exercisable, no Stock Award or Performance Unit shall be granted, no Common Stock shall be issued, no certificate for Common
Stock shall be delivered, and no payment shall be made under this Plan until the Company has obtained such consent or approval
as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters.

 

Article
XIV

GENERAL
PROVISIONS

 

14.01.     Effect
on Service

 

Neither the adoption
of this Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof), shall confer upon any
entity any right to continue in the service of the Company or an Affiliate of the Company or in any way affect any right and power
of the Company or an Affiliate of the Company to terminate the service of any entity at any time with or without assigning a reason
therefor.

 

14.02.     Unfunded
Plan

 

This Plan, insofar
as it provides for grants, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time
be represented by grants under this Plan. Any liability of the Company to any person with respect to any grant under this Plan
shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company
shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company.

 

    	-18-

    	 

    

 

14.03.     Rules
of Construction

 

Headings are given
to the articles and sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or successor of such provision of law.

 

All awards made under
this Plan are intended to comply with, or otherwise be exempt from, Section 409A of the Code (“Section 409A”), after
giving effect to the exemptions in Treasury Regulation sections 1.409A-1(b)(3) through (b)(12). This Plan and all Agreements shall
be administered, interpreted and construed in a manner consistent with Section 409A. Nevertheless, the tax treatment of the benefits
provided under this Plan or any Agreement is not warranted or guaranteed. Neither the Company, its Affiliates nor their respective
directors or trustees, officers, employees or advisors shall be held liable for any taxes, interest, penalties or other monetary
amounts owed by any Participant or any other taxpayer as a result of the Plan or any Agreement. If any provision of this Plan or
any Agreement is found not to comply with, or otherwise not be exempt from, the provisions of Section 409A, it shall be modified
and given effect, in the sole discretion of the Committee and without requiring the Participant’s consent, in such manner
as the Committee determines to be necessary or appropriate to comply with, or effectuate an exemption from, Section 409A. Each
payment under an award granted under this Plan shall be treated as a separate identified payment for purposes of Section 409A.

 

If a payment obligation
under an award or an Agreement arises on account of the Participant’s termination of service and such payment obligation
constitutes “deferred compensation” (as defined under Treasury Regulation section 1.409A-1(b)(1), after giving effect
to the exemptions in Treasury Regulation sections 1.409A-1(b)(3) through (b))12)), it shall be payable only after the Participant’s
“separation from service” (as defined under Treasury Regulation section 1.409A-1(h)).

 

14.04.     Withholding
Taxes

 

Each Participant shall
be responsible for satisfying any income, employment and other tax withholding obligations attributable to participation in this
Plan. Unless otherwise provided by the Agreement, any such withholding tax obligations may be satisfied in cash (including from
any cash payable in settlement of an award of Performance Units, SARs or Other Equity-Based Award) or a cash equivalent acceptable
to the Committee. Except to the extent prohibited by Treasury Regulation Section 1.409A-3(j), any minimum statutory federal, state,
district, city or foreign withholding tax obligations also may be satisfied (a) by surrendering to the Company shares of Common
Stock previously acquired by the Participant; (b) by authorizing the Company to withhold or reduce the number of shares of Common
Stock otherwise issuable to the Participant upon the exercise of an Option or SAR, the settlement of a Performance Unit award,
Incentive Award or an Other Equity-Based Award (if applicable) or the grant or vesting of a Stock Award; or (c) by any other method
as may be approved by the Committee. If shares of Common Stock are used to pay all or part of such withholding tax obligation,
the Fair Market Value of the Common Stock surrendered, withheld or reduced shall be determined as of the date of surrender, withholding
or reduction and the number of shares of Common Stock which may be withheld, surrendered or reduced shall be limited to the number
of shares of Common Stock which have a Fair Market Value on the date of withholding, surrender or reduction equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for tax purposes that are applicable to such supplemental
taxable income.

 

    	-19-

    	 

    

 

14.05.     REIT
Status

 

This Plan shall be
interpreted and construed in a manner consistent with the Company’s status as a REIT. No award shall be granted or awarded,
and with respect to any award granted under this Plan, such award shall not vest, be exercisable or be settled (i) to the extent
that the grant, vesting, exercise or settlement could cause the Participant or any other person to be in violation of the share
ownership limit or any other limitation on ownership or transfer prescribed by the Company’s charter, or (ii) if, in the
discretion of the Committee, the grant, vesting, exercise or settlement of the award could impair the Company’s status as
a REIT.

 

14.06.     Elections
Under Section 83(b)

 

No Participant may
make an election under Section 83(b) of the Code with respect to the grant of any award, the vesting of any award, the settlement
of any award or the issuance of Common Stock under the Plan without the consent of the Company, which the Company may grant or
withhold in its sole discretion.

 

Article
XV

CHANGE
IN CONTROL

 

15.01.     Impact
of Change in Control.

 

Upon a Change in Control
the Committee may prescribe that (i) all outstanding Options and SARs shall be fully vested and exercisable, (ii) outstanding Stock
Awards shall be transferable and nonforfeitable and (iii) outstanding Performance Units, Incentive Awards and Other Equity-Based
Awards shall be earned and nonforfeitable in their entirety.

 

15.02.     Assumption
Upon Change in Control.

 

In addition to the
vesting of awards under Section 15.01, in the event of a Change in Control, the Committee, in its discretion and without the need
for a Participant’s consent, may provide that an outstanding Option, SAR, Stock Award, Incentive Award, Performance Unit
or Other Equity-Based Award shall be assumed by, or a substitute award granted by, the Successor Entity (or, if applicable, the
Parent Company) in the Change in Control. Such assumed or substituted award shall be of the same type of award as the original
Option, SAR, Stock Award, Performance Unit, Incentive Award or Other Equity-Based Award being assumed or substituted. The assumed
or substituted award shall be immediately vested and shall have a value (or the difference between the Fair Market Value and the
option price or Initial Value in the case of Options and SARs), as of the Control Change Date, that is substantially equal to the
value of the original award (or the difference between the Fair Market Value and the option price or Initial Value in the case
of Options and SARs) as the Committee determines is equitably required and such other terms and conditions as may be prescribed
by the Committee.

 

    	-20-

    	 

    

 

15.03.     Cash-Out
Upon Change in Control.

 

In addition to the
vesting of awards under Section 15.01, in the event of a Change in Control, the Committee, in its discretion and without the need
of a Participant’s consent, may provide that each Option, SAR, Stock Award and Performance Unit, Incentive Award and Other
Equity-Based Award shall be cancelled in exchange for a payment. The payment may be in cash, Common Stock or other securities or
consideration received by stockholders in the Change in Control transaction or, in the case of an Incentive Award, the entire amount
that can be paid under the Incentive Award. Except as provided in the preceding sentence with respect to the Incentive Awards,
the amount of the payment shall be an amount that is substantially equal to (i) the amount by which the price per share received
by stockholders in the Change in Control for each share of Common Stock exceeds the option price or Initial Value in the case of
an Option and SAR, or (ii) for each share of Common Stock subject to a Stock Award, Performance Unit or Other Equity-Based Award,
the price per share received by stockholders or (iii) the value of the other securities or property in which the Performance Unit
or Other Equity-Based award is denominated. If the option price or Initial Value exceeds the price per share received by stockholders
in the Change in Control transaction, the Option or SAR may be cancelled under this Section 15.03 without any payment to the Participant.

 

15.04.     Limitation
of Benefits

 

The benefits that a
Participant may be entitled to receive under this Plan and other benefits that a Participant is entitled to receive under other
plans, agreements and arrangements (which, together with the benefits provided under this Plan, are referred to as “Payments”),
may constitute Parachute Payments that are subject to Code Sections 280G and 4999. As provided in this Section 15.04, the Parachute
Payments will be reduced pursuant to this Section 15.04 if, and only to the extent that, a reduction will allow a Participant to
receive a greater Net After Tax Amount than a Participant would receive absent a reduction.

 

The Accounting Firm
will first determine the amount of any Parachute Payments that are payable to a Participant. The Accounting Firm also will determine
the Net After Tax Amount attributable to the Participant’s total Parachute Payments.

 

The Accounting Firm
will next determine the largest amount of Payments that may be made to the Participant without subjecting the Participant to tax
under Code Section 4999 (the “Capped Payments”). Thereafter, the Accounting Firm will determine the Net After Tax Amount
attributable to the Capped Payments.

 

The Participant will
receive the total Parachute Payments or the Capped Payments, whichever provides the Participant with the higher Net After Tax Amount.
If the Participant will receive the Capped Payments, the total Parachute Payments will be adjusted by first reducing the amount
of any benefits under this Plan or any other plan, agreement or arrangement that are not subject to Section 409A of the Code (with
the source of the reduction to be directed by the Participant) and then by reducing the amount of any benefits under this Plan
or any other plan, agreement or arrangement that are subject to Section 409A of the Code (with the source of the reduction to be
directed by the Participant) in a manner that results in the best economic benefit to the Participant (or, to the extent economically
equivalent, in a pro rata manner). The Accounting Firm will notify the Participant and the Company if it determines that the Parachute
Payments must be reduced to the Capped Payments and will send the Participant and the Company a copy of its detailed calculations
supporting that determination.

 

    	-21-

    	 

    

 

As a result of the
uncertainty in the application of Code Sections 280G and 4999 at the time that the Accounting Firm makes its determinations under
this Article XV, it is possible that amounts will have been paid or distributed to the Participant that should not have been paid
or distributed under this Section 15.04 (“Overpayments”), or that additional amounts should be paid or distributed
to the Participant under this Section 15.04 (“Underpayments”). If the Accounting Firm determines, based on either the
assertion of a deficiency by the Internal Revenue Service against the Company or the Participant, which assertion the Accounting
Firm believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been
made, the Participant must repay the Overpayment to the Company, without interest; provided, however, that no amount will
be payable by the Participant to the Company unless, and then only to the extent that, the repayment would either reduce the amount
on which the Participant is subject to tax under Code Section 4999 or generate a refund of tax imposed under Code Section 4999.
If the Accounting Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred,
the Accounting Firm will notify the Participant and the Company of that determination and the amount of that Underpayment will
be paid, without interest, to the Participant promptly by the Company.

 

For purposes of this
Section 15.04, the term “Accounting Firm” means the independent accounting firm engaged by the Company immediately
before the Control Change Date. For purposes of this Article XV, the term “Net After Tax Amount” means the amount of
any Parachute Payments or Capped Payments, as applicable, net of taxes imposed under Code Sections 1, 3101(b) and 4999 and any
State or local income taxes applicable to the Participant on the date of payment. The determination of the Net After Tax Amount
shall be made using the highest combined effective rate imposed by the foregoing taxes on income of the same character as the Parachute
Payments or Capped Payments, as applicable, in effect on the date of payment. For purposes of this Section 15.04, the term “Parachute
Payment” means a payment that is described in Code Section 280G(b)(2), determined in accordance with Code Section 280G and
the regulations promulgated or proposed thereunder.

 

Notwithstanding any
other provision of this Section 15.04, this Section 15.04 shall not limit or otherwise supersede the provisions of any other agreement
or plan which provides that a Participant cannot receive Payments in excess of the Capped Payments.

 

Article
XVI

AMENDMENT

 

The Board may amend
or terminate this Plan at any time; provided, however, that no amendment may adversely impair the rights of Participants
with respect to outstanding awards. In addition, an amendment will be contingent on approval of the Company’s stockholders
if such approval is required by law or the rules of any exchange on which the Common Stock is listed or if the amendment would
materially increase the benefits accruing to Participants under this Plan, materially increase the aggregate number of shares of
Common Stock that may be issued under this Plan and the Entities Plan (except as provided in Article XII) or materially modify
the requirements as to eligibility for participation in this Plan. For the avoidance of doubt, without the approval of stockholders,
the Board may not (except pursuant to Article XII) (a) reduce the option price per share of an outstanding Option or the Initial
Value of an outstanding SAR, (b) cancel an outstanding Option or outstanding SAR when the option price or Initial Value, as applicable
exceeds the Fair Market Value or (c) take any other action with respect to an outstanding Option or an outstanding SAR that may
be treated as a repricing of the award under the rules and regulations of the principal exchange on which the Common Stock is listed
for trading.

 

    	-22-

    	 

    

 

Article
XVII

DURATION
OF PLAN

 

No Stock Award, Performance
Unit Award, Incentive Award, Option, SAR or Other Equity-Based Award may be granted under this Plan after May 28, 2025. Stock Awards,
Performance Unit awards, Options, SARs and Other Equity-Based Awards granted before such date shall remain valid in accordance
with their terms.

 

Article
XVIII

EFFECTIVENESS
OF PLAN

 

Options, SARs, Stock
Awards, Performance Unit Awards, Incentive Awards and Other Equity-Based Awards may be granted under this Plan, as amended and
restated herein, on and after the Effective Date.

 

    	-23-Exhibit 10.1

KemPharm, Inc.

 

Employment Agreement

Tracy Woody

 

Dated March 30, 2015

 

 

 

 

KemPharm, Inc.

Employment Agreement

 

This Employment Agreement (“Agreement”) is made and entered into effective as of March 30, 2015, by and between KemPharm, Inc., a Delaware corporation (the “Company”) and Tracy Woody (“Executive”) (each being a “Party” hereto and together constituting the “Parties”).

Whereas, the Company desires to employ the Executive as its Chief Commercial Officer under the terms and conditions set forth below.

Now, Therefore, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

1. Employment.  

A. Employment.  Company hereby continues to employ Executive and Executive hereby accepts such continued employment with Company as Chief Commercial Officer, or in such other capacities as Company shall reasonably determine from time to time, upon the terms and conditions set forth in this Agreement.  

B. Effective Date and Term.  Company’s continued employment of Executive under this Agreement shall commence effective as of February 18, 2015 (the “Effective Date”), and continue until the Date of Termination (defined in Section 4(A)) (hereinafter such period of time from the commencement until termination of employment shall be referred to as the “Employment Term”).  

C. Duties of Executive.  During the Employment Term, all of the following shall apply:  Executive shall carry out, perform and comply with such reasonable and lawful orders, directions, and written rules and policies (including those rules and policies memorialized in meeting minutes) as are assigned or set by Company’s Chief Executive Officer (the “CEO”) from time to time.  Executive shall report to, receive directions from and be reviewed by the CEO.  Executive’s duties shall include the duties and responsibilities commonly associated with a Chief Commercial Officer of a company similar to Company.   Subject to the limitations of Section 4(E)(3)(iv), the CEO retains the right to modify Executive’s job title and responsibilities pursuant to the legitimate business needs of Company.   

D. Duty of Loyalty.  Except as set forth in Exhibit A, during the Employment Term Executive shall not, without the prior written consent of the CEO, accept other employment or render or perform other services for compensation and shall devote Executive’s full business time and attention and Executive’s best efforts to the faithful performance of Executive’s duties as an executive officer and employee of Company.  Executive’s expenditure of reasonable amounts of time for teaching, personal business, or on behalf of charitable or professional organizations shall not be deemed a breach of this Agreement, provided such activities do not materially interfere with the performance of Executive’s duties and responsibilities hereunder.    

E. Place of Performance.  Executive’s principal place of employment during the Employment Term will be in the Chapel Hill, NC area.  Notwithstanding the foregoing, Executive understands and agrees that Executive’s presence may be required at Company headquarters or other Company worksite, or Executive may be required to travel for business, in each case, in accordance with Executive’s duties and responsibilities under this Agreement, as business needs require or may change over time and as reasonably requested by the CEO. 

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2. Compensation and Benefits. In consideration of the services to be rendered by Executive pursuant to this Agreement, as well as Executive’s covenants set forth in this Agreement, Company shall pay to Executive the following compensation, which shall be the entire and exclusive compensation for all of Executive’s services rendered and other obligations taken on Company’s behalf:

A. Annual Base Salary.  During the Employment Term, Company shall pay to Executive an annualized base salary of $300,000 (the “Base Salary”).  For calendar years in which Executive is employed for less than the full year, the Base Salary shall be prorated and accrue on a per diem basis for only those days on which Executive was employed during the Employment Term.  The Base Salary will be paid by Company in equal installments according to Company’s customary payroll practices, but in any event not less frequently than monthly, and shall be subject to all mandatory and voluntary payroll deductions.  Executive’s Base Salary shall be reviewed periodically by the Company’s Board of Directors (“Board of Directors”) or the Compensation Committee of the Board of Directors (the “Compensation Committee”) if so designated and may be appropriately increased from time to time in the sole discretion of Board of Directors or the Compensation Committee, as applicable, and may only be decreased proportionately with any across-the-board decrease applicable to all senior executives of Company.

B. Incentive Compensation.  During the Employment Term, Executive shall be entitled to participate in all short-term and long-term incentive programs established by Company, at such levels as the Board of Directors or Compensation Committee determines.  Executive’s annual short-term incentive opportunity target shall be no less than 35% of the Base Salary, as such percentage may be increased from time to time (the “Target Annual Bonus”).  The actual amount of such annual incentive compensation shall be determined in accordance with the applicable plans based on achievement of individual and Company performance objectives established in advance by the Board of Directors or the Compensation Committee, taking into account input from the CEO, and such actual annual short term incentive compensation amount may be more or less than the target amount.  No minimum incentive is guaranteed. 

C. Equity Compensation.  Upon the terms and conditions set forth in the following subsections, Company shall grant to Executive options to purchase shares of Company’s common stock (“Common Stock”) pursuant to and in accordance with the terms and conditions of Company's Incentive Stock Plan, or a successor plan (the “Stock Plan”) and Company’s form of option or stock grant agreement, as applicable:

(1) Company shall grant Executive a stock option to purchase 1,000,000 shares of Common Stock (the “Sign-On Option”).  The Sign-On Option shall have an exercise price equal to $1.15 per share as of grant date of the Sign-On Option.  The Sign-On Option shall vest over a four-year period with 25% of the shares of Common Stock subject to the Sign-On Option vesting on each anniversary of the Effective Date until all such shares are fully vested and exercisable.

(2) Upon the occurrence of an IPO (as defined below), the Company shall issue to Executive a stock option to purchase that number of shares of Common Stock necessary so that the aggregate number of shares subject to options held by the Executive, including without limitation the Sign-On Option, shall equal at least 1.0% of the Company’s fully diluted capitalization as of the closing date of the IPO.  Such option shall have an exercise price equal to closing sale price of the Common Stock on the date of grant as quoted on the National Security Exchange on which the Common Stock is traded as reported in a source deemed reliable by the Board of Directors.  Such option shall vest over a four-year period with 25% of the shares of Common Stock subject to such option vesting on each anniversary of the date of grant thereof thereafter until all such shares are fully vested and exercisable.  For purposes of this Agreement, “IPO” mean the first sale of equity securities issued by Company, which sale is registered under the Securities Act, and 

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which securities are listed on a National Securities Exchange.  For purposes of this Agreement, a “National Securities Exchange” means a securities exchange described in Section 18(b)(1) of the Securities Act.

 

(3) All options vested prior to Executive’s Date of Termination shall remain exercisable for the remainder of their term, unless Executive’s employment is terminated with Cause as defined herein, in which case all unexercised options shall terminate on the Date of Termination.

D. Retirement, Welfare and Other Benefit Plans and Programs.  During the Employment Term, Executive shall be entitled to participate in the employee retirement and welfare benefit plans and programs made available to Company’s other senior level executives as a group, as such retirement and welfare plans may be in effect from time to time and subject to the eligibility requirements of such plans, including but not limited to, life, health and disability plans, and a 401(k) retirement plan and similar or other plans.  During the Employment Term, Executive shall be eligible for vacation, sick leave and holidays in accordance with Company’s vacation, sick and holiday and other pay for time not worked policies.  Nothing in this Agreement or otherwise shall prevent Company from amending or terminating after the Effective Date any retirement, welfare or other employee benefit plans, programs, policies or perquisites from time to time as Company deems appropriate, and Executive’s participation in any such plan, program, policy and perquisite shall be subject to the terms, provisions, rules and regulations thereof. 

E. Reimbursement of Expenses.  During the Employment Term, Company shall reimburse Executive for all reasonable and necessary business expenses that Executive incurs while performing Executive’s duties under this Agreement in accordance with Company’s general policies of expense reimbursement in effect from time to time.

3. Company Policies and Procedures. Executive agrees to observe and comply with the reasonable and lawful policies and procedures of Company as adopted by the Board of Directors in writing or reflected in the formal minutes of the Board of Directors or committee thereof, respecting performance of Executive’s duties and to carry out and to perform the reasonable and lawful orders and directions stated by Company to Executive, from time to time, either orally or in writing.  Executive agrees that Executive will be subject to any compensation clawback, recoupment and anti-hedging policies that may be applicable to executives of Company generally, as in effect from time to time and as approved by the Board of Directors or a duly authorized committee thereof.

4. Termination.  

A. Notice of Termination and Date of Termination. Each Party must give written notice to the other of the intent to terminate this Agreement and Executive’s employment hereunder (“Notice of Termination”). The Notice of Termination must specify a date of termination of employment, which shall incorporate any period of notice required by this Section 4 (“Date of Termination”).  

B. Executive’s Death or Total Disability.  Executive’s employment under this Agreement shall terminate upon the date of Executive’s death.  Additionally, if, during the Employment Term, Executive suffers a Total Disability (as defined in Section 4(E)(3)(iii), then Company may terminate Executive’s employment under this Agreement by giving Executive a Notice of Termination specifying the Date of Termination.  Upon such termination due to death or Total Disability, Company shall pay to Executive or Executive’s estate (i) any Base Salary that has fully accrued but not been paid as of the effective date of such termination, as well as any vested and accrued employment benefits subject to the terms of any applicable employment benefit arrangements and applicable law (“Accrued Benefits”) and (ii) a prorated bonus for the year in which Executive’s death 

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or Disability occurs, which bonus shall be calculated and paid in the same manner as set forth below in Section 4(E)(1)(b).  All other rights and benefits of Executive and Executive’s dependents hereunder shall terminate upon such termination, except for any right to the continuation of benefits otherwise provided by law.  

C. By Company with Cause.  Company may terminate with Cause (as defined in Section 4(E)(3)(i)) Executive’s employment hereunder at any time.  In order to terminate Executive’s employment hereunder with Cause, Company must give Notice of Termination to Executive specifying the Cause and the Date of Termination, which may be the same date as the date of the Notice of Termination.  Upon termination with Cause, Company shall pay to Executive all Accrued Benefits.  All other rights and benefits of Executive hereunder shall terminate upon such termination, except for any right to the continuation of benefits otherwise provided by law.  

D. By Executive without Good Reason or by Mutual Agreement. Executive may terminate Executive’s employment without Good Reason (as defined in Section 4(E)(3)(iv) at any time by giving Company Notice of Termination at least 30 days prior to the Date of Termination designated by Executive.  In addition, this Agreement may be terminated at any time by written mutual agreement of the Parties with or without notice.  Upon termination of Executive’s employment by Executive without Good Reason or termination by mutual agreement of the parties, Company shall pay to Executive all Accrued Benefits.  All other rights and benefits of Executive hereunder shall terminate upon such termination, except for any right to the continuation of benefits otherwise provided by law.  

E. Without Cause by Company or For Good Reason by Executive. Company may terminate Executive’s employment at any time without Cause (as defined in Section 4(E)(3)(ii)) by giving Executive a Notice of Termination at least one day prior to the Date of Termination, and Executive may terminate Executive’s employment for Good Reason by giving Company a Notice of Termination in accordance with Section 4(E)(3)(iv) below.  Upon termination of Executive’s employment without Cause by Company or for Good Reason by Executive, Company will pay Executive (i) all Accrued Benefits, (ii) the severance compensation payable set forth below in this Section 4(E), if Executive executes and does not revoke a Release (as defined in Section 4(E)(3)(v).  All other rights and benefits of Executive hereunder shall terminate upon such termination, except for any right to the continuation of benefits otherwise provided by law.  

(1) In the event that Company terminates Executive’s employment without Cause or Executive terminates Executive’s employment for Good Reason, and Executive executes and does not revoke a Release, then Company shall pay to Executive as severance compensation, the following:

(a) Executive’s Base Salary (at the rate payable at the time of such termination) for a period of twelve months following the Date of Termination.  Such severance compensation shall be paid by Company in equal installments according to Company’s customary payroll practices, with the first payment made on the first regularly scheduled pay day immediately following the 60th day following the Date of Termination; provided, however, that if such termination of employment occurs within 60 days before, upon or within one year following a Sale (as defined in Section 4(E)(3)(vi)), then Company shall pay such amount in a lump sum on the first regularly scheduled pay day immediately following the 60th day following the Date of Termination, but (i) the amount will only be paid in a lump sum if the Sale constitutes a “change in control event” as defined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”); and (ii) notwithstanding the preceding clause (i), if the Sale is not a “change in control event” as defined under Section 409A of the Code and penalty taxes may result under Section 409A of the Code if such severance compensation is paid in a 

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lump sum, then the severance compensation will be paid in equal installments according to Company’s customary payroll practices, with the first payment made on the first regularly scheduled pay day immediately following the 60th day following the Date of Termination.

(b) To the extent Executive has an annual incentive compensation award for the year of termination in which the Date of Termination occurs, Executive shall receive a pro rata Target Annual Bonus award payment for the year in which the Date of Termination occurs (measured at the target level, identified “goal” target or other similar target, without taking into account any incentive override for above goal performance, or any project-specific or other non-standard incentives), which shall be paid on the first regularly scheduled pay day immediately following the 60th day following the Date of Termination.  The pro rata amount shall be determined as the Target Annual Bonus in effect for the year in which the Date of Termination occurs, multiplied by a fraction, the numerator of which is the number of days in which Executive was employed by Company during the year in which the Date of Termination occurs, including the Date of Termination, and the denominator of which is 365.  

(c) During the 12 month period following the Date of Termination, if Executive timely elects continued coverage under Section 4980B of the Code (“COBRA”), Company will reimburse Executive for the monthly COBRA cost of continued health coverage under the health plans of Company paid by Executive for Executive, and, if applicable, Executive’s spouse and dependents, less the amount that Executive would be required to contribute for health coverage if Executive were an active employee of Company; provided that such reimbursements shall not continue beyond the first to occur of (x) the date on which Executive fails to pay the COBRA cost of continuation coverage under the health plans of Company and (y) the date on which Executive is eligible for substantially similar coverage from a subsequent employer.  These reimbursements will commence on the first regularly scheduled pay day immediately following the 60th day following the Date of Termination and will be paid on the first regularly scheduled pay day of each month, provided that Executive demonstrates proof of payment of the applicable premiums prior to the applicable reimbursement payment date.

(d) The vesting of each outstanding equity award granted to Executive will accelerate so that such awards will be fully vested as of the Date of Termination. If any equity awards vest based on the attainment of performance goals, the performance goals will be deemed to have met as of the Date of Termination, unless such greater amount of vesting is provided for in the applicable award agreements.

(2) Payment of the severance compensation shall be subject to all mandatory and voluntary payroll deductions.  In the event that Executive materially breaches any of Executive’s post-employment covenants or obligations set forth in this Agreement that the Board of Directors reasonably determines is not cured (to the extent the breach is curable as determined by the Board of Directors) within 15 days following written notice from Company, then the payment of severance compensation pursuant to this section shall terminate immediately and permanently.  During the period that Executive is paid the foregoing severance compensation, Executive shall not further accrue any other benefits under any benefit plans of which Executive was a participant while employed by Company, except as otherwise required by applicable federal or state law, by the express terms of this Agreement, or by the express terms of such benefit plans; provided, however, that if Executive becomes entitled to and receives the payments described in Section 4(E)(1) of this Agreement, Executive hereby waives Executive’s right to receive payments under any severance plan or similar program applicable to employees of Company. 

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(3) For purposes of this Agreement:

(i) Executive’s employment will be deemed to have been terminated by Company “with Cause” if the termination arises from a determination by the Board of Directors that (a) Executive is convicted of (or pleads guilty or nolo contendere to) a crime constituting a misdemeanor involving dishonesty or moral turpitude or any crime constituting a felony; (b) Executive neglects, refuses or fails to perform Executive’s material duties hereunder (other than a failure resulting from Executive’s incapacity due to physical or mental illness); (c) Executive commits a material act of dishonesty or otherwise engages in or is guilty of gross negligence or willful misconduct in the performance of Executive’s duties; or (d) Executive materially breaches the provisions of any written non-competition, non-disclosure or non-solicitation agreement, or any other agreement in effect with Company, including without limitation the provisions of Sections 7 – 9 of this Agreement or Company’s applicable written code of business conduct and compliance policies; provided, however, Executive shall have 15 days following Company’s provision of the Notice of Termination specifying a condition under clause (b), (c) or (d) constituting Cause to cure such condition (to the extent the condition is curable as reasonably determined by the Board of Directors), before which time a termination with Cause cannot be effective unless such condition remains uncured as reasonably determined by the Board of Directors.  

(ii) Executive’s employment shall be deemed to have been terminated by Company “without Cause” if such termination is not with “Cause,” and such termination is not the result of Executive’s death or Executive suffering a Total Disability.  

(iii) Executive shall be deemed to have suffered a “Total Disability” if (a) Executive is granted long-term disability benefits under Company’s long-term disability plan or (b) Executive becomes physically or mentally disabled so that Executive is unable to perform the essential functions of Executive’s job, with or without reasonable accommodation in accordance with the Americans with Disabilities Act and its amendments, for a period of 180 consecutive days.

(iv) Executive shall be deemed to have terminated Executive’s employment for “Good Reason” if Executive terminates Executive’s employment on account of the occurrence of one or more of the following without Executive’s consent:

(a) A material diminution by Company of Executive’s authority, duties or responsibilities, other than a diminution of authority, duties or responsibilities during a 15-day cure period following Company’s notice to Executive of a termination with Cause, temporarily while Executive is physically or mentally incapacitated, or otherwise as required by applicable law;

(b) A material change in the geographic location at which Executive must principally perform services under this Agreement (which, for purposes of this Agreement, means the requirement that Executive principally work from a location more than 50 miles from the at which Executive principally performs her duties immediately prior to the relocation);

(c) A material diminution in Executive’s Base Salary which is not the result of an across-the-board reduction in base salaries of other senior executives of Company; or

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(d) Any action or inaction that constitutes a material breach by Company of this Agreement, including the failure of Company to pay any amounts due under Section 2 or the failure of Company to obtain from its successors the express assumption and agreement required under Section 17(A).

Executive must provide Notice of Termination for Good Reason to Company within 60 days after the event constituting Good Reason.  Company shall have a period of 30 days in which it may correct the act or failure to act that constitutes the grounds for Good Reason as set forth in Executive’s Notice of Termination.  If Company does not correct the act or failure to act, then, in order for the termination to be considered a Good Reason termination, Executive must terminate Executive’s employment for Good Reason by giving Notice of Termination with a Date of Termination designated by Executive which is at least 30 days after the date on which the Notice of Termination is given but not more than 90 days after the end of the cure period.  

 

(v) The term “Release” shall mean a release of claims approved by Company, which shall be in the form attached hereto as Exhibit B, subject to revision based on advice from Company counsel to comply with changes in applicable law.

(vi) The term “Sale” means the sale of more than 50% of the equity of Company, a merger of Company with an entity the equity of which after the merger the stockholders of Company immediately prior to such merger own less than 50%, or the sale of all or substantially all of the assets of Company, in any case to a person or entity not affiliated with Company.  Neither a recapitalization nor change of form of Company shall be considered a Sale.  Additionally, a “Sale” shall not be deemed to have occurred as a result of a lender exercising any of its remedies in connection with the occurrence or continuation of an event of default under that certain Facility Agreement, to be dated as of or around May 30, 2014, by and between Company and Deerfield Private Design Fund III, L.P.

(4) In the event Company terminates Executive’s employment with Cause, Executive voluntarily terminates Executive’s employment with Company other than for Good Reason, or such employment is terminated by mutual agreement or as the result of Executive’s death or Total Disability, Executive shall not be entitled to payment of any severance compensation under this Agreement (except in the case of death or Total Disability, a pro-rated bonus per Section 4B) and Executive shall not be entitled to receive severance benefits under any Company severance plan. 

F. Cooperation after Notice of Termination. Following any Notice of Termination by either Company or Executive, Executive, if requested by Company, shall reasonably cooperate with Company in all matters relating to the winding up of Executive’s pending work on behalf of Company and the orderly transfer of any such pending work to other employees of Company as may be reasonably designated by Company following the Notice of Termination.  Executive shall not receive any additional compensation during the Employment Term, other than Executive’s Base Salary, for any services that Executive renders as provided in this Section 4(F).  For each day that Executive performs services under this Section 4(F) after the Employment Term, Executive shall be reimbursed for her reasonable out-of-pocket expenses and, after the final payment by Company of any and all severance compensation due to Executive under Section 4(E), Company shall pay Executive a per diem cash amount at Executive’s Base Salary rate on the Date of Termination.

G. Surrender of Records and Property.  Upon termination of employment, Executive shall promptly turn-over or deliver to Company at Company’s expense all property of Company in 

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Executive’s possession, custody, or control, including without limitation thereto: records (paper and electronic), files (paper and electronic), documents (paper and electronic), electronic mail (e-mail) on Company accounts, letters, financial information, memorandum, notes, notebooks, contracts, project manuals, specifications, reports, data, tables, calculations, data, electronic information, and computer disks, in all cases whether or not such property constitutes Confidential Information (as defined below), and all copies thereof; all keys to motor vehicles, offices or other property of Company; and all computers, cellular phones and other property of Company. If any of the foregoing property of Company is electronically stored on a computer or other storage medium owned by Executive or a friend, family member or agent of Executive, such information shall be copied onto a computer disk to be delivered to Company together with a written statement of Executive that the information has been deleted from such person’s computer or other storage medium. 

5. Section 280G of the Code.

A. Shareholder Approval, etc.  At any time when Company is a corporation described in Section 280G(b)(5)(A)(ii)(I) of the Code, if a nationally recognized United States public accounting firm selected (and paid for) by Company (the “Accountant”) determines that any payment or benefit (including any accelerated vesting of equity awards) made or provided, or to be made or provided, by Company (or any successor thereto or affiliate thereof) to or for the benefit of Executive, whether pursuant to the terms of this Agreement, any other agreement, plan, program or arrangement of or with Company (or any successor thereto or affiliate thereof) or otherwise in connection with, or arising out of, a change in ownership or an effective control of Company or of a substantial portion of assets (any such payment or benefit, a “Parachute Payment”), will be subject to the excise tax imposed by Section 4999 of the Code or any comparable tax imposed by any replacement or successor provision of United States tax law (the “Excise Tax”), if Executive waives Executive’s right to receive all or a portion of the Parachute Payments unless such Parachute Payments are approved by the shareholders pursuant to Treas. Reg. Section 1.280G-1, Q&A-7, Company shall in good faith seek to obtain approval of payment of such waived Parachute Payments in accordance with the shareholder approval requirements described in Treas. Reg. Section 1.280G-1, Q&A-7.

B. Better Off.  If, following the date when Company ceases to be corporation described in Section 280G(b)(5)(A)(ii)(I) of the Code, it is determined by the Accountant that Executive shall become entitled to a Parachute Payment, which Parachute Payment shall be subject to the Excise Tax, then Company shall cause to be determined, before any amounts of any Parachute Payment is paid to Executive, which of the following two alternative forms of payment would result in Executive, on an after-tax basis, retaining the greater amount of Parachute Payments, notwithstanding that all or a portion of the Parachute Payments may be subject to the Excise Tax: (a) payment in full of all Parachute Payments or (b) payment of only a part of the Parachute Payments so that Executive receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”).  For purposes of this Section 5(B), the Accountant shall take into account all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at Executive’s actual marginal tax rate).  If a Reduced Payment is made, (i) Executive shall have no rights to any additional payments and/or benefits constituting the Parachute Payments, and (ii) reduction in payments and/or benefits shall occur in the manner that results in the greatest economic benefit to Executive as determined in Section 5(C).

C. Method of Determination.  One or more determinations (each a “Tax Determination”) as to whether any of the Parachute Payments will be subject to the Excise Tax shall be made by the Accountant (with all costs related thereto paid by Company).  For purposes of determining whether any of the Parachute Payments will be subject to the Excise Tax:  (i) all of the Parachute Payments shall be treated as “parachute payments” (within the meaning of Section 280G of the Code) unless and to the extent that in the written advice of the Accountant, certain Payments should not constitute 

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parachute payments, and (ii) all “excess parachute payments” (within the meaning of Section 280G of the Code) shall be treated as subject to the Excise Tax unless and only to the extent that the Accountant advises Company that such excess parachute payments are not subject to the Excise Tax.  

6. Intellectual Property. 

A. Work Product.  During the Employment Term, Executive will be expected to perform duties which may lead to and include the discovery, creation, development, or expression of inventions, discoveries, developments, modifications, procedures, ideas, innovations, systems, programs, know-how, literary properties, chemical or biological data, computer software, improvements, processes, methods, formulas, systems, creative works and techniques (collectively, hereinafter “Work Product”).

B. Assignment.  Executive hereby assigns and transfers to Company, and agrees that Company shall be the sole owner of all Work Product conceived, developed or made by Executive (alone or with others), whether during working hours or at any other time, in whole or in part during Executive’s employment with Company (including prior to,  during and after the Employment Term), whether at the request or upon the suggestion of Company or otherwise, which are useful in, or directly or indirectly related to Company’s business or any contemplated business of Company or which relate to, or are conceived, developed, or made in the course of, Executive’s employment or which are developed or made from, or by reason of knowledge gained from, such employment.

C. Work for Hire.  Executive hereby agrees that all work or other material containing or reflecting any Work Product shall be deemed a work made for hire under the U.S. Copyright Act.  To the extent any such Work Product is determined that it is not a work made for hire, Executive hereby assigns to Company all of Executive’s right, title and interest, including all rights of copyright, patent, trade secret and other intellectual property rights, in, to and under the Work Product.

D. Continuing Obligations.  Executive agrees to disclose promptly all Work Product conceived or made by Executive (alone or with others) to which Company is entitled to as provided herein, and agrees not to disclose such Work Product to others except as required by law or as is reasonably necessary or appropriate in connection with the performance of Executive’s duties as an employee and officer of Company, without the express written consent of Company.  Executive further agrees that during the Employment Term and at any time thereafter, Executive will, upon request by Company, provide all assistance reasonably required to protect, perfect and use the Work Product, including execution of proper assignments to Company of any and all such Work Product to which Company is entitled, execution of all papers and performance all other lawful acts which Company may deem necessary or advisable for the preparation, prosecution, procurement and maintenance of trademarks, copyrights and or patent applications, and execution of any and all proper documents as shall be required or necessary to vest title in Company to such Work Product.  It is understood that all expenses in connection with such trademarks, copyrights or patents, and all applications related thereto, shall be borne by Company, however Company is under no obligation to protect such Work Product, except at its own discretion and to such extent as Company shall deem desirable.  Executive shall not receive any additional compensation during the Employment Term, other than Executive’s Base Salary, for any services that Executive renders as herein provided.  For each day that Executive performs services under this Section 6(D) after the Employment Term, Executive shall be reimbursed for her reasonable out-of-pocket expenses and, after the final payment by Company of any and all severance compensation due to Executive under Section 4(E), Company shall pay Executive a per diem cash amount at Executive’s Base Salary rate on the Date of Termination.  

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7. Confidential Information.

A. Confidential Information.  The term “Confidential Information” means all information related to Company’s business, which exists or is developed at any time while Executive is an employee, officer and/or director of Company (including prior to,  during and after the Employment Term), including without limitation: (i) strategic and development plans, financial information, equity investors, business plans, co-developer identities, business relationships, business records, project records, market reports, information relating to processes and techniques, technology, research, data, development, trade secrets, know-how, discoveries, ideas, concepts, specifications, diagrams, inventions, technical and statistical data, designs, drawings, models, flow charts, engineering, products, invention disclosures, patent applications, chemical and molecular structures, synthetic pathways, biological data, safety data, clinical data, developmental data, development route, manufacturing processes, synthetic techniques, analytical data, Work Product, and any and all other proprietary and sensitive information, disclosed or learned, whether oral, written, graphic or machine-readable, whether or not marked confidential or proprietary, whether or not patentable, whether or not copyrightable, including the manner and results in which any such Confidential Information may be combined with other information or synthesized or used by Company, which could prove beneficial in enabling a competitor to compete with Company; or (ii) information that satisfies the definition of a “trade secret” as that term is defined in the Iowa Uniform Trade Secrets Act, IA Code Chpt. 550, as amended from time to time; provided, however, that information that is in the public domain (other than as a result of a breach by Executive of this Section 7), approved for release by Company, or lawfully obtained from a third party who is not known by Executive (after Executive’s reasonable inquiry) to be bound by a confidentiality agreement with Company is not Confidential Information.

B. Acknowledgements.  Executive acknowledges and agrees that: (1) Executive’s position with Company is one of high trust and confidence, (2) the Confidential Information constitutes a valuable, special and unique asset which Company uses to obtain a competitive advantage over its competitors, (3) Executive’s protection of such Confidential Information against unauthorized use or disclosure is critically important to Company in maintaining its competitive advantage, (4) all Confidential Information is the property of Company, and (5) Executive shall acquire no right, title or interest in, to or under any such Confidential Information.  

C. Nondisclosure.  Executive promises that Executive will never (before, during or after the Employment Term): (1) disclose any Confidential Information to any person other than (i) an officer or director of Company; or (ii) any other person who is bound by nondisclosure restrictive covenants to Company and to whom disclosure of such Confidential Information is reasonably necessary or appropriate in connection with performance by Executive of Executive’s duties as an employee and officer of Company; or (2) use any Confidential Information except to the extent it is reasonably necessary or appropriate in connection with performance by Executive of Executive’s duties as an employee and officer of Company.  Executive promises to take all reasonable precautions to prevent the inadvertent or accidental disclosure or misuse of any Confidential Information.  In the event Executive receives a request to disclose all or any part of the Confidential Information under the terms of a subpoena or order issued by a court or governmental body, Executive promises, to the extent permissible by law, to (a) notify Company immediately of the existence, terms and circumstances surrounding such request, (b) consult with Company on the advisability of taking legally available steps to resist or narrow such request, (c) if disclosure is required, furnish only such portion of the Confidential Information as Executive is legally compelled to disclose; and (e) exercise Executive’s best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to the disclosed Confidential Information.  

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8. Noncompetition.  

A. Restricted Period.  As used in this Agreement, the term “Restricted Period” means throughout the Employment Term and continuing until the end of the twelve month period following the date on which Executive's employment with Company is terminated for any reason (whether voluntary or involuntary).      

B. Prohibition on Competition.  Executive hereby covenants and agrees that, until the expiration of the Restricted Period, except for any activity identified on Exhibit A, Executive will not serve as an officer, director, employee, independent contractor, consultant or agent of, or have any ownership interest in, any business entity which engages in any activities anywhere in the world that are materially similar to or competitive with Company’s pharmaceutical prodrug development and Commercialization (as defined below) activities in the fields of (i) opioid products for the treatment of pain, (ii) stimulant products for the treatment of ADHD, and/or (iii) such other products which Company is actively and demonstrably developing and/or Commercializing at the time Executive’s employment is terminated.  If a court of competent jurisdiction finds this non-competition provision invalid or unenforceable due to unreasonableness in time, geographic scope, or scope of Company’s business, then Executive agrees that such court shall interpret and enforce this provision to the maximum extent that such court deems reasonable.  For purposes of this Agreement, “Commercialize” or “Commercialization” means the sales and marketing phase with regard to a specific drug candidate in a specific country or region following the regulatory approval of said drug candidate in the applicable country or region. 

C. Exceptions.  Executive’s ownership of less than 5% of the stock of a company that is competitive with the activities of Company as described in Section 8(B) and listed on a national securities exchange shall not be deemed to violate the prohibitions of Section 8(B).  Also, Executive shall not be considered to have violated Section 8(B) with respect to the purchasing entity if there is a Sale and Executive becomes an employee, officer, director or shareholder of the purchasing entity.   

9. Nonsolicitation of Employees.  Until the expiration of the Restricted Period, Executive shall not, directly or indirectly, either on Executive’s own account or for any other person or entity: (a) employ, solicit, induce, advise, or otherwise convince, interfere with Company’s employment of, or offer employment to, any employee of Company; (b) employ or otherwise interfere with Company’s engagement with, or offer employment to, any consultant of Company; or (c) induce or attempt to induce any such employee or  consultant to breach their employment agreement or relationship or consulting agreement or relationship with Company; provided, however, that Executive shall not be in breach of this provision if any such employee or consultant, without inducement or solicitation by Executive, applies for employment at Executive’s subsequent employer in response to a general advertisement soliciting employment.

10. Reasonableness Of Restrictions; Remedies.  Executive has carefully read and considered the restrictive covenants set forth in Sections 7 – 9 hereof, and understands Executive’s obligations thereunder, the limitations such obligations will impose upon Executive after termination of Executive’s employment with Company, and that the Restricted Period extends for 12 months after the termination of Executive’s employment.  Executive has had full opportunity to review with Executive’s personal attorney this Agreement, including Sections 7 – 9, before executing the Agreement.  Executive agrees that, as a result of Executive’s position with Company, the length of the Restricted Period and each restriction set forth in Sections 7, 8 and 9 herein are (1) fair and reasonable, (2) reasonably required for the protection of the legitimate business interests and goodwill established by Company, and (3) not overly broad or unduly burdensome to Executive. Executive acknowledges that Executive’s compliance with Executive’s obligations and restrictive covenants set forth in this Agreement is necessary to protect the business and goodwill of Company. Executive agrees that Executive’s breach of Executive’s 

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obligations and/or restrictive covenants under this Agreement may irreparably and continually damage Company, for which money damages may not be adequate.  Consequently, Executive agrees that in the event that Executive breaches or threatens to breach any of the covenants or agreements contained herein, Company shall be entitled to:  (a) seek injunctive relief to prevent or halt Executive from breaching this Agreement; and (b) money damages as determined appropriate by a court of competent jurisdiction.  Executive hereby agrees that injunctive relief may be granted by a court of competent jurisdiction without the necessity of Company to post bond, or if required to post bond, Executive agrees that the lowest amount permitted shall be adequate.  Nothing in this Agreement shall be construed to prohibit Company from pursuing any other remedy available or from seeking to enforce any restrictive covenants to a lesser extent than set forth herein.  The Parties agree that all remedies shall be cumulative.  Each party is responsible for its own costs and expenses, including attorneys’ fees. 

11. No Prior Restrictions.  Executive hereby represents and warrants to Company that the execution, delivery, and performance by Executive of Executive’s duties under this Agreement do not violate any provision of any agreement or restrictive covenant which Executive has with any former employer or any other entity.  Executive further agrees to honor and inform Company of any and all post-employment obligations Executive has to any former employer or any other entity with which Executive has or had a business relationship.

12. Notices.  Any notice or communication required or permitted to be given hereunder may be delivered by hand, deposited with an overnight courier, sent by confirmed email, confirmed facsimile, or mailed by registered or certified mail, return receipt requested, postage prepaid, in the case of Company, addressed to Company’s principal office marked attention to Company’s president, and in the case of Executive, addressed to Executive’s personal address as appearing in Company’s payroll records, and in each case to such other mail address, e-mail address, or facsimile number as may hereafter be furnished in writing by either Party to the other Party.  Such notice will be deemed to have been given as of the date it is hand delivered, emailed, faxed or three days after deposit in the U.S. mail. 

13. Likeness.  Executive hereby grants to Company a license to use, without further compensation or approval from Executive, Executive’s name, image, portrait, voice, likeness and all other rights of publicity, or any derivative or modification thereto that Company may create, in any and all mediums, now known or hereafter developed, provided that such use is in relation to Company’s business and consistent with professional business standards, and does not disparage or denigrate Executive.  Provided, however, if written notice is provided to Company by Executive following termination of Executive’s employment requesting that Company cease using Executive’s likeness, Company has 30 days to cease using Executive’s likeness in the manner set forth in the notice. 

14. Section 409A; Section 162(m).

A. This Agreement is intended to comply with Section 409A of the Code and its corresponding regulations, or an exemption, and payments may only be made under this Agreement upon an event and in a manner permitted by Section 409A of the Code, to the extent applicable.  Severance benefits under the Agreement are intended to be exempt from Section 409A of the Code under the “short-term deferral” exception, to the maximum extent applicable, and then under the “separation pay” exception, to the maximum extent applicable.  Notwithstanding anything in this Agreement to the contrary, if required by Section 409A of the Code, if Executive is considered a “specified employee” for purposes of Section 409A and if payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to Section 409A of the Code, payment of such amounts shall be delayed as required by Section 409A of the Code, and the accumulated amounts shall be paid  in a lump sum payment within 10 days after the end of the six month period.  If Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Section 409A of the Code shall be paid to the personal representative 

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of Executive’s estate within 60 days after the day of Executive’s death.  The Parties agree that this Section 14 shall not be construed in a manner so as to accelerate any payments due under this Agreement.   

B. All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A of the Code.  For purposes of Section 409A of the Code, each payment hereunder shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  In no event may Executive, directly or indirectly, designate the calendar year of a payment.   All reimbursements and in-kind benefits provided under the Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code.

C. Executive agrees that if the stock of the Company becomes publicly traded, Executive will make any amendments to the Agreement that the Company deems necessary to allow performance-based compensation to qualify for the “qualified performance-based compensation” exception to Section 162(m) of the Code.

15. INDEMNIFICATION; LIABILITY INSURANCE. Company shall indemnify and hold Executive harmless to the fullest extent permitted by the laws of Company’s state of organization or incorporation in effect at the time against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including advancement of reasonable attorney’s fees), losses, and damages resulting from Executive’s performance of Executive’s duties and obligations with Company. Executive will be entitled to be covered, both during and, while potential liability exists, by any insurance policies the Employer may elect to maintain generally for the benefit of officers and directors of the Employer against all costs, charges and expenses incurred in connection with any action, suit or proceeding to which Executive may be made a party by reason of being an officer or director of Company in the same amount and to the same extent as Company covers its other officers and directors.  These obligations shall survive the termination of Executive’s employment with Company.

16. General Provisions.

A. Successors and Assigns.  The rights and obligations under this Agreement shall survive the termination of Executive’s services to Company in any capacity and shall inure to the benefit and shall be binding upon Executive’s heirs and personal representatives.  Executive’s duties and obligations are personal in nature and Executive may not assign or delegate any duties under this Agreement without Company’s prior written approval.  Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of Company, within 15 days of such succession, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as Company would be required to perform if no such succession had taken place and Executive acknowledges that in such event the obligations of Executive hereunder will continue to apply in favor of the successor.  As used in this Agreement, “Company” shall mean Company and any such successor which assumes and agrees to perform the duties and obligations of Company under this Agreement by operation of law or otherwise.  

B. Survival of Certain Terms. The terms, conditions and covenants set forth in this Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of Executive’s employment, including, without limitation, the restrictive covenants contained in Sections 7 – 9, shall survive the termination of this Agreement and Company’s employment of Executive hereunder, and the Parties shall remain bound by such terms, conditions and covenants.

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C. Governing Law; Jurisdiction.  This Agreement shall be governed by and construed and enforced in accordance with the procedural and substantive laws of the State of Iowa, without regard to its conflicts of laws provisions.  The litigation of any disputes arising out of this Agreement shall take place in the appropriate federal or state court located in Johnson County, Iowa.  The parties, to the extent they can legally do so, hereby consent to service of process, and to be sued in the State of Iowa and consent to the exclusive jurisdiction of the courts of the State of Iowa and the United States District Court for the Southern District of Iowa, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of any of their obligations hereunder or with respect to the transactions contemplated hereby, and expressly waive any and all objections they may have to venue in such courts.  Notwithstanding the foregoing, should Executive refuse to comply with an order or judgment of such court, then Company may enforce this Agreement and the order or judgment of such court in any jurisdiction it deems appropriate.  

D. Severability, Reform.  If any provision of this Agreement is determined to be void, invalid or unenforceable, the remainder shall be unaffected and shall be enforceable as if the void, invalid or unenforceable part was not a provision of the Agreement.  

E. Entire Agreement.  This Agreement and its attached exhibits, which by this reference are hereby incorporated into and made a part of this Agreement as if set forth herein verbatim, contain the entire understanding of the parties to this Agreement and supersede and replace all former agreements or understandings, oral or written, between Company and Executive, including any offer letter sent to Executive, regarding the subject matter hereof.  

F. Modification and Waiver. This Agreement may not be amended except by a written instrument signed by both Parties which specifically refers to the particular provision or provisions being amended.  No provision of this Agreement may be waived except in a written instrument that specifically refers to the particular provision or provisions being waived and is signed by the Party against whom the waiver is being asserted.  No waiver by any Party of any right, power or privilege hereunder shall constitute a waiver of any other right, power or privilege hereunder, and no waiver by any party of any breach of a provision hereunder shall constitute a waiver of any other breach of that or any other provision of this Agreement.

G. Taxes; Withholding.  All compensation and benefits payable to Executive under this Agreement shall be subject to all income and other employment tax withholding and reporting required by federal, state or local law with respect to compensation, benefits and reimbursable expenses paid by a corporation to an employee.  Executive shall be responsible for all taxes applicable to amounts payable under this Agreement.

H. Assistance in Litigation.  Executive shall reasonably cooperate with Company in the defense or prosecution of any claims or actions now in existence or that may be brought in the future against or on behalf of Company that relate to events or occurrences that transpired while Executive was employed by Company.  Executive’s cooperation in connection with such claims or actions shall include being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of Company at mutually convenient times.  Executive also shall cooperate fully with Company in connection with any investigation or review by any federal, state or local regulatory authority as any such investigation or review relates, to events or occurrences that transpired while Executive was employed by Company.  Notwithstanding anything to the contrary in this Section 17(H), unless otherwise mutually agreed between Executive and Company in writing and, for each day that Executive performs services under this Section 17(H) Executive shall be reimbursed for her reasonable out-of-pocket expenses and, after the final payment by Company of any and all severance 

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compensation due to Executive under Section 4(E), Company shall pay Executive a per diem cash amount at Executive’s Base Salary rate on the Date of Termination.   

I. Beneficiaries; References.  Executive shall be entitled to select (and change to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive’s death, and may change such election, in either case by giving Company written notice thereof.  In the event of Executive’s death or a judicial determination of Executive’s incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to Executive’s beneficiary, estate or other legal representative.  Any reference to any gender in this Agreement shall include, where appropriate, the other gender.

J. Voluntary Agreement.  Each Party to this Agreement has read and fully understands the terms and provisions hereof, has had an opportunity to review this Agreement with legal counsel, has executed this Agreement based upon such party’s own judgment and advice of counsel, and knowingly, voluntarily and without duress, agrees to all of the terms set forth in this Agreement.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any party because of authorship of any provision of this Agreement.  Except as expressly set forth in this Agreement, neither the Parties nor their affiliates, advisors and/or their attorneys have made any representation or warranty, express or implied, at law or in equity with respect of the subject matter contained herein.  Without limiting the generality of the previous sentence, Company, its affiliates, advisors and/or attorneys have made no representation or warranty to Executive concerning the state or federal tax consequences to Executive regarding the transactions contemplated by this Agreement.

K. Effect of Headings.  Headings to sections and paragraphs of this Agreement are for reference only, and do not form a part of this Agreement, or effect the interpretation of this Agreement.

L. Counterparts.  This Agreement may be executed in counterparts, including by transmission of facsimile or PDF copies of signature pages, each of which shall for all purposes are deemed to be an original and all of which shall constitute on instrument.  All signatures of the parties transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

[SIGNATURE PAGE FOLLOWS] 

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Signature Page

Of

Employment Agreement

 

In Witness Whereof, Company has caused this Agreement to be duly executed and delivered by its duly authorized officer, and Executive has duly executed and delivered this Agreement, as of the date first written on page 1 of this Agreement.

 

 

					
	
KemPharm, Inc. (“Company”):
	
 
	
Tracy Woody:

	
 
	
 

 

 
	
 
	
 
	
 

	
By:
	
/s/ Travis C. Mickle
	
 
	
 
	
/s/ Tracy Woody

	
 
	
Travis C. Mickle

President and Chief Executive Officer
	
 
	
 
	
 

 

 

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Exhibit A

List of Outside Business Activities

 

 

Executive may continue to serve as a director of and advisor to RetroJect, Inc., provided that the time devoted by Executive to such services shall not exceed 6 hours per month.

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Exhibit B

Release of Claims

Separation of Employment Agreement and General Release

THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the “Agreement”) is made as of this ___ day of __________, ____, by and between Tracy Woody (“Executive”) and KemPharm, Inc. (the “Company”).

 

WHEREAS, Executive is employed by Company as Chief Commercial Officer;

 

WHEREAS, Executive and Company entered into an Employment Agreement, dated February __, 2015, (the “Employment Agreement”) which provides for certain benefits in the event that Executive’s employment is terminated on account of a reason set forth in the Employment Agreement; 

 

WHEREAS, Executive’s employment with Company will terminate effective __________________ (the “Termination Date”); and

 

WHEREAS, in connection with the termination of Executive’s employment, the parties have agreed to a separation package and the resolution of any and all disputes between them.

 

NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and Company as follows:

 

1. Executive, for and in consideration of the commitments of Company as set forth in paragraph 6 of this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE Company, its stockholders, its present and past affiliates, subsidiaries and parents, their respective officers, directors, investors, employees, and agents, and their respective predecessors, successors and assigns, heirs, executors, and administrators (collectively, “Releasees”), subject to the exceptions of Section 2 of the Agreement, from all causes of action, suits, debts, claims and demands whatsoever in law or in equity, which Executive ever had, now has, or hereafter may have, whether known or unknown, or which Executive’s heirs, executors, or administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of time to the date of this Agreement, to the extent arising from or relating in any way to Executive’s employment relationship with Company, the terms and conditions of that employment relationship, and/or the termination of that employment relationship, including, but not limited to, (i) any claims for monetary damages arising under the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act (“OWBPA”), Title VII of The Civil Rights Act of 1964, the Americans with Disabilities Act; (ii) any and all claims arising under the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, as amended; (iii) any and all claims arising under any applicable state and local fair employment practice laws and wage and hour laws; (iv) any other claims under any federal, state or local common law, statutory, or regulatory provision, now or hereafter recognized; and (v) any claims for attorneys’ fees and costs.  

 

2. The foregoing shall in no event apply to (i) enforcement by Executive of Executive’s rights under this Agreement, (ii) Executive’s rights as a stockholder in Company or any of its affiliates, (iii) Executive’s rights to indemnifications under any separate contract or insurance policy, (iv) Executive’s right to seek unemployment insurance benefits, (v) Executive’s right to seek workers’ compensation benefits, (vi) any rights Executive has to indemnification for service as an officer of Company, or (vii) any claims that, as a matter of applicable law, are not waivable.  This Agreement is effective without 

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regard to the legal nature of the claims raised and without regard to whether any such claims are based upon tort, equity, implied or express contract or discrimination of any sort.

 

Executive and Company agree that nothing in this Agreement prevents or prohibits Executive from (i) making any disclosure of relevant and necessary information or documents in connection with any charge, action, investigation, or proceeding relating to this Agreement, or as required by law or legal process; (ii) participating, cooperating, or testifying in any charge, action, investigation, or proceeding with, or providing information to, any self-regulatory organization, governmental agency or legislative body, and/or pursuant to the Sarbanes-Oxley Act, (iii) filing, testifying, participating in or otherwise assisting in a proceeding relating to an alleged violation of any federal, state or municipal law relating to fraud, or any rule or regulation of the Securities and Exchange Commission or any self-regulatory organization or (iv) challenging the knowing and voluntary nature of the release of ADEA claims pursuant to the OWBPA.  To the extent permitted by law, upon receipt of any subpoena, court order or other legal process compelling the disclosure of any such information or documents, Executive agrees to give prompt written notice to Company so as to permit Company to protect its interests in confidentiality to the fullest extent possible.  To the fullest extent provided by law, Executive acknowledges and agrees, however, Executive is waiving any right to recover monetary damages in connection with any such charge, action, investigation or proceeding.  To the extent Executive receives any monetary relief in connection with any such charge, action, investigation or proceeding, Company will be entitled to an offset for the benefits made pursuant to this Agreement, to the fullest extent provided by law. 

 

Executive and Company further agree that the Equal Employment Opportunity Commission (“EEOC”) and comparable state or local agencies have the authority to carry out their statutory duties by investigating charges, issuing determinations, and filing lawsuits in Federal or state court in their own name, or taking any action authorized by the EEOC or comparable state or local agencies.  Executive retains the right to participate in any such action and to seek any appropriate non-monetary relief.  Executive retains the right to communicate with the EEOC and comparable state or local agencies and such communication can be initiated by Executive or in response to the government and such right is not limited by any non-disparagement claims.  Executive and Company agree that communication with employees plays a critical role in the EEOC’s enforcement process because employees inform the agency of employer practices that might violate the law.  For this reason, the right to communicate with the EEOC is a right that is protected by federal law and this Agreement does not prohibit or interfere with those rights.  Notwithstanding the foregoing, Executive agrees to waive Executive’s right to recover monetary damages in any charge, complaint or lawsuit filed by Executive or by anyone else on Executive’s behalf.

 

3. In consideration of Executive’s agreement to comply with the covenants described in Section 6-10 of the Employment Agreement, Company agrees as set forth in paragraph 6 herein.

 

4. Executive further agrees and recognizes that Executive has permanently and irrevocably severed Executive’s employment relationship with Company, that Executive shall not seek employment with Company or any affiliated entity at any time in the future, and that neither Company nor any affiliate has any obligation to employ Executive in the future.

 

5. Executive agrees that Executive will not disparage or subvert Company or the Releasees, or make any statement reflecting negatively on Company or the Releasees, including, but not limited to, any matters relating to the operation or management of Company, Executive’s employment and the termination of Executive’s employment, irrespective of the truthfulness or falsity of such statement.

 

6. In consideration for Executive’s agreement as set forth herein, Company agrees to pay and provide Executive with the severance benefits described in Section 4(E)(1) of Executive’s Employment 

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Agreement.  Executive agrees that Executive is not entitled to any payments, benefits, severance payments or other compensation beyond that expressly provided in Section 4(E)(1) of Executive’s Employment Agreement and the Accrued Benefits (as defined in Section 4(B) of the Employment Agreement).

 

7. Executive understands and agrees that the payments, benefits and agreements provided in this Agreement are being provided to Executive in consideration for Executive’s acceptance and execution of, and in reliance upon Executive’s representations in, this Agreement.  Executive acknowledges that if Executive had not executed this Agreement containing a release of all claims against Company and the Releasees, Executive would only have been entitled to the payments provided in Company’s standard severance pay plan for employees.  

 

8. Executive acknowledges and agrees that Company previously has satisfied any and all obligations owed to Executive under any employment agreement or offer letter Executive has with Company or a Releasee and, further, that this Agreement supersedes any and all prior agreements or understandings, whether written or oral, between the parties, excluding only Executive’s and Company’s post-termination obligations under Executive’s Employment Agreement, Executive’s rights under any outstanding equity grants in accordance with the terms of the applicable grant agreements, any obligations relating to the securities of Company or any of its affiliates and Company’s obligations under Section 4(E)(1) of Executive’s Employment Agreement and to pay or provide the Accrued Benefits (as defined in Section 4(B) of the Employment Agreement), all of which shall remain in full force and effect to the extent not inconsistent with this Agreement, and further, that, except as set forth expressly herein, no promises or representations have been made to Executive in connection with the termination of Executive’s Employment Agreement or the terms of this Agreement.

 

9. Except as may be necessary to obtain approval or authorization to fulfill Executive’s or its obligations hereunder or as required by applicable law and subject to the exceptions of Section 2 of the Agreement, (a) Executive agrees not to disclose the terms of this Agreement to anyone, except Executive’s spouse, attorney and, as necessary, tax/financial advisor, and (b) Company agrees that the terms of this Agreement will not be disclosed.  It is expressly understood that any violation of the confidentiality obligation imposed hereunder constitutes a material breach of this Agreement.

 

10. Executive represents that Executive does not presently have in Executive’s possession any records and business documents, whether on computer or hard copy, and other materials (including but not limited to computer disks and tapes, computer programs and software, office keys, correspondence, files, customer lists, technical information, customer information, pricing information, business strategies and plans, sales records and all copies thereof) (collectively, the “Corporate Records”) provided by Company and/or its predecessors, parents, subsidiaries or affiliates or obtained as a result of Executive’s  employment with Company and/or its predecessors, parents, subsidiaries or affiliates, or created by Executive while employed by or rendering services to Company and/or its predecessors, parents, subsidiaries or affiliates.  Executive acknowledges that all such Corporate Records are the property of Company.  In addition, Executive shall promptly return in good condition any and all Company owned equipment or property, including, but not limited to, automobiles, personal data assistants, facsimile machines, copy machines, pagers, credit cards, cellular telephone equipment, business cards, laptops and computers.  As of the Termination Date, Company will make arrangements to remove, terminate or transfer any and all business communication lines including network access, cellular phone, fax line and other business numbers.  

 

11. Subject to the exceptions of Section 2 of the Agreement, Executive expressly waives all rights afforded by any statute which expressly limits the effect of a release with respect to unknown claims.  Executive acknowledges the significance of this release of unknown claims and the waiver of statutory 

- 21 -

 

 

protection against a release of unknown claims which provides that a general release does not extend to claims which the creditor does not know or suspect to exist in Executive’s favor at the time of executing the release, which if known by it must have materially affected its settlement with the debtor.

 

12. The parties agree and acknowledge that the agreements by Company described herein, and the settlement and termination of any asserted or unasserted claims against the Releasees, are not and shall not be construed to be an admission of any violation of any federal, state or local statute or regulation, or of any duty owed by any of the Releasees to Executive. 

 

13. Executive agrees and recognizes that should Executive breach any of the obligations or covenants set forth in this Agreement, Company will have no further obligation to provide Executive with the consideration set forth herein, and will have the right to seek repayment of all consideration paid up to the time of any such breach.  Further, Executive acknowledges in the event of a breach of this Agreement, Releasees may seek any and all appropriate relief for any such breach, including equitable relief and/or money damages.

 

14. This Agreement and the obligations of the parties hereunder shall be construed, interpreted and enforced in accordance with the laws of the State of Iowa.

 

15. Executive certifies and acknowledges as follows:

 

(a) That Executive has read the terms of this Agreement, and that Executive understands its terms and effects, including the fact that Executive has agreed to RELEASE AND FOREVER DISCHARGE Company and each of the Releasees from any legal action arising out of Executive’s employment relationship with Company and the termination of that employment relationship;

 

(b) That Executive has signed this Agreement voluntarily and knowingly in exchange for the consideration described herein, which Executive acknowledges is adequate and satisfactory to Executive and which Executive acknowledges is in addition to any other benefits to which Executive is otherwise entitled;

 

(c) That Executive has been and is hereby advised in writing to consult with an attorney prior to signing this Agreement;

 

(d) That Executive does not waive rights or claims that may arise after the date this Agreement is executed;

 

(e) That Company has provided Executive with a period of [twenty-one (21)] or [forty-five (45)] days within which to consider this Agreement, and that Executive has signed on the date indicated below after concluding that this Separation of Employment Agreement and General Release is satisfactory to Executive; and   

[Note:  The applicable time period will depend on whether the termination is part of a reduction in force (45 days) or not (21 days).  In addition, if the termination is in connection with a reduction in force, certain disclosures will need to be made to Executive to comply with the requirements of the ADEA if Executive is at least age 40.]

 

(f) Executive acknowledges that this Agreement may be revoked by Executive within seven (7) days after execution, and it shall not become effective until the expiration of such seven (7) day revocation period.  In the event of a timely revocation by Executive, this Agreement will be deemed null and void and Company will have no obligations hereunder.  Revocation may be achieved only by 

- 22 -

 

 

delivering a letter to [NAME, TITLE, ADDRESS], clearly evidencing a decision to revoke within the seven day revocation period.

 

 

Intending to be legally bound hereby, Executive and Company executed the foregoing Separation of Employment Agreement and General Release this ______ day of _______, ____.

 

 

______________________________  Witness:________________________

 

KemPharm, Inc.

 

By: ___________________________  Witness:________________________

Name:

Title:

 

 

 

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