Document:

Exhibit 10.10

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [***] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

AGREEMENT

This Agreement (this “Agreement”), dated as of September 24, 2017, is by and between MonoSol Rx, LLC, a Delaware limited liability company (“MonoSol”); and Indivior Inc., a Delaware corporation, and Indivior UK Limited, a corporation organized under the laws of England and Wales, as successors in interest to Reckitt Benckiser Pharmaceuticals Inc. and RB Pharmaceuticals Limited, respectively (collectively, “Indivior”).

MonoSol and Indivior are each sometimes referred to herein individually as a “Party” and are referred to collectively as the “Parties.”

WITNESSETH:

WHEREAS, MonoSol and Indivior Inc. are parties to the Commercial Exploitation Agreement, dated August 15, 2008, as amended (the “Commercial Exploitation Agreement”); and

WHEREAS, MonoSol, in the Commercial Exploitation Agreement, has granted certain exclusive rights to Indivior Inc. and its Affiliates, including an exclusive license under MonoSol patents to use and sell Suboxone® (buprenorphine and naloxone) film, a pharmaceutical product containing the active ingredients buprenorphine hydrochloride and naloxone hydrochloride; and

WHEREAS, Indivior Inc., in the Commercial Exploitation Agreement, has granted certain exclusive rights to MonoSol including an exclusive right to manufacture Suboxone® (buprenorphine and naloxone) film, a pharmaceutical product containing the active ingredients buprenorphine hydrochloride and naloxone hydrochloride; and

WHEREAS, the Parties seek to clarify the scope of their relationship, including certain rights and obligations that may be impacted by the possible sale, offer for sale, or distribution of a Generic Buprenorphine Product, as defined below, in the United States, by a Third Party, as defined below.

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties intending to be legally bound do hereby agree as follows:

ARTICLE 1:  DEFINITIONS

1.1.          The capitalized terms used in this Agreement shall have the meanings defined in this Article or elsewhere in this Agreement.

1.2.          Unless the context requires otherwise, words referred to in the singular include the plural and vice versa, the words “include,” “includes” and “including” will be deemed to be followed by the phrase “without limitation” (unless already present), the words “herein,” “hereof’ and “hereunder,” and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and the word “or” is used in the inclusive sense (and/or).

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

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1.4.          The term “Approved Suboxone Product” shall mean any product sold, offered for sale or distributed pursuant to New Drug Application (“NDA”) No. 22-410.

1.5.          The term “Generic Buprenorphine Product” shall mean a film dosage drug product containing the buprenorphine and naloxone moieties that is sold, offered for sale or distributed under an ANDA or an application pursuant to 21 U.S.C. § 355(b)(2) that refers to the Approved Suboxone Product as the reference-listed drug.

1.6.          The term “Third Party” shall mean any entity or person that is not a Party or an Affiliate of a Party.

ARTICLE 2:  PAYMENTS FROM INDIVIOR TO MONOSOL

2.1.          Five (5) business days following the date the Parties fully execute this Agreement, Indivior agrees to make a non-refundable payment of USD$17,000,000 (seventeen million U.S. dollars) to MonoSol.

2.2.          On February 1, 2018, Indivior will make a non-refundable payment of USD$8,000,000 (eight million U.S. dollars) to MonoSol.

2.3.          Starting on January 1, 2018, Indivior shall make [***] payments to MonoSol of USD$[***] ([***] U.S. dollars) [***]; provided, however, that the payment obligation on Indivior pursuant to this Section shall immediately cease, and be null and void, on the first date a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States.

2.4.          Starting on April 1, 2019, and through and including the first date a Third Party sells, offers for sale, or distributes a Generic Buprenorphine Product in the United States, Indivior shall make [***] payments equal to [***] of the net revenue earned by Indivior on sales of Suboxone sublingual film in the United States for the previous [***] with payment made within [***] after the start of the current [***], where:

		(A)	
the total amount Indivior pays to MonoSol in a calendar year shall be not less than USD$[***] U.S. dollars) (“Minimum Annual Payment”), and

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		(B)	
Notwithstanding the foregoing, Indivior’s obligation to make the Minimum Annual Payment shall immediately cease, and be null and void, once the total amount of the payments made from Indivior to MonoSol under this Article 2.4 is equal to USD$[***] U.S. dollars).

		(C)	
MonoSol shall have annual audit rights for royalty payments as outlined in the Commercial Exploitation Agreement.

2.5.          On the date a new patent issues to MonoSol or a new claim is asserted by MonoSol from an existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, Indivior shall make a one-time, non-refundable payment of USD$[***] U.S. dollars) to MonoSol in [***] installments; provided, that the applicable conditions to payment are satisfied. The [***] installment of USD$[***] ([***] U.S. dollars) shall be paid within [***] days of the date a new patent issues to MonoSol or a new claim is asserted by MonoSol from an existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, and the [***] installment of USD$[***] ([***] U.S. dollars) shall be paid within [***] days after the first (1st) anniversary of the issuance provided the new patent or new claim is valid and enforceable on this anniversary date. Within [***] days of the date a second new patent issues to MonoSol or a second new claim is asserted by MonoSol from a different existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, Indivior shall make a [***] payment of USD$[***] U.S. dollars) to MonoSol in [***] installments; provided, that the applicable conditions to payment are satisfied. The [***] installment of USD$[***] U.S. dollars) shall be paid within [***] days of the date a second new patent issues to MonoSol or a second new claim is asserted by MonoSol from a different existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, and the [***] installment of USD$[***] ([***] U.S. dollars) shall be paid within [***] days after the first (1st) anniversary of the issuance provided the second new patent or second new claim is valid and enforceable on this anniversary date. [***].

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2.6.          In the event a Third Party sells, offers for sale, or distributes a licensed Generic Buprenorphine Product in the United States pursuant to a settlement agreement with Indivior prior to January 1, 2023, then Indivior will make a one-time non-refundable payment equal to USD$75,000,000 (seventy five million U.S. dollars), minus total cumulative payments paid by Indivior to MonoSol under this Agreement as of the first date of entry of said licensed Third Party Generic Buprenorphine Product, paid in [***] installments by January 1, 2023, beginning [***] days following the first date of entry of a licensed Third Party Generic Buprenorphine Product. Notwithstanding the foregoing, the payment obligation on Indivior pursuant to this Section shall cease, and be null and void, if the sale, offer for sale, or distribution of a licensed Third Party Generic Buprenorphine Product is triggered by the sale, offer for sale, or distribution of an unlicensed Third Party Generic Buprenorphine Product.

2.7.          On January 1, 2023, Indivior will make a non-refundable payment of USD$[***] ([***] U.S. dollars) to MonoSol; provided, however, that if the first date a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States occurs before January 1, 2023, then the payment obligation of Indivior pursuant to this Section shall immediately cease, and be null and void.

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2.8.          Notwithstanding the foregoing payment provisions, the Parties agree and acknowledge that the total cumulative amounts payable under the terms of this Agreement by Indivior to MonoSol shall be capped at USD$75,000,000 (seventy five million U.S. dollars), provided the new patents or new claims pursuant to Article 2.5 hereof are issued,  or be capped at USD$[***] U.S. dollars), if no new patents or new claims pursuant to Article 2.5 hereof are issued, and shall not, under any circumstances, exceed the applicable stated amount.

2.9.          Notwithstanding the payment obligations set forth herein, if, at any time during the term of this Agreement, a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States where Indivior has legal recourse to challenge the sale, offer for sale, or distribution of said product at the United States Court of Appeals for the Federal Circuit (“At-Risk Launch”), then any payments that would otherwise have become due under this Agreement by Indivior from the date of such At-Risk Launch through the date that the Federal Circuit Court of Appeals issues a ruling enjoining said Third Party from selling, offering for sale or distributing a Generic Buprenorphine Product (“At-Risk Launch Period”) shall immediately cease, and be null and void, such that no further payments under this Agreement from Indivior to MonoSol shall be required to be made during the At-Risk Launch Period. If [***], any payments cancelled under this Agreement during such At-Risk Launch Period, shall be paid to MonoSol by Indivior [***] within [***] days of [***]. For clarity, Indivior’s obligation to pay MonoSol for any payments cancelled during the At-Risk Launch period shall not exceed [***]. For further clarity, once the At-Risk Launch Period ends, all payments owed by Indivior to MonoSol under this Agreement shall be reinstated.

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2.10.          Notwithstanding the payment obligations set forth herein, if, at any time during the term of this Agreement, a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States where Indivior has no legal recourse to challenge the sale, offer for sale, or distribution of said product at the Federal Circuit Court of Appeals, then Indivior’s payment obligations under this Agreement shall immediately cease, and be null and void, such that no further payments under this Agreement from Indivior to MonoSol shall be required. For the sake of clarity, the Commercial Exploitation Agreement shall remain in effect for the term thereof.

2.11.          Indivior agrees to use reasonable efforts, with the objective of prevailing, to exercise its rights to enforce and protect intellectual property relating to Generic Buprenorphine Products. If an unauthorized and/or unlicensed Third Party sells, offers for sale, or distributes a Generic Buprenorphine Product in the United States, but later discontinues such activities as a result of Indivior’s exercising its rights to enforce and protect intellectual property regarding those activities, whether through (1) the issuance of an injunction or damages award from a court of competent jurisdiction, or (2) the resolution of intellectual property rights in an agreement between the Third Party and Indivior, all payments owed to MonoSol under this Article 2 shall be retroactively reinstated.

ARTICLE 3:  LICENSE AND ENFORCEMENT

3.1.          Subject to the limitations of Article 3.2 below, if and to the extent that Indivior does not already hold the sole, exclusive and irrevocable right and entitlement to pursue, assert, enforce, litigate, settle and resolve all causes of action (whether known or unknown or whether currently pending, filed or otherwise) and all other enforcement rights involving Generic Buprenorphine Products (“the Enforcement Rights”), MonoSol, for itself and its Affiliates, hereby confirms that Indivior and its Affiliates hold and may exercise all such Enforcement Rights, and in connection with any settlement or other resolution of any such causes of action may sublicense rights to make, have made, use, sell or import a Generic Buprenorphine Product under any of the MonoSol patents, present and future, licensed to Indivior under the Commercial Exploitation Agreement. At the request of Indivior, MonoSol will execute and deliver such other instruments and do and perform such other acts as may be necessary or desirable for effectuating or confirming the provisions of this Article. For clarity, this foregoing Article 3.1 does not alter or affect the supply and/or manufacturing arrangements between Indivior and MonoSol, as provided for under the Commercial Exploitation Agreement, with respect to the Approved Suboxone Product, and this foregoing Article 3.1 does not change the rights and obligations of Indivior and MonoSol under the Commercial Exploitation Agreement with respect to MonoSol’s supply and/or manufacturing of the Approved Suboxone Product. If Indivior terminates this Agreement, and Indivior seeks to engage another party to manufacture the Approved Suboxone Product, nothing in this Agreement prevents MonoSol from seeking to enforce its intellectual property rights in suing either Indivior or that third party manufacturer, or both, consistent with the Commercial Exploitation Agreement, nor does anything in this Agreement prevent Indivior from contesting any such suit brought by MonoSol. For further clarity, nothing in this Agreement prohibits MonoSol, upon termination of the Commercial Exploitation Agreement, from manufacturing any product in the Field, as defined in the Commercial Exploitation Agreement, for anyone anywhere in the world, nor does anything in this Agreement prevent Indivior from contesting MonoSol’s entitlement to engage in such manufacturing.

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3.2.          MonoSol agrees not to assert its rights regarding any agreements by Indivior with any Third Party under which a sale, offer for sale, or distribution of a Generic Buprenorphine Product by that Third Party would occur on or after [***]. For the sake of clarity, MonoSol does not waive any such rights regarding any agreements by Indivior with any Third Party under which a sale, offer for sale, or distribution of a Generic Buprenorphine Product by a Third Party would occur prior to [***].

ARTICLE 4:  BREACH AND INDEMNIFICATION

4.1.          Indivior hereby agrees to indemnify MonoSol and to hold it harmless with respect to all costs, including attorneys’ fees and expert fees, and any penalties or monetary damages arising out of or relating to any investigation, enforcement action, and administrative or court proceeding regarding or relating to this Agreement under the Clayton Act § 7A, 15 U.S.C. § 18a and its implementing rules and regulations. For clarity, this Article 4.1 does not apply to any pre-existing investigations, enforcement actions, and administrative or court proceedings and applies only to the terms of this Agreement.

ARTICLE 5:  MISCELLANEOUS

5.1.          Confidentiality: Except as (a) required by statute, ordinance or regulation, (b) required pursuant to compulsory legal process, or (c) necessary for the exercise of the rights granted to the Parties under this Agreement, neither the Parties nor their Affiliates shall publicly announce or otherwise disclose to Third Parties any of the terms of this Agreement without the prior written approval of the other Party, not to be unreasonably withheld, conditioned or delayed. If a Party intends to disclose information relating to this Agreement because it is required to do so in order to comply with a statute, ordinance or regulation or compulsory legal process, including, without limitation, its reporting requirements under the Securities Exchange Act of 1934, as amended, such Party shall give the other Party at least three (3) business days’ prior notice in writing of the text of the intended disclosure, unless such statute, ordinance, regulation or compulsory legal process would require earlier disclosure, in which event the notice shall be provided as early as practicable. A Party that determines that it is required to file this Agreement with the Securities and Exchange Commission or any other governmental authority, including any court proceeding, shall request confidential treatment with respect to the terms of this Agreement, shall consult in good faith with the other Party regarding such confidential treatment and shall use commercially reasonable efforts to have redacted from any publicly available version such provisions as the Parties may agree. Notwithstanding anything to the contrary above, each Party may disclose the terms of this Agreement to its respective Affiliates, and its and their respective insurers, lenders, attorneys, accountants, and prospective and actual acquirers, subject to such Affiliates, insurers, lenders, attorneys, accountants and prospective and actual acquirers undertaking to keep the terms of this Agreement strictly confidential in accordance with confidentiality terms at least as restrictive as the terms hereof.

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5.2.          Notice: Any notice or other communication to be given under this Agreement shall be given in the same manner identified in Article 2.1 of the Commercial Exploitation Agreement.

5.3.          Modification: This Agreement may only be amended, modified, or varied by the Parties by an instrument in writing signed on behalf of each of the Parties.

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

5.5.          No Agency: Nothing in this Agreement shall constitute or be deemed to constitute the creation of a partnership, agency, or employer/employee relationship between the parties.

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5.6.          Entire Agreement: This Agreement represents the entire understanding and agreement between the Parties with regard to the matters addressed herein.

5.7.          Enforceability: If any provision of this Agreement is held by any court or other competent authority to be invalid or unenforceable in whole or in part for any reason, the Parties agree to use commercially reasonable efforts to negotiate a provision, in replacement of the provision held illegal, unenforceable, or invalid, that is consistent with applicable law and accomplishes, as nearly as possible, the original intention of the Parties with respect thereto. In any event, the provision held illegal, unenforceable, or invalid shall be deemed severed from this Agreement and the validity of the other provisions and the remainder of the provision in question shall not be affected.

5.8.          Counterparts. This Agreement may be executed in any number of counterparts, and through pdf, facsimile or photocopy signatures. Each counterpart shall be deemed an original instrument, but all counterparts together shall be considered as one and the same agreement.

5.9.          Governing Law: This Agreement and the rights and obligations of the Parties under this Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without regard to its choice-of-law or conflicts-of-law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction, and the Parties agree to submit to the jurisdiction of the federal courts located in the State of Delaware.

[SIGNATURE PAGE FOLLOWS]

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

Signed for and on behalf of Indivior Inc.:

 

	
By:

	
/s/ Shaun Thaxter

	 
	
Name:

	
Shaun Thaxter

	 
	
Title:

	
CEO

	 
	
Date:

	
9/23/17

	 

Signed for and on behalf of Indivior UK Limited:

 

	
By:

	
/s/ Richard Simkin

	 
	
Name:

	
Richard Simkin

	 
	
Title:

	
CCO

	 
	
Date:

	
9/23/17

	 

 

Signed for an on behalf of MonoSol Rx, LLC:

	
By:

	
/s/ Keith Kendall

	 
	
Name:

	
Keith Kendall

	 
	
Title:

	
CEO

	 
	
Date:

	
9/24/17

	 

11Exhibit 10.14

AQUESTIVE THERAPEUTICS, INC.

2018 EQUITY INCENTIVE PLAN

Adopted by the Board of Directors June 15, 2018

Approved by the Stockholders June 27, 2018

AQUESTIVE THERAPEUTICS, INC.

2018 EQUITY INCENTIVE PLAN

Section 1.          Purpose of the Plan.  The purpose of the Plan is to assist the Company and its Subsidiaries in attracting and retaining valued Employees, Consultants and Non-Employee Directors by offering them a greater stake in the Company’s success and a closer identity with it, and to encourage ownership of the Company’s shares by such Employees, Consultants and Non-Employee Directors.

Section 2.          Definitions.  As used herein, the following definitions shall apply:

2.1.          “Award” means the grant of Options, SARs, Restricted Stock, Restricted Stock Units, Performance Stock, Performance Stock Units and Other Stock-Based Awards under the Plan.

2.2.          “Award Agreement” means the written agreement, instrument or document evidencing an Award.

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

2.4.          “Cause” means, as determined in the sole discretion of the Board or Committee,

(a)          if the applicable Participant is party to an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and such term is defined therein, “Cause” shall have the meaning provided in such agreement;

(b)          if the applicable Participant is not a party to an effective employment, consulting, severance or similar agreement or if no definition of “Cause” is set forth in the applicable employment, consulting, severance or similar agreement, “Cause” shall have the meaning provided in the applicable Award Agreement;

(c)          if neither (a) nor (b) applies, then “Cause” shall mean (i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect; (ii) the indictment for, conviction of, or plea of guilty or no contest to, a felony, or a crime involving any of the following: moral turpitude, dishonesty, breach of trust, unethical business conduct or a crime involving the Company or any of its Subsidiaries; (iii) fraud, misappropriation or embezzlement; (iv) the Participant’s abuse of illegal drugs or other controlled substances or the Participant’s habitual intoxication while providing services for the Company or any of its Subsidiaries; or (v) the Participant’s material breach of any written policy of the Company or any of its Subsidiaries.

2.5.          “Change in Control” means, unless otherwise provided in an Award Agreement, after the Effective Date:

(a)          the acquisition in one or more transactions (whether by purchase, merger, amalgamation or otherwise) by any “Person” (as such term is used for purposes of Section 13(d) or Section 14(d) of the Exchange Act, but excluding, for this purpose, (i) the Company or any of its Subsidiaries, (ii) any employee benefit plan of the Company or any of its Subsidiaries or (iii) an entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company) of “Beneficial Ownership” (within the meaning of Rule 13d-3 under the Exchange Act), of more than fifty percent (50%) of the combined voting power of the Company’s then outstanding voting securities;

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(b)          a change in the composition of the Board such that the individuals who as of any date constitute the Board (the “Incumbent Board”) cease to constitute a majority of the Board at any time during the 12-month period immediately following such date; provided, however, that if the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board, and provided further that any reductions in the size of the Board that are instituted voluntarily by the Incumbent Board shall not constitute a Change in Control, and after any such reduction the “Incumbent Board” shall mean the Board as so reduced;

(c)          a complete liquidation or dissolution or winding up of the Company (other than pursuant to a transaction in which the assets of the Company are distributed to an entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company); or

(d)          the sale, directly or indirectly, of all or substantially all of the Company’s assets (determined on a consolidated basis), other than to a Person described in clauses (i), (ii) or (iii) of Section 2.5(a) above.

Notwithstanding the foregoing, a restructuring, reorganization or similar or analogous event in which the stockholders of the Company immediately before such event have “Beneficial Ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of the Company (or its successor) immediately after such event in substantially the same proportions as their ownership of Shares of the Company immediately before such event shall not constitute a Change in Control.

2.6.          “Code” means the Internal Revenue Code of 1986, as amended.

2.7.          “Company” means Aquestive Therapeutics, Inc., a Delaware corporation, or any successor corporation or company.

2.8.          “Committee” means the Compensation Committee of the Board, provided that the Committee shall at all times have at least two members, each of whom shall be a “non-employee director” as defined in Rule 16b-3 under the Exchange Act and an “independent director” under the rules of any applicable stock exchange.

2.9.          “Consultant” means a natural person (within the meaning of Form S-8 of the Securities Act) who provides bona fide services to the Company or any of its Subsidiaries other than in connection with the offer or sale of Shares or other securities or shares in a capital-raising transaction and is not engaged in activities that directly or indirectly promote or maintain a market for the Company’s Shares or other securities.

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2.10.          “Disability” means,

(a)          if the applicable Participant is party to an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and such term is defined therein, “Disability” shall have the meaning provided in such agreement;

(b)          if the applicable Participant is not a party to an effective employment, consulting, severance or similar agreement or if no definition of “Disability” is set forth in the applicable employment, consulting, severance or similar agreement, “Disability” shall have the meaning provided in the applicable Award Agreement;

(c)          if neither (a) nor (b) applies, then “Disability” shall mean the inability to engage in any substantial gainful activity by reason of any physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

2.11.          “Effective Date” means the date that the Plan is approved by the stockholders of the Company.

2.12.          “Employee” means an officer or other employee of the Company or a Subsidiary, including without limitation a director who is such an employee.

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

2.14.          “Fair Market Value” means, on any given date (i) if the Shares are listed on any established stock exchange or a national market system, including without limitation the NASDAQ Global Market, the closing sales price for such Shares as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable (or, if no closing sales price was reported on that date, on the last trading date such closing sales price was reported); (ii) if clause (i) does not apply, then if the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the mean between the high bid and low asked prices for the Shares on the day of determination (or, if no bids and asks were reported on that date, on the last trading date such bids and asks were reported); or (iii) if neither clause (i) nor clause (ii) applies, such value as the Committee in its discretion may in good faith determine in accordance with Section 409A of the Code and the regulations thereunder (and, with respect to Incentive Stock Options, in accordance with Section 422 of the Code and the regulations thereunder).

2.15.          “Good Reason” means,

(a)          if the applicable Participant is party to an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and such term is defined therein, “Good Reason” shall have the meaning provided in such agreement;

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(b)          if the applicable Participant is not a party to an effective employment, consulting, severance or similar agreement or if no definition of “Good Reason” is set forth in the applicable employment, consulting, severance or similar agreement, “Good Reason” shall have the meaning provided in the applicable Award Agreement;

(c)          if neither (a) nor (b) applies, then “Good Reason” shall mean, following a Change in Control, (i) a material diminution in the Participant’s base salary or target bonus, in either case, from that in effect immediately prior to such Change in Control; (ii) a material diminution in the Participant’s authority, duties, or responsibilities, in any case, from those as in effect immediately prior to such Change in Control; or (iii) a relocation of the Participant’s principal place of employment or service to a location that increases his/her one-way commute distance by more than thirty-five (35) miles from that in effect immediately prior to such Change in Control provided, in all cases of clauses (i) through (iii) above, that the Participant has notified the Committee in writing of such condition within ninety (90) days following its first occurrence, the Company has failed to remedy such condition within thirty (30) days following the date of such notice, and the Participant terminates his or her employment or service with the Company or any if its Subsidiaries within ninety (90) days following the end of such thirty-day cure period.

2.16.          “Incentive Stock Option” means an Option or portion thereof that (i) is designated as an Incentive Stock Option and (ii) meets the requirements of an incentive stock option as defined in Section 422 of the Code.

2.17.          “Incumbent Director” means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination.

2.18.          “Non-Employee Director” means a member of the Board or any board of directors or managers (or similar body) of a Subsidiary, in any case, who is not an Employee.

2.19.          “Non-Qualified Option” means an Option or portion thereof that is designated as not being an Incentive Stock Option or that does not otherwise qualify as an Incentive Stock Option.

2.20.          “Option” means a right granted under Section 6.1 of the Plan to purchase a specified number of Shares at a specified price.  An Option may be an Incentive Stock Option or a Non-Qualified Option; provided, however, that unless otherwise explicitly stated in an Award Agreement, each Option is hereby designated as a Non-Qualified Option.

2.21.          “Other Stock-Based Award” means a right granted under Section 6.7 of the Plan.

2.22.          “Participant” means any Employee, Non-Employee Director or Consultant who receives an Award.

2.23.          “Performance Goal” means any goal established by the Committee in its sole discretion, the attainment of which is substantially uncertain at the time such goals are established.  If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or a Subsidiary, or the manner in which any such entity conducts its business, or other events or circumstances render any Performance Goal unsuitable, the Committee may modify such Performance Goal and/or the related minimum, target, maximum and/or other levels of achievement, in whole or in part, as the Committee deems appropriate and equitable.

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2.24.          “Performance Period” means the period selected by the Committee during which the performance of the Company, any Subsidiary, any department of the Company or any Subsidiary, or any individual is measured for the purpose of determining the extent to which a Performance Goal has been achieved.

2.25.          “Performance Stock” means Shares awarded by the Committee under Section 6.6 of the Plan that are subject to one or more Performance Goals.

2.26.          “Performance Stock Unit” means the right granted under Section 6.5 of the Plan to receive, on the date of settlement, one Share or an amount equal to the Fair Market Value of one Share, which right is subject to one or more Performance Goals.  Performance Stock Units may be settled in cash, Shares or any combination thereof; provided, however, that unless otherwise provided in an Award Agreement, Performance Stock Units shall be settled in Shares.

2.27.          “Person” means an individual, corporation, partnership, association, limited liability company, estate or other legal entity.

2.28.          “Plan” means the Aquestive Therapeutics, Inc. 2018 Equity Incentive Plan herein set forth, as amended from time to time.

2.29.          “Restricted Stock” means a Share awarded by the Committee under Section 6.3 of the Plan.

2.30.          “Restricted Stock Unit” means the right granted under Section 6.4 of the Plan to receive, on the date of settlement, an amount equal to the Fair Market Value of one Share.  An Award of Restricted Stock Units may be settled in cash, Shares or any combination of the foregoing, as determined by the Committee in its sole discretion; provided, however, that unless otherwise provided in an Award Agreement, Restricted Stock Units shall be settled in Shares.

2.31.          “Restriction Period” means the period during which Performance Stock, Performance Stock Units, Restricted Stock and Restricted Stock Units are subject to forfeiture.

2.32.          “Retirement” means a Participant’s termination of employment with the Company and its Subsidiaries for any reason (other than death or by the Company or a Subsidiary for Cause) after the Participant has attained age 60 with at least 10 years of continuous employment with the Company or a Subsidiary thereof.

2.33.          “SAR” means a stock appreciation right awarded by the Committee under Section 6.2 of the Plan.

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2.34.          “Securities Act” means the Securities Act of 1933, as amended.

2.35.          “Share” means one share of the Company’s common stock, par value $0.001 per share.

2.36.          “Subsidiary” means any corporation, partnership, joint venture, company or other business entity of which 50% or more of the outstanding voting power is beneficially owned, directly or indirectly, by the Company.

2.37.          “Ten Percent Stockholder” means a Person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), shares possessing more than 10% of the total combined voting power of all classes of shares of the Company or a Subsidiary.

Section 3.          Eligibility.  Any Employee, Non-Employee Director or Consultant shall be eligible to receive an Award under the Plan, as determined in the sole discretion of the Committee; provided, however, that only persons who are Employees may be granted Incentive Stock Options.

Section 4.          Administration and Implementation of the Plan.

4.1.          The Plan and all Award Agreements shall be administered by the Committee.  Any action of the Committee in administering the Plan or an Award Agreement shall be final, conclusive and binding on all Persons, including without limitation the Company, its Subsidiaries, Participants, Persons claiming rights from or through Participants and stockholders of the Company.  No member of the Committee (or any person to whom the Committee has delegated authority to act under the Plan) shall be personally liable for any action, determination, or interpretation taken or made in good faith by the Committee (or such person) with respect to the Plan or any Awards granted hereunder, and all members of the Committee (and such persons to whom the Committee has delegated authority to act under the Plan) shall be fully indemnified and protected by the Company in respect of any such action, determination or interpretation to the fullest extent permitted by law.

4.2.          Subject to the provisions of the Plan, the Committee shall have full and final authority in its discretion to (i) select the Employees, Non-Employee Directors and Consultants who will receive Awards pursuant to the Plan; provided that Awards granted to Non-Employee Directors who are on the Board shall be subject to ratification by the Board; (ii) determine the type or types of Awards to be granted to each Participant; (iii) determine the number of Shares to which an Award will relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, restrictions as to vesting, Performance Goals relating to an Award, transferability or forfeiture, exercisability or settlement of an Award, waivers or accelerations thereof, and waivers of or modifications to Performance Goals relating to an Award, based in each case on such considerations as the Committee shall determine) and all other matters to be determined in connection with an Award; (iv) determine the strike price, grant price or purchase price (if any) of an Award; (v) determine whether, to what extent, and under what circumstances an Award may be cancelled, forfeited, or surrendered; (vi) determine whether, and to certify that, Performance Goals to which an Award is subject are satisfied; (vii) determine whether Participants will be permitted to defer the settlement of certain Awards; (viii) correct any defect or supply any omission or reconcile any inconsistency in the Plan and Award Agreements, and adopt, amend and rescind such rules, regulations, guidelines, forms of agreements and instruments relating to the Plan and Award Agreements as it may deem necessary or advisable; (ix) construe and interpret the Plan and Award Agreements; and (x) make all other determinations as it may deem necessary or advisable for the administration of the Plan and Award Agreements.  Notwithstanding anything in the Plan or an Award Agreement to the contrary, no underwater Option or underwater SAR may be repriced, replaced or regranted through cancellation, nor may any underwater Option or underwater SAR be repurchased for cash, in any case, without the approval of the stockholders of the Company, provided that nothing herein shall prevent the Committee from taking any action provided for in Sections 7 and 8.

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4.3.          To the extent permitted by applicable law and the Company’s by-laws, the Committee may delegate some or all of its authority with respect to the Plan and Awards to any executive officer of the Company or any other person or persons designated by the Committee, in each case, acting individually or as a committee, provided that the Committee may not delegate its authority hereunder to any person to make Awards to (a) Employees who are (i) subject to the requirements of Rule 16b-3 of the Exchange Act or (ii) officers or other Employees who are delegated authority by the Committee pursuant to this Section 4.3 or (b) members of the Board.  Any delegation hereunder shall be subject to the restrictions and limits that the Committee specifies at the time of such delegation or thereafter in its sole discretion.  The Committee may at any time rescind the authority delegated to any person pursuant to this Section 4.3.  Any action undertaken by any such person or persons in accordance with the Committee’s delegation of authority pursuant to this Section 4.3 shall have the same force and effect as if undertaken directly by the Committee.

4.4.          Notwithstanding any other provision to the contrary, Awards granted to Non-Employee Directors who are on the Board shall be administered by the Board, and any authority reserved under the Plan for the Committee with regard to Awards granted to Non-Employee Directors who are on the Board shall be exercised by the Board.

4.5.          Notwithstanding anything contained in the Plan to the contrary, for so long as the Common Stock is publicly traded on a national securities exchange with sufficient public float and to the extent permitted by applicable law, the Committee shall ensure that a program is in place to offer Participants the opportunity to engage in broker-assisted sales of shares of Common Stock to allow Participants to pay the exercise price of, and withholding taxes relating to, Awards; provided that Participants who are subject to Section 16 of the Exchange Act with respect to the Company shall be permitted to direct the Company in their discretion to withhold Shares from those otherwise due with respect to an Award to pay the exercise price and withholding taxes relating to such Award.  Only whole shares of Common Stock shall be withheld, and the number of shares of Common Stock withheld shall be based on the Fair Market Value of the Common Stock on the date on which the event giving rise to such share withholding occurs.

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Section 5.          Shares Subject to the Plan.

5.1.          Subject to adjustment as provided in Section 8 hereof, the total number of shares of Common Stock available for Awards under the Plan as of the Effective Date shall be 4,100,000 (the “Plan Limit”); provided, however, that on January 1, 2019 and each January 1st thereafter prior to the termination of the Plan, the Plan Limit shall be increased by the lesser of (x) 4.0% of the number of shares of Common Stock outstanding as of the immediately preceding December 31st and (y) such lesser number as the Board may determine in its discretion.   Up to 4,100,000 shares available for Awards under the Plan may be issued pursuant to Incentive Stock Options (the “ISO Limit”), provided that on January 1, 2019 and each January 1st thereafter prior to the termination of the Plan, the ISO Limit shall be increased by the lesser of (x) 4.0% of the number of shares of Common Stock outstanding as of the immediately preceding December 31st, (y) 4,100,000 shares and (z) such lesser number as the Board may determine in its discretion.  The maximum value (determined as of the grant date) of the Shares underlying Awards granted to any Non-Employee Director who is on the Board during any calendar year is $500,000, except that such limit shall be increased by 50% for the first calendar year in which a Non-Employee Director is appointed to the Board.  For purposes of determining the number of shares available for Awards under the Plan, each stock-settled SAR shall count against the Plan Limit based on the number of shares underlying the exercised portion of such SAR rather than the number of shares issued in settlement of such SAR.  Any shares tendered, with the Committee’s approval, by a Participant in payment of an exercise price for an Award or the tax liability with respect to an Award, including shares withheld from any such Award, shall not be available for future Awards hereunder.  Common Stock awarded under the Plan may be reserved or made available from the Company’s authorized and unissued Common Stock or from Common Stock reacquired and held in the Company’s treasury.  Any shares of Common Stock issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall not reduce the shares of Common Stock available for Awards under the Plan.

5.2.          If any Shares subject to an Award under the Plan are forfeited or such Award otherwise terminates for any reason whatsoever without an actual distribution of Shares to the Participant, any Shares counted against the number of Shares available for issuance pursuant to the Plan with respect to such Award shall, to the extent of any such forfeiture or termination, be added back to the Plan Limit and shall again be available for Awards under the Plan; provided, however, that the Committee may adopt procedures for the counting of Shares relating to any Award to ensure appropriate counting, avoid double counting, provide for adjustments in any case in which the number of Shares actually distributed differs from the number of Shares previously counted in connection with such Award, and if necessary, to comply with applicable law or regulations.

Section 6.          Awards.  Awards may be granted on the terms and conditions set forth in this Section 6.  In addition, the Committee may impose on any Award or the settlement or exercise thereof, at the grant date or thereafter, such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including without limitation terms requiring forfeiture of unvested Awards in the event of a Participant’s termination of employment or other service with the Company or any Subsidiary; provided, however, that the Committee shall retain full power to accelerate or waive any such additional term or condition as it may have previously imposed (provided that, in any case, any such action is permitted under Code Section 409A).  The right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such Performance Goals as may be determined by the Committee.  Each Award, and the terms and conditions applicable thereto, shall be evidenced by an Award Agreement.

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6.1.          Options.  Options give a Participant the right to purchase a specified number of Shares from the Company for a specified time period at a fixed exercise price, as provided in the applicable Award Agreement.  Options may be either Incentive Stock Options or Non-Qualified Options; provided that Incentive Stock Options may not be granted to Non-Employee Directors or Consultants.  The grant of Options shall be subject to the following terms and conditions:

(a)          Exercise Price.  The price per Share at which Shares may be purchased upon exercise of an Option shall be determined by the Committee and specified in the Award Agreement, but shall be not less than the Fair Market Value of one Share on the grant date (or 110% of the Fair Market Value of one Share on the grant date in the case of an Incentive Stock Option granted to a Ten Percent Stockholder).

(b)          Term of Options.  The term of an Option shall be specified in the Award Agreement, but shall in no event be greater than ten years from the grant date (or five years from the grant date in the case of an Incentive Stock Option granted to a Ten Percent Stockholder).

(c)          Exercise of Option.  Each Award Agreement with respect to an Option shall specify the time or times at which an Option may be exercised in whole or in part and the terms and conditions applicable thereto, including without limitation (i) a vesting schedule which may be based upon the passage of time, attainment of Performance Goals or a combination thereof, (ii) whether the exercise price for an Option shall be paid in cash, with Shares, with any combination of cash and Shares, or with other legal consideration that the Committee may deem appropriate and to the extent permitted by applicable law, (iii) the methods of payment, which may include payment through cashless and net exercise arrangements, to the extent permitted by applicable law and (iv) the methods by which, or the time or times at which, Shares will be delivered or deemed to be delivered to Participants upon the exercise of such Option.  Payment of the exercise price shall in all events be made within three days after the date of exercise of an Option.

(d)          Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and except as otherwise provided in Section 7.2 hereof, upon a Participant’s termination of employment or other service with the Company and its Subsidiaries, the unvested portion of such Participant’s Options shall cease to vest and shall be forfeited (with no compensation due to the Participant) and the vested portion of such Participant’s Options shall remain exercisable by the Participant or the Participant’s beneficiary or legal representative, as the case may be, for a period of (i) 90 days in the event of a termination by the Company or a Subsidiary for Cause, (ii) one year in the event of a termination due to death or Disability, by the Company or a Subsidiary without Cause, by the Participant for Good Reason or as the result of the Participant’s Retirement and (iii) six months in the event of the Participant’s resignation without Good Reason and not due to Retirement; provided, however, that in no event shall any Option be exercisable after its stated term has expired.

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(e)          Incentive Stock Options.  Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date he or she makes a “disqualifying disposition” (as defined in Section 421(b) of the Code) of any Shares acquired pursuant to the exercise of such Incentive Stock Option.  The Company may, if determined by the Committee and in accordance with procedures established by it, retain possession of any Shares acquired pursuant to the exercise of an Incentive Stock Option as agent for the applicable Participant until the end of any period during which a disqualifying disposition could occur, subject to complying with any instructions from such Participant as to the sale of such Shares.  The aggregate Fair Market Value, determined as of the grant date, for Awards granted under the Plan (or any other stock or share option plan required to be taken into account under Section 422(d) of the Code) that are intended to be Incentive Stock Options which are first exercisable by the Participant during any calendar year shall not exceed $100,000.  To the extent an Award purporting to be an Incentive Stock Option exceeds the limitation in the previous sentence or does not otherwise qualify as an Incentive Stock Option, the portion of the Award in excess of such limit or that does not so qualify shall be a Non-Qualified Option.

(f)          No Dividend Equivalent Rights.  No Participant shall be entitled to dividend equivalent rights or payments with respect to any Shares underlying the Participant’s Options.

6.2.          Stock Appreciation Rights.  A SAR shall confer on the Participant a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the SAR as determined by the Committee, but which may never be less than the Fair Market Value of one Share on the grant date.  No payment from the Participant shall be required to exercise a SAR.  The grant of SARs shall be subject to the following terms and conditions:

(a)          General.  Each Award Agreement with respect to a SAR shall specify the number of SARs granted, the grant price of the SAR, the time or times at which the SAR may be exercised in whole or in part (including without limitation vesting upon the passage of time, the attainment of Performance Goals, or a combination thereof), the method of exercise, the method of settlement (in cash, Shares or a combination thereof), the method by which Shares will be delivered or deemed to be delivered to Participants (if applicable) and any other terms and conditions of the SAR.

(b)          Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and except as otherwise provided in Section 7.2 hereof, upon a Participant’s termination of employment or other service with the Company and its Subsidiaries, the unvested portion of such Participant’s SARs shall cease to vest and shall be forfeited (with no compensation due to the Participant) and the vested portion of such Participant’s SARs shall remain exercisable by the Participant or the Participant’s beneficiary or legal representative, as the case may be, for a period of (i) 90 days in the event of a termination by the Company or a Subsidiary for Cause, (ii) one year in the event of a termination due to death or Disability, by the Company or a Subsidiary without Cause, by the Participant for Good Reason or as the result of the Participant’s Retirement and (iii) six months in the event of the Participant’s resignation without Good Reason and not due to Retirement; provided, however, that in no event shall any SAR be exercisable after its stated term has expired.

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(c)          Term.  The term of a SAR shall be specified in the Award Agreement, but shall in no event be greater than ten years from the grant date.

(d)          No Dividend Equivalent Rights.  No Participant shall be entitled to dividend equivalent rights or payments with respect to any Shares underlying the Participant’s SARs.

6.3.          Restricted Stock.  An Award of Restricted Stock is a grant by the Company of a specified number of Shares to the Participant, which Shares are subject to forfeiture upon the occurrence of specified events during the Restriction Period.  Such an Award shall be subject to the following terms and conditions:

(a)          General.  Each Award Agreement with respect to Restricted Stock shall specify the duration of the Restriction Period and/or each installment thereof, the conditions under which the Restricted Stock may be forfeited to the Company, and the amount, if any, the Participant must pay to receive the Restricted Stock.  Such restrictions may include a vesting schedule based upon the passage of time.

(b)          Transferability.  During the Restriction Period, the transferability of Restricted Stock shall be prohibited or restricted in the manner and to the extent prescribed in the applicable Award Agreement.  Such restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee.

(c)          Stockholder Rights.  Unless otherwise provided in the applicable Award Agreement, during the Restriction Period the Participant shall have all the rights of a stockholder with respect to Restricted Stock, including, without limitation, the right to receive dividends thereon (whether in cash or Shares) and to vote such Shares of Restricted Stock in accordance with the Company’s by-laws. Dividends may, in the discretion of the Committee, be paid currently or subject to the same restrictions as the underlying Restricted Stock (and the Committee may, in its sole discretion, withhold any cash dividends paid on Restricted Stock until the restrictions applicable to such Restricted Stock have lapsed); provided, however, that dividends paid on unvested Restricted Stock that is subject to Performance Goals shall not be paid or released unless and until the applicable Performance Goals have been achieved.

(d)          Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and except as otherwise provided in Section 7.2 hereof, upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any reason, the unvested portion of each Award of Restricted Stock granted to such Participant shall be forfeited with no compensation due the Participant.

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(e)          Additional Matters.  Upon the Award of Restricted Stock, the Committee may direct the number of Shares subject to such Award be issued to the Participant or placed in a restricted stock account (including without limitation an electronic account) with the transfer agent and in either case designating the Participant as the registered owner.  The certificate(s), if any, representing such Shares shall be physically or electronically legended, as applicable, as to sale, transfer, assignment, pledge or other encumbrances during the Restriction Period and, if issued to the Participant, returned to the Company to be held in escrow during the Restriction Period.  In all cases, the Participant shall sign a stock power or share transfer form (as appropriate) endorsed in blank to the Company to be held in escrow during the Restriction Period.

6.4.          Restricted Stock Units.  Restricted Stock Units are solely a device for the measurement and determination of the amounts to be paid to a Participant under the Plan.  Restricted Stock Units do not constitute Shares and shall not be treated as (or as giving rise to) property or as a trust fund of any kind; provided, however, that the Company may establish a bookkeeping reserve to meet its obligations hereunder or a trust or other funding vehicle that would not cause the Plan to be deemed to be funded for tax purposes or for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.  The right of any Participant in respect of an Award of Restricted Stock Units shall be no greater than the right of any unsecured general creditor of the Company.  The grant of Restricted Stock Units shall be subject to the following terms and conditions:

(a)          Restriction Period.  Each Award Agreement with respect to Restricted Stock Units shall specify the duration of the Restriction Period, if any, and/or each installment thereof and the conditions under which such Award may be forfeited to the Company.  Such restrictions may include a vesting schedule based upon the passage of time.

(b)          Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and except as otherwise provided in Section 7.2 hereof, upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any reason, the unvested portion of each Award of Restricted Stock Units credited to such Participant shall be forfeited with no compensation due the Participant.

(c)          Settlement.  Unless otherwise provided in an Award Agreement (i) an Award of Restricted Stock Units shall be settled in Shares, provided that any fractional Restricted Stock Units shall be settled in cash and (ii) subject to the Participant’s continued employment or other service with the Company or a Subsidiary from the grant date through the expiration of the Restriction Period (or applicable portion thereof), the vested portion of an Award of Restricted Stock Units shall be settled within 60 days after the expiration of the Restriction Period (or applicable portion thereof).

(d)          Stockholder Rights.  Nothing contained in the Plan shall be construed to give any Participant rights as a stockholder with respect to an Award of Restricted Stock Units (including, without limitation, any voting, dividend or derivative or other similar rights).  Notwithstanding the foregoing, the Committee may provide in an Award Agreement that amounts equal to any dividends declared during the Restriction Period on the Shares represented by an Award of Restricted Stock Units will be credited to the Participant’s account and settled in Shares at the same time (and subject to the same forfeiture restrictions) as the Restricted Stock Units to which such dividend equivalents relate (with the number of Shares released in payment of such dividend equivalents to equal the amount of dividend equivalents then being settled, divided by the Fair Market Value of one Share on the settlement date of such dividend equivalents).

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6.5.          Performance Stock Units.  Performance Stock Units are solely a device for the measurement and determination of the amounts to be paid to a Participant under the Plan.  Performance Stock Units do not constitute Shares and shall not be treated as (or as giving rise to) property or as a trust fund of any kind; provided, however, that the Company may establish a bookkeeping reserve to meet its obligations hereunder or a trust or other funding vehicle that would not cause the Plan to be deemed to be funded for tax purposes or for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.  The right of any Participant in respect of an Award of Performance Stock Units shall be no greater than the right of any unsecured general creditor of the Company.  The grant of Performance Stock Units shall be subject to the following terms and conditions:

(a)          Restriction Period.  Each Award Agreement with respect to Performance Stock Units shall specify the duration of the Performance Period and the Restriction Period, if any, and/or each installment thereof, the Performance Goals applicable to the Performance Stock Units and the conditions under which the Performance Stock Units may be forfeited to the Company.  Such restrictions shall include a vesting schedule based on the attainment of one or more Performance Goals.

(b)          Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and except as otherwise provided in Section 7.2 hereof, upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any reason, the unvested portion of each Award of Performance Stock Units credited to such Participant shall be forfeited with no compensation due the Participant.

(c)          Settlement.  Unless otherwise provided in an Award Agreement, subject to the Participant’s continued employment or other service with the Company or a Subsidiary from the grant date through the expiration of the Restriction Period (or applicable portion thereof), the vested portion of an Award of Performance Stock Units shall be settled within 60 days after the expiration of the Restriction Period (or applicable portion thereof).

(d)          Stockholder Rights.  Nothing contained in the Plan shall be construed to give any Participant rights as a stockholder with respect to an Award of Performance Stock Units (including, without limitation, any voting, dividend or derivative or other similar rights).  Notwithstanding the foregoing, the Committee may provide in an Award Agreement that amounts equal to any dividends declared by the Company during the Restriction Period on the Shares represented by an Award of Performance Stock Units will be credited to the Participant’s account and settled in cash or Shares at the same time (and subject to the same forfeiture restrictions and Performance Goals) as the Performance Stock Units to which such dividend equivalents relate (with the number of Shares released in payment of such dividend equivalents to equal the amount of dividend equivalents then being settled, divided by the Fair Market Value of one Share on the settlement date of such dividend equivalents).

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6.6.          Performance Stock.  An Award of Performance Stock is a grant by the Company of a specified number of Shares to the Participant, which Shares are conditional on the achievement of Performance Goals during the Performance Period and subject to forfeiture upon the happening of specified events during the Restriction Period.  An Award of Performance Stock shall be subject to the following terms and conditions.

(a)          General.  Each Award Agreement with respect to Performance Stock shall specify the duration of the Performance Period and the Restriction Period, if any, and/or each installment thereof, the Performance Goals applicable to the Performance Stock and the conditions under which the Performance Stock may be forfeited to the Company, and the amount, if any, the Participant must pay to receive the Performance Stock.

(b)          Transferability.  During the Restriction Period, if any, the transferability of Performance Stock shall be prohibited or restricted in the manner and to the extent prescribed in the applicable Award Agreement. Such restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Performance Stock to a continuing substantial risk of forfeiture in the hands of any transferee.

(c)          Stockholder Rights.  Unless otherwise provided in the applicable Award Agreement, during the Restriction Period the Participant shall have all the rights of a stockholder with respect to Performance Stock, including, without limitation, the right to receive dividends thereon (whether in cash or Shares), but only to the extent that Performance Stock vests based on the achievement of Performance Goals, and to vote such shares of Performance Stock.  Dividends shall be subject to the same restrictions (and Performance Goals) as the underlying Performance Stock and the Committee shall withhold any cash dividends paid on Performance Stock until the Performance Goals are achieved and restrictions applicable to such Performance Stock have lapsed.

(d)          Termination of Employment or Other Service.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, and except as otherwise provided in Section 7.2 hereof, upon a Participant’s termination of employment or other service with the Company and its Subsidiaries for any reason, the unvested portion of each Award of Performance Stock granted to such Participant shall be forfeited with no compensation due the Participant.

6.7.          Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to Participants any type of Award (in addition to those Awards provided in Sections 6.1, 6.2, 6.3, 6.4, 6.5 and 6.6 hereof) that is payable in, or valued in whole or in part by reference to, Shares, and that is deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, fully vested Shares and dividend equivalents.

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Section 7.          Change in Control.

7.1.          General.  Unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, a Change in Control shall not, in and of itself, accelerate the vesting, settlement or exercisability of outstanding Awards.  Notwithstanding the foregoing and unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, if (i) the successor corporation or company (or its direct or indirect parent) does not agree to assume an outstanding Award or does not agree to substitute or replace such Award with an award involving the registered and publicly traded ordinary equity securities of such successor corporation (or its direct or indirect parent) on terms and conditions necessary to preserve the rights of the applicable Participant with respect to such Award, (ii) the ordinary equity securities underlying the assumed or substituted Award would not be registered and publicly traded on a U.S. securities exchange immediately following such Change in Control or (iii) the Change in Control is not approved by a majority of the Incumbent Directors immediately prior to such Change in Control, then the Committee, in its sole discretion, may take one or more of the following actions with respect to all, some or any such Awards: (a) accelerate the vesting and, if applicable, exercisability of such Awards such that the Awards are fully vested and, if applicable, exercisable (effective immediately prior to such Change in Control); (b) with respect to any Awards that do not constitute “non-qualified deferred compensation” within the meaning of Code Section 409A, accelerate the settlement of such Awards upon such Change in Control; (c) with respect to Awards that constitute “non-qualified deferred compensation” within the meaning of Code Section 409A, terminate all such Awards and settle all such Awards for a cash payment equal to the Fair Market Value of the Shares underlying such Awards less the amount the Participant is required to pay for such Shares, if any, provided that (I) such Change in Control satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(v), (vi) or (vii) and (II) all other arrangements that would be aggregated with such Awards under Code Section 409A are terminated and liquidated within 30 days before or 12 months after such Change in Control; (d) cancel outstanding Options or SARs in exchange for a cash payment in an amount equal to the excess, if any, of the Fair Market Value of the Shares underlying the unexercised portion of the Option or SAR as of the date of the Change in Control over the exercise price or grant price, as the case may be, of such portion, provided that any Option or SAR with a per Share exercise price or grant price, as the case may be, that equals or exceeds the Fair Market Value of one Share on the date of the Change in Control shall be cancelled with no payment due the Participant and (e) take such other actions as the Committee deems appropriate.  If any action is taken with respect to any Award under items (a) through (e) of this Section 7.1 and such Award is subject to Performance Goals, such Performance Goals shall be deemed satisfied based on the actual level of achievement of the applicable Performance Goals through the date of the Change in Control or, if determined by the Committee in its sole discretion prior to such Change in Control, using the applicable target level of achievement rather than such actual level of achievement.  The judgment of the Committee with respect to any matter referred to in this Section 7.1 shall be conclusive and binding upon each Participant without the need for any amendment to the Plan or any Award or Award Agreement.  Notwithstanding the foregoing, no Award that constitutes “non-qualified deferred compensation” (within the meaning of Section 409A of the Code) shall be payable upon the occurrence of a Change in Control unless such Change in Control satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5).

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7.2.          Termination Following a Change in Control.  Notwithstanding anything contained in the Plan to the contrary, unless otherwise provided in an Award Agreement or an effective employment, consulting, severance or similar agreement with the Company or a Subsidiary, or as otherwise may be determined by the Committee prior to a Change in Control, in the event that Awards under the Plan are assumed in connection with a Change in Control or are substituted with new awards, in either case, pursuant to Section 7.1 above, and a Participant’s employment or other service with the Company and its Subsidiaries is terminated by the Company or a Subsidiary without Cause or due to Disability, as the result of the Participant’s death or by the Participant for Good Reason, in any case, within 24 months following a Change in Control, (i) the unvested portion of such Participant’s Awards (including without limitation any awards received in substitution of an Award) shall vest in full (with any applicable Performance Goals being deemed to have been achieved at target or, if greater, actual levels of performance), (ii) Awards of Options and SARs (including without limitation options and stock or share appreciation rights received in substitution of an Award) shall remain exercisable by the Participant or the Participant’s beneficiary or legal representative, as the case may be, for a period of one-year thereafter (but not beyond the stated term of such Option or SAR), (iii) all Restricted Stock Units and Performance Stock Units (including without limitation restricted stock units and performance stock units received in substitution of an Award) shall be settled within 30 days after such termination and (iv) all Other Stock-Based Awards (including without limitation any received in substitution of an Award) shall be settled within 30 days after such termination; provided, however, that with respect to clauses (iii) and (iv), if settlement of such Awards on the date described in this Section 7.2 would violate Code Section 409A, then such Award instead shall be settled in full at the time it otherwise would have been settled in connection with a termination of employment or service without Cause, for Good Reason or due to death or Disability, as applicable.

Section 8.          Adjustments upon Changes in Capitalization.

8.1.          In order to prevent dilution or enlargement of the rights of Participants under the Plan as a result of any share dividend, recapitalization, forward share split or reverse share split, reorganization, spin-off, extraordinary or unusual cash distribution or other similar or analogous non-reciprocal corporate transaction or event between the Company and its shareholders that affects the Shares, the Committee shall adjust (i) the number and kind of Shares which may thereafter be issued in connection with Awards, (ii) the number and kind of Shares issuable in respect of outstanding Awards, (iii) the aggregate number and kind of Shares available under the Plan (including without limitation any of the specific limitations under Section 5 hereof), and (iv) the exercise or grant price relating to any Award.  Any such adjustment shall be made in an equitable manner which reflects the effect of such transaction or event.

8.2.          In addition, the Committee is authorized (but not obligated) to make adjustments in the terms and conditions of, and the criteria included in, Awards, including any Performance Goals, in recognition of unusual or nonrecurring events (including, without limitation, events described in Section 8.1) affecting the Company or any Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.

8.3.          If Sections 7 and 8 could both apply to an event, Section 7 shall control.

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Section 9.          Termination and Amendment.

9.1.          Changes to the Plan and Awards.  The Board may amend, alter, suspend, discontinue, or terminate the Plan without the consent of the Company’s stockholders or Participants, except that any such amendment, alteration, suspension, discontinuation or termination shall be subject to the approval of the Company’s stockholders if (i) such action would increase the number of Shares subject to the Plan (other than in connection with adjustments under Section 8.1), (ii) such action would decrease the price at which Awards may be granted, (iii) such stockholder approval is required by any applicable federal, state or foreign law or regulation or the rules of any stock exchange or automated quotation system on which the Shares may then be listed or quoted, or (iv) the Board may otherwise, in its discretion, determine to submit such other changes to the Plan to the Company’s stockholders for approval; provided, however, that except as provided in Section 18, without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may materially and adversely affect the rights of such Participant under any outstanding Award unless such amendment, alteration, suspension, discontinuation or termination is required by law or regulation, or the rules of any applicable securities exchange or automated quotation system.

9.2.          The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate, any Award theretofore granted and any Award Agreement relating thereto; provided, however, that except as provided in Section 18, without the consent of an affected Participant, no such amendment, alteration, suspension, discontinuation, or termination of any Award may materially and adversely affect the rights of such Participant under such Award unless such amendment, alteration, suspension, discontinuation or termination is required by law or regulation, or the rules of any applicable securities exchange or automated quotation system.

9.3.          Notwithstanding anything in Section 8 or this Section 9 to the contrary, any Performance Goal applicable to an Award shall not be deemed a fixed contractual term, but shall remain subject to adjustment by the Committee, in its discretion at any time in view of the Committee’s assessment of the Company’s strategy, performance of comparable companies, and other circumstances.

9.4.          No Repricing.  Notwithstanding anything in the Plan or an Award Agreement to the contrary, no underwater Option or underwater SAR may be repriced, replaced or regranted through cancellation, nor may any underwater option or underwater SAR be repurchased for cash, in any case, without the approval of the stockholders of the Company, provided that nothing herein shall prevent the Committee from taking any action provided for in Sections 7 and 8.

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Section 10.          No Right to Award, Employment or Service.  No Employee, Consultant or Non-Employee Director shall have any claim to be granted any Award under the Plan, and there is no obligation that the terms of Awards be uniform or consistent among Participants.  Neither the Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the employ or service of the Company or any Subsidiary.  For purposes of the Plan, a transfer of employment or service between the Company and its Subsidiaries shall not be deemed a termination of employment or service; provided, however, that individuals employed by, or otherwise providing services to, an entity that ceases to be a Subsidiary shall be deemed to have incurred a termination of employment or service, as the case may be, as of the date such entity ceases to be a Subsidiary unless such individual becomes an employee of, or service provider to, the Company or another Subsidiary as of the date of such cessation.  A change in status from Employee to Consultant shall be deemed to be a termination of employment, unless otherwise determined by the Committee.  The Committee may adopt rules and make determinations on how a leave of absence will impact an Award, including, without limitation, tolling the vesting schedule or treating such leave of absence as a termination of employment or other service.

Section 11.          Taxes.  Each Participant must make appropriate arrangement for the payment of any taxes relating to an Award granted hereunder.  The Company or any Subsidiary is authorized to withhold from any payment relating to an Award under the Plan, including without limitation from a distribution of Shares, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company, its Subsidiaries and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award (including without limitation withholding from any payroll or other payment due to a Participant).  This authority shall include the ability to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations.  Withholding of taxes in the form of Shares with respect to an Award shall not occur at a rate that equals or exceeds the rate that would result in such Award being subject to liability accounting treatment.

Section 12.          Limits on Transferability; Beneficiaries.  No Award or other right or interest of a Participant under the Plan shall be (i) pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any party, other than the Company or any Subsidiary, or (ii) assigned or transferred by such Participant other than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the Participant or (with respect to Awards other than Incentive Stock Options) his or her guardian or legal representative.  Notwithstanding the foregoing, to the extent permitted by applicable law and the rules of any applicable stock exchange, Non-Qualified Options, SARs, Performance Stock, Restricted Stock and any other Award that is not “deferred compensation” within the meaning of Code Section 409A shall be transferable, without consideration, to immediate family members (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate family members and to partnerships or similar entities in which such Participant and his or her family members are the only partners, members or equityholders (any vesting and other conditions relating to such Awards shall be unaffected by such transfer).  The Committee may attach to such transferability feature such terms and conditions as it deems necessary to further the purposes of the Plan.  In addition, a Participant may, in the manner established by the Committee, designate a beneficiary (which may be a Person or a trust) to exercise the rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant.  A beneficiary, guardian, legal representative or other Person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional restrictions deemed necessary or appropriate by the Committee.

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Section 13.          Foreign Nationals.  Without amending the Plan, Awards may be granted to Employees, Consultants and Non-Employee Directors who are foreign nationals or are employed or providing services outside the United States or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to further the purpose of the Plan.  Moreover, the Committee may approve such supplements to, or sub-plans, amendments, restatements or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose, provided that no such supplements, sub-plans, amendments, restatements or alternative versions shall include any provisions that are prohibited by the terms of the Plan, as then in effect, unless the Plan could have been amended to eliminate such prohibition without further approval by the stockholders of the Company.

Section 14.          Securities Law Requirements.

14.1.          No Shares may be issued hereunder if the Company shall at any time determine that to do so would (i) violate the listing requirements of an applicable securities or stock exchange, or adversely affect the registration or qualification of the Company’s Shares under any state or federal law, or (ii) require the consent or approval of any regulatory or supervising body or stockholders.  In any of the events referred to in clause (i) or clause (ii) above, the issuance of such Shares shall be suspended and shall not be effective unless and until such listing, registration, qualifications, consents or approval shall have been effected or obtained free of any conditions not acceptable to the Company in its sole discretion, notwithstanding any termination of any Award or any portion of any Award during the period when issuance has been suspended (provided, however, that if permitted under Code Section 409A, the Committee may toll the expiration date of an Award such that it will not terminate during any such period of suspension).

14.2.          For purposes of ensuring compliance with applicable securities laws or for other legal compliance purposes, the Committee may require, as a condition to the issuance of Shares hereunder, representations, warranties and agreements to the effect that such Shares are being purchased or acquired by the Participant for investment only and without any present intention to sell or otherwise distribute such Shares, and that the Participant will not dispose of such Shares in transactions which, in the opinion of counsel to the Company, would violate the registration provisions of the Securities Act and the rules and regulations thereunder.

Section 15.          Termination.  Unless earlier terminated, the Plan shall terminate with respect to the grant of new Awards on the earlier of the 10-year anniversary of the Effective Date or the 10-year anniversary of the date the Plan was approved by the Board, and no Awards under the Plan shall thereafter be granted; provided that no such termination shall adversely impact Awards that were granted prior to such termination.

Section 16.          Fractional Shares.  The Company will not be required to issue any fractional Shares pursuant to the Plan.  The Committee may provide for the elimination of fractions and settlement of such fractional Shares in cash, in its sole discretion.

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Section 17.          Discretion.  In exercising, or declining to exercise, any grant of authority or discretion hereunder, the Committee may consider or ignore such factors or circumstances and may accord such weight to such factors and circumstances as the Committee alone and in its sole judgment deems appropriate and without regard to the effect such exercise, or declining to exercise such grant of authority or discretion, would have upon the affected Participant, any other Participant, any Employee, any Consultant, any Non-Employee Director, the Company, any Subsidiary, any affiliate, any stockholder or any other Person.

Section 18.          Code Section 409A.  The Plan and all Awards are intended to comply with, or be exempt from, Code Section 409A and all regulations, guidance, compliance programs and other interpretative authority thereunder, and shall be interpreted in a manner consistent therewith.  Notwithstanding anything contained herein to the contrary, in the event any Award is subject to Code Section 409A, the Committee may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Award, adopt policies and procedures, or take any other actions as deemed appropriate by the Committee to (i) exempt the Plan and/or any Award from the application of Code Section 409A, (ii) preserve the intended tax treatment of any such Award or (iii) comply with the requirements of Code Section 409A.  In the event that a Participant is a “specified employee” within the meaning of Code Section 409A, and a payment or benefit provided for under the Plan would be subject to additional tax under Code Section 409A if such payment or benefit is paid within six (6) months after such Participant’s separation from service (within the meaning of Code Section 409A), then such payment or benefit shall not be paid (or commence) during the six (6) month period immediately following such Participant’s separation from service except as provided in the immediately following sentence. In such an event, any payments or benefits that would otherwise have been made or provided during such six (6) month period and which would have incurred such additional tax under Code Section 409A shall instead be paid to the Participant in a lump-sum, without interest, on the earlier of (i) the first business day of the seventh month following the month in which such Participant’s separation from service occurs or (ii) the tenth business day following such Participant’s death (but not earlier than if such delay had not applied). A Participant’s right to receive any installment payments under an Award Agreement, including without limitation as the result of any deferral of an Award in accordance with Code Section 409A, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Code Section 409A.  Notwithstanding anything contained in the Plan or in an Award Agreement to the contrary, neither the Company, any member of the Committee nor any Subsidiary shall have any liability or obligation to any Participant or any other Person for taxes, interest, penalties or fines (including without limitation any of the foregoing resulting from the failure of any Award granted hereunder to comply with, or be exempt from, Code Section 409A).  Any Award that is to be settled or paid upon a termination of employment or service and that constitutes “non-qualified deferred compensation” under Code Section 409A shall not be paid or settled unless such termination of employment or service constitutes a “separation from service” within the meaning of Code Section 409A.

Section 19.          Governing Law.  The validity and construction of the Plan and any Award Agreements entered into thereunder shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof.

Section 20.          Recoupment.  Any Award granted pursuant to the Plan (and all Shares acquired thereunder) shall be subject to mandatory repayment and clawback pursuant to the terms of the Company’s clawback policy, if any, as in effect from time to time, and as may otherwise be required by law or the rules of any applicable securities exchange.  Additional recoupment and clawback policies may be provided in the Participant’s Award Agreement.

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Section 21.          Employment Agreements.  In the event of any conflict between the terms of the Plan or an Award, on the one hand, and the terms of a Participant’s employment agreement with the Company or a Subsidiary on the other hand, the terms of such employment agreement shall control.

Section 22.          Effective Date.  The Plan shall become effective upon the Effective Date, and no Award shall become exercisable, realizable or vested prior to the Effective Date.

[End of Document]

 

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