Document:

PRX-2014.3.31-Ex 10.1

EXHIBIT 10.1

SKY GROWTH HOLDINGS CORPORATION
2012 EQUITY INCENTIVE PLAN
AS AMENDED MAY 9, 2014
1.DEFINED TERMS
Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.  
2.    PURPOSE
The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock-based and other incentive Awards.
3.    ADMINISTRATION
The Administrator has discretionary authority, subject only to the express provisions of the Plan and any Award Agreement, to: interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award, in each case, subject to Section 9 below; prescribe forms, rules and procedures; and otherwise do all things necessary to carry out the purposes of the Plan.  Determinations of the Administrator made under the Plan or any Award will be conclusive and will bind all parties.
4.    LIMITS ON AWARDS UNDER THE PLAN
(a)    Number of Shares.  A maximum of 68,250,000 shares of Stock may be delivered in satisfaction of, or may underlie, Awards under the Plan, including ISOs (the “Pool”).  To the extent consistent with Section 422, (i) shares of Stock underlying Awards that expire, become unexercisable without having been exercised, or are forfeited without payment with respect thereto shall not be treated as having been delivered under the Plan, and (ii) Stock issued under awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition will not reduce the number of shares available for Awards under the Plan.  Each Performance Award granted pursuant to a Long-Term Cash Incentive Award Agreement (“Incentive Agreement”) shall decrease the Pool by a number of shares equal to the Award Amount (as defined in the Incentive Agreement) determined at target based on a 3.4 “Multiple of Money” (as defined in the Incentive Agreement) divided by 2.4 (the “Performance Award Amount”); provided that if the Performance Award is forfeited, the Pool shall be increased by such Performance Award Amount.  
(b)    Type of Shares.  Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company.  Unless the Administrator determines otherwise, no fractional shares of Stock will be delivered under the Plan.
5.    ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among those key employees and directors of, and consultants and advisors to, the Company and its subsidiaries who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its subsidiaries.  Eligibility for ISOs is limited to employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.  Eligibility for Stock Options other than ISOs is limited to individuals described in the first sentence of this Section 5 who are providing direct services on the date of grant of the Stock Option to the Company or to a subsidiary of the Company that would be described in the first sentence of Treas. Reg. §1.409A-1(b)(5)(iii)(E).
6.    RULES APPLICABLE TO AWARDS
(a)    All Awards.
(1)    Award Provisions.  The Administrator will determine the terms of all Awards, subject to the limitations provided herein.  By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant shall be deemed to have agreed to the terms of the Award Agreement and the Plan.  Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.
(2)    Term of Plan.  No Awards may be made after September 28, 2022, but previously granted Awards may continue beyond that date in accordance with their terms.
(3)    Transferability.  Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3) or as permitted in the Management Stockholders’ Agreement, other Awards may be transferred other than by will or by the laws of descent and distribution or to the Participant’s guardian or legal representative, and during a Participant’s lifetime ISOs (and, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards requiring exercise) may be exercised only by the Participant.  The transfer of any Award pursuant to this Section 6(a)(3) will be subject to applicable securities laws, the terms of the Management Stockholders’ Agreement or other stockholders agreement with the Company, to the extent applicable, and such other limitations as set forth in the Plan or any Award Agreement.  In no event will transfers to a person that the Administrator determines, directly or indirectly, provides services or financial or other support to a competitor of the Company be permitted.
(4)    Vesting, etc.  The Administrator may provide in any Award Agreement the time or times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable.  Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration.  Unless the Administrator expressly provides otherwise in an Award Agreement, however, the following rules will apply if a Participant’s Employment ceases:  
(A)    Immediately upon the cessation of the Participant’s Employment, each Award requiring exercise that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate, except to the extent otherwise provided in (B), (C), or (D) below, and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited.
(B)    Subject to (C), (D), and (E) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of 30 days and (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.
(C)    All Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the termination of the Participant’s Employment by reason of the Participant’s death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary of the Participant’s death or termination due to Disability, as the case may be, and (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.
(D)    All Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to termination of the Participant’s Employment by the Company other than for Cause to the extent then exercisable, will remain exercisable for the lesser of (i) a period of 90 days and (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.
(E)    All Stock Options and SARs (whether or not vested) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation if the Administrator in its sole discretion determines that such cessation of Employment has resulted from, or occurs in connection with, an act or failure to act constituting Cause (or such Participant’s Employment could have been terminated for Cause (without regard to the lapsing of any required notice or cure periods in connection therewith) at the time such Participant terminated Employment).  
(5)    Competing Activity.  Except as set forth in any Award Agreement, the Administrator may cancel, rescind, withhold or otherwise limit or restrict any vested or unvested Award at any time if the Participant is not in compliance with all applicable provisions of the Award Agreement and the Plan, or if the Participant breaches any agreement with the Company or its Affiliates with respect to non-competition, non-solicitation or confidentiality.
(6)    Taxes.  The delivery, vesting and retention of Stock or cash under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements, if any, with respect to the Award.  The Administrator will prescribe such rules for the withholding of taxes as it reasonably deems necessary.  Each Participant agrees promptly to remit to the Company, in cash, the full amount of all taxes required to be withheld in connection with an Award unless the Administrator provides alternative means for satisfying the Company’s tax withholding requirements.  Except as expressly provided in an Award Agreement, the Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law).
(7)    Dividend Equivalents, etc.  The Administrator may provide for the payment of amounts (on terms and subject to conditions reasonably established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award.  Any entitlement to dividend equivalents or similar entitlements shall be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A.  In addition, any amounts payable in respect of Restricted Stock or Restricted Stock Units may be subject to such limits or restrictions as the Administrator may impose.
(8)    Rights Limited.  Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan.  The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.
(9)    Coordination with Other Plans.  Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its subsidiaries.  For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its subsidiaries may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered will be treated as awarded under the Plan (and will reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4).
(10)    Fair Market Value.  For purposes of the Plan and all Awards, fair market value shall be equal to the fair value of a share of Stock as determined by the Administrator in good faith.  In determining the fair market value of any share of Stock under the Plan or any Award Agreement, the Administrator shall make the determination consistent with the rules of Section 422 and Section 409A, to the extent applicable.  
(11)    Management Stockholders’ Agreement.  Unless otherwise specifically provided, all Awards issued under the Plan and all Stock issued thereunder will be subject to the Management Stockholders’ Agreement.  No Award will be granted to a Participant and no Stock will be delivered to a Participant, in either case, until the Participant has executed the Management Stockholders’ Agreement.
(b)    Awards Requiring Exercise.
(1)    Time and Manner of Exercise.  Unless the Administrator expressly provides otherwise in an Award Agreement, an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a notice of exercise (in form reasonably acceptable to the Administrator), which if the Administrator so determines may be an electronic notice, signed (including electronic signature in form acceptable to the Administrator) by the appropriate person and accompanied by any payment required under the Award.  If the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.
(2)    Exercise Price.  Unless the Administrator expressly provides otherwise in an Award Agreement, the exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise will be 100% (in the case of an ISO granted to a ten-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the fair market value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant.  Awards, once granted, may be repriced only in accordance with the applicable requirements of the Plan. 
(3)    Payment of Exercise Price.  Where the exercise of an Award is to be accompanied by payment, payment of the exercise price shall be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of unrestricted (other than under the Management Stockholders’ Agreement) shares of Stock that have a fair market value equal to the exercise price, subject to such minimum holding period requirements, if any, as the Administrator may reasonably prescribe, (ii) at such time, if any, as the Stock is publicly traded, through a broker-assisted exercise program acceptable to the Administrator, (iii) to the extent permitted by the Administrator or specifically set forth in an Award Agreement, on a cashless basis under which the shares of Stock otherwise deliverable under the Award and having a fair market value equal to the exercise price for the total number of shares of Stock as to which the Award is exercised are withheld by the Company, (iv) by other means acceptable to the Administrator, or (v) by any combination of the foregoing permissible forms of payment. The delivery of shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.
(4)    Maximum Term.  Awards requiring exercise will have a maximum term not to exceed ten (10) years from the date of grant (five (5) years from the date of grant in the case of an ISO granted to a ten-percent shareholder described in Section 6(b)(2) above).
7.    EFFECT OF CERTAIN TRANSACTIONS
(a)    Mergers, etc.  Except as otherwise provided in an Award Agreement (as it relates to this entire Section 7(a)), the Administrator shall, in its sole discretion, determine the effect of a Covered Transaction on Awards, which determination may include, but is not limited to, the actions set forth in subsections (1), (2), (3), (4) and (5) below.
(5)    Assumption or Substitution. The Administrator may provide for the assumption or continuation of some or all outstanding Awards or for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor, in which case, the Awards shall be subject to adjustment as set forth in Section 7(b) below (provided that any such adjustment may be made, in the Administrator’s discretion, in a manner permitted under Section 409A), and to the extent that such Awards vest based on the achievement of performance objectives or criteria and such Awards are assumed or continued, such objectives shall be adjusted, in the Administrator’s good faith determination, to reflect appropriately the Covered Transaction. 
(6)    Cash-Out of Awards.  Subject to Section 7(a)(5) below, the Administrator may provide for the cancellation of some or all outstanding Awards or any portion thereof in exchange for payment (a “cash-out”) equal to the excess, if any, of (A) the fair market value of one share of Stock times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of an SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines; provided that the Administrator may not exercise its discretion under this Section 7(a)(2) with respect to an Award or portion thereof providing for “nonqualified deferred compensation” subject to Section 409A in a manner that would constitute an extension or acceleration of, or other change in, payment terms if such change would be inconsistent with the applicable requirements of Section 409A.  For the avoidance of doubt, the holders of Stock Options and other Awards subject to exercise shall be entitled to consideration in respect of cancellation of such Awards only if the per-share consideration less the applicable exercise price or base price is greater than zero (0), and to the extent that the per-share consideration is less than or equal to the applicable exercise price or base price, such Awards may be cancelled for no consideration. 
(7)    Acceleration of Certain Awards.  Subject to Section 7(a)(5) below, the Administrator may provide that each Award requiring exercise will become fully exercisable, and the delivery of any shares of Stock remaining deliverable under each outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated and such shares will be delivered, prior to the Covered Transaction, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Covered Transaction; provided that to the extent acceleration pursuant to this Section 7(a)(3) of an Award subject to Section 409A would cause the Award to fail to satisfy the requirements of Section 409A, the Award may not be accelerated and the Administrator in lieu thereof shall take such steps as are necessary to ensure that payment of the Award is made in a medium other than Stock and on terms that as nearly as possible, but taking into account adjustments required or permitted by this Section 7, replicate the prior terms of the Award.
(8)    Termination of Awards Upon Consummation of Covered Transaction.  Each Award will terminate upon consummation of the Covered Transaction, other than the following: (i) Awards assumed pursuant to Section 7(a)(1) above; (ii) Awards (other than Awards that are subject to performance-based vesting) that are not, and do not become, vested at the date of or by reason of the Covered Transaction; (iii) Awards converted pursuant to the proviso in Section 7(a)(3) above into an ongoing right to receive payment other than in Stock.
(9)    Additional Limitations.  Any share of Stock and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect comparable performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction.  For purposes of the immediately preceding sentence, a cash-out under Section 7(a)(2) above or the acceleration of exercisability of an Award under Section 7(a)(3) above shall not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition.  In the case of Restricted Stock that does not vest in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.
(b)    Changes in and Distributions With Respect to Stock.
(1)    Basic Adjustment Provisions.  In the event of changes in the outstanding Stock or in the capital structure of the Company by reason of stock dividends, stock splits, or combination of shares (including reverse stock splits), recapitalizations or other changes in the Company’s capital structure that constitute an equity restructuring within the meaning of FASB ASC Topic 718, the Administrator shall make appropriate adjustments to the maximum type and number of shares specified in Section 4(a) that may be delivered, or may underlie Awards, under the Plan and shall also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change. 
(2)    Certain Other Adjustments.  The Administrator may also make adjustments or provide in any Award Agreement for adjustments of the type described in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1) (including an extraordinary dividend), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder or provide for such adjustment in an Award Agreement, having due regard for the qualification of ISOs under Section 422 and the requirements of Section 409A, where applicable, with any determination by the Administrator as to whether or not to make any adjustment in accordance with this Section 7(b)(2) to be made by the Administrator in good faith.
(3)    Continuing Application of Plan Terms.  References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.
8.    LEGAL CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Stock (or, as applicable, any cash or other property) pursuant to the Plan or remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is reasonably satisfied that the issuance and delivery of such shares (or cash or other property) would be in compliance with all applicable laws, it being understood that the Company will use commercially reasonable efforts to address and resolve any legal matters that may arise from time to time; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have, to the extent required by applicable law, stock exchange or similar requirements, been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived.  If the sale of Stock has not been registered under the Securities Act, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider reasonably appropriate to avoid violation of the Securities Act or any applicable state or foreign securities laws.  The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.
9.    AMENDMENT AND TERMINATION
The Administrator may at any time or times amend the Plan or any outstanding Award Agreement for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s written consent, alter the terms of the Plan or an Award Agreement so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so in the applicable Award Agreement. Any amendments to the Plan will be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including the Code), as determined by the Administrator.
10.    OTHER COMPENSATION ARRANGEMENTS
The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to Award a person bonuses or other compensation in addition to Awards under the Plan.
11.    MISCELLANEOUS
(a)    Waiver of Jury Trial.  By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury.  By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers.
(b)    Limitation of Liability.  Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate of the Company, nor the Administrator, nor any person acting on behalf of the Company, any Affiliate of the Company, or the Administrator, will be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award; provided that nothing in this Section 11(b) will limit the ability of the Administrator or the Company, in its discretion, to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such acceleration of income or additional tax.
12.    ESTABLISHMENT OF SUB-PLANS
The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions.  The Board will establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as the Board deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board deems necessary or desirable.  All such supplements adopted by the Board will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction and the Company will not be required to provide copies of any supplement to Participants in any jurisdiction that is not affected.
13.    GOVERNING LAW
Except as otherwise provided by the express terms of an Award Agreement or under a sub-plan described in Section 12, the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of or based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.
EXHIBIT A

Definition of Terms

The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:
“Administrator”:  The Board, except that the Board may delegate its authority under the Plan to a committee of the Board (or one or more members of the Board), in which case references herein to the Board will refer to such committee (or members of the Board).  The Board may delegate (i) to one or more of its members such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant rights or options to the extent permitted by Section 157(c) of the Delaware General Corporation Law; and (iii) to such employees or other persons as it determines such ministerial tasks as it deems appropriate.  In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation.
“Affiliate”:  Shall have the meaning set forth in the Management Stockholders’ Agreement.  
“Award”:  Any or a combination of the following:  
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Stock Units, including Restricted Stock Units. 
(vi) Performance Awards.
(vii) Awards (other than Awards described in (i) through (vi) above) that are convertible into or otherwise based on Stock. 
“Award Agreement”:  Any written agreement evidencing an Award.
“Board”:  The Board of Directors of the Company.
“Cause”:  With respect to any Participant, means (i) a material breach by the Participant of (x) his or her employment agreement with the Company, (y) any material policy of the Company or its Affiliates generally applicable to similarly situated employees of the Company or its Affiliates or (z) any equity grant agreement; (ii) the failure by the Participant to reasonably and substantially perform his or her duties to the Company or any of its Affiliates, which failure is damaging to the financial condition or reputation of the Company or its Affiliates; (iii) the Participant’s willful misconduct or gross negligence which is injurious to the Company or an Affiliate; or (iv) the commission by the Participant of a felony or other crime involving moral turpitude or dishonesty.  If, subsequent to the Participant’s termination of Employment for other than Cause, it is determined that the Participant’s Employment could have been terminated for Cause, the Participant’s Employment shall be deemed to have been terminated for Cause retroactively to the date the events giving rise to such Cause occurred.  Notwithstanding the foregoing, if a Participant is party to an employment, severance-benefit, change in control or similar agreement with the Company or any subsidiary of the Company that contains a definition of “Cause” (or a correlative term), such definition will apply (in the case of such Participant) in lieu of the definition set forth above during the term of such agreement.
“Code”:  The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.
“Company”:  Sky Growth Holdings Corporation, a Delaware corporation.
“Covered Transaction”: Any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of a majority of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, (iii) a Change of Control (as defined in the Management Stockholders’ Agreement) or (iv) a dissolution or liquidation of the Company.  Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.
“Disability”:  With respect to any Participant, means a disability that would entitle the Participant to long-term disability benefits under the Company’s long-term disability plan in which the Participant participates; provided that if a Participant is party to an employment, severance-benefit, change in control or similar agreement with the Company or any subsidiary of the Company that contains a definition of “Disability” (or a correlative term), such definition will apply (in the case of such Participant) in lieu of the preceding definition.  Notwithstanding the foregoing, in any case in which a benefit that constitutes or includes “nonqualified deferred compensation” subject to Section 409A would be payable by reason of Disability, the term “Disability” will mean a disability described in Treas. Reg. § 1.409A-3(i)(4)(i)(A).  
“Employment”:  A Participant’s employment or other service relationship with the Company and its subsidiaries.  Employment will be deemed to continue, unless the Administrator expressly provides otherwise in the applicable Award Agreement, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to the Company or one of its subsidiaries.  If a Participant’s employment or other service relationship is with a subsidiary and that entity ceases to be a subsidiary of the Company, the Participant’s Employment will be deemed to have terminated when the entity ceases to be a subsidiary of the Company unless the Participant transfers Employment to the Company or one of its remaining subsidiaries.  Notwithstanding the foregoing, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms shall be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations.  The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred.  Any such written election shall be deemed a part of the Plan.
“ISO”:  A Stock Option intended to be an “incentive stock option” within the meaning of Section 422.  Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be a non-incentive Stock Option unless, as of the date of grant, it is expressly designated as an ISO. 
“Management Stockholders’ Agreement”:  The Management Stockholders’ Agreement dated as of September 28, 2012 among the Company and certain affiliates, stockholders and Participants, as amended or modified from time to time in compliance with the amendment provisions thereof.
“Participant”:  A person who is granted an Award under the Plan.
“Performance Award”:  An Award subject to specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of the Award, whether payable in the form of cash or stock.  
“Plan”:  The Sky Growth Holdings Corporation 2012 Equity Incentive Plan as from time to time amended and in effect.
“Restricted Stock”:  Stock subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.
“Restricted Stock Unit”:  A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified performance or other vesting conditions.
“SAR”:  A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.
“Section 409A”:  Section 409A of the Code.
“Section 422”:  Section 422 of the Code.
“Securities Act”:  Securities Act of 1933, as amended.
“Stock”:  Common Stock of the Company, par value $0.001 per share. 
“Stock Option”:  An option entitling the holder to acquire shares of Stock upon payment of the exercise price.
“Stock Unit”:  An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.
“Unrestricted Stock”:  Stock not subject to any restrictions under the terms of the Award.

1PRX-2014.3.31-Ex 10.2

EXHIBIT 10.2

FORM OF NON-STATUTORY STOCK OPTION AGREEMENT

	
		
	Name of Optionee:
	[●]

	Number of Shares of Common Stock subject to Option:
	[●]

	Price Per Share:
	$1.40

	Date of Grant:
	[●], 2014

SKY GROWTH HOLDINGS CORPORATION 
2012 EQUITY INCENTIVE PLAN
THIS AWARD AND ANY SECURITIES ISSUED UPON EXERCISE OF THIS STOCK OPTION ARE SUBJECT TO RESTRICTIONS ON VOTING AND TRANSFER AND REQUIREMENTS OF SALE AND OTHER PROVISIONS AS SET FORTH IN THE MANAGEMENT STOCKHOLDERS’ AGREEMENT, AS WELL AS PAR PHARMACEUTICAL COMPANIES, INC.’S EXECUTIVE FINANCIAL RECOUPMENT PROGRAM.
SKY GROWTH HOLDINGS CORPORATION STRONGLY ENCOURAGES YOU TO SEEK THE ADVICE OF YOUR OWN LEGAL AND FINANCIAL ADVISORS WITH RESPECT TO YOUR AWARD AND ITS TAX CONSEQUENCES.
NON-STATUTORY STOCK OPTION AGREEMENT

This agreement (this “Agreement”) evidences a stock option granted by Sky Growth Holding Corporation (the “Company”) to the optionee set forth above (the “Optionee”), pursuant to and subject to the terms of the Sky Growth Holdings Corporation 2012 Equity Incentive Plan (as amended from time to time, the “Plan”), which is incorporated herein by reference.  

1.Grant of Stock Option.  The Company grants to the Optionee on the date set forth above (the “Date of Grant”) an option (the “Stock Option”) to purchase, on the terms provided herein and in the Plan (including, without limitation, the exercise provisions in Section 6(b)(3) of the Plan), the number of shares of common stock of the Company set forth above (the “Shares”) with an exercise price per Share as set forth above, in each case subject to adjustment pursuant to Section 7 of the Plan in respect of transactions occurring after the Date of Grant.
The Stock Option evidenced by this Agreement is a non-statutory option (that is, an option that is not to be treated as a stock option described in subsection (b) of Section 422 of the Code) and is granted to the Optionee in connection with the Optionee’s Employment by the Company and its qualifying subsidiaries.  For purposes of the immediately preceding sentence, “qualifying subsidiary” means a subsidiary of the Company as to which the Company has a “controlling interest” as described in Treas. Reg. §1.409A-1(b)(5)(iii)(E)(1).

1

2.    Meaning of Certain Terms.  Except as otherwise defined herein (including for the avoidance of doubt, in Schedule A attached hereto, which is incorporated herein and is a part hereof), all capitalized terms used herein have the same meaning as in the Plan.  The following terms have the following meanings:
		
	(a)
	“Annual EBITDA” means Consolidated EBITDA for the applicable fiscal year.

		
	(b)
	“Annual EBITDA Target” has the meaning set forth in Schedule A.

		
	(c)
	“Beneficiary” means, in the event of the Optionee’s death, the beneficiary named in the written designation (in form acceptable to the Administrator) most recently filed with the Administrator by the Optionee prior to the Optionee’s death and not subsequently revoked, or, if there is no such designated beneficiary, the Optionee’s estate.  An effective beneficiary designation will be treated as having been revoked only upon receipt by the Administrator, prior to the Optionee’s death, of an instrument of revocation in form acceptable to the Administrator. 

		
	(d)
	“Cash Proceeds” means, as of any Determination Date, the cumulative total of all cash and Marketable Securities actually received by the Investors on or before such Determination Date in respect of the Investors Equity Investment, excluding, for the avoidance of doubt, management, consulting, monitoring, advisory or similar fees paid to affiliates of the Investors that are contemplated by the Management Services Agreement dated September 28, 2012 or associated with the termination of such agreement.

		
	(e)
	“Change of Control” shall have the meaning set forth in the Management Stockholders’ Agreement.

		
	(f)
	“Competitive Activity” means, directly or indirectly, becoming employed by, engaging in business with, serving as an agent or consultant to, becoming a partner, member, principal, stockholder or other owner (other than a holder of less than 1% of the outstanding voting shares of any publicly held company) of, any person competitive with, or otherwise performing services relating to, the business activities of the Company or its Affiliates at the time of the Optionee’s termination of Employment; provided that if the Optionee is a party to a written agreement containing a non-competition provision in favor of the Company or any subsidiary of the Company, “Competitive Activity” shall mean any action that would constitute a breach of such non-competition provision.

		
	(g)
	“Confidential Information” means all information of the Company or its Affiliates (in whatever form) which is not generally known to the public, including without limitation any inventions, processes, methods of distribution, customer lists or customers’ trade secrets, but excluding information that (i) is or becomes generally available to the public other than as a result of disclosure directly or indirectly by the Optionee in breach of his or her obligations; (ii) is or becomes available to the Optionee on a non-confidential basis from a source other than the 

2

Optionee unless the Optionee knows after due inquiry that such source is prohibited from disclosing the information to the Optionee by a contractual, fiduciary or other legal obligation to the Company or any of its Affiliates; or (iii) is or was independently acquired or developed by the Optionee after the termination of his or her Employment without violating the Optionee’s obligations under this Agreement or any other obligation of confidentiality the Optionee may have to the Company or any of its Affiliates; provided that if the Optionee is a party to a written agreement containing a provision regarding non-disclosure of confidential information in favor of the Company or any subsidiary of the Company, “Confidential Information” shall mean the information described in such provision.
		
	(h)
	“Consolidated EBITDA” has the meaning set forth in the Credit Agreement dated as of September 28, 2012 and amended February 6, 2013, February 20, 2013, February 28, 2013 and February 20, 2014, among Sky Growth Acquisition Corporation, Par Pharmaceutical Companies, Inc., Par Pharmaceutical, Inc., Sky Growth Intermediate Holdings II Corporation, Bank of America, N.A., and the other parties thereto.

		
	(i)
	“Cumulative EBITDA” means the sum of the Annual EBITDA for the relevant fiscal year and the immediately preceding fiscal year.

		
	(j)
	“Cumulative EBITDA Target” has the meaning set forth in Schedule A.

		
	(k)
	“Determination Date” means (i) as to any cash received by the Investors in respect of the Investor Shares, the date such cash is actually received, or (ii) as to any Marketable Securities actually received by the Investors in respect of the Investor Shares, the “measurement date” as referred to in Section 2(p) below.

		
	(l)
	“Initial Investment” means $698,000,000.

		
	(m)
	“Investor Shares” means the shares of the Company’s common stock  issued to the Investors, including any stock, securities or other property or interests received by the Investors in respect of such shares in connection with any stock dividend or other similar distribution, stock split or combination of shares, recapitalization, conversion, reorganization, consolidation, split-up, spin-off, combination, repurchase, merger, exchange of stock or other transaction or event that affects the Company’s capital occurring after the date of issuance.

		
	(n)
	“Investors” means TPG Sky, L.P., TPG Sky Co-Invest, L.P. and any of their respective Affiliates and funds or partnerships managed or advised by any of them or any of their respective Affiliates that is or becomes a holder of Company Shares (as such term is defined in the Management Stockholders’ Agreement). 

		
	(o)
	“Investors Equity Investment” shall mean, as of any Determination Date, the cumulative total of (i) the Initial Investment and (ii) the aggregate other 

3

consideration paid by the Investors to acquire Investor Shares, including all related transaction expenses.
		
	(p)
	“Marketable Securities” means any equity security (other than Stock or any security issued by the Company in substitution or exchange for such Stock) that is both (i) of a class that includes equity securities that are listed on a national securities exchange and (ii) registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in each case as of the applicable Determination Date; provided that Marketable Securities shall not include (x) any such equity securities described above to the extent that, and only for so long as, the equity securities of such type or class received by the Investors are subject to a contractual lock-up or similar agreement restricting transferability (y) may not be distributed or resold without volume limitation or other restrictions on transfer under Rule 144 under the Securities Act of 1933, as amended (or any successor provision thereof), including without application of paragraphs (c), (e), (f) and (h) of such Rule 144 or (z) are subject to any other prohibitions or material restrictions on transfer under applicable securities laws (including, for example, the Investors’ possession of material nonpublic information which, if used in purchasing or selling such equity securities, could result in a violation of Rule 10b-5 promulgated under the Exchange Act ).  For purposes of this Agreement, the value of the Marketable Securities on any “measurement date” (which shall be the date of initial receipt of Marketable Securities by the Investors or, if later, the date any contractual lockup, prohibition on transfer or similar restriction to which the proviso in the immediately preceding sentence applies expires) shall be equal to the average of the Trading Price of such Marketable Securities over each of the forty-five (45) consecutive Trading Days immediately preceding (and including) such measurement date; provided that the Administrator shall be entitled to make equitable adjustments to such valuation methodology in the event of an extraordinary transaction occurring during any such forty-five (45) Trading Day period ending on such measurement date.

		
	(q)
	“Option Holder” means the Optionee, his permitted transferee or, if as of the relevant time the Stock Option has passed to a Beneficiary, the Beneficiary.  

		
	(r)
	“Performance Period” means the four (4) year period beginning on January 1, 2014 and ending on December 31, 2017.

		
	(s)
	“Solicitation” means, directly or indirectly, soliciting or hiring or assisting any other person or entity in soliciting or hiring any employee of the Company or any of its respective Affiliates to perform services for any entity (other than the Company or its respective Affiliates), or attempting to induce any such employee to leave the employ of the Company or its respective Affiliates, or interfering in any manner with any such employee’s relationship with the Company or its respective affiliates, or soliciting, hiring or engaging on behalf of himself or any other person  anyone who was employed by the Company or its respective 

4

Affiliates during the six-month period preceding such hiring or engagement. Nothing herein shall preclude the Optionee or such other person or entity from using any public advertising of a nature not specifically directed to employees of the Company or its Affiliates to solicit or hire employees of the Company or its respective affiliates if such employees initiate contact with the Optionee further to such advertising without specific solicitation; provided that if the Optionee is a party to a written agreement containing a non-solicitation provision in favor of the Company or any subsidiary of the Company, “Solicitation” shall mean any action that would constitute a breach of such non-solicitation provision.
		
	(t)
	“Trading Day” means each business day during such calendar quarter in which the Trading Price of a share of stock that constitutes Marketable Securities is reported by the principal securities exchange.

		
	(u)
	“Trading Price” means, as of any Trading Day, the closing price on such day of a share of stock that constitutes Marketable Securities as reported on the principal securities exchange on which such share of stock that constitutes Marketable Securities is then listed or admitted to trade.

		
	(v)
	“Tranche 1 Option” means the portion of the Stock Option to purchase the number of shares of Stock set forth in Schedule A that is subject to time-based vesting in accordance with the terms of this Agreement, including Schedule A, and the Plan.

		
	(w)
	“Tranche 2 Option” means the portion of the Stock Option to purchase the number of shares of Stock set forth in Schedule A, that is subject to performance-based vesting in accordance with the terms of this Agreement, including Schedule A, and the Plan.

		
	(x)
	“Vesting Commencement Date” means [●], 2014.

3.    Vesting and Exercisability; Method of Exercise; Treatment of the Stock Option Upon Termination of Employment.
		
	(a)
	Generally. As used herein with respect to the Stock Option or any portion thereof, the term “vest” means to become exercisable and the term “vested” as applied to any outstanding Stock Option means that the Stock Option is then exercisable, subject in each case to the terms of the Plan.  Notwithstanding anything in the Plan to the contrary, the Tranche 1 Option and the Tranche 2 Option will vest in accordance with the terms of Schedule A attached hereto.

		
	(b)
	Exercise of the Stock Option.  No portion of the Stock Option may be exercised until such portion vests in accordance with the terms of Schedule A attached hereto.  Each election to exercise any vested portion of the Stock Option will be subject to the terms and conditions of the Plan and shall be in writing, signed by the Option Holder (subject to any restrictions provided under the Plan and the 

5

Management Stockholders’ Agreement).  Each such written exercise election must be received by the Company at its principal office or by such other party as the Administrator may prescribe and be accompanied by payment in full as provided in the Plan.  The exercise price may be paid (i) by cash or check acceptable to the Administrator, or (ii) by such other means, if any, as may be acceptable to the Administrator as provided in the Plan.  In the event that the Stock Option is exercised by a person other than the Optionee, the Company will be under no obligation to deliver shares hereunder unless and until it is satisfied as to the authority of the Option Holder to exercise the Stock Option and compliance with applicable securities laws and the terms of the Management Stockholders’ Agreement.  The latest date on which the Stock Option or any portion thereof may be exercised will be the 10th anniversary of the Date of Grant (the “Final Exercise Date”) and if not exercised by such date the Stock Option or any remaining portion thereof will thereupon immediately terminate.
		
	(c)
	Treatment of the Stock Option Upon Termination of Employment.  Except as set forth on Schedule A, if the Optionee’s Employment terminates, the Stock Option, to the extent not already vested (after giving effect to any acceleration of vesting to the extent provided on Schedule A hereto) will be immediately forfeited, and, notwithstanding anything in the Plan to the contrary, any vested portion of the Stock Option that is then outstanding will be treated as follows:

(i)    Subject to clauses (ii), (iii) and (iv) below and Section 4 of this Agreement, the Stock Option, to the extent vested as of the termination of the Optionee’s Employment (which, for the avoidance of doubt, shall include the portion of any Stock Option that vests upon such termination in accordance with Schedule A attached hereto, if any), will remain exercisable until the earlier of (A) the 30th day following the date of such termination of Employment and (B) the Final Exercise Date, and except to the extent previously exercised as permitted by this Section 3(c)(i) will thereupon immediately terminate.
(ii)    Subject to clause (iv) below and Section 4 of this Agreement, the Stock Option, to the extent vested as of the termination of the Optionee’s Employment due to death or Disability, will remain exercisable until the earlier of (A) the first anniversary of the Optionee’s death or termination of Employment due to Disability, as the case may be and (B) the Final Exercise Date, and except to the extent previously exercised as permitted by this Section 3(c)(ii) will thereupon immediately terminate.
(iii)    Subject to clause (iv) below and Section 4 of this Agreement, the Stock Option, to the extent vested as of the termination of the Optionee’s Employment by the Company other than for Cause (which, for the avoidance of doubt, shall include the portion of any Stock Option that vests upon such termination in accordance with Schedule A attached 

6

hereto, if any), will remain exercisable until the earlier of (A) the 90th day following the termination of the Optionee’s Employment by the Company other than for Cause and (B) the Final Exercise Date, and except to the extent previously exercised as permitted by this Section 3(c)(iii) will thereupon immediately terminate.
(iv)    If the Optionee’s Employment is terminated by the Company and its subsidiaries in connection with an act or failure to act constituting Cause (as determined by the Administrator in accordance with the terms of the Plan), or if the Optionee voluntarily terminates his or her Employment and, at the time of such termination, there exist (as determined by the Administrator in accordance with the terms of the Plan) circumstances that would have entitled the Company and its subsidiaries to terminate the Optionee’s Employment for Cause, the Stock Option (whether or not vested) will immediately terminate and be forfeited upon such termination.
4.    Competing Activity; Cause.  
The Administrator may cancel, rescind, terminate, withhold or otherwise limit or restrict the Stock Option at any time if the Optionee is not in compliance with all applicable provisions of this Agreement and the Plan, or if the Optionee breaches any agreement with the Company or its subsidiaries with respect to non-competition or non-solicitation or materially breaches any agreement with the Company or its subsidiaries with respect to confidentiality, or, if no such agreement exists, the Optionee engages in Competitive Activity or Solicitation during the term of the Optionee’s Employment or during the 18-month period following cessation of the Optionee’s Employment or engages in any material unauthorized disclosure of Confidential Information during the term of the Optionee’s Employment or thereafter, in each case, regardless of the reason for such cessation.  Notwithstanding the foregoing, if the Optionee is subject to a non-competition, non-solicitation or confidentiality agreement with the Company or its subsidiaries, the determination as to whether the Optionee has breached any obligation contained in such agreement shall be made in accordance with the terms of such agreement. 
5.    Share Restrictions, Etc.  Not later than upon the execution of this Agreement and effective as of the date hereof, the Optionee has executed and become a party to the Management Stockholders’ Agreement.  The Optionee’s rights hereunder (including with respect to shares of Stock received upon exercise) are subject to the additional restrictions and other provisions contained in the Management Stockholders’ Agreement. 
6.    Legends, Etc.  Shares issued upon exercise of the Stock Option or otherwise delivered in satisfaction of the Stock Option will bear such legends as may be required or provided for under the terms of the Management Stockholders’ Agreement.  
7.    Transfer of Stock Option. The Stock Option may not be transferred except to a Permitted Transferee (as defined in the Management Stockholders’ Agreement) in accordance with the Management Stockholders’ Agreement.  Following such a permitted transfer, the provisions of this Agreement providing for the exercise of this Stock Option by the Optionee 

7

shall be deemed to permit exercises by a Permitted Transferee to whom all or a part of this Stock Option has been permissibly transferred but all other provisions of the Plan and this Agreement shall continue to apply as if such transfer had not occurred.
8.    Withholding.  The exercise of the Stock Option will give rise to “wages” subject to withholding.  The Optionee expressly acknowledges and agrees that the Optionee’s rights hereunder, including the right to be issued shares upon exercise, are subject to the Optionee promptly paying to the Company in cash (or by such other means as may be acceptable to the Administrator in its discretion) all taxes required to be withheld.  No shares will be transferred pursuant to the exercise of this Stock Option unless and until the person exercising this Stock Option has remitted to the Company an amount in cash sufficient to satisfy all U.S. federal, state, local and non-U.S. requirements with respect to tax withholdings then due and has committed (and by exercising the Stock Option the Optionee shall be deemed to have committed) to pay in cash all tax withholdings required at any later time in respect of the transfer of such shares, or has made other arrangements satisfactory to the Administrator with respect to such taxes; provided that, if the Administrator so permits, the Optionee may satisfy such withholding requirements by having the Company hold back shares otherwise issuable upon the exercise of the Stock Option with a fair market value equal to the applicable statutory minimum tax withholding requirements.  The Optionee authorizes the Company and its subsidiaries to withhold such amounts due hereunder from any payments otherwise owed to the Optionee, but nothing in this sentence shall be construed as relieving the Optionee of any liability for satisfying his or her obligation under the preceding provisions of this Section 9.
9.    Effect on Employment.  Neither the grant of the Stock Option, nor the issuance of shares upon exercise of the Stock Option, will give the Optionee any right to be retained as an employee of, or other service provider to, the Company or any of its Affiliates, affect the right of the Company or any of its Affiliates to discharge or discipline such Optionee at any time, or affect any right of such Optionee to terminate his or her Employment at any time.
10.    Executive Financial Recoupment Program.  Notwithstanding anything to the contrary contained in this Agreement, this award and any securities issued upon exercise of the Stock Option are subject to the Company’s Executive Financial Recoupment Program (found at Exhibit D to Par Pharmaceutical Companies, Inc.’s Corporate Integrity Agreement).
11.    Governing Law/Disputes.  This Agreement and all claims or disputes arising out of or based upon this Agreement or relating to the subject matter hereof will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.  The parties agree that any disputes related to this Agreement shall be resolved in the state or federal courts of Delaware, to whose exclusive jurisdiction the Optionee expressly consents.
By acceptance of the Stock Option, the undersigned agrees hereby to become a party to, and be bound by the terms of, the Management Stockholders’ Agreement and to be subject to the terms of the Plan.  The Optionee further acknowledges and agrees that (i) the signature to this Agreement on behalf of the Company may be an electronic signature that will be treated as an 

8

original signature for all purposes hereunder and (ii) such electronic signature will be binding against the Company and will create a legally binding agreement when this Agreement is countersigned by the Optionee.

[The remainder of this page is intentionally left blank]

9

Executed as of the ____ day of ___________, 2014.

		
	Company:
	SKY GROWTH HOLDINGS CORPORATION

    

By:    ______________________________
Name:    ______________________________
Title:    ______________________________

		
	Participant:
	__________________________________

Name: [●]
                                                             

1

Schedule A
Vesting Schedule

The number of Shares subject to the Tranche 1 Option is [●], and the number of Shares subject to the Tranche 2 Option is [●]. 

All initially capitalized terms used in this Schedule A, unless separately defined herein, have the meanings set forth in this Agreement.

Tranche 1 Option

The Tranche 1 Option, unless earlier terminated or forfeited, shall become vested as to 25% of the total number of Shares subject to the Tranche 1 Option on each of the first, second, third and fourth anniversaries of the Vesting Commencement Date. Notwithstanding the foregoing, Shares subject to the Tranche 1 Option shall not vest on any vesting date unless the Optionee has remained in continuous Employment from the Date of Grant until such vesting date. 

In the event of termination of the Optionee’s Employment by the Company without Cause or termination of the Optionee’s Employment by the Optionee for Good Reason (as defined below), in either case, occurring within the two-year period following a Change of Control, either (x) to the extent outstanding immediately prior to such termination of Employment, the Tranche 1 Option shall be treated for all purposes of this Agreement as having vested in full immediately prior to such termination of Employment, or (y) to the extent that the Tranche 1 Option shall have been terminated or exchanged for other current or deferred cash or property in connection with the Change of Control in accordance with Section 7 of the Plan, such current or deferred cash or property shall be treated as having vested in full, fully exercisable and no longer subject to any risk of forfeiture or repayment, as applicable, immediately prior to such termination of Employment.  The exercise periods set forth in Section 3(c)(iii) of this Agreement shall apply following such termination of Employment.

For purposes of this Agreement, “Good Reason” means any of the following events or conditions occurring without the Optionee’s express written consent, provided that the Optionee shall have given notice of such event or condition within a period not to exceed ninety (90) days of the initial existence of such event or condition and the Company shall not have remedied such event or condition within thirty (30) days after receipt of such notice: (i) a materially adverse alteration in the nature or status of the Optionee’s responsibilities or the conditions of employment; (ii) a material reduction in the Optionee’s annual base salary or any target bonus, other than an across-the-board reduction that applies to the Optionee and similarly-situated employees; (iii) a change of fifty (50) miles or more in the Optionee’s principal place of employment, except for required travel on business to an extent substantially consistent with the Optionee’s business travel obligations; or (iv) the Company’s material breach of any material written agreement between the Optionee and the Company.  Notwithstanding the foregoing, if an Optionee is party to an employment, severance-benefit, change in control or similar agreement with the Company or any subsidiary of the Company that contains a definition of “Good 

Reason” (or a correlative term), such definition will apply in lieu of the definition set forth in the preceding sentence during the term of such agreement.

The exercise schedule for the Tranche 1 Option shall, subject to the provisions of the Plan and Award Agreement relating to exercise, be cumulative, such that to the extent the Tranche 1 Option has not already been exercised and has not expired or been terminated or cancelled, the Optionee (or his permitted transferee) may at any time and from time to time exercise all or any portion of the Tranche 1 Option that has vested.

Tranche 2 Option

Unless earlier terminated or forfeited, the Tranche 2 Option will vest, if at all, in accordance with the following provisions:

With respect to each of the fiscal years ending within the Performance Period, 25% of the Tranche 2 Option will vest on each of the first, second, third and fourth anniversaries of the Vesting Commencement Date (each, a “Vesting Date”) if the Annual EBITDA Target with respect to the applicable fiscal year is achieved by the Annual EBITDA meeting or exceeding the applicable Annual EBITDA Target below for such fiscal year, as follows:

Fiscal Year            Annual EBITDA Target
2014        $374,000
2015        $426,000
2016        $450,000
2017        $486,000

provided that any portion of the Tranche 2 Option that does not vest on any of the applicable Vesting Dates based on the achievement of the Annual EBITDA Target for the particular completed fiscal year as provided for above shall vest on the next succeeding Vesting Date (except with respect to fiscal year 2017) if the applicable two-year Cumulative EBITDA Target is achieved by the Cumulative EBITDA meeting or exceeding the applicable Cumulative EBITDA Target below for such fiscal years with respect to the applicable fiscal year and the immediately preceding completed fiscal year as follows:

Fiscal Years            Cumulative EBITDA Target
2014 and 2015    $800,000 
2015 and 2016    $876,000 
2016 and 2017    $936,000 

The Company shall determine whether any Annual EBITDA Target or Cumulative EBITDA Target with respect to a fiscal year or fiscal years, as applicable, has been satisfied based on the Company’s audited financial statements for such fiscal year or years, as applicable (with respect to each fiscal year, the date of such determination, the “Calculation Date”).  If the Optionee’s Employment terminates after a Vesting Date but before the Calculation Date with 

A-2

respect to the fiscal year (or years, in the case of the Cumulative EBITDA Target), the exercise period set forth in Section 3(c) of this Agreement applicable to such termination of Employment shall not commence until the Calculation Date.

For the avoidance of doubt, any portion of the Tranche 2 Option that does not vest based on the achievement of either the Annual EBITDA Target or the two-year Cumulative EBITDA Target set forth above shall no longer be eligible to vest based on any future achievement of any Annual EBITDA Target or Cumulative EBITDA Target, but shall remain eligible to vest upon the achievement of the MoM performance goals as provided in the following paragraphs.

The Board and the Company acknowledge that the above EBITDA Targets will be challenging for the Company to achieve; that the Company’s past performance has relied in large part upon the Company’s ability to pursue, enter into and execute on profitable business development opportunities, meaning the acquisition, by purchase or license, of the rights to development and/or commercial products for development, regulatory approval, manufacture, distribution and/or sale by the Company and similar activities (“Business Development Opportunities”); and that, in order for the Company to achieve the above EBITDA Targets, the Company must be able to continue to pursue and execute upon Business Development Opportunities.  Accordingly, the Company’s plan to achieve the above EBITDA Targets envisions extensive investment in Business Development Opportunities of $40 million annually, and both the Company and the Board desire and expect even greater investment in rewarding Business Development Opportunities.  The Board and the Company acknowledge that the Company’s investment in Business Development Opportunities over certain threshold amounts (currently $25 million per opportunity and $40 million annual aggregate) require Board approval.  

Subject to the foregoing, the Board may, in its good faith discretion and subject to prior consultation with the Chief Executive Officer and President of the Company, adjust any Annual EBITDA Target(s) and/or Cumulative EBITDA Target(s) in the event that the Company or any of its subsidiaries enters into:

		
	(a)
	an agreement for the acquisition of a company or division of a company or for the disposition of a division or material product(s) of the Company, in either case requiring Board approval; or

		
	(b)
	any Business Development Opportunity requiring Board approval that (i) exceeds the $40 million annual threshold and (ii) is not projected by the Company and the Board to return the invested capital within five years of investment.  

In the case of a proposed investment meeting the criteria of clause (b) above, the Board and the Company acknowledge that it is unlikely that the Board would approve such an investment unless the Board foresees some other projected longer term value, and therefore, that an increase to the EBITDA Target would not likely be warranted.  Any Business Development Opportunity that does not meet the criteria of clause (a) or clause (b) above will not occasion any adjustment to the EBITDA Target(s); provided, however that, notwithstanding the foregoing:

A-3

		
	1)
	The Board may in its good faith discretion, subject to prior consultation with the Chief Executive Officer and President of the Company, and only upon a unanimous decision of the entire Board (and subject to the consent of the Chief Executive Officer of the Company, if not then a voting member of the Board), adjust any Annual EBITDA Target or Cumulative EBITDA Target in the event that the Company or any of its subsidiaries enters into any Business Development Opportunity requiring Board approval that (i) exceeds the $40 million annual threshold and (ii) is projected by the Company and the Board to return the invested capital within five years of investment. 

		
	1)
	The Board and the Company further acknowledge that future settlements of “Paragraph IV” litigations can influence the timing of expected revenues and related expense under the Company's plan that may affect the Company's ability to achieve an Annual EBITDA Target(s) and/or Cumulative EBITDA Target(s).  Accordingly, the Board will consider in good faith adjustments proposed by the Chief Executive Officer and President of the Company and in its sole discretion but subject to mutual agreement of the Board and such officers will adjust any Annual EBITDA Target(s) and/or Cumulative EBITDA Target(s) based on such litigation settlement.

MoM Vesting

In any event (except as described in the paragraph below), the first 50% of the Tranche 2 Option will vest, to the extent not previously vested in accordance with the vesting criteria set forth above (whether due to the failure of any Annual EBITDA Target or Cumulative EBITDA Target to be met or due to the fact that any Vesting Date has not yet occurred), upon receipt by the Investors of Cash Proceeds equal to 2.5 times the Investors Equity Investment and the balance (i.e., the remaining 50%) of the Tranche 2 Option will vest, to the extent not previously vested in accordance with the vesting schedule set forth above (whether due to the failure of any Annual EBITDA Target or Cumulative EBITDA Target to be met or due to the fact that any Vesting Date has not yet occurred), upon receipt by the Investors of Cash Proceeds equal to three times the Investors Equity Investment.

For the avoidance of doubt, any portion of the Tranche 2 Option that fails to vest as a result of the Optionee’s termination of Employment prior to the applicable performance period or fiscal year end shall be forfeited and shall not be eligible to vest under any provision of this Schedule A or otherwise regardless of whether any Annual EBITDA Target or two-year Cumulative EBITDA Target has been met.

The exercise schedule for the Tranche 2 Option shall, subject to the provisions of the Plan and Award Agreement relating to exercise, be cumulative, such that to the extent the Tranche 2 Option has not already been exercised and has not expired or been terminated or cancelled, the Optionee (or his permitted transferee) may at any time and from time to time exercise all or any portion of the Tranche 2 Option that has vested.

A-4

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