Document:

Exhibit 10.45

 

KADMON HOLDINGS, INC.

 

2016 EMPLOYEE STOCK PURCHASE PLAN

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Establishment, Purpose   and Term of Plan
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Establishment
    	
1
    
	
 
    	
1.2
    	
Purpose
    	
1
    
	
 
    	
1.3
    	
Term of Plan
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Definitions and   Construction
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Definitions
    	
1
    
	
 
    	
2.2
    	
Construction
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Administration
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
Administration by the   Committee
    	
5
    
	
 
    	
3.2
    	
Authority of Officers
    	
6
    
	
 
    	
3.3
    	
Power to Adopt   Sub-Plans or Varying Terms with Respect to Non-U.S. Employees
    	
6
    
	
 
    	
3.4
    	
Power to Establish   Separate Offerings with Varying Terms
    	
6
    
	
 
    	
3.5
    	
Policies and Procedures   Established by the Company
    	
6
    
	
 
    	
3.6
    	
Indemnification
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Shares Subject to Plan
    	
7
    
	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Maximum Number of   Shares Issuable
    	
7
    
	
 
    	
4.2
    	
Annual Increase in   Maximum Number of Shares Issuable
    	
7
    
	
 
    	
4.3
    	
Adjustments for Changes   in Capital Structure
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Eligibility
    	
8
    
	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Employees Eligible to   Participate
    	
8
    
	
 
    	
5.2
    	
Exclusion of Certain Stockholders
    	
8
    
	
 
    	
5.3
    	
Determination by   Company
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Offerings
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Participation in the   Plan
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Initial Participation
    	
9
    
	
 
    	
7.2
    	
Continued Participation
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Right to Purchase   Shares
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
8.1
    	
Grant of Purchase Right
    	
10
    
	
 
    	
8.2
    	
Calendar Year Purchase   Limitation
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
Purchase Price
    	
10
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
10.
    	
Accumulation of   Purchase Price through Payroll Deduction
    	
11
    
	
 
    	
 
    	
 
    
	
 
    	
10.1
    	
Amount of Payroll   Deductions
    	
11
    
	
 
    	
10.2
    	
Commencement of Payroll   Deductions
    	
11
    
	
 
    	
10.3
    	
Election to Decrease or   Stop Payroll Deductions
    	
11
    
	
 
    	
10.4
    	
Administrative   Suspension of Payroll Deductions
    	
11
    
	
 
    	
10.5
    	
Participant Accounts
    	
12
    
	
 
    	
10.6
    	
No Interest Paid
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
Purchase of Shares
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
11.1
    	
Exercise of Purchase   Right
    	
12
    
	
 
    	
11.2
    	
Pro Rata Allocation of   Shares
    	
13
    
	
 
    	
11.3
    	
Delivery of Title to   Shares
    	
13
    
	
 
    	
11.4
    	
Return of Plan Account   Balance
    	
13
    
	
 
    	
11.5
    	
Tax Withholding
    	
13
    
	
 
    	
11.6
    	
Expiration of Purchase   Right
    	
13
    
	
 
    	
11.7
    	
Provision of Reports   and Stockholder Information to Participants
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
Withdrawal from Plan
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
12.1
    	
Voluntary Withdrawal   from the Plan
    	
14
    
	
 
    	
12.2
    	
Return of Plan Account   Balance
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
Termination of   Employment or Eligibility
    	
14
    
	
 
    	
 
    	
 
    
	
14.
    	
Effect of Change in   Control on Purchase Rights
    	
15
    
	
 
    	
 
    	
 
    
	
15.
    	
Nontransferability of   Purchase Rights
    	
15
    
	
 
    	
 
    	
 
    
	
16.
    	
Compliance with   Securities Law
    	
15
    
	
 
    	
 
    	
 
    
	
17.
    	
Rights as a Stockholder   and Employee
    	
16
    
	
 
    	
 
    	
 
    
	
18.
    	
Notification of   Disposition of Shares
    	
16
    
	
 
    	
 
    	
 
    
	
19.
    	
Legends
    	
16
    
	
 
    	
 
    	
 
    
	
20.
    	
Designation of   Beneficiary
    	
17
    
	
 
    	
 
    	
 
    
	
 
    	
20.1
    	
Designation Procedure
    	
17
    
	
 
    	
20.2
    	
Absence of Beneficiary   Designation
    	
17
    
	
 
    	
 
    	
 
    
	
21.
    	
Notices
    	
17
    
	
 
    	
 
    	
 
    
	
22.
    	
Amendment or   Termination of the Plan
    	
17
    

 

ii

 

Kadmon Holdings, Inc.

2016 Employee Stock Purchase Plan

 

1.             ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

 

1.1          Establishment.  The Kadmon Holdings, Inc. 2016 Employee Stock Purchase Plan (the “Plan”) is hereby established effective as of the effective date of the initial registration by the Company of its Stock under Section 12 of the Securities Exchange Act of 1934, as amended (the “Effective Date”).

 

1.2          Purpose.  The purpose of the Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward Eligible Employees of the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group.  The Plan provides such Eligible Employees with an opportunity to acquire a proprietary interest in the Company through the purchase of Stock.  The Company intends that the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code (including any amendments or replacements of such section), and the Plan shall be so construed.

 

1.3          Term of Plan.  The Plan shall continue in effect until its termination by the Committee.

 

2.             DEFINITIONS AND CONSTRUCTION.

 

2.1          Definitions.  Any term not expressly defined in the Plan but defined for purposes of Section 423 of the Code shall have the same definition herein.  Whenever used herein, the following terms shall have their respective meanings set forth below:

 

(a)           “Board” means the Board of Directors of the Company.

 

(b)           “Change in Control” means the occurrence of any one or a combination of the following:

 

(i)            any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total Fair Market Value or total combined voting power of the Company’s then-outstanding securities entitled to vote generally in the election of Directors; provided, however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial ownership results from any of the following: (A) an acquisition by any person who on the Effective Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any acquisition directly from the Company, including, without limitation, pursuant to or in connection with a public offering of securities, (C) any acquisition by the Company, (D) any acquisition by a trustee or other fiduciary under an employee benefit plan of a Participating Company or (E) any acquisition by an entity owned

 

 

directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the voting securities of the Company; or

 

(ii)           an Ownership Change Event or series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Directors or, in the case of an Ownership Change Event described in Section 2.1(p)(iii), the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or

 

(iii)          a date specified by the Committee following approval by the stockholders of a plan of complete liquidation or dissolution of the Company;

 

provided, however, that a Change in Control shall be deemed not to include a transaction described in subsections (i) or (ii) of this Section 2.1(b) in which a majority of the members of the board of directors of the continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors.

 

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities.  The Committee shall determine whether multiple events described in subsections (i), (ii) and (iii) of this Section 2.1(b) are related and to be treated in the aggregate as a single Change in Control, and its determination shall be final, binding and conclusive.

 

(c)           “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

 

(d)           “Committee” means the Compensation Committee and such other committee or subcommittee of the Board, if any, duly appointed to administer the Plan and having such powers in each instance as shall be specified by the Board.  If, at any time, there is no committee of the Board then authorized or properly constituted to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers.

 

(e)           “Company” means Kadmon Holdings, Inc., a Delaware corporation, or any successor corporation thereto.

 

(f)            “Compensation” means, with respect to any Offering Period, regular base wages or salary, overtime payments, shift premiums and payments for paid time off, calculated before deduction of (i) any income or employment tax withholdings or (ii) any amounts deferred pursuant to Section 401(k) or Section 125 of the Code.  Compensation shall be limited to such amounts actually payable in cash or deferred during the Offering Period.  Compensation shall not include (i) sign-on bonuses, annual or other incentive bonuses, commissions, profit-sharing distributions or other incentive-type payments, (ii) any contributions made by a Participating Company on the Participant’s behalf to any employee benefit or welfare

 

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plan now or hereafter established (other than amounts deferred pursuant to Section 401(k) or Section 125 of the Code), (iii) payments in lieu of notice, payments pursuant to a severance agreement, termination pay, moving allowances, relocation payments, or (iv) any amounts directly or indirectly paid pursuant to the Plan or any other stock purchase, stock option or other stock-based compensation plan, or any other compensation not expressly included by this Section.

 

(g)           “Eligible Employee” means an Employee who meets the requirements set forth in Section 5 for eligibility to participate in the Plan.

 

(h)           “Employee” means a person treated as an employee of a Participating Company for purposes of Section 423 of the Code.  A Participant shall be deemed to have ceased to be an Employee either upon an actual termination of employment or upon the corporation employing the Participant ceasing to be a Participating Company.  For purposes of the Plan, an individual shall not be deemed to have ceased to be an Employee while on any military leave, sick leave, or other bona fide leave of absence approved by the Company of ninety (90) days or less.  If an individual’s leave of absence exceeds ninety (90) days, the individual shall be deemed to have ceased to be an Employee on the ninety-first (91st) day of such leave unless the individual’s right to reemployment with the Participating Company Group is guaranteed either by statute or by contract.

 

(i)            “Fair Market Value” means, as of any date:

 

(i)            If, on such date, the Stock is listed or quoted on a national or regional securities exchange or quotation system, the closing price of a share of Stock as quoted on the national or regional securities exchange or quotation system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable.  If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or quotation system, the date on which the Fair Market Value is established shall be the last day on which the Stock was so traded or quoted prior to the relevant date, or such other appropriate day as determined by the Committee, in its discretion.

 

(ii)           If, on the relevant date, the Stock is not then listed on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined in good faith by the Committee.

 

(j)            “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 (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).

 

(k)           “Non-United States Offering” means a separate Offering covering Eligible Employees of one or more Participating Companies whose Eligible Employees are subject to a prohibition under applicable law on payroll deductions, as described in Section 11.1(b).

 

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(l)            “Offering” means an offering of Stock pursuant to the Plan, as provided in Section 6.

 

(m)          “Offering Date” means, for any Offering Period, the first day of such Offering Period.

 

(n)           “Offering Period” means a period, established by the Committee in accordance with Section 6, during which an Offering is outstanding.

 

(o)           “Officer” means any person designated by the Board as an officer of the Company.

 

(p)           “Ownership Change Event” means the occurrence of any of the following with respect to the Company:  (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).

 

(q)           “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.

 

(r)            “Participant” means an Eligible Employee who has become a participant in an Offering Period in accordance with Section 7 and remains a participant in accordance with the Plan.

 

(s)            “Participating Company” means the Company and any Parent Corporation or Subsidiary Corporation designated by the Committee as a corporation the Employees of which may, if Eligible Employees, participate in the Plan.  The Committee shall have the discretion to determine from time to time which Parent Corporations or Subsidiary Corporations shall be Participating Companies.  The Committee shall designate from time to time and set forth in Appendix A to this Plan those Participating Companies whose Eligible Employees may participate in the Plan.

 

(t)            “Participating Company Group” means, at any point in time, the Company and all other corporations collectively which are then Participating Companies.

 

(u)           “Purchase Date” means, for any Offering Period, the last day of such Offering Period, or, if so determined by the Committee, the last day of each Purchase Period occurring within such Offering Period.

 

(v)           “Purchase Period” means a period, established by the Committee in accordance with Section 6, included within an Offering Period and on the final date of which outstanding Purchase Rights are exercised.

 

4

 

(w)          “Purchase Price” means the price at which a share of Stock may be purchased under the Plan, as determined in accordance with Section 9.

 

(x)           “Purchase Right” means an option granted to a Participant pursuant to the Plan to purchase such shares of Stock as provided in Section 8, which the Participant may or may not exercise during the Offering Period in which such option is outstanding.  Such option arises from the right of a Participant to withdraw any payroll deductions or other funds accumulated on behalf of the Participant and not previously applied to the purchase of Stock under the Plan, and to terminate participation in the Plan at any time during an Offering Period.

 

(y)           “Registration Date” means the effective date of the registration on Form S-8 of shares of Stock issuable pursuant to the Plan.

 

(z)           “Securities Act” means the Securities Act of 1933, as amended.

 

(aa)         “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.3.

 

(bb)         “Subscription Agreement” means a written or electronic agreement, in such form as is specified by the Company, stating an Employee’s election to participate in the Plan and authorizing payroll deductions under the Plan from the Employee’s Compensation or other method of payment authorized by the Committee pursuant to Section 11.1(b).

 

(cc)         “Subscription Date” means the last business day prior to the Offering Date of an Offering Period or such earlier date as the Company shall establish.

 

(dd)         “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

 

2.2          Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

3.             ADMINISTRATION.

 

3.1          Administration by the Committee.  The Plan shall be administered by the Committee.  All questions of interpretation of the Plan, of any form of agreement or other document employed by the Company in the administration of the Plan, or of any Purchase Right shall be determined by the Committee, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or the Purchase Right, unless fraudulent or made in bad faith.  Subject to the provisions of the Plan, the Committee shall determine all of the relevant terms and conditions of Purchase Rights; provided, however, that all Participants granted Purchase Rights pursuant to an Offering shall have the same rights and privileges within the meaning of Section 423(b)(5) of the Code.  Any and all actions, decisions

 

5

 

and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or any agreement thereunder (other than determining questions of interpretation pursuant to the second sentence of this Section 3.1) shall be final, binding and conclusive upon all persons having an interest therein.  All expenses incurred in connection with the administration of the Plan shall be paid by the Company.

 

3.2          Authority of Officers.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election that is the responsibility of or that is allocated to the Company herein, provided that the Officer has apparent authority with respect to such matter, right, obligation, determination or election.

 

3.3          Power to Adopt Sub-Plans or Varying Terms with Respect to Non-U.S. Employees.  The Committee shall have the power, in its discretion, to adopt one or more sub-plans of the Plan as the Committee deems necessary or desirable to comply with the laws or regulations, tax policy, accounting principles or custom of foreign jurisdictions applicable to employees of a subsidiary business entity of the Company, provided that any such sub-plan shall not be within the scope of an “employee stock purchase plan” within the meaning of Section 423 of the Code.  Any of the provisions of any such sub-plan may supersede the provisions of this Plan, other than Section 4.  Except as superseded by the provisions of a sub-plan, the provisions of this Plan shall govern such sub-plan.  Alternatively and in order to comply with the laws of a foreign jurisdiction, the Committee shall have the power, in its discretion, to grant Purchase Rights in an Offering to citizens or residents of a non-U.S. jurisdiction (without regard to whether they are also citizens of the United States or resident aliens) that provide terms which are less favorable than the terms of Purchase Rights granted under the same Offering to Employees resident in the United States.

 

3.4          Power to Establish Separate Offerings with Varying Terms.  The Committee shall have the power, in its discretion, to establish separate, simultaneous or overlapping Offerings having different terms and conditions and to designate the Participating Company or Companies that may participate in a particular Offering, provided that each Offering shall individually comply with the terms of the Plan and the requirements of Section 423(b)(5) of the Code that all Participants granted Purchase Rights pursuant to such Offering shall have the same rights and privileges within the meaning of such section.

 

3.5          Policies and Procedures Established by the Company.  Without regard to whether any Participant’s Purchase Right may be considered adversely affected, the Company may, from time to time, consistent with the Plan and the requirements of Section 423 of the Code, establish, change or terminate such rules, guidelines, policies, procedures, limitations, or adjustments as deemed advisable by the Company, in its discretion, for the proper administration of the Plan, including, without limitation, (a) a minimum payroll deduction amount required for participation in an Offering, (b) a limitation on the frequency or number of changes permitted in the rate of payroll deduction during an Offering, (c) an exchange ratio applicable to amounts withheld or paid in a currency other than United States dollars, (d) a payroll deduction greater than or less than the amount designated by a Participant in order to adjust for the Company’s delay or mistake in processing a Subscription Agreement or in otherwise effecting a Participant’s election under the Plan or as advisable to comply with the requirements of Section 423 of the Code, and (e) determination of the date and manner by which the Fair Market Value of a share of

 

6

 

Stock is determined for purposes of administration of the Plan.  All such actions by the Company shall be taken consistent with the requirements under Section 423(b)(5) of the Code that all Participants granted Purchase Rights pursuant to an Offering shall have the same rights and privileges within the meaning of such section, except as otherwise permitted by Section 3.3 and the regulations under Section 423 of the Code.

 

3.6          Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or the Committee or as officers or employees of the Participating Company Group, to the extent permitted by applicable law, members of the Board or the Committee and any officers or employees of the Participating Company Group to whom authority to act for the Board, the Committee or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.

 

4.             SHARES SUBJECT TO PLAN.

 

4.1          Maximum Number of Shares Issuable.  Subject to adjustment as provided in Sections 4.2 and 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be Nine Hundred Thousand (900,000) and shall consist of authorized but unissued or reacquired shares of Stock, or any combination thereof.  If an outstanding Purchase Right for any reason expires or is terminated or canceled, the shares of Stock allocable to the unexercised portion of that Purchase Right shall again be available for issuance under the Plan.

 

4.2          Annual Increase in Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan as set forth in Section 4.1 shall be cumulatively increased automatically on January 1, 2017 and on each subsequent January 1, through and including January 1, 2025 by a number of shares (the “Annual Increase”) equal to the smallest of (a) one  and one half percent (1.5%) of the number of shares of Stock issued and outstanding on the immediately preceding December 31, (b) Six Hundred Thousand (600,000) shares, or (c) an amount determined by the Board.

 

4.3          Adjustments for Changes in Capital Structure.  Subject to any required action by the stockholders of the Company and the requirements of Section 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split,

 

7

 

split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares subject to the Plan, the Annual Increase, the limit on the shares which may be purchased by any Participant during an Offering (as described in Sections 8.1 and 8.2) and each Purchase Right, and in the Purchase Price in order to prevent dilution or enlargement of Participants’ rights under the Plan.  For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.”  If a majority of the shares which are of the same class as the shares that are subject to outstanding Purchase Rights are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Committee may unilaterally amend the outstanding Purchase Rights to provide that such Purchase Rights are for New Shares.  In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Purchase Rights shall be adjusted in a fair and equitable manner as determined by the Committee, in its discretion.  Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number, and in no event may the Purchase Price be decreased to an amount less than the par value, if any, of the stock subject to the Purchase Right.  The adjustments determined by the Committee pursuant to this Section 4.3 shall be final, binding and conclusive.

 

5.             ELIGIBILITY.

 

5.1          Employees Eligible to Participate.  Each Employee of a Participating Company is eligible to participate in the Plan and shall be deemed an Eligible Employee, except the following:

 

(a)           Any Employee who is customarily employed by the Participating Company Group for twenty (20) hours or less per week; or

 

(b)           Any Employee who is customarily employed by the Participating Company Group for not more than five (5) months in any calendar year.

 

5.2          Exclusion of Certain Stockholders.  Notwithstanding any provision of the Plan to the contrary, no Employee shall be treated as an Eligible Employee and granted a Purchase Right under the Plan if, immediately after such grant, the Employee would own, or hold options to purchase, stock of the Company or of any Parent Corporation or Subsidiary Corporation possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of such corporation, as determined in accordance with Section 423(b)(3) of the Code.  For purposes of this Section 5.2, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of such Employee.

 

5.3          Determination by Company.  The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee or an Eligible Employee and the effective date of such individual’s attainment or termination of such status, as the case may be.  For purposes of an individual’s participation in or

 

8

 

other rights, if any, under the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.

 

6.             OFFERINGS.

 

The Plan shall be implemented by sequential Offerings of approximately six (6) months’ duration or such other duration as the Committee shall determine.  Offering Periods shall commence on or about the first trading days of April and October of each year and end on or about the last trading days of the next September and March, respectively, occurring thereafter.  No Pre-Registration Offering Period shall be permitted.  Notwithstanding the foregoing, the Committee may establish additional or alternative concurrent, sequential or overlapping Offering Periods, a different duration for one or more Offering Periods or different commencing or ending dates for such Offering Periods; provided, however, that no Offering Period may have a duration exceeding twenty-seven (27) months.  If the Committee shall so determine in its discretion, each Offering Period may consist of two (2) or more consecutive Purchase Periods having such duration as the Committee shall specify, and the last day of each such Purchase Period shall be a Purchase Date.  If the first or last day of an Offering Period or a Purchase Period is not a day on which the principal stock exchange or quotation system on which the Stock is then listed is open for trading, the Company shall specify the trading day that will be deemed the first or last day, as the case may be, of the Offering Period or Purchase Period.

 

7.             PARTICIPATION IN THE PLAN.

 

7.1          Initial Participation.

 

(a)           Generally.  An Eligible Employee may become a Participant in an Offering Period by delivering a properly completed written or electronic Subscription Agreement to the Company office or representative designated by the Company (including a third-party administrator designated by the Company) not later than the close of business on the Subscription Date established by the Company for that Offering Period.  An Eligible Employee who does not deliver a properly completed Subscription Agreement in the manner permitted or required on or before the Subscription Date for an Offering Period shall not participate in the Plan for that Offering Period or for any subsequent Offering Period unless the Eligible Employee subsequently delivers a properly completed Subscription Agreement to the appropriate Company office or representative on or before the Subscription Date for such subsequent Offering Period.  An Employee who becomes an Eligible Employee after the Offering Date of an Offering Period shall not be eligible to participate in that Offering Period but may participate in any subsequent Offering Period provided the Employee is still an Eligible Employee as of the Offering Date of such subsequent Offering Period.

 

7.2          Continued Participation.

 

(a)           Generally.  A Participant shall automatically participate in the next Offering Period commencing immediately after the final Purchase Date of each Offering

 

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Period in which the Participant participates provided that the Participant remains an Eligible Employee on the Offering Date of the new Offering Period and has not either (a) withdrawn from the Plan pursuant to Section 12.1, or (b) terminated employment or otherwise ceased to be an Eligible Employee as provided in Section 13.  A Participant who may automatically participate in a subsequent Offering Period, as provided in this Section, is not required to deliver any additional Subscription Agreement for the subsequent Offering Period in order to continue participation in the Plan.  However, a Participant may deliver a new Subscription Agreement for a subsequent Offering Period in accordance with the procedures set forth in Section 7.1(a) if the Participant desires to change any of the elections contained in the Participant’s then effective Subscription Agreement.

 

8.             RIGHT TO PURCHASE SHARES.

 

8.1          Grant of Purchase Right.  Except as otherwise provided below, on the Offering Date of each Offering Period, each Participant in such Offering Period shall be granted automatically a Purchase Right consisting of an option to purchase the lesser of (a) that number of whole shares of Stock determined by dividing the Dollar Limit (determined as provided below) by the Fair Market Value of a share of Stock on such Offering Date or (b) the Share Limit (determined as provided below).  The Committee may, in its discretion and prior to the Offering Date of any Offering Period, (i) change the method of, or any of the foregoing factors in, determining the number of shares of Stock subject to Purchase Rights to be granted on such Offering Date, or (ii) specify a maximum aggregate number of shares that may be purchased by all Participants in an Offering or on any Purchase Date within an Offering Period.  No Purchase Right shall be granted on an Offering Date to any person who is not, on such Offering Date, an Eligible Employee.  For the purposes of this Section, the “Dollar Limit” shall be determined by multiplying $2,083.33 by the number of months (rounded to the nearest whole month) in the Offering Period and rounding to the nearest whole dollar, and the “Share Limit” shall be determined by multiplying two hundred (200) shares by the number of months (rounded to the nearest whole month) in the Offering Period and rounding to the nearest whole share.

 

8.2          Calendar Year Purchase Limitation.  Notwithstanding any provision of the Plan to the contrary, no Participant shall be granted a Purchase Right which permits his or her right to purchase shares of Stock under the Plan to accrue at a rate which, when aggregated with such Participant’s rights to purchase shares under all other employee stock purchase plans of a Participating Company intended to meet the requirements of Section 423 of the Code, exceeds Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or such other limit, if any, as may be imposed by the Code) for each calendar year in which such Purchase Right is outstanding at any time.  For purposes of the preceding sentence, the Fair Market Value of shares purchased during a given Offering Period shall be determined as of the Offering Date for such Offering Period.  The limitation described in this Section shall be applied in conformance with Section 423(b)(8) of the Code and the regulations thereunder.

 

9.             PURCHASE PRICE.

 

The Purchase Price at which each share of Stock may be acquired in an Offering Period upon the exercise of all or any portion of a Purchase Right shall be established by the Committee; provided, however, that the Purchase Price on each Purchase Date shall not be less

 

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than eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a share of Stock on the Offering Date of the Offering Period or (b) the Fair Market Value of a share of Stock on the Purchase Date.  Subject to adjustment as provided by the Plan and unless otherwise provided by the Committee, the Purchase Price for each Offering Period shall be eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a share of Stock on the Offering Date of the Offering Period or (b) the Fair Market Value of a share of Stock on the Purchase Date.

 

10.          ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.

 

Except as provided in Section 11.1(b) with respect to a Non-United States Offering, shares of Stock acquired pursuant to the exercise of all or any portion of a Purchase Right may be paid for only by means of payroll deductions from the Participant’s Compensation accumulated during the Offering Period for which such Purchase Right was granted, subject to the following:

 

10.1        Amount of Payroll Deductions.  Except as otherwise provided herein, the amount to be deducted under the Plan from a Participant’s Compensation on each pay day during an Offering Period shall be determined by the Participant’s Subscription Agreement.  The Subscription Agreement shall set forth the percentage of the Participant’s Compensation to be deducted on each pay day during an Offering Period in whole percentages of not less than one percent (1%) (except as a result of an election pursuant to Section 10.3 to stop payroll deductions effective following the first pay day during an Offering) or more than ten percent (10%).  The Committee may change the foregoing limits on payroll deductions effective as of any Offering Date.

 

10.2        Commencement of Payroll Deductions.  Payroll deductions shall commence on the first pay day following the Offering Date and shall continue to the end of the Offering Period unless sooner altered or terminated as provided herein.

 

10.3        Election to Decrease or Stop Payroll Deductions.  During an Offering Period, a Participant may elect to decrease the rate of or to stop deductions from his or her Compensation by delivering to the Company office or representative designated by the Company (including a third-party administrator designated by the Company) an amended Subscription Agreement authorizing such change on or before the “Change Notice Date.”  The “Change Notice Date” shall be a date prior to the beginning of the first pay period for which such election is to be effective as established by the Company from time to time and announced to the Participants.  A Participant who elects, effective following the first pay day of an Offering Period, to decrease the rate of his or her payroll deductions to zero percent (0%) shall nevertheless remain a Participant in such Offering Period unless the Participant withdraws from the Plan as provided in Section 12.1.

 

10.4        Administrative Suspension of Payroll Deductions.  The Company may, in its discretion, suspend a Participant’s payroll deductions under the Plan as the Company deems advisable to avoid accumulating payroll deductions in excess of the amount that could reasonably be anticipated to purchase the maximum number of shares of Stock permitted (a) under the Participant’s Purchase Right, or (b) during a calendar year under the limit set forth in Section 8.2.  Unless the Participant has either withdrawn from the Plan as provided in

 

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Section 12.1 or has ceased to be an Eligible Employee, suspended payroll deductions shall be resumed at the rate specified in the Participant’s then effective Subscription Agreement either (i) at the beginning of the next Offering Period if the reason for suspension was clause (a) in the preceding sentence, or (ii) at the beginning of the next Offering Period having a first Purchase Date that falls within the subsequent calendar year if the reason for suspension was clause (b) in the preceding sentence.

 

10.5        Participant Accounts.  Individual bookkeeping accounts shall be maintained for each Participant.  All payroll deductions from a Participant’s Compensation (and other amounts received from a non-United States Participant pursuant to Section 11.1(b)) shall be credited to such Participant’s Plan account and shall be deposited with the general funds of the Company.  All such amounts received or held by the Company may be used by the Company for any corporate purpose.

 

10.6        No Interest Paid.  Interest shall not be paid on sums deducted from a Participant’s Compensation pursuant to the Plan or otherwise credited to the Participant’s Plan account.

 

11.          PURCHASE OF SHARES.

 

11.1        Exercise of Purchase Right.

 

(a)           Generally.  Except as provided in Section 11.1(b), on each Purchase Date of an Offering Period, each Participant who has not withdrawn from the Plan and whose participation in the Offering has not otherwise terminated before such Purchase Date shall automatically acquire pursuant to the exercise of the Participant’s Purchase Right the number of whole shares of Stock determined by dividing (a) the total amount of the Participant’s payroll deductions accumulated in the Participant’s Plan account during the Offering Period and not previously applied toward the purchase of Stock by (b) the Purchase Price.  However, in no event shall the number of shares purchased by the Participant during an Offering Period exceed the number of shares subject to the Participant’s Purchase Right.  No shares of Stock shall be purchased on a Purchase Date on behalf of a Participant whose participation in the Offering or the Plan has terminated before such Purchase Date.

 

(b)           Purchase by Non-United States Participants for Whom Payroll Deductions Are Prohibited by Applicable Law.  Notwithstanding Section 11.1(a), where payroll deductions on behalf of Participants who are citizens or residents of countries other than the United States (without regard to whether they are also citizens of the United States or resident aliens) are prohibited by applicable law, the Committee may establish a separate Offering (a “Non-United States Offering”) covering all Eligible Employees of one or more Participating Companies subject to such prohibition on payroll deductions.  The Non-United States Offering shall provide another method for payment of the Purchase Price with such terms and conditions as shall be administratively convenient and comply with applicable law.  On each Purchase Date of the Offering Period applicable to a Non-United States Offering, each Participant who has not withdrawn from the Plan and whose participation in such Offering Period has not otherwise terminated before such Purchase Date shall automatically acquire pursuant to the exercise of the Participant’s Purchase Right a number of whole shares of Stock

 

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determined in accordance with Section 11.1(a) to the extent of the total amount of the Participant’s Plan account balance accumulated during the Offering Period in accordance with the method established by the Committee and not previously applied toward the purchase of Stock.  However, in no event shall the number of shares purchased by a Participant during such Offering Period exceed the number of shares subject to the Participant’s Purchase Right.  The Company shall refund to a Participant in a Non-United States Offering in accordance with Section 11.4 any excess Purchase Price payment received from such Participant.

 

11.2        Pro Rata Allocation of Shares.  If the number of shares of Stock which might be purchased by all Participants on a Purchase Date exceeds the number of shares of Stock remaining available for issuance under the Plan or the maximum aggregate number of shares of Stock that may be purchased on such Purchase Date pursuant to a limit established by the Committee pursuant to Section 8.1, the Company shall make a pro rata allocation of the shares available in as uniform a manner as practicable and as the Company determines to be equitable.  Any fractional share resulting from such pro rata allocation to any Participant shall be disregarded.

 

11.3        Delivery of Title to Shares.  Subject to any governing rules or regulations, as soon as practicable after each Purchase Date, the Company shall issue or cause to be issued to or for the benefit of each Participant the shares of Stock acquired by the Participant on such Purchase Date by means of one or more of the following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to the account of the Participant, (b) by depositing such shares of Stock for the benefit of the Participant with any broker with which the Participant has an account relationship, or (c) by delivering such shares of Stock to the Participant in certificate form.

 

11.4        Return of Plan Account Balance.  Any cash balance remaining in a Participant’s Plan account following any Purchase Date shall be refunded to the Participant as soon as practicable after such Purchase Date.  However, if the cash balance to be returned to a Participant pursuant to the preceding sentence is less than the amount that would have been necessary to purchase an additional whole share of Stock on such Purchase Date, the Company may retain the cash balance in the Participant’s Plan account to be applied toward the purchase of shares of Stock in the subsequent Purchase Period or Offering Period.

 

11.5        Tax Withholding.  At the time a Participant’s Purchase Right is exercised, in whole or in part, or at the time a Participant disposes of some or all of the shares of Stock he or she acquires under the Plan, the Participant shall make adequate provision for the federal, state, local and foreign taxes (including social insurance), if any, required to be withheld by any Participating Company upon exercise of the Purchase Right or upon such disposition of shares, respectively.  A Participating Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary to meet such withholding obligations.

 

11.6        Expiration of Purchase Right.  Any portion of a Participant’s Purchase Right remaining unexercised after the end of the Offering Period to which the Purchase Right relates shall expire immediately upon the end of the Offering Period.

 

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11.7        Provision of Reports and Stockholder Information to Participants.  Each Participant who has exercised all or part of his or her Purchase Right shall receive, as soon as practicable after the Purchase Date, a report of such Participant’s Plan account setting forth the total amount credited to his or her Plan account prior to such exercise, the number of shares of Stock purchased, the Purchase Price for such shares, the date of purchase and the cash balance, if any, remaining immediately after such purchase that is to be refunded or retained in the Participant’s Plan account pursuant to Section 11.4.  The report required by this Section may be delivered in such form and by such means, including by electronic transmission, as the Company may determine.  In addition, each Participant shall be provided information concerning the Company equivalent to that information provided generally to the Company’s common stockholders.

 

12.          WITHDRAWAL FROM PLAN.

 

12.1        Voluntary Withdrawal from the Plan.  A Participant may withdraw from the Plan by signing and delivering to the Company office or representative designated by the Company (including a third-party administrator designated by the Company) a written or electronic notice of withdrawal on a form provided by the Company for this purpose.  Such withdrawal may be elected at any time prior to the end of an Offering Period; provided, however, that if a Participant withdraws from the Plan after a Purchase Date, the withdrawal shall not affect shares of Stock acquired by the Participant on such Purchase Date.  A Participant who voluntarily withdraws from the Plan is prohibited from resuming participation in the Plan in the same Offering from which he or she withdrew, but may participate in any subsequent Offering by again satisfying the requirements of Sections 5 and 7.1.  The Company may impose, from time to time, a requirement that the notice of withdrawal from the Plan be on file with the Company office or representative designated by the Company for a reasonable period prior to the effectiveness of the Participant’s withdrawal.

 

12.2        Return of Plan Account Balance.  Upon a Participant’s voluntary withdrawal from the Plan pursuant to Section 12.1, the Participant’s accumulated Plan account balance which has not been applied toward the purchase of shares of Stock shall be refunded to the Participant as soon as practicable after the withdrawal, without the payment of any interest, and the Participant’s interest in the Plan and the Offering shall terminate.  Such amounts to be refunded in accordance with this Section may not be applied to any other Offering under the Plan.

 

13.          TERMINATION OF EMPLOYMENT OR ELIGIBILITY.

 

Upon a Participant’s ceasing, prior to a Purchase Date, to be an Employee of the Participating Company Group for any reason, including retirement, disability or death, or upon the failure of a Participant to remain an Eligible Employee, the Participant’s participation in the Plan shall terminate immediately.  In such event, the Participant’s Plan account balance which has not been applied toward the purchase of shares of Stock shall, as soon as practicable, be returned to the Participant or, in the case of the Participant’s death, to the Participant’s beneficiary designated in accordance with Section 20, if any, or legal representative, and all of the Participant’s rights under the Plan shall terminate.  Interest shall not be paid on sums returned

 

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pursuant to this Section 13.  A Participant whose participation has been so terminated may again become eligible to participate in the Plan by satisfying the requirements of Sections 5 and 7.1.

 

14.          EFFECT OF CHANGE IN CONTROL ON PURCHASE RIGHTS.

 

In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or parent thereof, as the case may be (the “Acquiring Corporation”), may, without the consent of any Participant, assume or continue the Company’s rights and obligations under outstanding Purchase Rights or substitute substantially equivalent purchase rights for the Acquiring Corporation’s stock.  If the Acquiring Corporation elects not to assume, continue or substitute for the outstanding Purchase Rights, the Purchase Date of the then current Offering Period shall be accelerated to a date before the date of the Change in Control specified by the Committee, but the number of shares of Stock subject to outstanding Purchase Rights shall not be adjusted.  All Purchase Rights which are neither assumed or continued by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control.

 

15.          NONTRANSFERABILITY OF PURCHASE RIGHTS.

 

Neither payroll deductions or other amounts credited to a Participant’s Plan account nor a Participant’s Purchase Right may be assigned, transferred, pledged or otherwise disposed of in any manner other than as provided by the Plan or by will or the laws of descent and distribution.  (A beneficiary designation pursuant to Section 20 shall not be treated as a disposition for this purpose.)  Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw from the Plan as provided in Section 12.1.  A Purchase Right shall be exercisable during the lifetime of the Participant only by the Participant.

 

16.          COMPLIANCE WITH SECURITIES LAW.

 

The issuance of shares under the Plan shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities.  A Purchase Right may not be exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any securities exchange or market system upon which the Stock may then be listed.  In addition, no Purchase Right may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Purchase Right be in effect with respect to the shares issuable upon exercise of the Purchase Right, or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Purchase Right may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares under the Plan shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of a Purchase Right, the Company may require the Participant to satisfy any qualifications that may be necessary or

 

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appropriate, to evidence compliance with any applicable law or regulation, and to make any representation or warranty with respect thereto as may be requested by the Company.

 

17.          RIGHTS AS A STOCKHOLDER AND EMPLOYEE.

 

A Participant shall have no rights as a stockholder by virtue of the Participant’s participation in the Plan until the date of the issuance of the shares of Stock purchased pursuant to the exercise of the Participant’s Purchase Right (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.3.  Nothing herein shall confer upon a Participant any right to continue in the employ of the Participating Company Group or interfere in any way with any right of the Participating Company Group to terminate the Participant’s employment at any time.

 

18.          NOTIFICATION OF DISPOSITION OF SHARES.

 

The Company may require the Participant to give the Company prompt notice of any disposition of shares of Stock acquired by exercise of a Purchase Right.  The Company may require that until such time as a Participant disposes of shares of Stock acquired upon exercise of a Purchase Right, the Participant shall hold all such shares in the Participant’s name until the later of two years after the date of grant of such Purchase Right or one year after the date of exercise of such Purchase Right.  The Company may direct that the certificates evidencing shares of Stock acquired by exercise of a Purchase Right refer to such requirement to give prompt notice of disposition.

 

19.          LEGENDS.

 

The Company may at any time place legends or other identifying symbols referencing any applicable federal, state or foreign securities law restrictions or any provision convenient in the administration of the Plan on some or all of the certificates representing shares of Stock issued under the Plan.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to a Purchase Right in the possession of the Participant in order to carry out the provisions of this Section.  Unless otherwise specified by the Company, legends placed on such certificates may include but shall not be limited to the following:

 

“THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF.  THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE).”

 

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20.          DESIGNATION OF BENEFICIARY.

 

20.1        Designation Procedure.  Subject to local laws and procedures, a Participant may file a written designation of a beneficiary who is to receive (a) shares and cash, if any, from the Participant’s Plan account if the Participant dies subsequent to a Purchase Date but prior to delivery to the Participant of such shares and cash, or (b) cash, if any, from the Participant’s Plan account if the Participant dies prior to the exercise of the Participant’s Purchase Right.  If a married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness of such designation may be subject to the consent of the Participant’s spouse.  A Participant may change his or her beneficiary designation at any time by written notice to the Company.

 

20.2        Absence of Beneficiary Designation.  If a Participant dies without an effective designation pursuant to Section 20.1 of a beneficiary who is living at the time of the Participant’s death, the Company shall deliver any shares or cash credited to the Participant’s Plan account to the Participant’s legal representative or as otherwise required by applicable law.

 

21.          NOTICES.

 

All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

22.          AMENDMENT OR TERMINATION OF THE PLAN.

 

The Committee may at any time amend, suspend or terminate the Plan, except that (a) no such amendment, suspension or termination shall affect Purchase Rights previously granted under the Plan unless expressly provided by the Committee, and (b) no such amendment, suspension or termination may adversely affect a Purchase Right previously granted under the Plan without the consent of the Participant, except to the extent permitted by the Plan or as may be necessary to qualify the Plan as an employee stock purchase plan pursuant to Section 423 of the Code or to comply with any applicable law, regulation or rule.  In addition, an amendment to the Plan must be approved by the stockholders of the Company within twelve (12) months of the adoption of such amendment if such amendment would authorize the sale of more shares than are then authorized for issuance under the Plan or would change the definition of the corporations that may be designated by the Committee as Participating Companies.  Notwithstanding the foregoing, in the event that the Committee determines that continuation of the Plan or an Offering would result in unfavorable financial accounting consequences to the Company, the Committee may, in its discretion and without the consent of any Participant, including with respect to an Offering Period then in progress: (i) terminate the Plan or any Offering Period, (ii) accelerate the Purchase Date of any Offering Period, (iii) reduce the discount or the method of determining the Purchase Price in any Offering Period (e.g., by determining the Purchase Price solely on the basis of the Fair Market Value on the Purchase Date), (iv) reduce the maximum number of shares of Stock that may be purchased in any Offering Period, or (v) take any combination of the foregoing actions.

 

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IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing sets forth the Kadmon Holdings, Inc. 2016 Employee Stock Purchase Plan as duly adopted by the Board on          , 2016.

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
, Secretary
    

 

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APPENDIX A

 

Participating Companies

 

[Company Name]

[Add participating subsidiaries]Exhibit 10.51

 

KADMON HOLDINGS, LLC

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 7, 2016, by and between KADMON HOLDINGS, LLC, a Delaware limited liability company (the “Company”), and KADMON I, LLC, a Delaware limited liability company and holder of a majority of the Class A units of membership interest of the Company (“Kadmon I”), acting for the benefit and on behalf of itself and the other Members (as defined below) of the Company and other parties having third-party beneficiary rights hereunder.  Certain capitalized terms used herein and not otherwise defined have the meaning given to them in Section 11 hereof.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the terms of the Operating Agreement, the Company has agreed to provide customary “piggyback” registration rights to the Members following the occurrence of an initial public offering, subject to the terms and conditions set forth herein.

 

WHEREAS, pursuant to the terms of certain warrants issued on June 17, 2013 (the “2013 Warrants”) to GoldenTree 2004 Trust, New Mexico Educational Retirement Board, Macquarie Bank Limited and SPCP Group LLC (the “2013 Warrantholders”) in connection with that certain Second Amended and Restated Credit Agreement, dated June 17, 2013, by and among Kadmon Pharmaceuticals, LLC (“Kadmon Pharmaceuticals”), the Company, Macquarie US Trading LLC and the lenders party thereto from time to time, the Company has agreed that, if a Public Offering (as defined in the 2013 Warrants) has been consummated, it shall grant customary piggyback registration rights to the 2013 Warrantholders on substantially the same terms as those granted to the Company’s members pursuant to the Operating Agreement;

 

WHEREAS, pursuant to the terms of certain warrants issued on August 28, 2015 (the “2015 Warrants”) to Perceptive Credit Opportunities Fund, LP, PCOF Partners Capital Fund, LP and GoldenTree Credit Opportunities, LP, (the “2015 Warrantholders”) in connection with that certain Credit Agreement, dated as of August 28, 2015, among Kadmon Pharmaceuticals, the guarantors party thereto and Perceptive Credit Opportunities Fund, LP, PCOF Partners Capital Fund, LP, and GoldenTree Credit Opportunities, LP (“GoldenTree”), as the lenders, the Company has agreed that, if a Public Offering (as defined in the 2015 Warrants) has been consummated, it shall grant customary piggyback registration rights to the 2013 Warrantholders on substantially the same terms as those granted to the Members pursuant to the Operating Agreement (the 2015 Warrantholders, together with the Members and the 2013 Warrantholders, the “Investors”);

 

WHEREAS, the Company is party to a Registration Rights Agreement, dated as of August 28, 2015 (the “PIK Notes Registration Rights Agreement”), by and among the Company and the holders from time to time of $114,760,000 aggregate original principal amount of 13.0% Second-Line Convertible PIK Notes (“PIK Notes”) issued by the Company’s wholly owned subsidiary, Kadmon Pharmaceuticals, with respect to the registration for resale of the Conversion Units (as defined in the PIK Notes Registration Rights Agreement) issuable upon conversion of the PIK Notes;

 

 

WHEREAS, the Company is a party to an Exchange Agreement, dated as of June 8, 2016 (the “Exchange Agreement”), by and among the Company and the lenders named in the Third Amended and Restated Convertible Credit Agreement dated as of August 28, 2015, as amended, pursuant to which the Company will enter into a registration rights agreement with such lenders immediately prior to the closing of the Initial Public Offering (as defined below) with respect to the registration for resale of the shares of Common Stock issuable to such lenders (the “Preferred Stock Investors”) pursuant to the transactions contemplated by the Exchange Agreement (such registration rights agreement, the “Convertible Preferred Registration Rights Agreement”);

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

 

1.                                      PIGGY-BACK REGISTRATION.

 

(a)                                 Following an Initial Public Offering, whenever the Company proposes to effect a registration (including any Demand Registration (as defined under the Convertible Preferred Registration Rights Agreement)) of any of its Class A Units under the Securities Act (except for the registration of securities to be offered pursuant to an employee benefit plan on Form S-8, pursuant to a registration made on Form S-4, or any successor forms thereto then in effect) and the registration form to be used may be used for the registration of Registrable Securities, it will, at each such time, give notice to each Investor of its intention to do so at least 10 Business Days prior to the anticipated filing date of the Registration Statement relating to such registration, which notice  shall set forth the Investors’ rights under this Section 1(a) and the rights of the Holders of Other Registrable Securities and shall offer to such Investors and such Holders of Other Registrable Securities the opportunity to include in such Registration Statement the number of Registrable Securities and Other Registrable Securities as such Investors and Holders of Other Registrable Securities, respectively, may request (a “Piggyback Registration”).

 

(b)                                 Upon the written request of any Investor and Holder of Other Registrable Securities (which request shall specify the number of Registrable Securities and Other Registrable Securities (as the case may be) intended to be registered or disposed of by such Investor or Holder of Other Registrable Securities (as the case may be)) received within 5 Business Days after the delivery of the Company’s notice of registration, the Company shall, subject to the limitations set forth in this Agreement including Section 1(d), use its commercially reasonable efforts to include in such registration under the Securities Act all Registrable Securities and Other Registrable Securities which the Investors and Holders of Other Registrable Securities (such holders, the “Other Registering Holders”), respectively, have so requested to be registered or sold.

 

(c)                                  If the Piggyback Registration is an Underwritten Offering (i) relating to a Demand Registration, the lead Underwriter and any additional Underwriters in connection with such offering shall be selected by the Preferred Stock Investors in accordance with the provisions of the Convertible Preferred Registration Rights Agreement, (ii) relating to a demand registration requested pursuant to the PIK Notes Registration Rights Agreement, the lead Underwriter and any additional Underwriters in connection with such offering shall be selected by holders of a

 

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majority of the registrable securities that are party to the PIK Notes Registration Rights Agreement, and (iii) relating to an offering for the account of the Company, the lead Underwriter and any additional Underwriters in connection with the offering shall be selected by the Company.

 

(d)                                 If a Piggyback Registration involves an Underwritten Offering and any of the lead Underwriters advises the Company that, in its view, the total number or dollar amount of securities requested to be included in the Registration Statement exceeds the number or dollar amount of securities that can be sold without having an adverse effect on such offering, including the price at which such securities can be sold (the “Maximum Offering Size”), the Company will include the securities in the registration, in the following order of priority, up to the Maximum Offering Size: (i) first, so much of the securities the Company proposes to sell as would not cause the offering to exceed the Maximum Offering Size, (ii) second, (x) all Registrable Securities requested to be included in such registration by any Investor pursuant to this Section 1 and (y) all Other Registrable Securities requested to be included in such registration by any Holder of Other Registrable Securities, in the case of (x) and (y) in aggregate, allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Investors and Holders of Other Registrable Securities on the basis of the relative number of Registrable Securities and Other Registrable Securities so requested to be included in such registration by each such Investor and each such Holder of Other Registrable Securities, and (iii) third, any securities proposed to be registered for the account of any other Persons with such priorities among them as the Company shall determine. All persons whose securities are included in the Piggyback Registration must sell their securities on the same terms and conditions as apply to the securities being sold by the Company.

 

(e)                                  Notwithstanding the foregoing, if the Piggyback Registration is an Underwritten Offering relating to a Demand Registration or a demand registration requested pursuant to the PIK Notes Registration Rights Agreement and any of the lead Underwriters advises the Company that, in its view, the total number or dollar amount of  securities requested to be included in the Registration Statement exceeds the Maximum Offering Size, then the Company will include the securities in the registration, in the following order of priority, up to the Maximum Offering Size: (i) first, all securities requested to be registered in such Demand Registration by the Preferred Stock Investors pursuant to the Convertible Preferred Registration Rights Agreement or in such demand registration by the holders of PIK Notes pursuant to the PIK Notes Registration Rights Agreement (as the case may be) allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Preferred Stock Investors or holders of PIK Notes (as applicable) on the basis of the relative number of securities so requested to be included in such registration by each such investor; (ii) second, all Other Registrable Securities requested to be included in such registration by any Other Registering Holders, pro rata among such Other Registering Holders on the basis of the relative number of Other Registrable Securities so requested to be included in such registration by each Other Registering Holder; and (iii) third, any securities proposed to be registered by the Company or for the account of any other third party. All persons whose securities are included in such Registration Statement must sell their securities on the same terms and conditions as apply to the securities being sold by the Preferred Stock Investors that initiated the Demand Registration or the holders of PIK Notes that initiated the demand registration pursuant to the PIK Notes Registration Rights Agreement.

 

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(f)                                   If, at any time after giving notice of its intention to register any securities of the Company for the Company’s own account pursuant to Section 1(a) and prior to the effective date of the Registration Statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company shall give notice to all the Investors and Other Registering Holders and, thereupon, shall be relieved of its obligation to register any Registrable Securities and Other Registrable Securities in connection with such registration.

 

2.                                      REGISTRATION PROCEDURES.  In connection with any registration contemplated hereunder, the Company shall as expeditiously as possible:

 

(a)                                 Use its commercially reasonable efforts to prepare and file with the SEC a registration statement on the appropriate form and use its commercially reasonable efforts to cause the registration to become effective as promptly as possible but in no event more than 60 calendar days after filing with the SEC or 15 calendar days if the Company receives an indication of “no review” by the SEC.  At least five Business Days before filing a registration statement or prospectus or any amendments or supplements thereto that covers Registrable Securities pursuant to Section 1 hereof, the Company will furnish to counsel to the Investors selling Registrable Securities in such offering (each, a “Selling Investor”, and collectively, the “Selling Investors”) copies of all documents proposed to be filed for such counsel’s review and approval, which approval shall not be unreasonably withheld or delayed;

 

(b)                                 Notify immediately each Selling Investor of any stop order threatened or issued by the SEC and take all actions reasonably required to prevent the entry of a stop order or if entered to have it rescinded or otherwise removed;

 

(c)                                  Use its commercially reasonable efforts to prepare and file with the SEC such amendments and supplements to the Registration Statement necessary to keep the Registration Statement effective for 180 days or such shorter period as may be required to sell all Registrable Securities covered by the registration statement; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Registration statement during each period in accordance with the Selling Investors’ intended methods of disposition as set forth in the Registration Statement;

 

(d)                                 Furnish to each Selling Investor a sufficient number of copies of the Registration Statement and such other documents as such Selling Investor may reasonably request to facilitate the disposition of its Registrable Securities;

 

(e)                                  Use its commercially reasonable efforts to register or qualify the Registrable Securities subject to registration under securities or blue sky laws of jurisdictions in the United States of America as any Selling Investor requests and will do any and all other acts and things that may be necessary or advisable to enable such Selling Investor to consummate the disposition of its Registrable Securities; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

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(f)                                   Use its commercially reasonable efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by those governmental agencies or authorities necessary to enable each Selling Investor to consummate the disposition of its Registrable Securities;

 

(g)                                  Notify each Selling Investor, at any time when a prospectus is required to be delivered under the Securities Act, of any event as a result of which the prospectus or any document incorporated therein by reference contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading, and will prepare a supplement or amendment to the prospectus or any such document incorporated therein by reference so that thereafter the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;

 

(h)                                 Use its commercially reasonable efforts to cause all Registrable Securities to be listed on each securities exchange, with the same CUSIP, and with the same transfer agent, as similar securities issued by the Company are then listed;

 

(i)                                     Provide an institutional transfer agent and registrar and a CUSIP number for all Registrable Securities on or before the effective date of the Registration Statement;

 

(j)                                    Enter into such customary agreements (including an underwriting agreement in customary form) and use its commercially reasonable efforts to in connection with those agreements as the Selling Investors or the underwriters, if any, reasonably request to expedite or facilitate the disposition of such Registrable Securities;

 

(k)                                 Make available for inspection by any Selling Investor, any Underwriter participating in any disposition pursuant to the Registration Statement, and any attorney, accountant, or other agent of any Selling Investor or Underwriter, all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors, and employees to supply all information reasonably requested by any Selling Investor, underwriter, attorney, accountant, or agent to exercise their due diligence responsibility in connection with the Registration Statement; provided that an appropriate confidentiality agreement is executed by any such Selling Investor, Underwriter, attorney, accountant or other agent;

 

(l)                                     Use its commercially reasonable efforts to ensure that any lock-up agreement requested of any Investor by the lead Underwriter(s) in connection with any Underwritten Offering has a term no longer than the shorter of (i) the lock-up term agreed to by the Company and (ii) the lock-up term agreed to by any officer or director of the Company or any other Investor;

 

(m)                             In connection with any Underwritten Offering, obtain a “comfort” letter from the Company’s independent public accountants in customary form and covering those matters customarily covered by “cold comfort” letters as the Selling Investors or the lead Underwriters request (and the letter shall be addressed to Selling Investors); and

 

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(n)                                 Furnish, at the reasonable request of any Selling Investor, an opinion of counsel representing the Company for the purposes of the registration, in the form and substance customarily given to Underwriters in an underwritten public offering and satisfactory to counsel representing such Selling Investors, addressed to the Underwriters, if any, and to such Selling Investors.

 

3.                                      SUSPENSION PERIOD.

 

(a)                                 The Company may suspend the use of a prospectus that is part of a Registration Statement for up to 30 days (or such shorter period as the Company determines in good faith is necessary under the circumstances, with extensions beyond such shorter period up to the 30 day maximum as may be required after consultation with counsel) from the date of the Suspension Notice (as defined below) and therefore suspend sales of Registrable Securities and Other Registrable Securities available for sale pursuant to such Registration Statement (such period, the “Suspension Period”) by providing written notice to each Selling Investor and Other Registering Holder if the Company’s board of directors determines in its reasonable good faith judgment that such suspension is in the best interests of the Company in connection with any proposal or plan by the Company to engage in any material acquisition of assets or stock (other than in the ordinary course of business) or any material merger, consolidation, tender offer, recapitalization, reorganization or other transaction involving the Company. The Company may not utilize more than one Suspension Period in any 12-month period, except with the consent of holders of a majority in interest of the Selling Investors and Other Registering Holders.

 

(b)                                 In the case of an event that causes the Company to suspend the use of a Registration Statement as set forth in Section 3(a) above (a “Suspension Event”), the Company shall give a written notice to the Selling Investors and Other Registering Holders (a “Suspension Notice”) to suspend sales of the Registrable Securities and Other Registrable Securities and such notice shall state generally the basis for the notice (but shall not contain any material non-public information concerning the Company) and that such suspension shall continue only for so long as the Suspension Event is continuing. An Investor shall not effect any sales of the Registrable Securities pursuant to such Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an End of Suspension Notice (as defined below). Each Investor agrees that such Investor shall treat as confidential the receipt of the Suspension Notice and shall not disclose the information contained in such Suspension Notice without the prior written consent of the Company until such time as the information contained therein is or becomes available to the public generally, other than as a result of disclosure by the Investor in breach of the terms of this Agreement. The Investors may recommence effecting sales of the Registrable Securities pursuant to the Registration Statement (or such filings) following further written notice to such effect (an “End of Suspension Notice”) from the Company, which End of Suspension Notice shall be given by the Company to the Investors and to the Investors’ counsel, if any, promptly following the conclusion of any Suspension Event; provided that the Company shall deliver the End of Suspension Notice within the Suspension Period.

 

4.                                      REGISTRATION EXPENSES. All expenses incident to the Company’s performance of or compliance with this Agreement (including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue

 

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sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, Underwriters (excluding underwriting discounts and commissions) and other persons retained by the Company), and the reasonable fees of one counsel to the Selling Investors and Other Registering Holders as a group (selected by a majority-in-interest of the Selling Investors and Other Registering Holders) shall be borne by the Company (all such expenses being herein called “Registration Expenses”).

 

5.                                      INFORMATION.  From time to time, the Company may require each Selling Investor to furnish to the Company information regarding the distribution of the securities subject to registration.  Whenever any such Selling Investor has requested that Registrable Securities be registered pursuant to this Agreement, such Selling Investor shall notify the Company, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as to such Selling Investor as a result of which the prospectus included in the Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading.

 

6.                                      MATERIAL CHANGE.  Each Selling Investor agrees that, upon receipt of any notice from the Company of any event as a result of which the prospectus or any document incorporated therein by reference contains an untrue statement of material fact or omits to state any material fact necessary to make the statements therein not misleading, such Selling Investor will discontinue the distribution of Registrable Securities pursuant to any such prospectus until such Selling Investor receives copies of a supplemented or amended prospectus from the Company.  In addition, if the Company requests, the Selling Investor will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in its possession, of the prospectus covering the Registrable Securities current at the time of receipt of the notice.  Each Selling Investor agrees not to use any free writing prospectus unless consented to by the Company and (in the case of an Underwritten Offering) the lead Underwriter.

 

7.                                      INDEMNIFICATION.

 

(a)                                 To the full extent permitted by law, the Company agrees to indemnify each Selling Investor, its officers and directors, and each person who controls such Selling Investor (within the meaning of the Securities Act and the Exchange Act) against all losses, claims, damages, liabilities and expenses to which any of such persons may become subject under the Securities Act or the Exchange Act arising out of or resulting from (i) any untrue or allegedly untrue statement of material fact contained in any Registration Statement, prospectus or preliminary prospectus or any omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to the action or inaction of the Company in connection with any registration, qualification or compliance, except to the extent the untrue statement or omission resulted from information that the Selling Investor furnished in writing to the Company specifically stating that it is for use in the preparation thereof; or (ii) any violation by the Company of any of the Securities Act or the Exchange Act or any applicable state securities laws, or any rules promulgated under any such acts or laws.  As to any person entitled to indemnity under this Section 7(a), such indemnity shall

 

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remain in full force and effect regardless of any investigation made by or on behalf of such person.

 

(b)                                 Each Selling Investor will furnish to the Company in writing the information and affidavits that the Company reasonably requests for use in connection with any Registration Statement or prospectus and each such Selling Investor agrees to indemnify, to the fullest extent permitted by law, the Company, its directors and officers, and each person who controls the Company (within the meaning of the Securities Act and the Exchange Act) against all losses, claims, damages, liabilities and expenses to which any of such persons may become subject under the Securities Act or the Exchange Act resulting from any untrue or allegedly untrue statement of material fact contained in any Registration Statement, prospectus or preliminary prospectus or any omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that the untrue statement or omission is contained in or omitted from any information or affidavit such Selling Investor furnished in writing to the Company through an instrument duly executed by such Selling Investor specifically stating that it is for use in the preparation of such Registration Statement, prospectus or preliminary prospectus; provided, however, that the obligations of any Selling Investor hereunder shall be limited to an amount equal to the proceeds received by such Selling Investor from the sale of securities pursuant to the applicable Registration Statement as contemplated herein.  As to any person entitled to indemnity under this Section 7(b), such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such person.

 

(c)                                  Any person entitled to indemnification under this Section 7 will (x) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (y) unless in the indemnifying party’s reasonable judgment a conflict of interest may exist between the indemnified and indemnifying parties with respect to the claim, permit the indemnifying party to assume the defense of the claim with counsel reasonably satisfactory to the indemnified party.  If the indemnifying party does not assume the defense, the indemnifying party will not be liable for any settlement made without its consent (but that consent may not be unreasonably withheld).  No indemnifying party will consent to entry of any judgment or will enter into any settlement that does not include as an unconditional term the claimant’s or plaintiffs release of the indemnified party from all liability concerning the claim or litigation.  An indemnifying party who is not entitled to or elects not to assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by the indemnifying party with respect to the claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between the indemnified party and any other indemnified party with respect to the claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of additional counsel.

 

(d)                                 In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (x) any Selling Investor exercising rights under this Agreement, or any controlling person of any such Selling Investor, makes a claim for indemnification pursuant to this Section 7 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, or (y) contribution under the Securities Act may be required on the part of any such Selling

 

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Investor or any such controlling person in circumstances for which indemnification is provided under this Section 7; then, in each such case, the Company and such Selling Investor will contribute to the aggregate losses, claims, damages, liabilities and expenses that they may be subject to (after contribution to others) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the actions that resulted in such losses, claims, damages, liabilities and expenses, as well as any other relevant equitable considerations; provided, however, that no Selling Investor will be required to contribute any amount in excess of the proceeds actually received by such Selling Investor pursuant to the Registration Statement.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact was made by, or relates to information supplied by, the indemnifying party or the indemnified party, and the indemnifying party’s or the indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in this Agreement, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 7(d).  No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

8.                                      RULE 144 AND RULE 144A; COMPANY OBLIGATIONS.  The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and obligations adopted by the SEC thereunder, and it will take such further action as any Investor reasonably may request, all to the extent required from time to time, to enable such Investor to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC.

 

9.                                      TERMINATION.  This Agreement shall terminate with respect to any Investor immediately after all of such Investor’s Registrable Securities are freely saleable under Rule 144 without any volume or other limitations.

 

10.                               SUCCESSOR ENTITY.  The Company shall not change its form of organization (i.e., to a corporation, partnership or other form of entity), or merge or consolidate into any other Person, unless such changed or successor entity agrees to be bound by this Agreement.

 

11.                               INTERPRETATION OF THIS AGREEMENT.

 

(a)                                 Terms Defined.  As used in this Agreement, the following terms have the respective meaning set forth below:

 

“2013 Warrantholders” has the meaning set forth in the recitals to this

 

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Agreement.

 

“2013 Warrants” has the meaning set forth in the recitals to this Agreement.

 

“2015 Warrantholders” has the meaning set forth in the recitals to this Agreement.

 

“2015 Warrants” has the meaning set forth in the recitals to this Agreement.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, provided, that any reference to “days” (unless Business Days are specified) shall mean calendar days.

 

“Class A Units” shall have the meaning specified in the Operating Agreement and shall include any equity interests into which any Class A Units shall have been converted or changed, any equity interests for which the Class A Units are exchanged and any equity interests resulting from any reclassification of any Class A Units in the Company (including, without limitation, as a result of the conversion of the Company into a Delaware corporation), in each case, the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current distributions and liquidating distributions after the payment of distributions with respect to any equity interests in the Company entitled to preference.

 

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

 

“Holders of Other Registrable Securities” shall mean the holders of registration rights under the PIK Notes Registration Rights Agreement and the Convertible Preferred Registration Rights Agreement.

 

“including” is not limiting and means “including without limitation.”

 

“Initial Public Offering” shall mean the first public offering of Class A Units of the Company or any successor corporation of the Company, as applicable.

 

“Investor” has the meaning set forth in the recitals.

 

“Members” shall have the meaning specified in the Operating Agreement.

 

“Operating Agreement” shall mean the Second Amended and Restated Limited Liability Company Agreement of the Kadmon Holdings, LLC dated as of June 27, 2014, among the Company and the members of the Company, as amended, restated, supplemented and otherwise modified from time to time in accordance with its terms.

 

“Other Registering Holders” has the meaning set forth in Section 1(b) above.

 

“Other Registrable Securities” means the securities registrable under the PIK Notes Registration Rights Agreement and the Convertible Preferred Registration Rights Agreement.

 

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“Public Offering” means any sale or distribution to the public of Class A Units of the Company by each of the Company, any Investor, their respective designees or another holder of securities of the Company pursuant to an offering validly registered under the Securities Act.

 

“Registrable Securities” shall mean (i) any Class A Units purchased or acquired by the Members prior to the date of the Company’s Initial Public Offering, (ii) any Class A Units issuable upon exercise of the 2013 Warrants and the 2015 Warrants, and (iii) any other securities of the Company (or any successor or assign of the Company, whether by merger, consolidation, sale of assets or otherwise) which may be issued or issuable with respect to, in exchange for, or in substitution of, Registrable Securities referenced in the foregoing clauses (i) through (iii) by reason of any dividend, distribution or subdivision, combination, merger, consolidation, recapitalization, reclassification, reorganization, sale of assets or similar transaction; provided that a Registrable Security shall cease to be a Registrable Security when it is registered under the Securities Act and disposed of in accordance with the Registration Statement covering it.

 

“Required Investors” shall mean Investors holding a majority of the Class A Units issued or issuable upon conversion of all Class A Units purchased by the Investors.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Selling Investors” has the meaning set forth in Section 2(a) above.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“Underwriter” means, with respect to any Underwritten Offering, a securities dealer who purchases any Registrable Securities and Other Registrable Securities as a principal in connection with a distribution of such Registrable Securities and Other Registrable Securities and not as part of such dealer’s market-making activities.

 

“Underwritten Offering” means a Public Offering in which an Underwriter, placement agent or other intermediary participates in the distribution of Registrable Securities.

 

(b)                                 Governing Law.  This Agreement shall be construed and enforced in accordance with and governed by the internal laws of the State of New York, excluding choice-of-law principles of such state that would require the application of the laws of a jurisdiction other than such state.

 

(c)                                  Section Headings.  The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof.

 

12.                               MISCELLANEOUS.

 

(a)                                 Notices.

 

(i)                                     All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier or by registered or certified mail, postage prepaid:

 

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(A)                               if to any of the Investors, to such Investor at the address set forth on such Investors’ signature page, or at such other address as such Investor may have furnished the parties hereto in writing;

 

(B)                               if to any other Investor, to such Investor at the registered address of such Investor as set forth in the applicable register kept at the principal office of the Company; and

 

(C)                               if to the Company, to it at 450 East 29th Street, New York, NY 10016, Attention: Steven N. Gordon, Esq., Executive Vice President and General Counsel or at such other address as the Company may have furnished the parties hereto in writing.

 

(ii)                                  Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; if mailed by courier, on the first Business Day following the date of such mailing; and if mailed by registered or certified mail, on the third Business Day after the date of such mailing.

 

(b)                                 Reproduction of Documents.  This Agreement and all documents relating thereto, including, without limitation, (i) consents, waivers and modifications which may hereafter be executed, (ii) documents received by each Investors pursuant hereto and (iii) financial statements, certificates and other information previously or hereafter furnished to each Investor, may be reproduced by each Investor by a photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and each Investor may destroy any original document so reproduced.  All parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by each Investor in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

 

(c)                                  Successors and Assigns.  The Agreement will inure to the benefit of, and be binding on, the parties hereto and their respective successors and permitted assigns.  The Investors may assign their rights and obligations hereunder to any transferee of their Registrable Securities (including any transferee by way of a distribution by an Investor to its shareholders, partners or members and the transferees of any such transferee) who enters into an agreement to be bound by the terms of this Agreement in the form of the Joinder Agreement attached hereto as Exhibit A.  By delivering an executed Joinder Agreement, such additional persons shall be deemed to be a party thereto and such Joinder Agreement shall be a part of this Agreement.

 

(d)                                 Entire Agreement; Amendment and Waiver.  This Agreement constitutes the entire understanding of the parties hereto relating to the subject matter hereof and supersede all prior understandings among such parties.  The Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company and the Required Investors.  No waiver by any party of any of the provisions of the Agreement will be effective unless explicitly set forth in writing and executed by the party so waiving.  Except as provided in the preceding sentence, no action taken pursuant to the Agreement, including without limitation, any investigation by or on behalf of any party, will be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein.  The

 

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waiver by any party hereto of a breach of any provision of the Agreement will not operate or be construed as a waiver of any subsequent breach.

 

(e)                                  Severability.  In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect.

 

(f)                                   Third Parties.  This Agreement does not create any rights, claims or benefits inuring to any person that is not a party thereto nor create or establish any third party beneficiary thereto, except that all Investors and their respective transferees of Registrable Securities (including any transferee by way of a distribution by an Investor to its shareholders, partners or members and the transferees of any such transferee) shall be third party beneficiaries of all rights and obligations hereof.

 

(g)                                  Specific Performance.  Without limiting or waiving in any respect any rights or remedies of the parties hereto and third-party beneficiaries under the Agreement, each of the parties and each third-party beneficiary will be entitled to seek specific performance of the obligations to be performed by the other in accordance with the provisions of the Agreement.  The Company and the Investors hereby declare that it is impossible to measure in money the damages which will accrue to the parties hereto by reason of the failure of any party to perform any of its obligations under this Agreement.  If any party hereto shall institute any action or proceeding to enforce the provisions hereof, each of the Company and the Investors hereby waives the claim or defense that the party instituting such action or proceeding has an adequate remedy at law.

 

(h)                                 Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement.

 

[The remainder of this page is intentionally blank - signatures on next page.]

 

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IN WITNESS WHEREOF, this Registration Rights Agreement has been executed by the parties as of the date first above written.

 

	
 
    	
KADMON   HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Harlan W. Waksal.   MD
    
	
 
    	
Name:
    	
Harlan W. Waksal. MD
    
	
 
    	
Title:
    	
President & CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KADMON   I, LLC,
    
	
 
    	
on   behalf of itself and the Investors
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steve Gordon
    
	
 
    	
Name:
    	
Steve Gordon
    
	
 
    	
Title:
    	
Managing Member
    

 

 

EXHIBIT A

 

JOINDER AGREEMENT

 

By executing this JOINDER AGREEMENT, the undersigned hereby agrees to become a party to the Registration Rights Agreement dated as of July 7, 2016 by and among Kadmon Holdings, LLC, a Delaware limited liability company (the “Company”), and Kadmon I, LLC, acting for the benefit and on behalf of itself and the other Members of the Company and other parties having third-party beneficiary rights expressly provided thereunder, and that he/she/it will have all the rights and obligations of an Investor provided under such Registration Rights Agreement.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[NAME]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Email:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Facsimile   No.:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}]]