Document:

Exhibit 10.27

 

OSMOTICA PHARMACEUTICALS PLC

2018 EMPLOYEE SHARE PURCHASE PLAN

 

1.                                      Defined Terms

 

Exhibit A, which is incorporated by reference, defines certain terms used in the Plan and sets forth certain operational rules related to those terms.

 

2.                                      Purpose of Plan

 

The Plan is intended to enable Eligible Employees to use payroll deductions to purchase Shares in offerings under the Plan, and thereby acquire an interest in the future of the Company.  During any time in which the Administrator, in its discretion, determines that the Plan is not able to satisfy the requirements under Section 423, the Plan shall not be treated as an “employee stock purchase plan” under Section 423, but the Administrator shall still be able to grant Options hereunder.  If, or as of such time as, the Administrator, in its discretion, determines that the Plan is able to satisfy the requirements under Section 423 and that it will operate the Plan in accordance with such requirements, the Plan is intended to qualify as an “employee stock purchase plan” under Section 423 and will be operated and construed accordingly.  In any event, the Plan is intended to be exempt from the application and requirements of Section 409A of the Code, and is to be construed accordingly.

 

3.                                      Options to Purchase Shares

 

Subject to adjustment pursuant to Section 16 of the Plan, the aggregate number of Shares available for purchase pursuant to the exercise of Options granted under the Plan to Eligible Employees will be [  ] Shares.  The Shares to be delivered upon exercise of Options under the Plan may be either authorized but unissued Shares, treasury Shares, or Shares acquired in an open-market transaction.  If any Option granted under the Plan expires or terminates for any reason without having been exercised in full or ceases for any reason to be exercisable in whole or in part, the unpurchased Shares subject to such Option will again be available for purchase pursuant to the exercise of Options under the Plan.  If, on an Exercise Date, the total number of Shares that would otherwise be subject to Options granted under the Plan exceeds the number of Shares then available under the Plan (after deduction of all Shares for which Options have been exercised or are then outstanding), the Administrator shall make a pro rata allocation of the Shares remaining available for the Option grants in as uniform a manner as shall be practicable and as it shall determine to be equitable.  In such event, the Administrator shall give written notice to each Participant of such reduction of the number of Options affected thereby and shall similarly reduce the rate of payroll deductions, if necessary.

 

4.                                      Eligibility

 

(a)                                 Eligibility Requirements.  Subject to Section 13 of the Plan, and the exceptions and limitations set forth in Sections 4(b) and (c) and 6 of the Plan, or as may be provided elsewhere in the Plan, each Employee (i) who has been continuously employed by the Company

 

 

or a Designated Subsidiary, as applicable, for a period of at least thirty (30) days as of the first day of an Option Period, (ii) whose customary Employment with the Company or a Designated Subsidiary, as applicable, is for more than five (5) months per calendar year, (iii) who customarily works twenty (20) hours or more per week, and (iv) who satisfies the requirements set forth in the Plan will be an Eligible Employee.

 

(b)                                 Five Percent Shareholders.  No Employee may be granted an Option under the Plan if, immediately after the Option is granted, the Employee would own (or pursuant to Section 424(d) of the Code would be deemed to own) shares possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company or of its Parent or Subsidiaries, if any.

 

(c)                                  Additional Requirements.  The Administrator may, for Option Periods that have not yet commenced, establish additional or different eligibility requirements not inconsistent with Section 423.

 

5.                                      Option Periods

 

The Plan will generally be implemented by a series of separate offerings referred to as “Option Periods”.  Unless otherwise determined by the Administrator, the Option Periods will be successive periods of approximately six (6) months commencing on the first Business Day in January and July of each year, anticipated to be on or around January 1 and July 1, and ending approximately six (6) months later on the last Business Day in June or December, as applicable, of each year, anticipated to be on or around June 30 and December 31, as applicable, of each year.  The last Business Day of each Option Period will be an “Exercise Date”.  The Administrator may change the Exercise Date and the commencement date, ending date and duration of the Option Periods to the extent permitted by Section 423, provided, however, that no Option may be exercised after 27 months from its grant date.

 

6.                                      Option Grant

 

Subject to the limitations set forth in Sections 4 and 10 of the Plan and the Maximum Share Limit, on the first day of an Option Period, each Participant automatically will be granted an Option to purchase Shares on the Exercise Date; provided, however, that no Participant will be granted an Option under the Plan that permits the Participant’s right to purchase Shares under the Plan and under all other employee stock purchase plans of the Company and its Parent and Subsidiaries, if any, to accrue at a rate that exceeds $25,000 in Fair Market Value (or such other maximum as may be prescribed from time to time by the Code) for each calendar year during which any Option granted to such Participant is outstanding at any time, as determined in accordance with Section 423(b)(8) of the Code.

 

7.                                      Method of Participation

 

(a)                                 Payroll Deduction and Participation Authorization.  To participate in an Option Period, an Eligible Employee must execute and deliver to the Administrator a payroll deduction and participation authorization form in accordance with the procedures prescribed by and in a form acceptable to the Administrator and, in so doing, the Eligible Employee will thereby become a Participant as of the first day of such Option Period.  Such an Eligible

 

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Employee will remain a Participant with respect to subsequent Option Periods until his or her participation in the Plan is terminated as provided herein.  Such payroll deduction and participation authorization must be delivered not later than ten (10) Business Days immediately prior to the first day of an Option Period, or such other time as specified by the Administrator.

 

(b)                                 Changes to Payroll Deduction Authorization for Subsequent Option Periods.  A Participant’s payroll deduction authorization will remain in effect for subsequent Option Periods unless the Participant files a new authorization not later than ten (10) Business Days immediately prior to the first day of the subsequent Option Period, or such other time as specified by the Administrator, or the Participant’s Option is cancelled pursuant to Section 13 or 14 of the Plan.

 

(c)                                  Changes to Payroll Deduction Authorization for Current Option Period.  During an Option Period, a Participant’s payroll deduction authorization may be reduced once, but may not be increased.  Any reduction to a Participant’s payroll deduction authorization must be delivered to the Administrator in accordance with the procedures prescribed by, and in a form acceptable to, the Administrator and will be effective as soon as administratively practicable.  If a Participant’s payroll deduction authorization is reduced to zero percent (0%) during an Option Period, the Participant will be deemed to have canceled his or her Option and terminated his or her payroll deduction authorization.  Upon such termination and cancellation, the balance in the Participant’s Account will be returned to the Participant, without interest, as soon as administratively practicable thereafter and the Participant’s participation in the Plan will thereupon terminate, unless the Participant has delivered a new payroll deduction authorization for the subsequent Option Period in accordance with the rules of Section 7(b) above.  A Participant may also terminate his or her payroll deduction authorization during an Option Period by canceling his or her Option in accordance with Section 13 of the Plan.

 

(d)                                 Payroll Deduction Percentage.  Each payroll deduction authorization will request payroll deductions as a whole percentage from one (1) to ten percent (10%) of an employee’s Eligible Compensation each payroll period.

 

(e)                                  Payroll Deduction Account.  All payroll deductions made pursuant to this Section 7 will be credited to the Participant’s Account.  Amounts credited to a Participant’s Account will not be required to be set aside in trust or otherwise segregated from the Company’s general assets.

 

8.                                      Method of Payment

 

A Participant must pay for Shares purchased upon the exercise of an Option with accumulated payroll deductions credited to the Participant’s Account.

 

9.                                      Purchase Price

 

The Purchase Price of Shares issued pursuant to the exercise of an Option on each Exercise Date will be eighty-five percent (85%) (or such greater percentage specified by the Administrator to the extent permitted under Section 423) of the lesser of (a) the Fair Market Value of a Share on the date on which the Option was granted pursuant to Section 6 of the Plan

 

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(i.e., the first day of the Option Period) and (b) the Fair Market Value of a Share on the date on which the Option is deemed exercised pursuant to Section 10 of the Plan (i.e., the Exercise Date).

 

10.                               Exercise of Options

 

(a)                                 Purchase of Shares.  Subject to the limitations set forth in Section 6 of the Plan and this Section 10, with respect to each Option Period, on the applicable Exercise Date, each Participant will be deemed to have exercised his or her Option and the accumulated payroll deductions in the Participant’s Account will be applied to purchase the greatest number of Shares (rounded down to the nearest whole share) that can be purchased with such Account balance at the applicable Purchase Price; provided, however, that no more than [  ] Shares may be purchased by a Participant on any Exercise Date, or such lesser number as the Administrator may prescribe in accordance with Section 423 (the “Maximum Share Limit”).  As soon as practicable thereafter, Shares so purchased will be placed, in book-entry form, into a record keeping account in the name of the Participant.  No fractional shares will be purchased pursuant to the exercise of an Option under the Plan; any accumulated payroll deductions in a Participant’s Account that are not sufficient to purchase a whole share will be retained in the Participant’s Account for the subsequent Option Period, subject to earlier withdrawal by the Participant as provided in Section 13 hereof.

 

(b)                                 Return of Account Balance.  Except as provided in Section 10(a) with respect to fractional shares, any amount of payroll deductions in a Participant’s Account that is not used for the purchase of Shares, whether because of the Participant’s withdrawal from participation in an Option Period or for any other reason, will be returned to the Participant (or his or her designated beneficiary or legal representative, as applicable), without interest, as soon as administratively practicable after such withdrawal or other event, as applicable.  If the Participant’s accumulated payroll deductions on the Exercise Date of an Option Period would otherwise enable the Participant to purchase Shares in excess of the Maximum Share Limit or the maximum Fair Market Value set forth in Section 6 of the Plan, the excess of the amount of the accumulated payroll deductions over the aggregate Purchase Price of the Shares actually purchased will be returned to the Participant, without interest, as soon as administratively practicable after such Exercise Date.

 

11.                               Interest

 

No interest will be payable on any amount held in the Account of any Participant.

 

12.                               Taxes

 

Payroll deductions will be made on an after-tax basis.  The Administrator will have the right, as a condition to exercising an Option, to make such provision as it deems necessary to satisfy its obligations to withhold federal, state, local income or other taxes incurred by reason of the purchase or disposition of Shares under the Plan.  In the Administrator’s discretion and subject to applicable law, such tax obligations may be paid in whole or in part by delivery of Shares to the Company, including Shares purchased under the Plan, valued at Fair Market Value, but not in excess of the maximum withholding amount consistent with the Option being subject to equity accounting treatment under the Accounting Rules.

 

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13.                               Cancellation and Withdrawal

 

(a)                                 Cancellation of Payroll Deduction Authorization.  A Participant who holds an Option under the Plan may cancel all (but not less than all) of his or her Option and terminate his or her payroll deduction authorization by notice delivered to the Administrator in accordance with the procedures prescribed by, and in a form acceptable to, the Administrator.  To be effective with respect to an upcoming Exercise Date, such cancellation notice must be delivered not later than ten (10) Business Days prior to such Exercise Date (or such other time as specified by the Administrator).  Upon such termination and cancellation, the balance in the Participant’s Account will be returned to the Participant, without interest, as soon as administratively practicable thereafter.

 

(b)                                 401(k) Hardship Withdrawal.  A Participant who makes a hardship withdrawal from a 401(k) Plan will be deemed to have terminated his or her payroll deduction authorization for subsequent payroll dates relating to the then current Option Period as of the date of such hardship withdrawal and amounts accumulated in the Participant’s Account as of such date will be returned to the Participant, without interest, as soon as administratively practicable thereafter.  An Employee who has made a hardship withdrawal from a 401(k) Plan will not be permitted to participate in Option Periods commencing after the date of his or her hardship withdrawal until the first Option Period that begins at least six months after the date of his or her hardship withdrawal.

 

14.                               Termination of Employment or Death of Participant

 

Upon the termination of a Participant’s employment with the Company or a Designated Subsidiary, as applicable, for any reason or the death of a Participant during an Option Period prior to an Exercise Date or in the event the Participant ceases to qualify as an Eligible Employee, the Participant will cease to be a Participant, any Option held by him or her under the Plan will be deemed canceled, the balance in the Participant’s Account will be returned to the Participant (or his or her estate or designated beneficiary in the event of the Participant’s death), without interest, as soon as administratively practicable thereafter, and the Participant will have no further rights under the Plan.

 

15.                               Equal Rights; Participant’s Rights Not Transferable

 

All Participants granted Options in an offering under the Plan will have the same rights and privileges, consistent with the requirements set forth in Section 423.  Any Option granted under the Plan will be exercisable during the Participant’s lifetime only by him or her and may not be sold, pledged, assigned, or transferred in any manner.  In the event any Participant violates or attempts to violate the terms of this Section 15, as determined by the Administrator in its sole discretion, any Options held by him or her may be terminated by the Company and, upon the return to the Participant of the balance of his or her Account, without interest, all of the Participant’s rights under the Plan will terminate.

 

16.                               Change in Capitalization; Corporate Transaction

 

(a)                                 Change in Capitalization.  In the event of any change in the outstanding Shares by reason of a share dividend, share split, reverse share split, split-up, recapitalization, merger,

 

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consolidation, reorganization, or other capital change, the aggregate number and type of Shares available under the Plan, the number and type of Shares granted under any outstanding Options, the maximum number and type of Shares purchasable under any outstanding Option, and the purchase price per Share under any outstanding Option will be appropriately adjusted; provided, that any such adjustment shall be made in a manner that complies with Section 423.

 

(b)                                 Corporate Transaction.  In the event of a Corporate Transaction, the Administrator may, in its discretion, (i) if the Company is merged with or acquired by another corporation, provide that each outstanding Option will be assumed or exchanged for a substitute Option granted by the acquiror or successor corporation or by a parent or subsidiary of the acquiror or successor corporation, (ii) cancel each outstanding Option and return the balances in Participants’ Accounts to the Participants, and/or (iii) pursuant to Section 18 of the Plan, terminate the Option Period on or before the date of the proposed sale, merger or similar transaction.

 

17.                               Administration of Plan

 

The Plan will be administered by the Administrator, which will have the authority to interpret the Plan, determine eligibility under the Plan, prescribe forms, rules and procedures relating to the Plan and otherwise do all things necessary or appropriate to carry out the purposes of the Plan.  All determinations and decisions by the Administrator regarding the interpretation or application of the Plan will be final and binding on all Participants and all persons.

 

The Administrator may specify the manner in which the Company and/or Employees are to provide notices and forms under the Plan, and may require that such notices and forms be submitted electronically.

 

18.                               Amendment and Termination of Plan; Separate Offerings; Sub-Plans

 

(a)                                 Amendment.  The Board reserves the right at any time or times to amend the Plan to any extent and in any manner it may deem advisable; provided, however, that any amendment that would be treated as the adoption of a new plan for purposes of Section 423 will have no force or effect unless approved by the shareholders of the Company within 12 months before or after its adoption.

 

(b)                                 Termination.  The Board reserves the right at any time or times to suspend or terminate the Plan.  In connection therewith, the Board may provide, in its sole discretion, either that outstanding Options will be exercisable either at the Exercise Date for the applicable Option Period or on such earlier date as the Board may specify (in which case such earlier date will be treated as the Exercise Date for the applicable Option Period), or that the balance of each Participant’s Account will be returned to the Participant, without interest.

 

(c)                                  Separate Offerings; Sub-Plans.  Notwithstanding the foregoing or any provision of the Plan to the contrary, consistent with the requirements of Section 423, the Administrator may, in its sole discretion, amend the terms of the Plan, or an offering, and/or provide for separate offerings under the Plan in order to, among other things, reflect the impact of local law outside of the United States as applied to one or more Eligible Employees of a Designated

 

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Subsidiary and may, where appropriate, establish one or more sub-plans to reflect such amended provisions.

 

19.                               Approvals

 

Shareholder approval of the Plan will be obtained prior to the date that is 12 months after the date of Board approval.  In the event that the Plan has not been approved by the shareholders of the Company prior to August 9, 2019, all Options to purchase Shares under the Plan will be cancelled and become null and void.

 

Notwithstanding anything herein to the contrary, the obligation of the Company to issue and deliver Shares under the Plan will be subject to the approval required of any governmental authority in connection with the authorization, issuance, sale or transfer of such Shares and to any requirements of any national securities exchange applicable thereto, and to compliance by the Company with other applicable legal requirements in effect from time to time.

 

20.                               Participants’ Rights as Shareholders and Employees

 

A Participant will have no rights or privileges as a shareholder of the Company and will not receive any dividends in respect of any Shares covered by an Option granted hereunder until such Option has been exercised, full payment has been made for such Shares, and the Shares have been issued to the Participant.

 

Nothing contained in the provisions of the Plan will be construed as giving to any Employee the right to be retained in the employ of the Company or any Designated Subsidiary or as interfering with the right of the Company or any Designated Subsidiary to discharge, promote, demote or otherwise re-assign any Employee from one position to another within the Company or any Designated Subsidiary at any time.

 

21.                               Restrictions on Transfer; Information Regarding Disqualifying Dispositions.

 

Shares purchased under the Plan by a Participant may be subject to such restrictions on transfer, sale, pledge or alienation of such Shares as determined by the Administrator from time to time.

 

By electing to participate in the Plan, each Participant agrees to provide such information about any transfer of Shares acquired under the Plan that occurs within two years after the first day of the Option Period in which such Shares were acquired and within one year after the acquisition of such Shares as may be requested by the Company or any Designated Subsidiary in order to assist it in complying with applicable tax laws.

 

22.                               Governing Law

 

The Plan will be governed by and administered in accordance with the Irish Companies Act 2014 (as may be amended, replaced and/or consolidated in the future), and with the applicable requirements of the stock exchanges or other trading systems on which the Shares are listed or entered for trading and the Code, in each case as determined by the Administrator.  Except as otherwise provided under a sub-plan described in Section 18(c) or as provided in the

 

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first sentence of this Section 22, the domestic substantive laws of Delaware govern the provisions of the Plan and of Options under the Plan and all claims or disputes arising out of or based upon the Plan or any Options under the Plan or relating to the subject matter hereof or thereof without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.

 

23.                               Effective Date and Term

 

The Plan will become effective upon adoption of the Plan by the Board and no rights will be granted hereunder after the earliest to occur of (a) the Plan’s termination by the Company, (b) the issuance of all Shares available for issuance under the Plan or (c) the day before the 10-year anniversary of the date the Board approves the Plan.

 

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EXHIBIT A

Definition of Terms

 

The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:

 

“401(k) Plan”:  A savings plan qualifying under Section 401(k) of the Code that is sponsored by the Company or one of its Subsidiaries for the benefit of its employees.

 

“Account”:  A payroll deduction account maintained in the Participant’s name on the books of the Company.

 

“Accounting Rules”:  Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor provision.

 

“Administrator”:  The Compensation Committee, except that the Compensation Committee may delegate (i) to one or more of its members (or one or more other members of the Board, including the full Board) such of its duties, powers and responsibilities as it may determine and (ii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate.  In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation.

 

“Affiliate” Any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as a single employer under Sections 414(b) or 414(c) of the Code, except that such sections shall be applied by substituting “at least 50%” for “at least 80%” wherever applicable.  The Company may at any time by amendment provide that different ownership thresholds apply.

 

“Board”:  The Board of Directors of the Company.

 

“Business Day”:  Any day on which the national stock exchange on which the Shares are traded is available and open for trading.

 

“Code”:  The U.S. Internal Revenue Code of 1986, as from time to time amended and in effect, or any successor statute as from time to time in effect.

 

“Company”:  Osmotica Pharmaceuticals plc, a public limited company registered under the Irish Companies Act 2014.

 

“Corporate Transaction”:  A (i) a consolidation, merger or similar transaction or series of related transactions, including a sale or other disposition of Shares, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then-outstanding Shares by a single person or entity or by a group of persons and/or entities acting in concert, including by way of a court ordered scheme of arrangement; (ii) a sale or transfer of all or substantially all of the Company’s assets; (iii) a dissolution or liquidation of the Company; or (iv) a “change in control event” as that term is defined in the regulations under

 

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Section 409A of the Code.  For the avoidance of doubt, an initial public offering shall not constitute a Change in Control.  Where a Corporate Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) as determined by the Administrator, the Corporate Transaction shall be deemed to have occurred upon consummation of the tender offer.

 

“Designated Subsidiary”:  A Subsidiary of the Company that has been designated by the Board or the Compensation Committee of the Board from time to time as eligible to participate in the Plan as set forth on Exhibit B to the Plan.  For the avoidance of doubt, any Subsidiary of the Company shall be eligible to be designated as a Designated Subsidiary hereunder.

 

“Effective Date”:  The date set forth in Section 23 of the Plan.

 

“Eligible Employee”:  Any Employee who meets the eligibility requirements set forth in Section 4 of the Plan.

 

“Employee”:  Any person who is employed by the Company or a Designated Subsidiary.  For the avoidance of doubt, independent contractors and consultants are not “Employees”.

 

“Eligible Compensation”:  Regular base salary, regular wages and overtime payments.  Eligible Compensation will not be reduced by any income or employment tax withholdings or any contributions by the Employee to a 401(k) Plan or a plan under Section 125 of the Code, but will be reduced by any contributions made on the Employee’s behalf by the Company or any Subsidiary to any deferred compensation plan or welfare benefit program now or hereafter established.

 

“Exercise Date”:  The date set forth in Section 5 of the Plan or otherwise designated by the Administrator with respect to a particular Option Period on which a Participant will be deemed to have exercised the Option granted to him or her for such Option Period.

 

“Fair Market Value”:  As of a particular date, (i) the closing price for a Share reported on the Nasdaq Global Market (or any other national securities exchange on which the Shares are then listed) for that date or, if no closing price is reported for that date, the closing price on the immediately preceding date on which a closing price was reported or (ii) in the event that the Shares are not traded on a national securities exchange, the fair market value of a Share determined by the Administrator consistent with the rules of Section 422 and Section 409A of the Code to the extent applicable.

 

“Maximum Share Limit”:  The meaning set forth in Section 10 of the Plan.

 

“Option”:  An option granted pursuant to the Plan entitling the holder to acquire Shares upon payment of the Purchase Price per Share.

 

“Option Period”:  An offering period established in accordance with Section 5 of the Plan.

 

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“Parent”:  A “parent corporation” as defined in Section 424(e) of the Code.

 

“Participant”:  An Eligible Employee who elects to enroll in the Plan.

 

“Plan”:  The Osmotica Pharmaceuticals plc 2018 Employee Share Purchase Plan, as from time to time amended and in effect.

 

“Purchase Price”:  The price per Share with respect to an Option Period determined in accordance with Section 9 of the Plan.

 

“Section 423”:  Section 423 of the Code and the regulations thereunder.

 

“Share”:  An ordinary share of the Company, nominal value $0.01 per share.

 

“Subsidiary”:  On and after the date the Plan is operated as a plan intended to qualify as an “employee stock purchase plan” under Section 423, a “Subsidiary” shall be limited to a “subsidiary corporation” as defined in Section 424(f) of the Code.  Prior to such date, a “Subsidiary” may also include a subsidiary of the Company that would be described in the first sentence of Section 1.409A-1(b)(5)(iii)(E) of the Treasury Regulations.

 

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EXHIBIT B

Designated Subsidiaries

 

Designated Subsidiaries as of the date of adoption of the Plan by the Board are listed below:

 

Osmotica Pharmaceutical Corp.

 

12Exhibit 10.28

 

OSMOTICA HOLDINGS S.C.SP.

 

2016 EQUITY INCENTIVE PLAN
 OPTION GRANT AWARD AGREEMENT

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
SECTION 1.
    	
GRANT OF OPTION AWARD
    	
1
    
	
 
    	
 
    	
 
    
	
(a)
    	
Grant
    	
1
    
	
(b)
    	
Plan
    	
2
    
	
(c)
    	
No Rights as Limited Partner
    	
2
    
	
(d)
    	
Confidentiality, IP   Assignment and Non-Solicit Agreement
    	
2
    
	
(e)
    	
Exercise Price
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
VESTING
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
EXERCISE PROCEDURES
    	
2
    
	
 
    	
 
    	
 
    
	
(a)
    	
Notice of Exercise
    	
2
    
	
(b)
    	
Withholding
    	
2
    
	
(c)
    	
Joinder Agreement;   83(b) Election
    	
3
    
	
(d)
    	
Issuance of Units; Limited   Partnership Agreement; Restrictions on Units
    	
3
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
SECURITIES LAW ISSUES, TRANSFER   RESTRICTIONS
    	
4
    
	
 
    	
 
    	
 
    
	
(a)
    	
Grantee Acknowledgements and   Representations
    	
4
    
	
(b)
    	
No Registration Rights
    	
4
    
	
(c)
    	
Transfers
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
TERM OF GRANT; EXPIRATION OF   VESTED PORTION AND UNVESTED PORTION
    	
4
    
	
 
    	
 
    	
 
    
	
(a)
    	
Term of Grant
    	
4
    
	
(b)
    	
Expiration of Vested Portion   Following Termination
    	
4
    
	
(c)
    	
Expiration of Unvested Portion Following   Termination
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
CALL RIGHT UPON TERMINATION OF   SERVICE
    	
5
    

 

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SECTION 7.
    	
ADJUSTMENT OF UNITS
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
MISCELLANEOUS PROVISIONS
    	
5
    
	
 
    	
 
    	
 
    
	
(a)
    	
No Retention Rights
    	
5
    
	
(b)
    	
Notices
    	
5
    
	
(c)
    	
Entire Agreement
    	
6
    
	
(d)
    	
Amendment; Waiver
    	
6
    
	
(e)
    	
Assignment
    	
6
    
	
(f)
    	
Successors and Assigns; No   Third-Party Beneficiaries
    	
6
    
	
(g)
    	
Governing Law; Venue
    	
7
    
	
(h)
    	
Waiver of Jury Trial
    	
7
    
	
(i)
    	
Interpretation
    	
7
    
	
(j)
    	
Severability
    	
7
    
	
(k)
    	
Counterparts
    	
7
    
	
(l)
    	
Grantee Undertaking
    	
7
    
	
(m)
    	
Option Subject to Plan
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 9.
    	
DEFINITIONS
    	
8
    

 

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OSMOTICA HOLDINGS S.C.SP.
 2016 EQUITY INCENTIVE PLAN
  OPTION GRANT AWARD AGREEMENT

 

GRANT TO:

 

THIS AGREEMENT (this “Agreement”) is made as of            (the “Grant Date”), between Osmotica Holdings S.C.Sp., a Luxembourg special limited partnership (the “Partnership”), and            (the “Grantee”). Capitalized terms, unless defined in Section 9 or a prior section of this Agreement, shall have the same meanings as in the Osmotica Holdings S.C.Sp. 2016 Equity Incentive Plan (the “Plan”).

 

WHEREAS, in connection with the Grantee’s Service, the Partnership desires to grant to the Grantee options to purchase a certain number of common units of the Partnership (“Units”) pursuant to the terms and conditions of this Agreement and the Plan;

 

WHEREAS, the Board has determined that it would be to the advantage, and in the best interest, of the Partnership and its limited partners to grant the options provided for herein to the Grantee pursuant to the terms and conditions of the Plan and this Agreement;

 

WHEREAS, the offer and sale of securities under this Agreement is intended to qualify for an exemption from the registration requirements (i) under the Securities Act of 1933 (the “Securities Act”) pursuant to Rule 506 promulgated under the Securities Act in the event the Grantee is an accredited investor and, in all other cases, pursuant to Rule 701 promulgated under the Securities Act, and (ii) under applicable state securities laws;

 

WHEREAS, this Agreement is a “compensatory benefit plan” within the meaning of Rule 701 promulgated under the Securities Act;

 

WHEREAS, this Agreement is an “employee compensation plan” within the meaning of Section 12(g)(5) of the Securities Exchange Act of 1934, as amended; and

 

WHEREAS, the Partnership has elected to be taxed as an association taxable as a corporation for U.S. income tax purposes.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.                         GRANT OF OPTION AWARD

 

(a)           Grant.  Subject to the terms and conditions of the Plan and this Agreement, the Partnership hereby grants to the Grantee the right and option to purchase all or any part of an aggregate of            Units (the “Option”), subject to adjustment as set forth in the Plan.            Units subject to the Option shall vest:           , in each case, in accordance with Section 2 and Section 5.

 

 

(b)                                 Plan.  The Option is subject to the terms and conditions of the Plan (as it may be amended from time to time) which are hereby incorporated herein by reference and made a part of this Agreement.

 

(c)                                  No Rights as Limited Partner.  It shall be understood that none of the terms contained herein grant to the Grantee any rights as a limited partner of the Partnership, and the Grantee shall not have any such rights unless and until the Grantee receives Incentive Units in connection with the exercise of the Option in accordance with the terms hereunder.

 

(d)                                 Confidentiality, IP Assignment and Non-Solicit Agreement.  Unless such Grantee is already a party to a Restrictive Agreement with the Partnership or any of its subsidiaries, it is a condition to the effectiveness of the Option and the obligation of the Partnership to issue any Units hereunder that the Grantee shall have executed, on or prior to the date hereof, a confidentiality, intellectual property assignment, and non-solicitation agreement in form and substance satisfactory to the Partnership.

 

(e)                                  Exercise Price.  The Exercise Price of the Units subject to the Option shall be            per Unit (the “Exercise Price”).

 

SECTION 2.                         VESTING

 

The portion of the Option that has become vested pursuant to the terms set forth herein is hereinafter referred to as the “Vested Portion” and the portion of the Option that has not yet become vested pursuant to the terms set forth herein is hereinafter referred to as the “Unvested Portion”. Subject to the terms set forth in the Plan and this Award Agreement, the Option shall vest as follows:           .

 

SECTION 3.                         EXERCISE PROCEDURES

 

(a)                                 Notice of Exercise. Subject to Section 5 hereof, the Vested Portion may be exercised by delivering to the Partnership at its principal office written notice of intent to so exercise in the form attached hereto as Exhibit A (such notice, a “Notice of Exercise”). Such Notice of Exercise shall be accompanied by payment in full of the aggregate Exercise Price in cash for the Units to be exercised (plus payment of the applicable tax withholding) and, if applicable, an executed Joinder Agreement as required by Section 3(c). In the event that the Option is being exercised by the Grantee’s representative, the Notice of Exercise shall be accompanied by proof (satisfactory to the Committee) of the representative’s right to exercise the Option. The aggregate Exercise Price for the Units to be exercised shall be paid in cash or another form of payment to the extent, but only to the extent, permitted by the Board, in its sole discretion, in accordance with the Plan. In the event of the Grantee’s death, the Vested Portion shall be exercisable by the executor or administrator of the Grantee’s estate, or the Person or Persons to whom the Grantee’s rights under this Agreement shall pass by will or by the laws of descent and distribution, as the case may be. Any heir or legatee of the Grantee shall take rights herein granted subject to the terms and conditions of this Agreement and the Plan.

 

(b)                                 Withholding. The Partnership shall have the power and the right to deduct or withhold automatically from any amount deliverable under this Agreement, or otherwise, or to require the Grantee to remit to the Partnership, the minimum statutory amount to satisfy federal,

 

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state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Agreement. The Grantee may elect, subject to the approval of the Board, in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Partnership withhold Units having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed in connection with any such taxable event.

 

(c)                                  Joinder Agreement; 83(b) Election. At the time of the Notice of Exercise, if the Grantee is not then party to the Limited Partnership Agreement, the Grantee shall be required to execute a Joinder Agreement and become a party to the to the Limited Partnership Agreement prior to or concurrent with such exercise, in the form attached hereto as Exhibit C. If the Grantee fails to execute the Joinder Agreement at or prior to the time of the Notice of Exercise, such exercise shall be ineffective and, without further notice, be deemed null and void. Grantee understands that under Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), the excess of the Fair Market Value of the Incentive Units on the date of any forfeiture restrictions applicable to such Incentive Units lapse over the Exercise Price for such Incentive Units will be reportable as ordinary income on such lapse date. For this purpose, the term “forfeiture restrictions” includes the right of the Partnership to repurchase the Incentive Units pursuant to the repurchase rights set forth in the Limited Partnership Agreement. Grantee understands that Grantee may elect under Section 83(b) of the Code to be taxed at the time the Incentive Units are acquired, rather than when and as such Incentive Units cease to be subject to such forfeiture restrictions. Such election, in the form attached hereto as Exhibit D, must be filed with the Internal Revenue Service within thirty (30) days after the Exercise Date. Even if the Fair Market Value of the Incentive Units on the Exercise Date equals the Exercise Price (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. Grantee understands that failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by Grantee as and each time the forfeiture restrictions lapse. GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY, AND NOT THE PARTNERSHIP’S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE PARTNERSHIP OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF. This filing should be made by registered or certified mail, return receipt requested, and Grantee must retain two (2) copies of the completed form for filing with Grantee’s State and Federal tax returns for the current tax year, and one (1) additional copy for Grantee’s personal records.

 

(d)                                 Issuance of Units; Limited Partnership Agreement; Restrictions on Units. After receiving a properly completed and executed Notice of Exercise and payment for the full amount of the Exercise Price as required by Section 3(a) and, if applicable, an executed Joinder Agreement as required by Section 3(c), the Partnership shall cause the Grantee (or such person and his or her spouse as community property or as joint tenants with right of survivorship), as a holder of the relevant Incentive Units, to be listed as a limited partner of the Partnership on Schedule I to the Limited Partnership Agreement and in the register of partners of the Partnership, provided that as a condition to the issuance of Incentive Units hereunder, the Grantee shall make, as of the time of issuance of such Incentive Units, representations and warranties in a form satisfactory to the Partnership and substantially similar to those contained in Exhibit B. Incentive Units received upon the exercise of the Option shall be subject to all of the terms and conditions

 

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of the Limited Partnership Agreement, including all transfer restrictions and repurchase rights set forth therein.

 

SECTION 4.                         SECURITIES LAW ISSUES, TRANSFER RESTRICTIONS

 

(a)                                 Grantee Acknowledgements and Representations. The Grantee understands and agrees that: (x) neither the Option nor the Incentive Units have been registered under the Securities Act, (y) the Option and the Incentive Units are restricted securities under the Securities Act and (z) neither the Option nor the Incentive Units may be resold or transferred unless they are first registered under the Securities Act or unless an exemption from such registration is available. The Grantee hereby makes the representations and warranties set forth in Exhibit B hereto.

 

(b)                                 No Registration Rights. The Partnership may, but shall not be obligated to, register or qualify the issuance of Incentive Units to the Grantee, or the resale of any such Incentive Units by the Grantee under the Securities Act or any other applicable law.

 

(c)                                  Transfers. Unless otherwise determined by the Board, in its sole discretion, the Grantee shall not be permitted to Transfer or assign the Option except in the event of death and in accordance with the Plan. The Grantee understands that the Limited Partnership Agreement contains significant restrictions on the Transfer of the Incentive Units. The Grantee acknowledges that the transfer restrictions contained in this Agreement are reasonable and in the best interests of the Partnership.

 

SECTION 5.                         TERM OF GRANT; EXPIRATION OF VESTED PORTION AND UNVESTED PORTION

 

(a)                                 Term of Grant. The Option granted pursuant to this Agreement shall expire, terminate and be cancelled 10 years from the Grant Date, unless such Option has expired, terminated and been cancelled earlier as set forth herein.

 

(b)                                 Expiration of Vested Portion Following Termination. Upon the Grantee’s Service ceasing (a “Terminated Grantee” and, the date of such termination, the “Termination Date”) for any reason, the following shall apply:

 

(i)                                     if the Terminated Grantee resigns or otherwise terminates his or her Service, the Terminated Grantee or his or her Permitted Transferees shall have 45 days from the Termination Date to exercise the Vested Portion (otherwise such Vested Portion, as of the end of such 45-day period, shall be cancelled, terminated and forfeited in all respects);

 

(ii)                                  if the Terminated Grantee’s Service is terminated without Cause by the applicable Subsidiary of the Partnership, the Terminated Grantee or his or her Permitted Transferees shall have 60 days from the Termination Date to exercise the Vested Portion (otherwise such Vested Portion, as of the end of such 60-day period, shall be cancelled, terminated and forfeited in all respects);

 

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(iii)                               if the Terminated Grantee’s Service is terminated for Cause by the applicable Subsidiary of the Partnership, the Vested Portion or the Option as of the Termination Date shall be cancelled, terminated and forfeited in all respects as of the Termination Date; and

 

(iv)                              if the termination of the Terminated Grantee’s Service is due to the Terminated Grantee’s death or Disability, the Terminated Grantee or his or her legal representative or Permitted Transferees shall have one year from the Termination Date to exercise the Vested Portion (otherwise such Vested Portion, as of the end of such one-year period, shall be cancelled, terminated and forfeited in all respects).

 

(c)                                  Expiration of Unvested Portion Following Termination. Any Unvested Portion as of the Termination Date shall expire and terminate in all respects as of such date, and shall be forfeited by the Grantee or his or her Permitted Transferees without any consideration due in respect thereof.

 

SECTION 6.                         CALL RIGHT UPON TERMINATION OF SERVICE

 

Upon the termination of the Grantee’s Service, the Partnership shall have the right to exercise the Call Rights following such termination for any reason, in each case, pursuant to the terms and conditions set forth in the Limited Partnership Agreement.

 

SECTION 7.                         ADJUSTMENT OF UNITS

 

In the event of a Recapitalization or another event set forth in Section 13 of the Plan, the terms of the Option (including, without limitation, the number and kind of Units subject to this Agreement) shall be adjusted as set forth in the Plan; it being understood, that the foregoing is not in limitation of the terms set forth in Sections 2(b) and 2(c) above.

 

SECTION 8.                         MISCELLANEOUS PROVISIONS

 

(a)                                 No Retention Rights. Nothing in this Agreement or in the Plan shall confer upon the Grantee any right to continue in Service or interfere with or otherwise restrict in any way the rights of the Partnership or any Subsidiary, which rights are hereby expressly reserved by the Partnership and each of its Subsidiaries, to terminate the Grantee’s Service at any time and for any reason, with or without Cause.

 

(b)                                 Notices. All notices, requests and other communications under this Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows:

 

if to the Partnership, to:

 

Osmotica Holdings S.C.Sp.
 c/o Vertical/Trigen Holdings, LLC
 2500 Main Street, Suite 6
 Sayreville, NJ 08872

 

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Facsimile: (732) 721-3430
 Attention: General Counsel

 

if to the Grantee, to the address that he or she most recently provided to the Partnership,

 

or, in each case, at such other address or fax number as such party may hereafter specify for the purpose of notices hereunder by written notice to the other party hereto. All notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. Any notice, request or other written communication sent by facsimile transmission shall be confirmed by certified or registered mail, return receipt requested, posted within one Business Day, or by personal delivery, whether by courier or otherwise, made within two Business Days after the date of such facsimile transmissions; provided, that such confirmation mailing or delivery shall not affect the date of receipt, which will be the date that the facsimile successfully transmitted the notice, request or other communication.

 

(c)                                  Entire Agreement. This Agreement, the Plan, the Limited Partnership Agreement, the Grantee’s employment agreement, if any, and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein or therein, constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.

 

(d)                                 Amendment; Waiver. This Agreement or any portion thereof may be amended at any time in accordance with Section 16 of the Plan. The failure of the Partnership in any instance to exercise the Call Rights shall not constitute a waiver of any other rights that may subsequently arise under the provisions of this Agreement or any other agreement between the Partnership and the Grantee. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature. Any amendment or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.

 

(e)                                  Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Grantee except pursuant to a Transfer in accordance with the provisions of this Agreement.

 

(f)                                   Successors and Assigns; No Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Partnership and the Grantee and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Partnership and the Grantee, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

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(g)                                  Governing Law; Venue. This Agreement and all issues concerning the relative rights of the Partnership and any Grantee with respect to each other shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. All claims or causes of action (whether in contract or tort) that may be based upon, arise out of, or relate to this Agreement shall be heard and determined in the Chancery Court of the State of Delaware and any state appellate court therefrom within the State of Delaware and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably and unconditionally waive the defense of an inconvenient forum, or lack of jurisdiction to the maintenance of any such action or proceeding.

 

(h)                                 Waiver of Jury Trial. The Grantee hereby irrevocably waives all right of trial by jury in any legal action or proceeding (including counterclaims) relating to or arising out of or in connection with this Agreement or any of the transactions or relationships hereby contemplated or otherwise in connection with the enforcement of any rights or obligations hereunder.

 

(i)                                     Interpretation. Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation apply:

 

Headings. The division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenience of reference only and do not alter the meaning of, or affect the construction or interpretation of, this Agreement.

 

Section References. Unless otherwise specified, all references in this Agreement to any “Section” are to the corresponding Section of this Agreement.

 

Schedules/Exhibits. Any capitalized terms used in any Schedule or Exhibit to this Agreement but are not otherwise defined therein have the meanings set forth in this Agreement.

 

(j)                                    Severability. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

(k)                                 Counterparts. The parties may execute this Agreement in one or more counterparts, each of which constitutes an original and all of which collectively constitute one and the same instrument. The signatures of all the parties need not appear on the same counterpart.

 

(l)                                     Grantee Undertaking. The Grantee agrees to take whatever additional action and execute whatever additional documents the Partnership may deem necessary or

 

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advisable to carry out or effect one or more of the obligations or restrictions imposed on either the Grantee or upon the Option or any Incentive Units pursuant to the provisions of this Agreement.

 

(m)                             Option Subject to Plan. By entering into this Agreement, the Grantee acknowledges and agrees that the Grantee has received and read a copy of the Plan and the Limited Partnership Agreement. The Option is subject to the terms and conditions of the Plan. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

SECTION 9.                         DEFINITIONS

 

(a)                                 Reserved.

 

(b)                                 “Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close.

 

(c)                                  “Call Rights” has the meaning ascribed to such term in the Limited Partnership Agreement.

 

(d)                                 Reserved,

 

(e)                                  Reserved.

 

(f)                                   “Incentive Units” means any Units issued pursuant to the exercise of the Option in accordance with the terms of this Agreement.

 

(g)                                  Reserved.

 

(h)                                 “Joinder Agreement” means an agreement substantially in the form of Exhibit C attached hereto, pursuant to which the Grantee shall become a party to the Limited Partnership Agreement and subject to all of the rights, restrictions and obligations contained therein.

 

(i)                                     Reserved.

 

(j)                                    “Permitted Transferee” means (i) any executor, administrator or testamentary trustee of the Grantee’s estate if the Grantee dies, (ii) any transferee receiving Units owned by the Grantee by will, intestacy laws or the laws of descent or survivorship, and (iii) any trustee of a trust (including an inter vivos trust) of which there are no principal beneficiaries other than the Grantee or one or more lineal descendents, siblings or parents of the Grantee or one or more lineal descendents of any siblings of the Grantee.

 

(k)                                 Reserved.

 

(l)                                     “Transfer” means, with respect to any securities (including the Units and the Option), (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such securities or any participation or interest therein, whether directly or indirectly, or agree or commit to do any of the foregoing and (ii) when used as a noun,

 

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a direct or indirect sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of such securities or any participation or interest therein or any agreement or commitment to do any of the foregoing.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

	
 
    	
OSMOTICA HOLDINGS S.C.SP.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NAME

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