Document:

Exhibit 10.29

 

AMENDED AND RESTATED OSMOTICA PHARMACEUTICALS PLC

2016 EQUITY INCENTIVE PLAN

 

AMENDED AND RESTATED EFFECTIVE AS OF AUGUST 9, 2018

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page No.
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 1. PURPOSE
    	
1
    
	
 
    	
 
    
	
SECTION 2. ADMINISTRATION
    	
1
    
	
 
    	
 
    
	
SECTION 3. ELIGIBILITY
    	
1
    
	
 
    	
 
    
	
SECTION 4. SHARES SUBJECT TO   PLAN
    	
2
    
	
 
    	
 
    
	
 
    	
a.
    	
Basic Limitation
    	
2
    
	
 
    	
b.
    	
Additional Shares
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 5. AWARDS
    	
2
    
	
 
    	
 
    
	
 
    	
a.
    	
Types of Awards
    	
2
    
	
 
    	
b.
    	
Award Agreements
    	
2
    
	
 
    	
c.
    	
No Rights as a Shareholder
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 6. OPTIONS
    	
3
    
	
 
    	
 
    
	
 
    	
a.
    	
Grant of Options
    	
3
    
	
 
    	
b.
    	
Option Award Agreements
    	
3
    
	
 
    	
c.
    	
Method of Exercise
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 7. STOCK   APPRECIATION RIGHTS
    	
3
    
	
 
    	
 
    
	
 
    	
a.
    	
Generally
    	
3
    
	
 
    	
b.
    	
Stock Appreciation Rights Award Agreements
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 8. RESTRICTED STOCK
    	
4
    
	
 
    	
 
    
	
 
    	
a.
    	
Generally
    	
4
    
	
 
    	
b.
    	
Restricted Stock Award Agreement
    	
4
    
	
 
    	
c.
    	
Voting Rights
    	
4
    
	
 
    	
d.
    	
Section 83(b) Election
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 9. PHANTOM SHARES
    	
5
    
	
 
    	
 
    
	
 
    	
a.
    	
Generally
    	
5
    
	
 
    	
b.
    	
Settlement of Phantom Shares
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 10. OTHER   SHARE-BASED AWARDS
    	
5
    
	
 
    	
 
    
	
SECTION 11. PAYMENT FOR   SHARES
    	
5
    
	
 
    	
 
    
	
 
    	
a.
    	
General Rule
    	
5
    
						

 

i

 

	
 
    	
b.
    	
Surrender of Shares
    	
5
    
	
 
    	
c.
    	
Discretion of Board
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 12. TERMINATION OF   SERVICE
    	
6
    
	
 
    	
 
    
	
 
    	
a.
    	
Termination for Cause
    	
6
    
	
 
    	
b.
    	
Termination Due to Death or Disability
    	
6
    
	
 
    	
c.
    	
Termination Without Cause
    	
6
    
	
 
    	
d.
    	
Termination for any Other Reason
    	
6
    
	
 
    	
e.
    	
Leave of Absence
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 13. ADJUSTMENT OF   SHARES
    	
7
    
	
 
    	
 
    
	
 
    	
a.
    	
General
    	
7
    
	
 
    	
b.
    	
Mergers and Consolidations
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 14. SECURITIES LAW   REQUIREMENTS
    	
8
    
	
 
    	
 
    
	
SECTION 15. GENERAL TERMS
    	
8
    
	
 
    	
 
    
	
 
    	
a.
    	
Nontransferability of Awards
    	
8
    
	
 
    	
b.
    	
Restrictions on Transfer of Shares
    	
8
    
	
 
    	
c.
    	
Settlement of Awards
    	
8
    
	
 
    	
d.
    	
Compliance with Section 409A of the Code
    	
8
    
	
 
    	
e.
    	
Withholding Requirements
    	
9
    
	
 
    	
f.
    	
No Guarantees Regarding Tax Treatment
    	
9
    
	
 
    	
g.
    	
No Retention Rights or Right to Awards
    	
10
    
	
 
    	
h.
    	
Severability
    	
10
    
	
 
    	
i.
    	
No Constraint on Corporate Action
    	
10
    
	
 
    	
j.
    	
Successors
    	
10
    
	
 
    	
k.
    	
Unfunded Plan
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 16. DURATION AND   AMENDMENTS
    	
11
    
	
 
    	
 
    
	
 
    	
a.
    	
Term of the Plan
    	
11
    
	
 
    	
b.
    	
Right to Amend or Terminate the Plan
    	
11
    
	
 
    	
c.
    	
Effect of Termination
    	
11
    
	
 
    	
d.
    	
Modification, Extension and Assumption of Awards
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 17. DEFINITIONS
    	
11
    
	
 
    	
 
    
	
SECTION 18. MISCELLANEOUS
    	
14
    
	
 
    	
 
    
	
 
    	
a.
    	
Choice of Law
    	
14
    
	
 
    	
b.
    	
Adoption
    	
15
    

 

ii

 

AMENDED AND RESTATED OSMOTICA PHARMACEUTICALS PLC

 

2016 EQUITY INCENTIVE PLAN

 

INTRODUCTION

 

The Plan has been amended and restated by the Board in connection with the Reorganization (as such term is defined in the Company’s Form S-1 filed on May 9, 2018). In connection with the Reorganization, options to purchase common units of Osmotica Holdings S.C.Sp. were converted into options to purchase Shares.

 

SECTION 1.  PURPOSE.

 

The purpose of the Plan is to attract and retain the best available personnel, to provide additional incentive to persons who provide services to the Company’s Subsidiaries, and to promote the success of the business operated by the Company’s Subsidiaries. Unless the context otherwise requires, capitalized terms used herein are defined in Section 17. The Plan is a “compensatory benefit plan” within the meaning of Rule 701 under the Securities Act, and all Awards granted under the Plan are intended to qualify for an exemption from the registration requirements under the Securities Act, including, without limitation, pursuant to Rule 701 of the Securities Act or Regulation D.

 

SECTION 2.  ADMINISTRATION.

 

The Plan shall be administered by the Board. The Board shall have full authority and sole discretion to take any actions it deems necessary or advisable for the administration and operation of the Plan, subject to the terms and conditions of the Plan, including, without limitation, the right to construe and interpret the provisions of the Plan or any Award, to provide for any omission in the Plan, to resolve any ambiguity or conflict under the Plan or any Award, to accelerate vesting of or otherwise waive any requirements applicable to any Award, to extend the term or any period of exercisability of any Award, to modify the purchase price or Exercise Price under any Award, to establish terms or conditions applicable to any Award and to review any decisions or actions made or taken by the Board. All decisions, interpretations and other actions of the Board shall be final and binding on all Participants and other persons deriving their rights from a Participant. Notwithstanding anything to the contrary herein, no action taken by the Board shall adversely affect in any material respect the rights granted to any Participant under any outstanding Award without such Participant’s written consent.

 

SECTION 3.  ELIGIBILITY.

 

The Board is authorized to grant Awards to directors (including, non-employee directors) and consultants of the Company or any of its Subsidiaries and to employees, directors (including non-employee directors) and managers (including non-employee managers) of any Subsidiaries of the Company; provided, that Options and Stock Appreciation Rights may only be granted to those employees, directors and consultants with respect to whom the Company is an “eligible issuer”

 

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within the meaning of Section 409A. Employees, managers, directors and consultants who have been granted Awards shall be Participants in the Plan with respect to such Awards. The designation of an individual as a Participant in any year shall not require that the Board designate such individual to receive an Award in any other year or to receive the same type or amount of Award in any other year.

 

SECTION 4.  SHARES SUBJECT TO PLAN.

 

a.                                      Basic Limitation.  Subject to Section 13, the maximum number of Shares that may be issued pursuant to Awards under the Plan is [·] Shares (the “Basic Limitation”). Where an Award is granted in tandem, the number of Shares charged against the Basic Limitation shall be the maximum number of Shares that may be issued pursuant to the Award.

 

b.                                      Additional Shares.  In the event that any outstanding Award expires, is cancelled or otherwise terminated without consideration (i.e., Shares or cash) therefor, any rights to acquire Shares allocable to the unexercised or unvested portion of such Award shall not be available for re-issuance under the Plan. Subject to compliance with applicable law, in the event that Shares issued under the Plan are reacquired by the Company pursuant to any forfeiture provision without consideration (i.e., Shares or cash) therefor, such Shares shall not be available for re-issuance under the Plan.

 

SECTION 5.  AWARDS.

 

a.                                      Types of Awards.  The Board may, in its sole discretion, make Awards of one or more of the following: Options, Stock Appreciation Rights, Restricted Stock, Phantom Shares and Other Share-Based Awards. The Company shall make Awards directly or cause one or more of its Subsidiaries to make Awards; provided, however, that the Company shall be responsible for causing any such Subsidiary to comply with the terms of any Award and the Plan. Awards may be granted singly or in tandem.

 

b.                                      Award Agreements.  Each Award made under the Plan shall be evidenced by an Award Agreement (which need not be identical) in a form approved by the Board, and no Award shall be valid without any such agreement. An Award shall be subject to all applicable terms and conditions of the Plan and to any other terms and conditions which the Board in its sole discretion deems appropriate for inclusion in the Award Agreement, provided such terms and conditions are not inconsistent with the Plan. Accordingly, in the event of any conflict between the provisions of the Plan and any such Award Agreement, the provisions of the Plan shall prevail. Each Award Agreement shall provide, in addition to any terms and conditions required to be provided in such agreement pursuant to any other provision of this Plan, the following terms:

 

(i)                                     Number of Shares. The number of Shares subject to the Award, if any, which number shall be subject to adjustment in accordance with Section 13.

 

(ii)                                  Price. Where applicable, each Award Agreement shall designate the price, if any, to acquire any Shares underlying the Award, which price shall be payable in a form described in Section 11 and subject to adjustment pursuant to Section 13.

 

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(iii)                               Vesting. Each Award Agreement shall specify the dates and events on which all or any installment of the Award shall be vested and nonforfeitable.

 

c.                                       No Rights as a Shareholder.  A Participant, or a transferee of a Participant, shall have no rights as a shareholder with respect to any Shares covered by an Award until Shares are actually issued in the name of such person (or if Shares will be held in street name, to a broker who will hold such Shares on behalf of such person), except as set forth in Section 8(c) or as may be set forth in the Award Agreement.

 

SECTION 6.  OPTIONS.

 

a.                                      Grant of Options.  The Board may, in its sole discretion, grant Options. All Options shall be nonqualified stock options. The Plan does not provide for the grant of “incentive stock options” within the meaning of Section 422 of the Code.

 

b.                                      Option Award Agreements.  Each agreement evidencing an Award of an Option shall contain the following information, which shall be determined by the Board in its sole discretion:

 

(i)                                     Exercise Price.  Each Award Agreement shall state the per Share exercise price (the “Exercise Price”), which shall not be less than 100% of the Fair Market Value of a Share on the date of grant unless such Option otherwise would satisfy Section 409A, and except in the case provided by Section 13.

 

(ii)                                  Exercisability.  Each Award Agreement shall specify the dates and events when all or any installment of the Option becomes exercisable.

 

(iii)                               Term.  Each Award Agreement shall state the term of each Option (including the circumstances under which such Option will expire prior to the stated term thereof), which shall not exceed 10 years from the date of grant.

 

c.                                       Method of Exercise.  Options shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Board, or by complying with any alternative procedures which may be authorized by the Board, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares (including satisfaction of any applicable tax withholding). As soon as practicable after receipt of written notification of exercise, full payment (including satisfaction of any applicable tax withholding) and satisfaction of any other conditions set forth in the applicable Award Agreement, the Company shall deliver to the Participant evidence of issuance of the Shares. The Company, at the Board’s election and in its sole discretion, may settle any Options requested to be exercised in Shares or cash.

 

SECTION 7.  STOCK APPRECIATION RIGHTS.

 

a.                                      Generally.  The Board may, in its sole discretion, grant “Stock Appreciation Rights”. A Stock Appreciation Right means a right to receive a payment in cash, Shares or a combination thereof, in the sole discretion of the Board, in an amount equal to the excess of (i) the Fair Market Value, or other specified valuation, of a number of Shares on the date the right is exercised over (ii) the base value (as determined by the Board and specified in any Award Agreement). If a Stock

 

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Appreciation Right is granted in tandem with or in substitution for an Option, the designated Fair Market Value in the Award Agreement shall reflect the Fair Market Value of the Shares underlying the Awards on the date the Option is granted.

 

b.                                      Stock Appreciation Rights Award Agreements.  Each agreement evidencing an Award of Stock Appreciation Rights shall contain the following information, which shall be determined by the Board in its sole discretion:

 

(i)                                     Base Value.  Each Award Agreement shall specify the base value of the Shares above which a Participant shall be entitled to share in the appreciation in the value of such Shares. The per Share initial base value shall not be less than 100% of the Fair Market Value of a Share on the date of grant unless such Stock Appreciation Right otherwise would satisfy Section 409A, and except in the case provided by Section 13.

 

(ii)                                  Exercisability.  Each Award Agreement shall specify how all or any portion of a Stock Appreciation Right shall be exercisable.

 

(iii)                               Term.  Each Award Agreement shall state the term of each Stock Appreciation Right (including the circumstances under which such Stock Appreciation Right will expire prior to the stated term thereof), which shall not exceed 10 years from the date of grant.

 

SECTION 8.  RESTRICTED STOCK

 

a.                                      Generally.  The Board is hereby authorized to grant Shares that are subject to a risk of forfeiture and, subject to compliance with applicable law, that contain such other restrictions, including restrictions on transferability, as the Board shall determine. Such Awards shall be known as a “Restricted Stock”.

 

b.                                      Restricted Stock Award Agreement.  Each agreement evidencing an Award of Restricted Stock shall specify the Restriction Period and such other terms, including vesting, term and transfer restrictions, as determined by the Board in its sole discretion. If Restricted Stock will be granted or the restrictions shall have lapsed upon the achievement of performance goals over a performance period, such Award of Restricted Stock shall be referred to as “Performance Stock”.

 

c.                                       Voting Rights.  Unless otherwise determined by the Board and set forth in a Participant’s Award Agreement, to the extent permitted or required by law, as determined by the Board, Participants holding Restricted Stock granted hereunder shall not have the right to exercise voting rights with respect to Restricted Stock during the Restriction Period.

 

d.                                      Section 83(b) Election.  The Board may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code. If a Participant makes an election pursuant to Section 83(b) of the Code concerning an Award of Restricted Stock, the Participant shall be required to file promptly a copy of such election with the Company.

 

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SECTION 9.  PHANTOM SHARES.

 

a.                                      Generally.  The Board may, in its sole discretion, grant Phantom Shares, where in each case one Phantom Share shall be a notional account representing one Share.

 

b.                                      Settlement of Phantom Shares.  Phantom Shares shall be settled in Shares unless the Award Agreement expressly provides for settlement of all or a portion of the Phantom Shares in cash equal to the Fair Market Value of the Shares that would otherwise be issued in settlement of such Phantom Shares. Shares issued to settle a Phantom Share may be issued with or without payment or consideration therefor, except as may be required by applicable law or the Board, in its sole discretion, as set forth in the Award Agreement. The Board may, in its sole discretion, establish a program to permit participants to defer payments and dividends made in respect of Phantom Shares.

 

SECTION 10.  OTHER SHARE-BASED AWARDS.

 

The Board may, in its sole discretion, grant Awards of Shares and Awards that are valued, in whole or in part, by reference to, or are otherwise based on the Fair Market Value of, Shares, including, without limitation, dividend equivalent rights and other phantom awards (an “Other Share-Based Award”). Such Other Share-Based Awards shall be in such form and dependent on such conditions as the Board shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of Service, the occurrence of an event and/or the attainment of performance objectives. The Board shall determine to whom and when Other Share-Based Awards will be made, the number of Shares to be awarded under (or otherwise related to) such Other Share-Based Awards, whether such Other Share-Based Awards shall be settled in cash, Shares, additional Awards or other securities or property and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable). Each Other Share-Based Award grant shall be evidenced by an Award Agreement, which shall conform to the requirements of the Plan.

 

SECTION 11.  PAYMENT FOR SHARES.

 

a.                                      General Rule.  The Exercise Price of Options and/or the purchase price (if any) of Shares issuable under the Plan shall be payable in cash or personal check at the time when such Shares are purchased, except as otherwise provided in this Section 11.

 

b.                                      Surrender of Shares.  Only to the extent permitted by the Board, in its sole discretion, with respect to Participant who is an employee of a Subsidiary of the Company, all or any part of the Exercise Price, the purchase price or any applicable withholding requirements may be paid by surrendering, or attesting to the ownership of, Shares that have fully vested, and are already owned by the Participant.  Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Option is exercised or payment is made (or, in the case of any applicable withholding requirements, Fair Market Value on the date the tax is to be determined). The Participant shall not surrender, or attest to the ownership of, Shares in payment of any portion of the purchase price (or withholding) if such action would cause the Company or any Subsidiary thereof to recognize a compensation expense (or additional

 

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compensation expense) with respect to the applicable Award for financial reporting purposes, unless the Board consents thereto.

 

c.                                       Discretion of Board.  The Board may authorize any other method of payment for the Exercise Price of Options that it determines, in its sole discretion; it being understood that, to the extent the Board permits any such other method of payment, it shall not be bound to permit such alternative method of payment for the remainder of any such Award or with respect to any other Award or Participant under the Plan.

 

SECTION 12.  TERMINATION OF SERVICE.

 

a.                                      Termination for Cause. Unless otherwise provided in an Award Agreement, in the event that a Participant’s Service is terminated for Cause, all Awards, including vested Options and Stock Appreciation Rights, held by the Participant shall terminate and be forfeited without consideration, effective on the date the Participant’s Service is terminated for Cause.

 

b.                                      Termination Due to Death or Disability.  Unless otherwise provided in an Award Agreement, in the event that a Participant’s Service is terminated due to death or Disability, (i) all unvested Awards held by the Participant shall terminate and be forfeited without consideration effective as of the date the Participant’s Service is terminated and (ii) all vested Options and Stock Appreciation Rights shall terminate and be forfeited on the earlier of (a) one (1) year following the termination of Service and (b) the expiration of the term of such Options or Stock Appreciation Rights, as applicable.

 

c.                                       Termination Without Cause.  Unless otherwise provided in an Award Agreement, in the event that a Participant’s Service is terminated by the applicable Subsidiary of the Company without Cause and other than as provided in Section 12.b., (i) all unvested Awards held by the Participant shall, subject to compliance with applicable law, terminate and be forfeited without consideration effective as of the date the Participant’s Service is terminated and (ii) all vested Options and Stock Appreciation Rights shall terminate and be forfeited on the earlier of (a) the date the term of such Options or Stock Appreciation Rights, as applicable, expires and (b) sixty (60) days following the termination of the Participant’s Service.

 

d.                                      Termination for any Other Reason.  Unless otherwise provided in an Award Agreement, in the event that a Participant’s Service is terminated for any reason other than pursuant to Sections 12.a. through c. above, (i) all unvested Awards held by the Participant shall, subject to compliance with applicable law, terminate and be forfeited without consideration effective as of the date the Participant’s Service is terminated and (ii) all vested Options and Stock Appreciation Rights shall terminate and be forfeited on the earlier of (a) the date the term of such Options or Stock Appreciation Rights, as applicable, expires and (b) forty-five (45) days following the termination of the Participant’s Service.

 

e.                                       Leave of Absence.  For purposes of this Section 12, Service shall be deemed to continue while a Participant is on a bona fide leave of absence, if such leave is approved by the applicable Subsidiary of the Company in writing or if continued crediting of service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Board).

 

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SECTION 13.  ADJUSTMENT OF SHARES.

 

a.                                      General.  In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, Recapitalization, separation, reverse share split, split up, spin-off, combination of Shares, exchange of Shares, dividend in kind, extraordinary cash dividend, or other like change in capital structure (other than normal cash dividends), or any similar event or transaction, the Board, to prevent dilution or enlargement of Participants’ rights under the Plan, shall, in its sole discretion, (i) substitute or adjust (a) the number and kind of Shares or other securities that may be issued under the Plan or under particular forms of Awards, (b) the number and kind of Shares or other securities subject to outstanding Awards, or (c) the Exercise Price, grant price or purchase price applicable to outstanding Awards, (ii) grant a dividend right, and/or (iii) make or implement other value determinations applicable to the Plan or outstanding Awards, including making additional Awards, issuing Shares or making cash payments.

 

b.                                      Mergers and Consolidations.  In the event that the Company is a party to a merger or consolidation (including a Change of Control transaction), outstanding Awards shall be subject to the agreement effecting such merger or consolidation transaction. Subject to the terms of the applicable Award Agreement, the agreement with respect to such merger or consolidation transaction, without the Participants’ consent, may provide for:

 

(i)                                     the continuation or assumption of such outstanding Awards under the Plan by the Company (if it is the surviving entity) or by the surviving entity or its direct or indirect parent;

 

(ii)                                  the substitution by the surviving entity or its direct or indirect parent of awards with substantially equivalent terms and economic value for such outstanding Awards;

 

(iii)                               the acceleration of the vesting of, right to exercise, and/or lapse of restrictions under some or all then outstanding Awards immediately prior to or as of the date of any such merger or consolidation transaction,

 

(iv)                              the expiration of such outstanding Awards to the extent not timely exercised or purchased by the date of any such merger or consolidation transaction or other date thereafter designated by the Board, after reasonable advance written notice thereof to the holder of each such Award; or

 

(v)                                 the cancellation of all or any portion of outstanding Awards for fair value (in the form of cash, Shares, other property or any combination thereof) as determined in the sole discretion of the Board and which value may be zero; provided, that, in the case of vested Options and Stock Appreciation Rights or similar Awards, the fair value shall equal the excess, if any, of the value of the consideration to be paid in any such merger or consolidation transaction to holders of the same number of Shares subject to such Awards (or, if no such consideration is paid, Fair Market Value of the Shares subject to such outstanding Awards or portion thereof being canceled) over the aggregate exercise price, purchase price or grant price, as applicable, with respect to such Awards or portion thereof being canceled, or if no such excess, zero.

 

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SECTION 14.  SECURITIES LAW REQUIREMENTS.

 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act, state or foreign securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. The Company shall not be obligated to file any registration statement under any applicable securities laws to permit the purchase or issuance of any Shares under the Plan. Each Participant and any person deriving its rights from any Participant shall, as a condition to the purchase or issuance of any Shares under the Plan, deliver to the Company an agreement or certificate containing such representations, warranties and covenants as the Company may deem necessary or appropriate to ensure that the issuance of Shares is not required to be registered under any applicable securities laws.

 

SECTION 15.  GENERAL TERMS.

 

a.                                      Nontransferability of Awards.  Unless otherwise permitted by the Board, in its sole discretion, no Award may be transferred, assigned, pledged or hypothecated by any Participant except in compliance with the terms of the applicable Award Agreement. The exercisability of an Option or other right to acquire Shares under the Plan by someone other than the Participant shall be governed by the agreement pursuant to which such Option or other right is granted.

 

b.                                      Restrictions on Transfer of Shares.  Subject to compliance with applicable law, any Shares issued under the Plan shall be subject to such vesting and special forfeiture conditions, repurchase rights, rights of first offer and other transfer restrictions as the Board may determine, including as set forth in any applicable shareholders or limited company agreement. Such restrictions shall be set forth in the applicable Award Agreement or the applicable shareholders or limited company agreement, as applicable, and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

c.                                       Settlement of Awards. The Board shall determine whether cash, Awards, other securities or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be issued, rounded, forfeited or otherwise eliminated.

 

d.                                      Compliance with Section 409A of the Code.

 

(i)                                     The Company intends that the Plan and all Awards be construed to avoid the imposition of additional taxes, interest and penalties pursuant to Section 409A. Notwithstanding the Company’s intention, in the event that any Award is subject to such additional taxes, interest or penalties pursuant to Section 409A, the Board may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Awards, adopt policies and procedures or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (a) exempt the Plan and/or any Award from the application of Section 409A, (b) preserve the intended tax treatment of any such Award or (c) comply with the requirements of Section 409A, including, without limitation, any such regulations, guidance, compliance programs and other interpretative authority that may be issued after the date of the grant. In no event shall the

 

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Company or any of its Subsidiaries or Affiliates or their respective directors, officers, agents, attorneys, employees, executives, shareholders, limited partners, members, managers, trustees, fiduciaries, representatives, principals, accountants, insurers, successors or assigns be liable for any additional tax, interest or penalties that may be imposed on a Participant under Section 409A or any damages for failing to comply with Section 409A.

 

(ii)                                  Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A) that are otherwise required to be made under the Plan or any Award Agreement to a “specified employee” (as defined under Section 409A) as a result of his or her “separation from service” (other than a payment that is not subject to Section 409A) shall be delayed for the first six (6) months following such separation from service (or, if earlier, until the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) on the day that immediately follows the end of such six-month period or as soon as administratively practicable thereafter. Any remaining payments of nonqualified deferred compensation shall be paid without delay and at the time or times such payments are otherwise scheduled to be made.

 

(iii)                               A termination of Service shall not be deemed to have occurred for purposes of any provision of the Plan or any Award Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of Service (but not for purposes of determining vesting or forfeiture), unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A. For purposes of any such provision of the Plan or any Award Agreement relating to any such payments or benefits, references to a “termination”, “termination of employment”, “termination of Service”, or like terms shall mean “separation from service”.

 

e.                                       Taxes.  The delivery, vesting and retention of Shares, cash or other property under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award.  The Administrator shall prescribe such rules for the withholding of taxes with respect to any Award as it deems necessary.  Except as otherwise determined by the Administrator or as required by law, the Participant shall be responsible for satisfying and paying all taxes arising from or due in connection with the Award and/or the delivery of Shares under the Award.  Participants who are employees of a Subsidiary of the Company may elect, subject to the approval by the Board, in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is determined equal to the minimum statutory total tax that could be imposed in connection with any such taxable event.  The Company shall have no liability or obligation related to any of the foregoing.

 

f.                                        No Guarantees Regarding Tax Treatment.  Participants (or their beneficiaries) shall be responsible for all taxes with respect to any Awards under the Plan. The Board and the Company make no guarantees to any Person regarding the tax treatment of Awards or payments made under the Plan. Neither the Board nor the Company has any obligation to take any action to prevent the assessment of any tax on any Person with respect to any Award under Section 409A, Section 280G

 

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or 457A of the Code or otherwise, and none of the Company, any of its Subsidiaries or Affiliates or any of their employees, directors, officers, representatives, shareholders, limited partners, members or Affiliates shall have any liability to a Participant with respect thereto.

 

g.                                       No Retention Rights or Right to Awards.  Nothing in the Plan or in any Award granted under the Plan shall confer upon a Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary thereof employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards.

 

h.                                      Severability.  If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

 

i.                                          No Constraint on Corporate Action.  Nothing in the Plan shall be construed to (i) limit, impair or otherwise affect the Company’s or any Subsidiaries’ right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets; or (ii) limit the right or power of the Company or any Subsidiary to take any action that it deems necessary or appropriate.

 

j.                                         Successors.  All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Company.

 

k.                                      Unfunded Plan.  Participants shall have no right, title or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, nor a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the rights of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

 

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SECTION 16.  DURATION AND AMENDMENTS.

 

a.                                      Term of the Plan.  The Plan, as set forth herein, shall become effective on the date of its initial adoption by the Board. The Plan shall terminate automatically on the day preceding the 10th anniversary of its initial adoption by the Board unless earlier terminated pursuant to Section 16.b. below.

 

b.                                      Right to Amend or Terminate the Plan.  The Board may amend, alter, suspend, discontinue or terminate (each, an “Amendment”) the Plan and any Awards at any time and for any reason; provided, however, that any Amendment that adversely affects in any material respect the rights granted to any Participant under any outstanding Awards (other than pursuant to Section 15.d. or in order to implement Section 13 or Section 16.e.) shall require such Participant’s prior written consent; and provided, further, that such consent shall not be required with respect to an Amendment made to conform the Plan or any Award to applicable law or any applicable shareholders or limited company agreement (as currently in effect or as any such agreement may subsequently be amended), or with respect to changes that (a) are of an inconsequential nature and do not adversely affect any Participant in any material respect, (b) are necessary to clarify any ambiguity or to correct or supplement any provisions of the Plan or the Awards or (c) required or specifically contemplated by the Plan, including changes relating to the grant of any Awards under the Plan.

 

c.                                       Effect of Termination.  No Shares shall be issued or sold under the Plan after the termination thereof, except pursuant to an Award granted prior to such termination. The termination of the Plan shall not affect any Awards outstanding on the termination date.

 

d.                                      Modification, Extension and Assumption of Awards.  Within the limitations of the Plan, the Board may modify, extend or assume outstanding Awards or may provide for the cancellation of outstanding Awards in return for the grant of new Awards for the same or a different number of Shares and at the same or a different price. The foregoing notwithstanding, except as provided in Section 15.d., Section 16.b. or Section 13 hereof, no modification of an Award shall, without the consent of the Participant, impair the Participant’s rights or increase the Participant’s obligations under such Award or impair the economic value of any such Award.

 

SECTION 17.  DEFINITIONS.

 

a.                                      “Affiliate” shall mean, with respect to any specified Person, (a) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); provided, however, that neither the Company nor any of its Subsidiaries shall be deemed an Affiliate of any of ACP Holdco (Offshore), L.P., ACP III AIV, L.P., Altchem Limited or any of their respective Affiliates and vice versa, and (b) if such specified Person is an investment fund, any other investment fund the

 

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primary investment advisor to which is the primary investment advisor to such specified Person.

 

b.                                      “Award” shall mean the grant of an Option, Stock Appreciation Right, Restricted Stock, Phantom Share or Other Share-Based Award under the Plan.

 

c.                                       “Award Agreement” shall mean either (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award, or (ii) a written statement signed by an authorized officer of the Company to a Participant describing the terms and provisions of the actual grant of such Award.

 

d.                                      “Board” shall mean the Board of Directors of the Company, as constituted from time to time, or if such Board of Directors has appointed a Compensation Committee, such Compensation Committee.

 

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

 

f.                                        “Cause” shall, with respect to a Participant, have the meaning ascribed to such term in the employment, consulting or similar agreement between such Participant and the Company or one of its Subsidiaries, or, in the absence of such agreement or if not defined therein shall mean any of the following: (i) such Participant’s willful and continued failure or refusal to perform his or her employment duties after a written demand by the Board for substantial performance is delivered to such Participant, which specifically identifies the manner in which the Board believes that such Participant has not substantially performed his or her duties, which willful and continued failure is not cured by such Participant within thirty (30) days, (ii) the failure to be true and accurate of the statement that the execution and delivery of such Participant’s employment agreement by the parties thereto and the performance by such Participant of such Participant’s duties thereunder do not constitute a breach of, or otherwise contravene, or prevent, interfere with or hinder, the terms of any employment agreement or other agreement or policy to which such Participant is a party or otherwise bound, and that such Participant is not subject to any limitation on his activities on behalf of the Company or its Affiliates as a result of agreements into which such Participant has entered, (iii) such Participant’s fraud, dishonesty or gross misconduct that is materially and demonstrably injurious to the Company or its Affiliates, (iv) the violation by such Participant of any material written policies of the Company or its Affiliates known or provided to such Participant in written (including electronic) form, (v) such Participant’s breach of any confidentiality, non-solicitation or non-competition obligations to the Company or its Affiliates, (vi) such Participant’s conviction of, or a plea of guilty or no contest to, any felony or other criminal offence involving fraud, dishonesty, misappropriation or moral turpitude, (vii) making public disparaging, derogatory or detrimental comments about the Company, any of its Subsidiaries, ACP Holdco (Offshore), L.P., ACP III AIV, L.P., Altchem Limited, or any of their respective Affiliates or any of their directors, officers, managers or employees that are detrimental to the reputation of any of the foregoing, or (viii) engaging in a pattern of conduct that is detrimental to the reputation of the Company, any of its Subsidiaries, or any of their respective Affiliates.

 

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g.                                       “Change of Control” shall mean any (a) transaction or series of related transactions, whether or not the Company is a party thereto, in which, after giving effect to such transaction or transactions, the equity securities representing in excess of fifty percent (50%) of the Shares are owned directly or indirectly through one or more entities, by any “person” or “group” (as such terms are used in Section 13(d) of the Exchange Act) of Persons, other than any of ACP Holdco (Offshore), L.P., ACP III AIV, L.P. or Altchem Limited or their respective Affiliates, or (b) a sale, lease or other disposition of all or substantially all of the assets of the Company and its Subsidiaries on a consolidated basis (including securities of the Company’s directly or indirectly owned Subsidiaries) to one or more purchasers other than any of ACP Holdco (Offshore), L.P., ACP III AIV, L.P. or Altchem Limited or their respective Affiliates.

 

h.                                      “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

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

 

j.                                         “Disability” shall mean, unless otherwise set forth in an Award Agreement,

 

(i)                                     if a Participant has an effective employment agreement or service agreement with a Subsidiary of the Company that defines “Disability” or a like term, the meaning set forth in such agreement at the time of the Participant’s termination of Service; or, in the absence of such an effective employment agreement, service agreement or definition,

 

(ii)                                  a Participant’s physical or mental illness, injury or infirmity which is reasonably likely to prevent or prevents such Participant from performing its essential job functions for a period of (A) ninety (90) consecutive calendar days or (B) an aggregate of one hundred twenty (120) calendar days out of any consecutive twelve (12) month period.

 

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

 

l.                                          “Fair Market Value” shall mean, 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 Board consistent with the rules of Section 422 of the Code and Section 409A to the extent applicable.

 

m.                                  “Option” shall mean an Option granted under the Plan and entitling the holder to purchase Shares.

 

n.                                      “Other Share-Based Award” shall have the meaning described in Section 10.

 

o.                                      “Participant” shall mean an eligible individual to whom an Award is granted under the Plan.

 

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p.                                      “Person” shall mean any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.

 

q.                                      “Plan” shall mean this Amended and Restated Osmotica Pharmaceuticals plc 2016 Equity Incentive Plan.

 

r.                                         “Recapitalization” shall mean an event or series of events affecting the capital structure of the Company including, but not limited to, share dividends or distributions, share splits, rights offers or recapitalizations through large, non-recurring cash distributions.

 

s.                                        “Restriction Period” means the period during which Restricted Stock awarded under Section 8 of this Plan are restricted.

 

t.                                         “Restricted Stock” shall have the meaning described in Section 8(a).

 

u.                                      “Phantom Share” shall have the meaning described in Section 9(a).

 

v.                                      “Section 409A” means Section 409A of the Code together with all regulations, guidance, compliance programs, and other interpretative authority thereunder.

 

w.                                    “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

x.                                      “Service” shall mean service as a director (including a non-employee director) or consultant of the Company or as an employee, manager, (including a non-employee manager), director (including a non-employee director) or consultant of any Subsidiary of the Company; provided, that, if a Participant is both an employee and a director or manager of any Subsidiary of the Company, Service with respect to such Participant shall only mean Service as an employee of such Subsidiary; provided, further, that a termination of Service shall not occur until a termination of Service with the Company and its Subsidiaries.

 

y.                                      “Share” shall mean an ordinary share of the Company, nominal value $0.01 per share.

 

z.                                       “Stock Appreciation Right” shall have the meaning described in Section 7(a).

 

aa.                               “Subsidiary” shall mean any Person as to which the Company owns or controls, directly or indirectly, more than 50% percent of the voting securities of such Person.

 

SECTION 18.  MISCELLANEOUS

 

a.                                      Choice of Law.  This Plan shall be governed by, and construed 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, in each case as determined by the Board. All claims or causes of action (whether in contract or tort) that may be based upon, arise out of, or relate to this Plan shall be heard and determined in the United States District Court for the District of Delaware and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such

 

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court 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.

 

b.                                      Adoption.  This Plan was duly adopted as of February 3, 2016, and has been amended and restated as of [·], 2018.

 

15Exhibit 10.30

 

OSMOTICA PHARMACEUTICALS PLC
 2018 INCENTIVE PLAN

 

1.                                      DEFINED TERMS

 

The following terms, when used in the Plan (as defined below), have the meanings and are subject to the provisions set forth below:

 

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

 

(b)                                 “Administrator”:  The Compensation Committee, except with respect to such matters that are not delegated to the Compensation Committee by the Board (whether pursuant to committee charter or otherwise) or with respect to which the Board acts.  The Compensation Committee (or the Board, with respect to such matters over which it retains authority under the Plan or otherwise) 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; (ii) to the extent permitted by Irish law, to one or more officers of the Company the authority to (1) designate the recipients of Awards and (2) grant, issue or settle Awards subject to the Board resolution regarding such delegation specifying the total number of Shares to be granted, issued or settled; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate provided however, that such officer or Employee may not grant an Award to himself or herself.  For purposes of the Plan, the term “Administrator” will include the Board, the Compensation Committee, and the person or persons delegated authority under the Plan to the extent of such delegation, as applicable.

 

(c)                                  “Award”:  Any or a combination of the following:

 

(1) Stock Options.

 

(2) SARs.

 

(3) Restricted Stock.

 

(4) Unrestricted Stock.

 

(5) Stock Units, including Restricted Stock Units.

 

(6) Performance Awards.

 

(7) Awards (other than Awards described in (1) through (6) above) that are convertible into or otherwise based on Shares.

 

(d)                                 “Board”:  The Board of Directors of the Company.

 

(e)                                  “Cause”:  In the case of any Participant who is party to an employment or severance-benefit agreement that contains a definition of “Cause,” the definition set forth in such agreement applies with respect to such Participant for purposes of the Plan for so long as such

 

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agreement is in effect.  In every other case, “Cause” means, as determined by the Administrator, (i) a substantial failure of the Participant to perform the Participant’s duties and responsibilities to the Company or any of its subsidiaries or substantial negligence in the performance of such duties and responsibilities; (ii) the commission by the Participant of a felony or a crime involving moral turpitude; (iii) the commission by the Participant of theft, fraud, embezzlement, material breach of trust or any material act of dishonesty involving the Company or any of its subsidiaries; (iv) a violation by the Participant of any material provision of the code of conduct or employee handbook of the Company or any of its subsidiaries, of any material policy of the Company or any of its subsidiaries, or of any statutory or common law duty of loyalty to the Company or any of its subsidiaries; (v) material breach of any of the terms of the Plan or any Award made under the Plan, or of the terms of any other agreement between, or restrictive covenant agreement in favor of, the Company or any of its subsidiaries and the Participant; or (vi) other conduct by the Participant that could be expected to be harmful to the business, interests or reputation of the Company or any of its subsidiaries.

 

(f)                                   “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.

 

(g)                                 “Compensation Committee”:  The Compensation Committee of the Board.

 

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

 

(i)                                    “Covered Transaction”:  Any of (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; or (iii) a dissolution or liquidation of the Company.  Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.

 

(j)                                    “Date of Adoption”:  The date the Plan was adopted by the Board.

 

(k)                                 “Director”:  A member of the Board who is not an Employee.

 

(l)                                    “Disability”: In the case of any Participant who is party to an employment contract, service contract or severance-benefit agreement that contains a definition of “Disability” or a like term, the definition set forth in such agreement applies with respect to such Participant for purposes of the Plan for so long as such agreement is in effect.  In every other case, “Disability” means, unless otherwise set forth in an Award agreement, a Participant’s physical or mental illness, injury or infirmity which is reasonably likely to prevent or prevents such Participant from performing his or her essential job or service functions for a period of 90 consecutive calendar days.

 

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(m)                             “Employee”:  Any person who is employed by the Company or any of its subsidiaries.

 

(n)                                 “Employment”:  A Participant’s employment with the Company or any of its subsidiaries.  Employment will be deemed to continue, unless the Administrator otherwise determines at the time of grant of an Award or at any time thereafter, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to, the Company or any of its subsidiaries.  If a Participant’s employment or other service relationship is with a subsidiary of the Company and that entity ceases to be a subsidiary of the Company, the Participant’s Employment will be deemed to have terminated when the entity ceases to be a subsidiary of the Company unless the Participant transfers Employment to the Company or any of its remaining subsidiaries.  Notwithstanding the foregoing, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations after giving effect to the presumptions contained therein) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations.  Notwithstanding the foregoing, the Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred.  Any such written election will be deemed a part of the Plan.

 

(o)                                 “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 to the extent applicable.

 

(p)                                 “ISO”:  A Stock Option intended to be an “incentive stock option” within the meaning of Section 422.  Each Stock Option granted pursuant to the Plan will be treated as providing by its terms that it is to be an NSO unless, as of the date of grant, it is expressly designated as an ISO.

 

(q)                                 “NSO”:  A Stock Option that is not intended to be an “incentive stock option” within the meaning of Section 422.

 

(r)                                  “Participant”:  A person who is granted an Award under the Plan.

 

(s)                                   “Performance Award”:  An Award subject to Performance Criteria.

 

(t)                                    “Performance Criteria”:  Specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant,

 

3

 

exercisability, vesting or full enjoyment of an Award.  A Performance Criterion and any targets with respect thereto need not be based upon an increase, a positive or improved result or avoidance of loss and may be applied to the Participant individually, or to a business unit or division or the Company as a whole and may relate to any or any combination of the following (measured either absolutely or by reference to an index or indices or the performance of one or more companies and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; prescription volume or trends; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; share price; shareholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; or strategic business criteria, consisting of one or more objectives based on: meeting specified market penetration or value added, product development or introduction (including, without limitation, any clinical trial accomplishments, regulatory or other filings or approvals, or other product development milestones), geographic business expansion, cost targets, cost reductions or savings, customer satisfaction, operating efficiency, acquisition or retention, employee satisfaction, information technology, corporate development (including, without limitation, licenses, innovation, research or establishment of third-party collaborations), manufacturing or process development, legal compliance or risk reduction, or patent application or issuance goals.  The Administrator may provide that one or more of the Performance Criteria applicable to such Award will be adjusted to reflect events (including, but not limited to, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the applicable performance period that affect the applicable Performance Criterion or Criteria.

 

(u)                                 “Plan”:  The Osmotica Pharmaceuticals plc 2018 Incentive Plan, as from time to time amended and in effect.

 

(v)                                 “Prior Plan”:                  The Amended and Restated Osmotica Pharmaceuticals plc 2016 Equity Incentive Plan.

 

(w)                               “Restricted Stock”:  Shares subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified service or performance-based conditions are not satisfied, subject to compliance with Irish law.

 

(x)                                 “Restricted Stock Unit”:  A Stock Unit that is, or as to which the delivery of Shares or cash in lieu of Shares is, subject to the satisfaction of specified performance or other vesting conditions.

 

(y)                                 “SAR”:  A right entitling the holder upon exercise to receive an amount (payable in cash or in Shares of equivalent value) equal to the excess of the Fair Market Value of the

 

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Shares subject to the right over the base value from which appreciation under the SAR is to be measured.

 

(z)                                  “Section 409A”:  Section 409A of the Code and the regulations thereunder.

 

(aa)                          “Section 422”:  Section 422 of the Code and the regulations thereunder.

 

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

 

(cc)                            “Stock Option”:  An option entitling the holder to acquire Shares upon payment of the exercise price.

 

(dd)                          “Stock Unit”:  An unfunded and unsecured promise, denominated in Shares, to deliver Shares or cash measured by the value of Shares in the future.

 

(ee)                            “Substitute Awards”:  Awards issued under the Plan in substitution for equity awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition.

 

(ff)                              “Unrestricted Stock”:  Shares not subject to any restrictions under the terms of the Award.

 

2.                                      PURPOSE

 

The Plan provides for the grant of Awards consisting of, or based on, Shares.  The purposes of the Plan are to attract, retain and reward key Employees of the Company and its subsidiaries, to incentivize them to generate shareholder value, to enable them to participate in the growth of the Company and to align their interests with the interests of the Company’s shareholders.

 

3.                                      ADMINISTRATION

 

The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; determine the form of settlement of Awards (whether in cash, Shares, other Awards, or other property); prescribe forms, rules and procedures relating to the Plan and Awards; and otherwise do all things necessary or desirable to carry out the purposes of the Plan.  Determinations of the Administrator made under the Plan are conclusive and bind all persons.

 

4.                                      LIMITS ON AWARDS UNDER THE PLAN

 

(a)                                 Number of Shares.  Subject to adjustment as provided in Section 7(b), the maximum number of Shares that may be delivered in satisfaction of Awards under the Plan is [·] Shares.  Up to [·] of the Shares set forth in the preceding sentence may be delivered in satisfaction of ISOs, but nothing in this Section 4(a) will be construed as requiring that any, or

 

5

 

any fixed number of, ISOs be awarded under the Plan.  For purposes of this Section 4(a), the number of Shares delivered in satisfaction of Awards will be determined (i) net of Shares underlying the portion of any Award that is settled in cash or the portion of any Award that expires, becomes unexercisable without having been exercised, terminates, or is forfeited to or repurchased by the Company (subject to compliance with Irish law) due to failure to vest, (ii) by treating as having been delivered the full number of Shares covered by any portion of a SAR that is settled in Shares (and not only the number of Shares delivered in settlement) and (iii) by treating as having been delivered any Shares withheld from a Stock Option or other Award to satisfy the tax withholding obligations with respect to such Stock Option or other Award or in payment of the exercise price or purchase price of such Stock Option or other Award. For the avoidance of doubt, the number of Shares available for delivery under the Plan shall not be increased by any Shares that have been delivered under the Plan that are subsequently repurchased using proceeds directly attributable to Stock Option exercises. The limits set forth in this Section 4(a) shall be construed to comply with Section 422.

 

(b)                                 Substitute Awards.  The Administrator may grant Substitute Awards under the Plan.  To the extent consistent with the requirements of Section 422 and the regulations thereunder and other applicable legal requirements (including applicable stock exchange requirements), Shares delivered under Substitute Awards will be in addition to and will not reduce the number of Shares available for Awards under the Plan set forth in Section 4(a).  Notwithstanding anything in Section 4(a) to the contrary, if any Substitute Award is settled in cash or expires, becomes unexercisable, terminates or is forfeited to or repurchased by the Company, subject to compliance with Irish law, in each case, without the delivery of Shares, the Shares previously subject to such Award will not be available for future grants under the Plan.  The Administrator will determine the extent to which the terms and conditions of the Plan apply to Substitute Awards, if at all, provided, however, that Substitute Awards will not be subject to the per-Participant Award limits described in Section 4(d) below.

 

(c)                                  Type of Shares.  Shares delivered by the Company under the Plan may be authorized but unissued Shares or previously issued Shares acquired by the Company.  No fractional Shares will be delivered under the Plan.

 

(d)                                 Individual Limits.  The following additional limits apply to Awards of the specified type granted to any Participant in any calendar year:

 

(1)                                 Stock Options:  [·] Shares.

 

(2)                                 SARs:  [·] Shares.

 

(3)                                 Awards other than Stock Options and SARs:  [·] Shares.

 

In applying the foregoing limits, (i) all Awards of the specified type granted to the same person in the same calendar year are aggregated and made subject to one limit; (ii) the limits applicable to Stock Options and SARs refer to the number of Shares underlying those Awards; and (iii) the share limit under clause (d)(3) refers to the maximum number of Shares that may be

 

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delivered, or the value of which could be paid in cash or other property, under an Award or Awards of the type specified in clause (d)(3) assuming a maximum payout.

 

5.                                      ELIGIBILITY AND PARTICIPATION

 

The Administrator shall select Participants from among key Employees of the Company and its subsidiaries.  Eligibility for ISOs is limited to individuals described in the first sentence of this Section 5 who are employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.  Eligibility for Stock Options, other than ISOs, and SARs is limited to individuals described in the first sentence of this Section 5 who are providing direct services on the date of grant of the Award to the Company or to 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.  Non-employee directors of, and consultants and advisors to, the Company and its subsidiaries are eligible to be selected as Participants by the Administrator and to participate in the Plan under a sub-plan established by the Administrator pursuant to Section 12 of the Plan.

 

6.                                      RULES APPLICABLE TO AWARDS

 

(a)                                 All Awards.

 

(1)                                 Award Provisions.  The Administrator shall determine the terms of all Awards, subject to the limitations provided herein.  By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant will be deemed to have agreed to the terms of the Award and the Plan.  Notwithstanding any provision of this Plan to the contrary, Substitute Awards may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.

 

(2)                                 Term of Plan.  No Awards may be made after 10 years from the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms.

 

(3)                                 Transferability.  Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution.  During a Participant’s lifetime, ISOs and, except as the Administrator otherwise expressly provides in accordance with the third sentence of this Section 6(a)(3), SARs and NSOs may be exercised only by the Participant.  The Administrator may permit the transfer of Awards other than ISOs, subject to applicable securities and other laws and such limitations as the Administrator may impose.

 

(4)                                 Vesting, etc.  The Administrator shall determine the time or times at which an Award vests or becomes exercisable and the terms on which a Stock Option or SAR remains exercisable.  Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration.  Unless the Administrator expressly provides otherwise, however, the following rules will apply if a Participant’s Employment ceases:

 

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(A)                               Except as provided in (B) and (C) below, immediately upon the cessation of the Participant’s Employment each Stock Option and SAR that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited.

 

(B)                               Subject to (C) and (D) below, all vested and unexercised Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of 90 days or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

 

(C)                               Subject to (D) below, all vested and unexercised Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment due to his or her death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one-year period ending with the first anniversary of the Participant’s death or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

 

(D)                               All Stock Options and SARs (whether or not vested or exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of Employment if the termination is for Cause or occurs in circumstances that in the determination of the Administrator would have constituted grounds for the Participant’s Employment to be terminated for Cause.

 

(5)                                 Recovery of Compensation.  Subject to applicable law, the Administrator may provide in any case that any outstanding Award (whether or not vested or exercisable) and the proceeds from the exercise or disposition of any Award or Shares acquired under any Award will be subject to forfeiture and disgorgement to the Company, with interest and other related earnings, if the Participant to whom the Award was granted violates (i) a non-competition, non-solicitation, confidentiality or other restrictive covenant by which he or she is bound or (ii) any Company policy applicable to the Participant that provides for forfeiture or disgorgement with respect to incentive compensation that includes Awards under the Plan.  In addition, the Administrator may require forfeiture and disgorgement to the Company of any outstanding Award and the proceeds from the exercise or disposition of any Award or Shares acquired under any Award, with interest and other related earnings, to the extent required by law or applicable stock exchange listing standards, including, without limitation, Section 10D of the Securities Exchange Act of 1934, as amended, and any applicable Company policy.  Each Participant, by accepting or being deemed to have accepted an Award under the Plan, agrees to be bound by the forfeiture and disgorgement provisions contained herein and agrees to cooperate fully with the Administrator, and to cause any and all permitted transferees of the Participant to cooperate fully

 

8

 

with the Administrator, to effectuate any forfeiture or disgorgement required hereunder, subject to applicable law.  Neither the Administrator nor the Company nor any other person, other than the Participant and his or her permitted transferees, if any, will be responsible for any adverse tax or other consequences to a Participant or his or her permitted transferees, if any, that may arise in connection with this Section 6(a)(5).

 

(6)                                 Taxes.  The delivery, vesting and retention of Shares, cash or other property under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award.  The Administrator shall prescribe such rules for the withholding of taxes with respect to any Award as it deems necessary.  The Administrator may hold back Shares from an Award or permit a Participant to tender previously owned Shares in satisfaction of tax withholding requirements (but not in excess of the maximum withholding amount consistent with the Award being subject to equity accounting treatment under the Accounting Rules).

 

(7)                                 Dividend Equivalents, etc.  The Administrator may provide for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Shares subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award.  Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A.  Dividends or dividend equivalent amounts payable in respect of Awards that are subject to restrictions may be subject to such limits or restrictions as the Administrator may impose.

 

(8)                                 Rights Limited.  Nothing in the Plan may be construed as giving any person the right to be granted an Award or to continued employment or service with the Company or any of its subsidiaries, or any rights as a shareholder except as to Shares actually issued under the Plan.  The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any of its subsidiaries to the Participant.

 

(9)                                 Coordination with Other Plans.  Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or any of its subsidiaries.  For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or any of its subsidiaries may be settled in Shares (including, without limitation, Unrestricted Stock) under the Plan if the Administrator so determines, in which case the Shares delivered will be treated as awarded under the Plan (and will reduce the number of Shares thereafter available under the Plan in accordance with the rules set forth in Section 4).

 

(10)                          Section 409A.

 

(A)                               Without limiting the generality of Section 11(b) hereof, each Award will contain such terms as the Administrator determines and will be construed and

 

9

 

administered, such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements.

 

(B)                               Notwithstanding Section 9 of this Plan or any other provision of this Plan or any Award agreement to the contrary, the Administrator may unilaterally amend, modify or terminate the Plan or any outstanding Award, including but not limited to changing the form of the Award, if the Administrator determines that such amendment, modification or termination is necessary or advisable to avoid the imposition of an additional tax, interest or penalty under Section 409A.

 

(C)                               If a Participant is deemed on the date of the Participant’s termination of Employment to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then, with regard to any payment that is considered nonqualified deferred compensation under Section 409A, to the extent applicable, payable on account of a “separation from service”, such payment will be made or provided on the date that is the earlier of (i) the expiration of the six-month period measured from the date of such “separation from service” and (ii) the date of the Participant’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 6(a)(10)(C) (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) will be paid on the first business day following the expiration of the Delay Period in a lump sum and any remaining payments due under the Award will be paid in accordance with the normal payment dates specified for them in the applicable Award agreement.

 

(D)                               For purposes of Section 409A, each payment made under this Plan will be treated as a separate payment.

 

(E)                               With regard to any payment considered to be nonqualified deferred compensation under Section 409A, to the extent applicable, that is payable upon a change in control of the Company or other similar event, to avoid the imposition of an additional tax, interest or penalty under Section 409A, no amount will be payable unless such change in control constitutes a “change in control event” within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations.

 

(b)                                 Stock Options and SARs.

 

(1)                                 Time and Manner of Exercise.  Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be deemed to have been exercised until the Administrator receives notice of exercise in a form acceptable to the Administrator that is signed by the appropriate person and accompanied by any payment required under the Award.  Any attempt to exercise a Stock Option or SAR by any person other than the Participant (or a permitted transferee) will not be given effect unless the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so.

 

(2)                                 Exercise Price.  The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise must be no less than 100% (in

 

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the case of an ISO granted to a 10-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the Fair Market Value of the Shares subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant, and in any event may not be less than the nominal value of a Share.

 

(3)                                 Payment of Exercise Price.  Where the exercise of an Award is to be accompanied by payment, payment of the exercise price must be by cash or check acceptable to the Administrator or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of previously acquired unrestricted Shares, or the withholding of unrestricted Shares otherwise deliverable upon exercise, in either case that have a Fair Market Value equal to the exercise price; (ii) through a broker-assisted exercise program acceptable to the Administrator; (iii) by other means acceptable to the Administrator; or (iv) by any combination of the foregoing permissible forms of payment.  The delivery of previously acquired Shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.

 

(4)                                 Maximum Term.  The maximum term of Stock Options and SARs must not exceed 10 years from the date of grant (or five years from the date of grant in the case of an ISO granted to a 10-percent shareholder described in Section 6(b)(2) above).

 

(5)                                 Repricing.  Except in connection with a corporate transaction involving the Company (which term includes, without limitation, any share dividend, share split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares) or as otherwise contemplated by Section 7 below, the Company may not, without obtaining shareholder approval, (i) amend the terms of outstanding Stock Options or SARs to reduce the exercise price or base value of such Stock Options or SARs; (ii) cancel outstanding Stock Options or SARs in exchange for Stock Options or SARs with an exercise price or base value that is less than the exercise price or base value of the original Stock Options or SARs; or (iii) cancel outstanding Stock Options or SARs that have an exercise price or base value greater than the Fair Market Value of a Share on the date of such cancellation in exchange for cash or other consideration.

 

7.                                      EFFECT OF CERTAIN TRANSACTIONS

 

(a)                                 Mergers, etc.  Except as otherwise expressly provided in an Award agreement or by the Administrator, the following provisions will apply in the event of a Covered Transaction:

 

(1)                                 Assumption or Substitution.  If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for (i) the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.

 

(2)                                 Cash-Out of Awards.  Subject to Section 7(a)(5) below, the Administrator may provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if

 

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any, of (i) the Fair Market Value of a Share times the number of Shares subject to the Award or such portion, over (ii) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of a SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Shares) and other terms, and subject to such conditions, as the Administrator determines; provided, however, for the avoidance of doubt, that if the per Share exercise or purchase price (or base value) of an Award is equal to or greater than the Fair Market Value of a Share, the Award may be cancelled with no payment due hereunder or otherwise in respect of such Award.

 

(3)                                 Acceleration of Certain Awards.  Subject to Section 7(a)(5) below, the Administrator may provide that any Award requiring exercise will become exercisable, in full or in part, and/or that the delivery of any Shares remaining deliverable under any outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated, in full or in part, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the Shares, as the case may be, to participate as a shareholder in the Covered Transaction.

 

(4)                                 Termination of Awards upon Consummation of Covered Transaction.  Except as the Administrator may otherwise determine in any case, each Award will automatically terminate (and in the case of outstanding shares of Restricted Stock, will automatically be forfeited) immediately upon consummation of the Covered Transaction, other than (i) any Award that is assumed or substituted pursuant to Section 7(a)(1) above and (ii) any Award that by its terms, or as a result of action taken by the Administrator, continues following the Covered Transaction.

 

(5)                                 Additional Limitations.  Any Share and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction.  For purposes of the immediately preceding sentence, a cash-out under Section 7(a)(2) above or an acceleration under Section 7(a)(3) above will not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition.  In the case of Restricted Stock that does not vest and is not forfeited in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Share in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.

 

(b)                                 Changes in and Distributions with Respect to Shares.

 

(1)                                 Basic Adjustment Provisions.  In the event of a share dividend, share split or combination of shares (including a reverse share split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of the Accounting Rules, the Administrator shall make appropriate adjustments to the maximum

 

12

 

number of Shares specified in Section 4(a) that may be issued under the Plan and to the maximum share limits described in Section 4(d), and shall make appropriate adjustments to the number and kind of shares or securities underlying Awards then outstanding or subsequently granted, any exercise or purchase prices (or base values) relating to Awards and any other provision of Awards affected by such change.

 

(2)                                 Certain Other Adjustments.  The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to shareholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the qualification of ISOs under Section 422 and the requirements of Section 409A, to the extent applicable.

 

(3)                                 Continuing Application of Plan Terms.  References in the Plan to Shares will be construed to include any shares or securities resulting from an adjustment pursuant to this Section 7.

 

8.                                      LEGAL CONDITIONS ON DELIVERY OF SHARES

 

The Company will not be obligated to deliver any Shares pursuant to the Plan or to remove any restriction from Shares previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such Shares have been addressed and resolved; (ii) if the outstanding Shares are at the time of delivery listed on any stock exchange or national market system, the Shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived.  The Company may require, as a condition to the exercise of an Award or the delivery of Shares under an Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act of 1933, as amended, or any applicable state or non-U.S. securities law.  Any Shares required to be issued to Participants under the Plan will be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or delivery of share certificates.  In the event that the Administrator determines that share certificates will be issued to Participants under the Plan, the Administrator may require that certificates evidencing Shares issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Shares, and the Company may hold the certificates pending lapse of the applicable restrictions.

 

9.                                      AMENDMENT AND TERMINATION

 

The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, however, that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted.  Any amendments to the Plan will be conditioned upon shareholder approval only to the extent, if

 

13

 

any, such approval is required by law (including the Code) or applicable stock exchange requirements, as determined by the Administrator.

 

10.                               OTHER COMPENSATION ARRANGEMENTS

 

The existence of the Plan or the grant of any Award will not affect the Company’s right to award a person bonuses or other compensation in addition to Awards under the Plan.

 

11.                               MISCELLANEOUS

 

(a)                                 Waiver of Jury Trial.  By accepting or being deemed to have accepted an Award under the Plan, to the maximum extent permitted by law, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim will be tried before a court and not before a jury.  By accepting or being deemed to have accepted an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers.  Notwithstanding anything to the contrary in the Plan, nothing herein is to be construed as limiting the ability of the Company and a Participant to agree to submit disputes arising under the terms of the Plan or any Award made hereunder to binding arbitration or as limiting the ability of the Company to require any eligible individual to agree to submit such disputes to binding arbitration as a condition of receiving an Award hereunder.

 

(b)                                 Limitation of Liability.  Notwithstanding anything to the contrary in the Plan, neither the Company, nor any of its subsidiaries, nor the Administrator, nor any person acting on behalf of the Company, any of its subsidiaries, or the Administrator, will be liable to any Participant, to any permitted transferee, to the estate or beneficiary of any Participant or any permitted transferee, or to any other person by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award.

 

(c)                                  Section 162(m) of the Code.  To the extent applicable, Awards granted under this Plan are intended to be eligible for exemption from the limitations of Section 162(m) of the Code by reason of the post-initial public offering transition relief set forth in Section 1.162-27(f) of the Treasury Regulations.

 

12.                               ESTABLISHMENT OF SUB-PLANS

 

The Administrator may at any time and from time to time establish one or more sub-plans, including a Director and consultant sub-plan, under the Plan (for local-law compliance purposes or other administrative reasons determined by the Administrator) by adopting supplements to the Plan containing, in each case, such limitations on the Administrator’s discretion under the Plan, and such additional terms and conditions, as the Administrator deems necessary or desirable.  Each supplement so established will be deemed to be part of the Plan but

 

14

 

will apply only to Participants within the group to which the supplement applies (as determined by the Administrator).

 

13.                               GOVERNING LAW

 

(a)                                 Certain Requirements of Corporate Law.  Awards will be granted 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, in each case as determined by the Administrator.

 

(b)                                 Other Matters.  Except as otherwise provided by the express terms of an Award agreement, under a sub-plan described in Section 12 or as provided in Section 13(a) above, the domestic substantive laws of Delaware govern the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of or based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof 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.

 

(c)                                  Jurisdiction.  By accepting an Award, each Participant will be deemed to (i) have submitted irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (ii) agree not to commence any suit, action or other proceeding arising out of or based upon the Plan or an Award, except in the federal and state courts located within the geographic boundaries of the United States District Court for the District of Delaware; and (iii) waive, and agree not to assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that he or she is not subject personally to the jurisdiction of the above-named courts, that his or her property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or an Award or the subject matter thereof may not be enforced in or by such court.

 

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OSMOTICA PHARMACEUTICALS PLC

2018 INCENTIVE PLAN

 

SUB PLAN FOR DIRECTORS AND CONSULTANTS

 

1                                        ESTABLISHMENT AND PURPOSE

 

This sub-plan is established by the Board in accordance with Section 12 of the Osmotica Pharmaceuticals plc 2018 Incentive Plan (the “Plan”) for the purposes of granting Awards to Directors and Consultants of Osmotica Pharmaceuticals plc and its subsidiaries.  This sub-plan shall be known as the “NED and Consultant Sub-Plan” or “Sub-Plan”.

 

2                                        RULES

 

The provisions of the Plan shall apply in their entirety to Awards made under this Sub-Plan save and except only as set out in Sections 3 and 4 below.  Capitalized terms used but not defined in this Sub-Plan shall have the meanings set forth in the Plan.

 

3                                        DEFINITIONS

 

3.1                         The definition of “Employment” shall be deleted for the purposes of the Sub-Plan.

 

3.2                         The following definitions shall be inserted for the purposes of this Sub-Plan:

 

“Consultant”: Any person, including an advisor, who is engaged by the Company or a subsidiary to render consulting or advisory services and is compensated for such services.

 

“Service”: A Participant’s service with the Company or any of its subsidiaries.  Service will be deemed to continue, unless the Administrator otherwise determines at the time of grant of an Award or at any time thereafter, so long as the Participant is providing services in a capacity described in Section 5 to, the Company or any of its subsidiaries.  If a Participant’s service relationship is with a subsidiary of the Company and that entity ceases to be a subsidiary of the Company, the Participant’s Service will be deemed to have terminated when the entity ceases to be a subsidiary of the Company unless the Participant transfers Service to the Company or any of its remaining subsidiaries.  Notwithstanding the foregoing, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Service, references to separation from service, retirement or similar or correlative terms will be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations after giving effect to the presumptions contained therein) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations.  Notwithstanding the foregoing, the Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred.  Any such written election will be deemed a part of the Plan.

 

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3.3                         The following definition shall be deleted and replaced with the following for the purposes of this Sub-Plan:

 

“Cause”: In the case of any Participant who is party to a service agreement or severance-benefit agreement that contains a definition of “Cause”, the definition set forth in such agreement applies with respect to such Participant for purposes of the Plan for so long as such agreement is in effect.  In every other case, “Cause” means, as determined by the Administrator, (i) a substantial failure of the Participant to perform the Participant’s duties and responsibilities to the Company or any of its subsidiaries or substantial negligence in the performance of such duties and responsibilities; (ii) the commission by the Participant of a felony or a crime involving moral turpitude; (iii) the commission by the Participant of theft, fraud, embezzlement, material breach of trust or any material act of dishonesty involving the Company or any of its subsidiaries; (iv) a violation by the Participant of any material provision of the code of conduct of the Company or any of its subsidiaries, of any material policy of the Company or any of its subsidiaries, or of any statutory or common law duty of loyalty to the Company or any of its subsidiaries; (v) material breach of any of the terms of the Plan or any Award made under the Plan, or of the terms of any other agreement between, or restrictive covenant agreement in favour of, the Company or any of its subsidiaries and the Participant; or (vi) other conduct by the Participant that could be expected to be harmful to the business, interests or reputation of the Company or any of its subsidiaries.

 

4                                         SECTIONS

 

In this Sub-Plan:

 

4.1                         Section 2 of the Plan shall be deleted and replaced with the following:

 

2.  Purpose

 

The Plan provides for the grant of Awards consisting of, or based on, Shares.  The purposes of the Plan are to attract, retain and reward Directors, Consultants and advisors to or of, the Company and its subsidiaries, to incentivize them to generate shareholder value, to enable them to participate in the growth of the Company and to align their interests with the interests of the Company’s shareholders.

 

4.2                         The following shall be added as a new clause 4(e) to the Plan:

 

4(e) Director Limits. The aggregate value of all compensation granted or paid to any Director with respect to any calendar year, including Awards granted under the Plan and cash fees or other compensation paid by the Company to such Director outside of the Plan, in each case, for his or her Services as a Director during such calendar year may not exceed $[•] in the aggregate, calculating the value of any Awards based on the grant date fair value in accordance with the Accounting Rules, assuming a maximum payout.

 

4.3                         Section 5 shall be deleted and replaced with the following

 

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5.  Eligibility and Participation

 

The Administrator shall select Participants from among Directors, Consultants and advisors to and of Company and its subsidiaries.  Eligibility for Stock Options, other than ISOs, and SARs is limited to individuals described in the first sentence of this Section 5 who are providing direct Services on the date of grant of the Award to the Company or to 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.  No ISOs shall be granted under this Sub-Plan.

 

4.4                         Section 6(a)(4) shall be deleted and replaced with the following:

 

6(a)(4) Vesting, etc.  The Administrator shall determine the time or times at which an Award vests or becomes exercisable and the terms on which a Stock Option or SAR remains exercisable.  Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration.  Unless the Administrator expressly provides otherwise, however, the following rules will apply if a Participant’s Service ceases:

 

(A)                              Except as provided in (B) and (C) below, immediately upon the cessation of the Participant’s Service each Stock Option and SAR that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited.

 

(B)                              Subject to (C) and (D) below, all vested and unexercised Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Service, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of 90 days or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

 

(C)                              Subject to (D) below, all vested and unexercised Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Service due to his or her death or Disability, to the extent then exercisable, will remain exercisable for the lesser of (i) the one-year period ending with the first anniversary of the Participant’s death or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon immediately terminate.

 

(D)                              All Stock Options and SARs (whether or not vested or exercisable) held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Service will immediately terminate upon such cessation of Service if the termination is for Cause or occurs in circumstances that

 

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in the determination of the Administrator would have constituted grounds for the Participant’s Service to be terminated for Cause.

 

4.5                         Section 6(a)(6) of the Plan shall be deleted and replaced with the following:

 

(6) Taxes.  The delivery, vesting and retention of Shares, cash or other property under an Award are conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award.  The Administrator shall prescribe such rules for the withholding of taxes with respect to any Award as it deems necessary.  Except as otherwise determined by the Administrator or as required by law, the Participant shall be responsible for satisfying and paying all taxes arising from or due in connection with the Award and/or the delivery of Shares under the Award.  The Company shall have no liability or obligation related to the foregoing.

 

4.6                         Section 6(a)(8) shall be deleted and replaced with the following:

 

(8) Rights Limited.  Nothing in the Plan may be construed as giving any person the right to be granted an Award or to continued Service with the Company or any of its subsidiaries, or any rights as a shareholder except as to Shares actually issued under the Plan.  The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Service for any reason, even if the termination is in violation of an obligation of the Company or any of its subsidiaries to the Participant.

 

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