Document:

Exhibit 10.1

 

EXECUTION VERSION

 

Portions of this exhibit have been omitted
pursuant to a request for confidential treatment pursuant to 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2(b). The omitted portions,
marked by [***], have been separately filed with the Securities and Exchange Commission.

 

EXCLUSIVE U.S. LICENSE AND SUPPLY AGREEMENT

 

by and between

 

CHIESI FARMACEUTICI S.p.A.

 

and

 

PROTALIX LTD.

 

JULY 23, 2018

 

 [***] Redacted pursuant to confidential
treatment request. 

 

    			 

     

    

 

TABLE OF CONTENTS

 

	
        Section
1.
	DEFINITIONS	1
	Section 2.	LICENSE	17
	2.1	Exclusive License	17
	2.2	Other License Provisions.	18
	2.3	Non-Assertion of Rights	18
	2.4	Sublicensing and Subcontracting	19
	2.5	Liability for Affiliates and Subcontractors	19
	2.6	New Indications	19
	2.7	Patent Challenges	20
	2.8	No Implied License	20
	Section 3.	DEVELOPMENT, REGULATORY APPROVALS AND MARKETING	21
	3.1	Development Plan	21
	3.2	Development Responsibilities	21
	3.3	Steering Committee	22
	3.4	Records	27
	3.5	Diligence	27
	3.6	Regulatory Affairs	28
	3.7	Commercialization and Pricing	34
	3.8	Early Access Programs	34
	3.9	Trademarks	34
	3.10	Use of Names	36
	3.11	[***]	36
	Section 4.	MANUFACTURE AND SUPPLY.	37
	4.1	Commercial Supply of Licensed Product	37
	4.2	[***]	37
	4.3	Protalix Manufacturing Activities	37
	4.4	Compliance of Third Parties	38
	4.5	Forecasting and Ordering	38
	4.6	Pricing, Invoicing and Supply Price Reconciliation	39
	4.7	Shipping and Delivery	42
	4.8	Certificate of Analysis; Acceptance and Returns	43
	4.9	Product Specification and Manufacturing Changes	44
	4.10	Labeling	44
	4.11	Shortages	44
	4.12	Safety Stock Obligations	45
	4.13	[***]	46
	4.14	Failure to Supply	46
	Section 5.	FINANCIAL PROVISIONS	47
	5.1	Effective Date Payment	47
	5.2	Event Milestone Payments	47
	5.3	Development Costs.	50

 

 [***] Redacted
pursuant to confidential treatment request. 

    	 	i	 

     

    

 

	Section 6.	ACCOUNTING AND PROCEDURES FOR PAYMENT	53
	6.1	Periodic Reporting and Reconciliation Payments	53
	6.2	Currency	53
	6.3	Method of Payments	53
	6.4	No Set-Off	53
	6.5	Interest for Late Payments	54
	6.6	Inspection of Records	54
	6.7	Tax Matters	55
	Section 7.	PATENTS AND INFRINGEMENT	55
	7.1	Filing and Prosecution	55
	7.2	Correspondence	56
	7.3	Maintenance	57
	7.4	Notices	57
	7.5	Interpretation of Patent Judgments	57
	7.6	Third Party Royalty Obligations	57
	7.7	Third-Party Infringement	59
	7.8	Other Actions by a Third Party	60
	7.9	Patent Marking	61
	Section 8.	CONFIDENTIALITY; PUBLICATION	61
	8.1	Confidentiality	61
	8.2	Permitted Disclosures	61
	8.3	Terms of Agreement	62
	8.4	Mandatory Disclosure	62
	8.5	Publication	63
	8.6	Publicity	64
	8.7	Filing, Registration or Notification of the Agreement	64
	Section 9.	REPRESENTATIONS, WARRANTIES AND COVENANTS	65
	9.1	Mutual Representations, Warranties and Covenants	65
	9.2	Additional Representations, Warranties and Covenants of Protalix	67
	9.3	Additional Representation and Warranty of Chiesi	72
	9.4	Disclaimer of Warranty	72
	Section 10.	NON-COMPETITION	73
	10.1	[***]	73
	Section 11.	TERM	73
	Section 12.	TERMINATION	73
	12.1	Termination Rights	73
	12.2	Continuing and Accrued Obligations	75
	12.3	Effects of Termination	75
	Section 13.	INDEMNIFICATION AND INSURANCE	77
	13.1	Indemnification by Chiesi	77
	13.2	Indemnification by Protalix	77
	13.3	Indemnification of Product Liability Claims	78
	13.4	Defense Procedures; Procedures for Third Party Claims	78

  

[***] Redacted pursuant
to confidential treatment request.

    	 	ii	 

     

    

 

	13.5	Insurance	79
	13.6	Disclaimer of Liability for Consequential Damages	79
	13.7	Sole Remedy	80
	13.8	Concurrency of Agreement and Ex-US Agreement	80
	Section 14.	GOVERNING LAW AND JURISDICTION	80
	14.1	Governing Law	80
	14.2	Jurisdiction and Dispute Resolution Process	80
	14.3	Expert Legal Determination	81
	Section 15.	MISCELLANEOUS	82
	15.1	Force Majeure	82
	15.2	Severability	82
	15.3	Waivers	83
	15.4	Entire Agreements; Amendments	83
	15.5	Survival	83
	15.6	Assignment; Binding Effect	83
	15.7	Independent Contractor	84
	15.8	Notices	84
	15.9	Third-Party Beneficiaries	85
	15.10	Binding Effect	85
	15.11	Performance by Affiliates	85
	15.12	Counterparts	85
	15.13	Headings	85
	15.14	Equitable Remedies	85

 

	Schedules	 	 
	Schedule 3.1	–	CONFIDENTIAL – Development Plan
	Schedule 3.7	–	CONFIDENTIAL – Initial Draft Commercialization Plan
	Schedule 5.3(i)	–	CONFIDENTIAL – Example of Development Cost Detail
	Schedule 7.1(b)  	–	CONFIDENTIAL – Specified Patent Applications
	 	 	 
	Exhibits	 	 
	Exhibit A	–	Protalix Patent Rights
	Exhibit B	–	Third Party Licenses
	Exhibit C	–	Press Release
	Exhibit D	–	Chiesi Anti-Bribery Policy
	Exhibit E	–	Chiesi Code of Ethics and Conduct

  

    	 	iii	 

     

    

 

EXCLUSIVE U.S. LICENSE AND SUPPLY AGREEMENT

 

This Exclusive U.S. License and Supply Agreement
(this “Agreement”) dated as of the 23rd day of July, 2018
is made by and between Protalix Ltd., a limited liability company incorporated under the laws of Israel with offices located at
2 Snunit Street, Science Park, P.O. Box 455, Carmiel 20100, Israel (“Protalix”),
and Chiesi Farmaceutici S.p.A., a company incorporated under the laws of Italy with offices located at Largo F. Belloli, 11/A,
43122 Parma, Italy (“Chiesi”) (each, a “Party”
and collectively, the “Parties”).

 

WHEREAS, Protalix owns or otherwise controls
certain patents, patent applications, technology, know-how and scientific and technical information relating to an enzyme replacement
therapy for the treatment of Fabry Disease;

 

WHEREAS, Chiesi has extensive experience
and expertise in the development and commercialization of drug products;

 

WHEREAS, Protalix and Chiesi are parties
to that certain Exclusive License and Supply Agreement dated October 17, 2017, pursuant to which Protalix granted to Chiesi an
exclusive license outside the Territory (as defined below) to such patents, patent applications, technology, know-how and scientific
and technical information, upon the terms and subject to the conditions set forth therein (such agreement, the “Ex-US
Agreement”);

 

WHEREAS, Chiesi now desires to acquire an
exclusive license in the Territory to such patents, patent applications, technology, know-how and scientific and technical information,
upon the terms and subject to the conditions set forth herein; and

 

WHEREAS, Protalix desires to grant such
license to Chiesi.

 

NOW, THEREFORE, in consideration of the
mutual covenants and agreements provided herein, Protalix and Chiesi hereby agree as follows:

 

		Section 1.	DEFINITIONS

 

For purposes of this Agreement, the following definitions shall
be applicable:

 

1.1       “Acquisition”
means, with respect to Protalix Parent (i) a completed Business Combination Transaction, unless, immediately following such completed
Business Combination Transaction all or substantially all of the individuals and entities who were the beneficial owners of the
outstanding voting securities of Protalix Parent immediately prior to such completed Business Combination Transaction beneficially
own, directly or indirectly (including through one more holding companies or subsidiaries) at least fifty percent (50%) of the
then-outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting
from such completed Business Combination Transaction (including a corporation or other entity that as a result of such transaction
owns Protalix Parent or all or substantially all of a Protalix Parent’s assets either directly or through one or more subsidiaries);
(ii) the acquisition, directly or indirectly, by any Person (other than Chiesi or its Affiliates) of beneficial ownership of at
least fifty percent (50%) or more of the outstanding voting securities of Protalix Parent, or (iii) the acquisition by a Third
Party of all or substantially all of the assets of Protalix or Protalix Parent. As used in this Agreement, “voting securities”
means any securities of Protalix Parent entitled to vote on the election of directors.

 

    			 

     

    

 

1.2       “Additional
Studies” means [***].

 

1.3       “Affiliate”
means any entity directly or indirectly controlled by, controlling, or under common control with, a Party to this Agreement, but
only for so long as such control shall continue. For purposes of this definition, “control” (including, with correlative
meanings, “controlled by”, “controlling” and “under common control with”) means (a) possession,
direct or indirect, of the power to direct or cause direction of the management or policies of an entity (whether through ownership
of securities or other ownership interests, by contract or otherwise), or (b) beneficial ownership of at least fifty-percent (50%)
of the voting securities or other ownership interest (whether directly or pursuant to any option, warrant or other similar arrangement)
or other comparable equity interests of an entity, it being understood and agreed that for purposes of clause (a), neither ownership
of voting securities or other ownership interests of an entity nor membership or representation on (if less than half of the members
of) an entity’s board of directors shall, by themselves, be presumed to constitute the power to direct or cause direction
of the management or policies of such entity. With respect to the definition of Protalix Patent Rights and the definition of Protalix
Technology, and with respect to the grant of license rights by Protalix to Chiesi under Section 2 in respect of such Protalix
Patent Rights and Protalix Technology, “Affiliates” of Protalix shall exclude any Third Party that becomes an Affiliate
due to such Third Party’s acquisition of Protalix.

 

1.4       “Alliance
Manager” shall have the meaning assigned to it in Section 3.3(a).

 

1.5       “Annual
Cap” shall have the meaning assigned to it in Section 5.3(d).

 

1.6       “Annual
Net Sales” means Net Sales for any Commercial Year.

 

1.7       “Applicable
Rate” shall have the meaning assigned to it in Section 4.6(f).

 

1.8       “Audit”
shall have the meaning assigned to it in Section 6.6.

 

1.9       “Average
Sales Price” shall have the meaning assigned to it in Section 4.6(e).

 

1.10       [***]

  

1.11       [***]

 

1.12       [***]

 

1.13       [***]

 

[***] Redacted pursuant to confidential treatment request.

    		2	 

     

    

 

1.14       “Business
Combination Transaction” means any tender or exchange offer to Protalix Parent’s stockholders, or any other
offer or proposal to Protalix Parent or its stockholders for any merger, consolidation, restructuring, recapitalization or similar
transaction with or involving Protalix Parent.

 

1.15       “Business
Day” means a day other than a Saturday, Sunday, or bank or other public holiday in New York, New York, Parma,
Italy or Carmiel, Israel.

 

1.16       “Buy-Back
Payment” shall have the meaning assigned to it in Section 12.1(d).

 

1.17       “Calendar
Quarter” means each of the four (4) three (3) month periods commencing on January 1 of any Calendar Year and ending
on (respectively) March 31, June 30, September 30, and December 31 of such Calendar Year.

 

1.18       “Calendar
Year” means the twelve (12) month period commencing on January 1 and ending on December 31 of any calendar year;
provided that the first Calendar Year of the Term, shall commence on the Effective Date and end on December 31 of such calendar
year and the last Calendar Year of the Term shall end on the date of expiration or termination of this Agreement.

 

1.19       “Claims”
shall have the meaning assigned to it in Section 13.1.

 

1.20       “Clinical
Data” means all clinical data (including, for the avoidance of doubt, all statistics, statistical source data,
and associated required formatting) generated by or on behalf of either Party in the course of performance of any clinical studies
conducted in respect of the Licensed Product in the Field.

 

1.21       “Change
of Control” means the occurrence of any of the following: (a) any consolidation or merger of a Party with
or into any Third Party, or any other corporate reorganization involving a Third Party, in which those persons or entities that
are stockholders of such Party immediately prior to such consolidation, merger or reorganization own less than fifty percent (50%)
of the surviving entity’s voting power immediately after such consolidation, merger or reorganization; (b) a change in the
legal or beneficial ownership of fifty percent (50%) or more of the voting securities of any Party (whether in a single transaction
or series of related transactions) where, immediately after giving effect to such change, the legal or beneficial owner of more
than fifty percent (50%) of the voting securities of such Party is a Third Party; or (c) the sale, transfer, lease, license or
other disposition of all or substantially all of a Party’s assets related to this Agreement in one or a series of related
transactions to a Third Party. 

 

1.22       “Chiesi
Chair” means one of the Chiesi representatives on the Steering Committee designated by Chiesi as Chiesi’s
chair for Steering Committee Meetings.

  

    		3	 

     

    

 

1.23       “Chiesi
Confidential Information” means all information or data of a proprietary or confidential nature relating to the
Commercialization of the Licensed Product in the Field in the Territory, as well as any other information regarding the business,
operations, Technology and Commercialization activities of Chiesi, whether in oral, written, graphic, machine-readable form, or
any other form, (provided that data and information disclosed orally or visually are confirmed in writing by Chiesi within thirty
(30) days after the date of such disclosure), disclosed and/or made available by or on behalf of Chiesi to Protalix, Protalix’s
Affiliates, and its and their respective directors, officers, employees, consultants, contractors and agents or otherwise acquired
by any such Persons as a result of or in connection with this Agreement and/or the Parties’ discussions (whether prior to
the execution hereof or thereafter). Notwithstanding the foregoing, unmarked information and un-confirmed information will be
considered Chiesi Confidential Information under this Agreement if a reasonable person familiar with the Licensed Product and
given the nature of information and the circumstances of disclosure would consider such information to be confidential. Such information
shall not be considered to be Chiesi Confidential Information to the extent that such information is: (a) as of the date of disclosure
known to Protalix or its Affiliates, as demonstrable in any tangible medium in existence at the time of disclosure; or (b) wholly
disclosed in published literature, or otherwise is or becomes generally known to the public through no breach by Protalix of this
Agreement; or (c) obtained by Protalix or its Affiliates from a Third Party free from any obligation of confidentiality to Chiesi;
or (d) independently developed by Protalix or its Affiliates without use of or reference to the Chiesi Confidential Information.

 

1.24       “Commercial
Medical Affairs and Pharmacovigilance” has the meaning assigned to it in Section 3.6(d)(iv).

 

1.25       “Commercial
Quarter” means each of the four (4) consecutive three (3) month periods of each Commercial Year, with the first
Commercial Quarter commencing on first day of such Commercial Year (other than the first Commercial Quarter of the first Commercial
Year, which shall commence on the first day of such Commercial Year, but end on the last day of the subsequent Calendar Quarter,
i.e., including the period from Launch through the end of the subsequent full Calendar Quarter) and the last Commercial
Quarter ending on the last day of such Commercial Year.

 

1.26       “Commercial
Year” means (a) for the sole purpose of calculating whether an Event Milestone under Section 5.2 has been
achieved, the twelve (12) month period commencing on either (i) the Launch date, or (ii) January 1 of the subsequent Calendar Year,
if during such first twelve (12) month period starting from the Launch date, Event Milestone 5 has not been achieved; or (b) for
all other purposes, the period commencing on the Launch Date and ending twelve (12) months after the first day of the subsequent
Calendar Quarter, and (in each case (a) and (b)) any subsequent twelve (12) month period.

 

1.27       “Commercialization”
means any and all activities directed to and including marketing, promoting, advertising, distributing, disposing, offering for
sale, selling, Labelling and Packaging, final product release testing, exporting and importing of a Licensed Product for commercial
sale (to the extent applicable). When used as a verb, “Commercialize”
means to engage in Commercialization.

 

1.28       “Commercialization
Plan” shall have the meaning set forth in Section 3.7(a).

 

    		4	 

     

    

 

1.29       “Commercially
Reasonable Efforts” means, with respect to the efforts to be expended by a Party with respect to the objective
that is the subject of such efforts, reasonable, good faith efforts and resources to accomplish such objective that such Party
would normally use to accomplish a similar objective under similar circumstances, it being understood and agreed that with respect
to the Commercialization of the Licensed Product in the Field in the Territory by Chiesi, such efforts shall be similar to those
efforts and resources consistent with the usual practice of Chiesi in pursuing the Commercialization of drug products owned by
it or to which it otherwise has rights that are of similar market potential as a Licensed Product in the Territory, taking into
account all relevant factors, including the orphan drug status (if any) of the Licensed Product and other regulatory matters, safety
and efficacy matters, product labeling or anticipated labeling, pricing, present and future market potential, past performance
of the Licensed Product, past performance of Chiesi’s own drug products that are of similar market potential (taking into
account that the Licensed Product is intended for the treatment of a rare disease), financial return [***], medical and clinical
considerations, present and future regulatory environment and competitive market conditions, all as measured by the facts and circumstances
at the time such efforts are due. It is anticipated that the level of effort constituting Commercially Reasonable Efforts may change
over time. With respect to the Commercialization of the Licensed Product in the Field in the Territory by Chiesi, such efforts
shall include [***]. With respect to the [***] and each subsequent Commercial Year thereafter during the Term, on an annual basis
and at least one hundred and twenty (120) days prior to the start of such Commercial Year, the Parties shall, through the Steering
Committee, discuss and mutually agree, acting reasonably and in good faith, upon the appropriate minimum number of FTEs to apply
during such upcoming Commercial Year, with the intent that such number reflect the number of FTEs needed to successfully Commercialize
the Licensed Product in the Territory given the then-current market conditions, and taking into account each of the other relevant
factors set forth in the first sentence of this Section 1.29. In the event that the Parties are unable to agree upon the
appropriate minimum number of FTEs to apply during such Commercial Year at least sixty (60) days prior to the start of such Commercial
Year, such matter shall be escalated to the Parties’ respective Chief Executive Officers, who shall attempt to resolve such
issue within a subsequent thirty (30) day period.

 

1.30       “Competing
Product” means [***].

 

1.31       “Competing
Product Patent” means any Third Party Patent or Patent Application owned or controlled by a Third Party that (itself
or through an affiliate) is selling, or has sold, a Competing Product anywhere in the world.

 

1.32       “Compliance
Records” shall have the meaning assigned to it in Section 6.6.

 

1.33       “Compound”
means (a) a plant cell-expressed recombinant form of human alpha-Galactosidase-A, including pegunigalsidase alfa (PRX-102) and
(b) any analogs, derivatives and variants thereof.

 

[***] Redacted pursuant to confidential treatment request.

    		5	 

     

    

 

1.34       “Confidential
Information” means the Protalix Confidential Information or the Chiesi Confidential Information, as applicable.

 

1.35       “Control”
or “Controlled” means, with respect to any compound, material, information,
or intellectual property right, that a Party owns or has a license to use, commercialize, manufacture, market, distribute or sell,
and has the ability to grant to the other Party access and/or a license or a sublicense (as applicable under this Agreement) to,
such compound, material, information, or intellectual property right as provided for herein without violating (a) the terms of
any agreement or other arrangements with any Third Party existing before or after the Effective Date or (b) any Law applicable
to such license or sublicense.

 

1.36       “Country”
means any generally recognized sovereign entity.

 

1.37       “CMC”
means, in respect of a regulatory filing, “Chemistry, Manufacturing, and Controls”.

 

1.38       “Deferred
Milestone” shall have the meaning assigned to it in Section 5.2(d).

 

1.39       “Development”
or “Develop” means conducting non-clinical (including pre-clinical
studies and CMC activities) and clinical trials (including the Ongoing Clinical Studies and the [***]), collecting,
validating and analyzing pre-clinical and clinical trial data, preparing and submitting any regulatory filings prior to obtaining
Regulatory Approval, preparing the clinical and Manufacturing portions of any regulatory filing seeking Regulatory Approval (including
portions relating to CMC), and regulatory affairs related to the foregoing. When used as a verb, “Develop” means to
engage in Development. For clarity, Development does not include any regulatory affairs or commitments in respect of the Licensed
Product in the Territory following Regulatory Approval for such Licensed Product in the Territory, or any of the foregoing in connection
therewith. When used as a verb, “Developing” means to engage in Development.

 

1.40       “Development
Costs” means Protalix’s fully-loaded costs related to the Development of (and obtaining Regulatory Approval
from the FDA for) the Licensed Product, excluding Patent Costs, and including any (a) direct, out-of-pocket costs and expenses,
including clinical or medical grants, clinical laboratory fees, positive controls and the cost of pre-clinical and clinical studies
conducted and services provided by contract research organizations, and (b) the conduct of clinical studies, including costs and
expenses associated with data management, statistical designs and studies, document preparation and any and all other costs and
expenses associated with preparing and submitting regulatory filings, obtaining (including, solely with respect to approvals granted
upon specific conditions requiring the conduct of specified additional required studies to maintain such granted Regulatory Approval,
maintaining) Regulatory Approval for the Licensed Product, and the conduct of the clinical Development program for the Licensed
Product, including as set out in the Development Plan [***].

 

1.41       “Development
Costs Cap” shall have the meaning assigned to it in Section 5.3(c).

 

1.42       “Development
Plan” shall have the meaning assigned to it in Section 3.1.

 

[***] Redacted pursuant to confidential treatment request.

    		6	 

     

    

 

1.43       “Drug
Substance” means the Compound component of a pharmaceutical drug product.

 

1.44       “Drug
Product” means unlabeled vials of Licensed Product [***], but not Labeling and Packaging.

 

1.45       “Early
Access Program” means any program to provide patients with the Licensed Product prior to Regulatory Approval and
prior to Launch in the Territory. Early Access Programs include, for example, any expanded compassionate use or expanded access
programs authorized by the FDA in the Territory.

 

1.46       “Effective
Date” means the date of this Agreement.

 

1.47       “EMA”
means the European Medicine Agency or any successor agency thereto.

 

1.48       “European
Union” or “EU” means the Countries that are members
of the European Union as of the Effective Date or that become members of the European Union thereafter, and includes, for the avoidance
of doubt, any Countries that as of the Effective Date, or at any point during the Term thereafter, cease being members of the European
Union, but that remain subject to any applicable Law of the EU.

 

1.49       “Event
Milestone” shall have the meaning set forth in Section 5.2(a).

 

1.50       “Event
Milestone 1”, “Event Milestone 2”, “Event
Milestone 3”, “Event Milestone 4”, “Event
Milestone 5”, “Event Milestone 6”, “Event
Milestone 7”, “Event Milestone 8”, “Event
Milestone 9”, “Event Milestone 10”, “Event
Milestone 11”, “Event Milestone 12”, “Event
Milestone 13”, “Event Milestone 14”, “Event
Milestone 15”, “Event Milestone 16”, “Event
Milestone 17”, “Event Milestone 18”, and “Event
Milestone 19”, shall each have the meanings assigned to those terms in Section 5.2(a).

 

1.51       “Event
Milestone Payments” means the amounts set forth in Section 5.2(a) opposite the respective Event Milestones,
subject to Sections 5.2(b), 5.2(c) and 5.2(d).

 

1.52       “Extension
Studies” means any extension study that allows patients to continue to receive study treatment when the original
Ongoing Clinical Studies into which they were enrolled have reached their designated end-dates.

 

1.53       “Ex-US
Agreement” shall have the meaning assigned to it in the Recitals.

 

1.54       [***]

 

[***] Redacted pursuant to confidential treatment request.

    		7	 

     

    

 

1.55       “Facility”
means, as applicable, Protalix’s Manufacturing facility and such other facilities used by Protalix (or its Affiliates, permitted
licensees, permitted sublicensees or designees [***]) in the Manufacture or storage of (a) Drug Substance, (b) Drug Product or
(c) materials utilized in the Manufacture of Drug Substance or Drug Product.

 

1.56       “Failure
to Supply” shall have the meaning assigned to it in Section 4.14(a).

 

1.57       “FDA”
means the United States Food and Drug Administration (or any successor agency thereto).

 

1.58       “Field”
means enzyme replacement therapy for the treatment of Fabry Disease.

 

1.59       [***]

 

1.60       [***]

  

1.61       “Financial
Records” shall have the meaning assigned to it in Section 6.6.

 

1.62       “Force
Majeure Event” shall have the meaning assigned to it in Section 15.1.

 

1.63       “Forecast”
shall have the meaning assigned to it in Section 4.5(a).

 

1.64       “FTE”
shall mean one or more persons allocated on a full-time basis to the Commercialization of the Licensed Product in the Territory
(both at a headquarter and country level, and including, for clarity, any product specialists, key asset managers, sales representatives,
medical science liaisons, or medical, regulatory, market access and marketing personnel).

 

1.65       “GAAP”
means United States generally accepted accounting principles consistently applied.

 

1.66       “Good
Manufacturing Practices” or “GMP” means all applicable
Good Manufacturing Practices including, (i) the applicable part of quality assurance to ensure that products are consistently produced
and controlled in accordance with the quality standards appropriate for their intended use, as defined in European Commission Directive
2003/94/EC laying down the principals and guidelines of good manufacturing practice, (ii) the principles detailed in the U.S. Current
Good Manufacturing Practices, 21 C.F.R. Sections 210 and 211, (iii) the Rules Governing Medicinal Products in the European Community,
Volume IV Good Manufacturing Practice for Medicinal Products, (iv) the principles detailed in the ICH Q7A guidelines, and (v) the
equivalent Laws in any relevant Country, each as may be amended and applicable from time to time.

 

[***] Redacted pursuant
to confidential treatment request.

    		8	 

     

    

 

1.67       “Governmental
Authority” means any court, agency, department, authority or other instrumentality of any national, supra national,
state, county, city or other political subdivision.

 

1.68       “ICC
Rules” shall have the meaning assigned to it in Section 14.2(b).

 

1.69       “IND”
means (i) an investigational new drug application as defined in 21 CFR 312.3 and all amendments and supplements thereto filed
with the FDA or (ii) an equivalent application filed with any equivalent foreign agency or Governmental Authority including all
documents, data and other information concerning use of an investigational pharmaceutical product which are necessary for gaining
authorization from such equivalent foreign agency or Governmental Authority to ship and use such product in clinical investigations.

 

1.70       “Indemnified
Party” shall have the meaning assigned to it in Section 13.4(a).

 

1.71       “Indemnifying
Party” shall have the meaning assigned to it in Section 13.4(a).

 

1.72       “Indenture”
means the Indenture, dated as of December 7, 2016, as amended, supplemented or restated from time to time, among Protalix Parent,
as Issuer, the Guarantors party thereto, The Bank of New York Mellon Trust Company, N.A., as Trustee, and Wilmington Savings Fund
Society, FSB, as Collateral Agent.

 

1.73       “Indenture
Collateral Agent” means Wilmington Savings Fund Society, FSB, as Collateral Agent under the Indenture and the
Indenture Security Documents, or any successor thereto.

 

1.74       “Indenture
Security Documents” means the security agreements and other documentation defined as “Security Documents”
under the Indenture.

 

1.75       “Indenture
Trustee” means The Bank of New York Mellon Trust Company, N.A., as Trustee under the Indenture, or any successor
thereto.

 

1.76       “Initial
Forecast” shall have the meaning assigned to it in Section 4.5(a).

 

1.77       “Initiation”
means, with respect to the Phase 1 Clinical Trial for a New Use, the first study-specific screening activities.

 

1.78       “IRB”
means an Institutional Review Board within the meaning of 45 C.F.R. part 46. For the avoidance of doubt, similarly constituted
bodies identified as independent ethics committees, ethical review boards, or research ethics boards shall, in each case, constitute
IRBs for the purposes of this Agreement.

 

1.79       “Israeli
Security Trustee” means Altshuler Shaham Trusts Ltd. as in its capacity as Security Trustee under the Israeli law governed
Security Documents.

 

    		9	 

     

    

 

1.80       “Invention”
means all inventions, discoveries and improvements (whether or not patentable) that are made, conceived, or first actually reduced
to practice by or on behalf of a Party or any of its Affiliates.

 

1.81       “Joint
Legal Counsel” shall have the meaning assigned to it in Section 14.3(a).

 

1.82       “Joint
Legal Opinion” shall have the meaning assigned to it in Section 14.3(a).

 

1.83       “Label”
means, with respect to a Licensed Product, all labels and other written, printed, or graphic matter (a) on the Licensed Product
containers or wrappers, or (b) accompanying the Licensed Product.

 

1.84       “Labeling
and Packaging” means the final product labeling and packaging of the Drug Product, including materials to be inserted
such as patient inserts, patient medication guides, professional inserts and any other written, printed or graphic materials accompanying
the Drug Product.

 

1.85       “Launch”
with respect to the Territory, means the first shipment of a Licensed Product in commercial quantities for commercial sale by Chiesi
or its Affiliates to a Third Party in the Territory after receipt of the first Regulatory Approval for such Licensed Product in
the Territory. “Launched”, when used in respect of the Licensed Product,
means that the Launch of such Licensed Product has already occurred in the Territory.

 

1.86       “Laws”
means all laws, statutes, rules, regulations, codes, administrative or judicial orders, judgments, decrees, injunctions and/or
ordinances of any Governmental Authority, and common law or other legal requirements of any kind, whether currently in existence
or hereafter promulgated, enacted, adopted or amended.

 

1.87       “Licensed
Product” means any finished dosage form of a drug product that contains the Drug Substance and either: (a) the
manufacture, sale, offer for sale, importation, or use of which (i) would, absent the license granted by Protalix to Chiesi herein,
infringe at least one Valid Claim of a Protalix Patent Right or (ii) embodies, incorporates or uses Protalix Technology, or (b)
is supplied by Protalix to Chiesi under this Agreement as Drug Product or, after the [***] (subject to Chiesi performing Labeling
and Packaging in respect of such Drug Product and, after [***].

 

1.88       “Long
Range Forecast” shall have the meaning assigned to it in Section 4.5(b).

 

1.89       “Manufacture”
or “Manufacturing” means all activities related to the manufacturing
of the Drug Substance, Drug Product or Licensed Product (as applicable), and/or any ingredient thereof, including manufacturing
for clinical use or commercial sale, in-process and finished product testing, the final product labeling and packaging of the product,
release of product, quality assurance activities related to manufacturing and release of product and ongoing stability tests and
regulatory activities related to any of the foregoing.

 

[***] Redacted pursuant
to confidential treatment request.

    		10	 

     

    

 

1.90       “Manufacturing
Certificate of Analysis” shall have the meaning assigned to it in Section 4.8(a)(i).

 

1.91       “Material
Change” shall have the meaning assigned to it in Section 7.2(a).

 

1.92       “Maximum
Order Quantity” shall have the meaning assigned to it in Section 4.6(i).

 

1.93       “Minimum
Batch Size” means the minimum batch size for Drug Product (as may be updated by Protalix from time to time, in
its sole discretion for any variance of [***] or less, and only with Chiesi’s prior consent for any variance of more than
[***], such consent not to be unreasonably withheld, conditioned or delayed), which currently is [***] vials of Licensed Product.

 

1.94       “Minimum
Payment” shall have the meaning assigned to it in Section 4.6(h).

 

1.95       “NDA”
means a New Drug Application or Biologics License Application (as applicable) filed with the FDA with respect to a drug product
or an analogous application or filing with any Regulatory Authority outside of the United States (including any supra-national
entity such as the European Union) for the purpose of obtaining approval to market and sell a drug product in such jurisdiction.

 

1.96       “Negotiation
Period” means the ninety (90)-day period beginning on the date as set forth in Section 2.5(b) of the Ex-US Agreement.

 

1.97       “Net
Sales” means, with respect to a Licensed Product, the gross amounts invoiced by Chiesi or its Affiliates for sale
of Licensed Product, less the following customary deductions, determined in accordance with GAAP and standard internal policies
and procedures and accounting standards and methods consistently applied throughout Chiesi’s organization, to the extent
specifically and solely allocated to such Licensed Product and actually taken, paid, accrued, allowed, included or allocated: [***]

 

1.98       “New
Indication” means a distinct type of disease or medical condition in humans to which a Licensed Product is directed
that is not the Field.

 

1.99       [***]

 

1.100       “New
Use” shall have the meaning assigned to it in the Ex-US Agreement.

 

1.101       “Notice
of Non-Conformance” shall have the meaning assigned to it in Section 4.8(a)(i).

 

1.102       “Ongoing
Clinical Study” means [***].

 

[***] Redacted pursuant to confidential
treatment request.

    		11	 

     

    

 

1.103       “Orphan
Drug Designation” shall have the meaning set out in 21 C.F.R. Part 316.

 

1.104       “Other
Patent Challenge” shall have the meaning assigned to it in Section 2.7(c).

 

1.105       “Outside
of the Scope Product” shall have the meaning assigned to it in Section 7.2(a).

 

1.106       “Patent
Application” means any application for a Patent.

 

1.107       “Patent
Costs” means any and all costs and expenses incurred by Protalix in respect of the exercise of any of its rights
and obligations under Section 7 of this Agreement.

 

1.108       “Patent
Rights” means Patents and Patent Applications.

 

1.109       “Patents”
means issued patents, whether domestic or foreign, including all continuations, continuations-in-part, divisions, provisionals
and renewals, and letters of patent granted with respect to any of the foregoing, patents of addition, supplementary protection
certificates, registration or confirmation patents and all reissues, re-examination and extensions thereof.

 

1.110       “Patent
Ownership Challenge” shall have the meaning assigned to it in Section 2.7(a).

 

1.111       “PCT”
means the Patent Cooperation Treaty, opened for signature June 19, 1970, 28 U.S.T. 7645.

 

1.112       “Pediatric
Study” means the pediatric clinical study of the Licensed Product that, as of the effective date of the ex-US
Agreement, was being designed and prepared by Protalix, to be conducted in accordance with Section 3.2(d).

 

1.113       “Person”
means an individual, corporation, partnership, company, joint venture, unincorporated organization, limited liability company or
partnership, sole proprietorship, association, bank, trust company or trust, whether or not legal entities, or any Governmental
Authority.

 

1.114       “Pharmacovigilance
Agreement” shall have the meaning assigned to it in Section 3.6(f).

 

1.115       “Phase
1 Clinical Trial” means a human clinical trial of the initial Licensed Product that would satisfy the requirements
of 21 C.F.R. § 312.21(a) or any other equivalent foreign requirements.

 

    		12	 

     

    

 

1.116       “Post-Approval
Studies” means any pre-clinical or clinical studies for a Licensed Product (or for the Drug Substance therein)
commenced after receipt of Regulatory Approval for such Licensed Product, that are not [***].

 

1.117       “Price”
means the price to be charged by Protalix and paid by Chiesi for Drug Product [***] sold by Protalix to Chiesi under this Agreement
as specifically determined in accordance with Section 4.6.

 

1.118       “Product
Marks” shall have the meaning assigned to it in Section 3.9(b).

 

1.119       “Product
Specifications” means those Manufacturing, performance, quality - control release, and other specifications for
Drug Substance, Drug Product or Licensed Product in the Territory, which are initially as set forth in the applicable Regulatory
Approval for a Licensed Product, as such specifications may be amended from time to time pursuant to the terms of this Agreement.

 

1.120       “Protalix
Chair” means one of the Protalix representatives on the Steering Committee designated by Protalix as Protalix’s
chair for Steering Committee Meetings.

 

1.121       “Protalix
Confidential Information” means all information or data of a proprietary or confidential nature relating to the
Protalix Technology, Compound or Licensed Product as well as any other information, including proprietary information and materials,
regarding the business, operations, research, Technology and the supply, Manufacture, Development and Commercialization activities
of Protalix, whether in oral, written, graphic, machine-readable form, or any other form, (provided that data and information disclosed
orally or visually are confirmed in writing by Protalix within thirty (30) days after the date of such disclosure), disclosed and/or
made available by or on behalf of Protalix to Chiesi, Chiesi’s Affiliates, and its and their respective directors, officers,
employees, consultants, contractors and agents or otherwise acquired by any such Persons as a result of or in connection with this
Agreement and/or the Parties’ discussions (whether prior to the execution hereof or thereafter). Notwithstanding the foregoing,
unmarked information and un-confirmed information will be considered Protalix Confidential Information under this Agreement if
a reasonable person familiar with the Licensed Product and given the nature of information and the circumstances of disclosure
would consider such information to be confidential. Such information shall not be considered to be Protalix Confidential Information
to the extent that such information is: (a) as of the date of disclosure known to Chiesi or its Affiliates, as demonstrable in
any tangible medium in existence at the time of disclosure; or (b) wholly disclosed in published literature, or otherwise is or
becomes generally known to the public through no breach by Chiesi of this Agreement; or (c) obtained by Chiesi or its Affiliates
from a Third Party free from any obligation of confidentiality to Protalix; or (d) independently developed by Chiesi or its Affiliates
without use of or reference to the Protalix Confidential Information.

 

1.122       “Protalix
Parent” means Protalix Biotherapeutics, Inc.

 

[***] Redacted pursuant
to confidential treatment request. 

    		13	 

     

    

 

1.123       “Protalix
Patent Rights” means all Patent Rights owned or otherwise Controlled by Protalix or any of its Affiliates as of
the Effective Date or at any time during the Term that claim the composition of matter, manufacture or use of the Compound, Drug
Substance or a drug product that contains Drug Substance (or, with respect to the use of the term Protalix Patent Rights in Section
7 of this Agreement only, of a recombinant form of alpha-Galactosidase), including the Patent Rights listed in Exhibit A.

 

1.124       “Protalix
System Patent Rights” means Protalix Patent Rights that relate primarily to the System.

 

1.125       “Protalix
Trademarks” shall have the meaning assigned to it in Section 3.10.

 

1.126       “Protalix
Technology” means any Technology owned or otherwise Controlled by Protalix or any of its Affiliates as of the
Effective Date or at any time during the Term that is necessary or useful for the Development, Manufacture, use or Commercialization
of Compound, Drug Substance or a drug product that contains Drug Substance, including the System.

 

1.127       “Purchase
Order” shall have the meaning assigned to it in Section 4.5(a).

 

1.128       “Quality
Agreement” means the Quality Agreement(s) to be entered into (or already entered into) between Protalix and Chiesi
under the Ex-US Agreement, with respect to the Drug Product [***].

 

1.129       [***]

 

1.130       [***]

 

1.131       “Reconciliation
Adjustment” shall have the meaning assigned to it in Section 4.6(h).

 

1.132       “Referent
Person” shall have the meaning assigned to it in Section 8.5.

 

1.133       “Registry”
shall mean an organized system that uses observational study methods to collect uniform data (clinical and other) to evaluate specified
outcomes for a population defined by a particular disease, condition, or exposure, and that serves one or more predetermined scientific,
clinical, or policy purposes and meets the requirements of the applicable Regulatory Authority.

 

1.134       “Reimbursed
Party” shall have the meaning assigned to it in Section 5.3(i).

 

[***] Redacted pursuant to confidential
treatment request. 

    		14	 

     

    

 

1.135       “Reimbursing
Party” shall have the meaning assigned to it in Section 5.3(i).

 

1.136       “Regulatory
Approval” means any and all approvals, or authorizations of a Regulatory Authority, that are necessary for the
commercial Manufacture, distribution, use, marketing or sale of a drug product in the Territory, including but not limited to any
NDAs.

 

1.137       “Regulatory
Authority” means, in respect of a particular Country or jurisdiction, the Governmental Authority having responsibility
for granting Regulatory Approvals in such Country or jurisdiction.

 

1.138       “Regulatory
Exclusivity” means any rights or protections which are recognized, afforded or granted by the FDA, in association
with the Regulatory Approval of a Licensed Product, providing such Licensed Product: (a) a period of marketing exclusivity, during
which the Regulatory Authority recognizing, affording or granting such marketing exclusivity will refrain from either reviewing
or approving a marketing authorization application or similar regulatory submission, submitted by a Person other than Chiesi or
its Affiliates seeking to market a drug product in which the Drug Substance is the primary ingredient, or during which such an
application or submission may be reviewed or approved by a Regulatory Authority, but the product may not be placed on the market
or (b) a period of data exclusivity, during which a Person, other than Chiesi or its Affiliates, seeking to market a drug product
in which the Drug Substance is the primary ingredient, is precluded from either referencing or relying upon a Licensed Product’s
clinical dossier or relying on previous findings of safety or effectiveness with respect to a Licensed Product to support the submission,
review or approval of a marketing authorization application or similar regulatory submission before the applicable Regulatory Authority.

 

1.139       [***]

 

1.140       [***]

 

1.141       [***]

 

1.142       “Safety
Stock” shall have the meaning assigned to it in Section 4.12(a).

 

1.143       “Safety
Stock Amount” shall have the meaning assigned to it in Section 4.12(a).

 

1.144       “Shortage”
shall have the meaning assigned to it in Section 4.11.

 

1.145       “Side
Letter” means that certain Side Letter to this Agreement effective on the Effective Date and made by and between
Chiesi and Protalix.

  

1.146       “Standby
License” shall have the meaning assigned to in Section 2.2(d).

 

[***]
Redacted pursuant to confidential treatment request.

    		15	 

     

    

 

1.147       “Steering
Committee” shall have the meaning assigned to it in Section 3.3(a).

 

1.148       “Steering
Committee Meeting” shall have the meaning assigned to it in Section 3.3(b).

 

1.149       “Sublicense”
means the grant by Chiesi of a sublicense under, or an agreement of Chiesi not to assert, any of the rights licensed by Protalix
to Chiesi pursuant to Section 2.1.

 

1.150       [***]

 

1.151       “System”
means Protalix’s proprietary protein expression system, ProCellExTM.

 

1.152       “Technology”
means proprietary materials, technology, data, results and non-public technical, scientific and clinical information, in any tangible
or intangible form, including know-how, expertise, trade secrets, practices, techniques, methods, processes, developments, specifications,
formulations, formulae, including any intellectual property rights embodying any of the foregoing, but excluding Patent Rights.

 

1.153       “Term”
shall have the meaning assigned to it in Section 11.

 

1.154       “Territory”
means the United States.

 

1.155       “Third
Party” means any Person other than Chiesi, Protalix, or any of their respective Affiliates.

 

1.156       “Third
Party Claim” shall have the meaning assigned to it in Section 13.4(a).

 

1.157       “Third
Party License” means each license agreement between Protalix and a Third Party pursuant to which or from which
Protalix licenses Protalix Patent Rights or Protalix Technology, including those listed on Exhibit B.

 

1.158       “United
States” or “U.S.” means the United States of America,
its territories and possessions.

 

[***] Redacted pursuant to confidential
treatment request.

 

    		16	 

     

    

 

1.159       “Valid
Claim” means (a) a claim of an issued and unexpired Patent (including the term of any patent term extension, supplemental
protection certificate, renewal or other extension) which has not been held unpatentable, invalid or unenforceable in a final decision
of a court or other Governmental Authority of competent jurisdiction from which no appeal may be or has been taken, and which has
not been admitted to be invalid or unenforceable through reissue, re-examination or disclaimer; or (b) a claim of a Patent Application,
which claim has been pending less than seven (7) years from the original priority date of such claim in a given jurisdiction, unless
or until such claim thereafter issues as a claim of an issued Patent (from and after which time the same shall be deemed a Valid
Claim subject to paragraph (a) above).

 

1.160       “Yearly
Reconciliation” shall have the meaning assigned to it in Section 4.6(h).

 

1.161       Construction.
Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (a) “include”,
“includes” and “including” are not limiting and mean include, includes and including, without limitation;
(b) definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (c) references
to an agreement, statute or instrument mean such agreement, statute or instrument as from time to time amended, modified or supplemented;
(d) references to a Person are also to its permitted successors and assigns; (e) references to an “Article”, “Section”,
“Exhibit” or “Schedule” refer to an Article or Section of, or any Exhibit or Schedule to, this Agreement
unless otherwise indicated; (f) the word “will” shall be construed to have the same meaning and effect as the word
“shall”; and (g) the word “any” shall mean “any and all” unless otherwise indicated by context.

 

		Section 2.	LICENSE

 

2.1       Exclusive
License. Subject to the terms of this Agreement, including Section 2.2, Protalix hereby grants to Chiesi, and Chiesi
hereby accepts, an exclusive (including as to Protalix and its Affiliates, except as set forth in Section 2.2), non-transferable,
license during the Term, solely in the Territory and within the Field, including the right to Sublicense to its Affiliates (solely
as permitted under and in accordance with Section 2.4):

 

(a)       under
the Protalix Patent Rights to (i) Commercialize the Licensed Product in the Field in the Territory, (ii) on a non-exclusive basis,
following the completion of [***] (if any), carry out [***] activities with respect to the Licensed Product in the Field in the
Territory, and (iii) seek and obtain Regulatory Approval for the Licensed Product in the Field in the Territory (in each case,
in accordance with Section 3); and

 

(b)       to
use Protalix Technology as necessary to (i) seek and obtain Regulatory Approval for the Licensed Product in the Field in the
Territory, including following the transfer contemplated by Section 3.6(c), to prepare and submit any regulatory
filings and communicate with Regulatory Authorities with respect to the Licensed Product in the Field in the Territory (in
each case, in accordance with Section 3), (ii) following completion of the transfers contemplated
by Section 3.6(d)(iv), on a non-exclusive basis, carry out its Commercial Medical Affairs and Pharmacovigilance
responsibilities, (iii) on a non-exclusive basis, following the completion of [***], carry out
[***] activities with respect to the Licensed Product in the Field in the Territory, and (iv) Commercialize the
Licensed Product in the Field in the Territory.

 

[***]
Redacted pursuant to confidential treatment request.

    		17	 

     

    

 

2.2       Other
License Provisions.

 

(a)       The
licenses granted to Chiesi pursuant to Section 2.1 shall be co-exclusive with Protalix to the extent it is necessary or
useful for Protalix to perform its obligations under this Agreement.

 

(b)       The
Parties expressly acknowledge and agree that, the exclusivity grant in favor of Chiesi in Section 2.1 shall not be construed
as limiting (i) Protalix’s right to Develop or Manufacture the Licensed Product (or the Compound, Drug Substance or Drug
Product for use in the Licensed Product), (ii) Protalix’s right to Commercialize the Licensed Product outside of the Field
or, subject to the Ex-US Agreement, outside of the Territory, or (iii) subject to the Ex-US Agreement, any of Protalix’s
rights in respect of the Licensed Product (including its rights under the Protalix Patent Rights) outside of the Territory.

 

(c)       For
purposes of clarity, Chiesi acknowledges that in the event Protalix does not have exclusive rights to Protalix Patent Rights or
Protalix Technology licensed or obtained by Protalix from Third Parties vis à vis the Third Party licensor, Chiesi’s
rights to such Protalix Patent Rights or Protalix Technology under the sublicenses granted under Section 2.1 would not be
exclusive vis à vis the Third Party licensor or its licensees (but would have the same scope of rights licensed or obtained
by Protalix thereunder to the extent such rights are granted to Chiesi by Protalix hereunder and permitted to be granted by Protalix
to Chiesi under such Third Party License).

 

(d)       Protalix
shall use Commercially Reasonable Efforts to obtain an agreement between Chiesi and such Third Party licensor pursuant to which,
in the event that the applicable Third Party License is terminated for any reason, such Third Party licensor would grant Chiesi
a license to the Protalix Patent Rights or Protalix Technology (as applicable) that Protalix has licensed from that Third Party
licensor to the extent included in, and solely for the purpose of, the license granted to Chiesi hereunder (each such agreement,
a “Standby License”), including approaching such Third Party licensor
with respect thereto within thirty (30) days after the Effective Date.

 

2.3       Non-Assertion
of Rights.

 

(a)       During
the Term, Chiesi shall not, and shall cause its Affiliates not to, assert any Patent Rights or Technology owned or Controlled by
Chiesi and its Affiliates against Protalix, its Affiliates or permitted sublicensees for (i) exercising its rights and performing
its obligations pursuant to this Agreement or (ii) subject to the Ex-Us Agreement, using, making, having made, selling, offering
for sale, supplying, causing to be supplied and importing the Drug Substance or Licensed Product outside the Territory.

 

(b)       The
covenant not to sue in Section 2.3(a) shall inure to the benefit of any permitted assignee of this Agreement pursuant to
Section 15.6.

 

    		18	 

     

    

 

(c)       During
the Term, Protalix shall not, and shall cause its Affiliates not to, assert any Protalix System Patent Rights owned or Controlled
by Protalix and its Affiliates against Chiesi and its Affiliates for exercising its rights and performing its obligations pursuant
to and in accordance with this Agreement and the license granted herein. Such covenant not to sue shall inure to the benefit of
any permitted assignee of this Agreement pursuant to Section 15.6.

 

2.4       Sublicensing
and Subcontracting.

 

(a)       Chiesi
may only grant Sublicenses to its Affiliates, which Sublicense shall automatically terminate when such Affiliate ceases to be an
Affiliate of Chiesi, for the purposes of exercising, on behalf of Chiesi, any of the rights granted to Chiesi in Section 2.1
(other than the right to grant Sublicenses thereunder). Any sublicensee obligations required by a Third Party License to be
included in a sublicense shall be deemed to be included in this Agreement as obligations of Chiesi. To the extent that Chiesi wishes
to grant a Sublicense other than in accordance with this Section 2.4(a), Chiesi must first obtain the express written consent
of Protalix to such Sublicense in Protalix’s sole discretion.

 

(b)       Right
to Subcontract. Each Party may, subject to Section 4.3 and Section 8, subcontract its rights and obligations
under this Agreement to an Affiliate or Third Party as it would in the normal course of its business without the prior written
consent of the other Party, except that Chiesi may not subcontract to any Third Party (including sub-distributors and contract
sales organizations), without the prior written consent of Protalix, such consent not to be unreasonably delayed, withheld or conditioned,
its rights or obligations to promote the Licensed Product (and the majority of the members of Chiesi’s sales force shall
be employees of Chiesi or its Affiliate).

 

2.5       Liability
for Affiliates and Subcontractors

 

. Each Party shall ensure that each of its Affiliates and permitted
subcontractors accepts and complies with all of the applicable terms and conditions of this Agreement as if such Affiliates or
permitted subcontractors were Parties to this Agreement and each Party shall remain fully responsible and fully liable for its
Affiliates’ and permitted subcontractors’ performance under this Agreement.

 

2.6       New
Indications.

 

(a)       As
provided in the Ex-US Agreement, Protalix shall notify the Steering Committee, at least every six (6) months during the Term, of
any material updates with respect to any material Development activities, with respect to the Licensed Product for a New Indication
(a “New Use”).

 

(b)       [***]

 

(c)       [***]

[***] Redacted pursuant to confidential treatment request.

    		19	 

     

    

 

2.7       Patent
Challenges.

 

(a)       During
the Term of this Agreement, Chiesi and its Affiliates hereby covenant and agree not to, directly or indirectly, commence any legal
proceeding, or to, directly or indirectly, provide support or assistance in respect of any legal proceeding commenced by a Third
Party, that challenges the ownership of any Protalix Patent Right, including any Protalix System Patent Right, to the extent such
Protalix Patent Right relates to the Compound or Licensed Product or the Development, Manufacture or Commercialization of the Compound
or Licensed Product (a “Patent Ownership Challenge”).

 

(b)       If
Chiesi or its Affiliate directly or indirectly commences (or provides any support or assistance in respect of) any Patent Ownership
Challenge or any Other Patent Challenge, Protalix shall have the right to immediately terminate this Agreement by written notice
effective upon receipt by Chiesi. The foregoing right of Protalix to terminate this Agreement shall not apply to any such challenge
that arises out of or is in connection with any legal action commenced by Protalix against Chiesi, in which Protalix asserts any
Protalix Patent Rights or other Patent Rights against Chiesi, whether arising out of or in connection with this Agreement or otherwise.

 

(c)       For
the purpose of this Section 2.7, the term “Other Patent Challenges”
means any legal proceeding that challenges the validity or enforceability of any Protalix Patent Right, including any Protalix
System Patent Right, to the extent such Protalix Patent Right relates to the Compound or Licensed Product or the Development, Manufacture
or Commercialization of the Compound or Licensed Product (“Other Patent Challenge”).

 

(d)       Without
limiting the generality of the foregoing, Chiesi specifically agrees that filing a request for re-examination, knowingly copying
patent claims so as to institute an interference, or filing an opposition with respect to any of the Protalix Patent Rights shall
be deemed an Other Patent Challenge hereunder.

 

2.8       No
Implied License. Except for the licenses and other rights expressly granted to Chiesi herein, all right, title and interest
in and to the Protalix Patent Rights, Protalix Technology, and Protalix Confidential Information (and all modifications, derivatives
and improvements thereof), and any other rights of Protalix and its Affiliates not expressly granted to Chiesi hereunder (including,
for clarity, all of the foregoing with respect to any Outside of the Scope Products), shall remain solely with Protalix, its Affiliates
and its Third Party licensors, as applicable. To the extent any such rights vest in Chiesi (by operation of Chiesi’s exercise
of its step-in rights under Section 3.2(b) or otherwise), then Chiesi shall, and hereby does, irrevocably assign all such
right, title and interest in and to the Protalix Patent Rights, Protalix Technology, and Protalix Confidential Information (and
all modifications, derivatives and improvements thereof) to Protalix, and hereby acknowledges and agrees that any such rights
are and shall remain owned solely by Protalix. Except as expressly provided in this Section 2 or elsewhere in this Agreement,
neither Party will be deemed by this Agreement to have been granted any license or other rights to the other Party’s intellectual
property rights, either expressly or by implication, estoppel or otherwise. Notwithstanding anything to the contrary in this Agreement,
the Parties acknowledge and agree that the Development and Commercialization of any Outside of the Scope Products (including any
New Uses) shall not be within the scope of the licenses granted to Chiesi pursuant to Section 2 hereunder (except as expressly
provided in Section 2.6).

 

    		20	 

     

    

 

		Section 3.	DEVELOPMENT, REGULATORY APPROVALS AND MARKETING

 

3.1       Development
Plan. For the avoidance of doubt, the development plan that has already been prepared by Protalix pursuant to the Ex-US Agreement,
to describe the Development program of, and otherwise govern the Development of, the Licensed Product in the Field, including
the continuing conduct by Protalix (subject to Section 3.2(d)) of each Ongoing Clinical Study (such plan, the “Development
Plan”), shall apply equally to this Agreement. [***]

 

3.2       Development
Responsibilities.

 

(a)       Clinical
Development by Protalix. Pursuant to the Development Plan, and subject to the oversight of the Steering Committee, Protalix
will be responsible for the Development of the Licensed Product in the Field, including (subject to Section 3.2(d)) continuing
to conduct the Ongoing Clinical Studies. Protalix will also be responsible for preparing and promptly submitting to Chiesi the
clinical sections of any regulatory filings in respect of obtaining Regulatory Approval with the FDA for the Licensed Product and,
subject to Chiesi’s approval rights in respect of such regulatory filing as a whole, Protalix shall consider in good faith
any proposed revision reasonably made by Chiesi thereto.

 

(b)       Chiesi
Step-in Right. Notwithstanding Section 3.2(a), in the event of a delay, for reasons within Protalix’s reasonable
control (and, for clarity, not for reasons outside Protalix’s reasonable control, i.e., a Force Majeure Event [***],
of more than [***] (as compared to the timelines expressly identified as “step-in” timelines in the Development Plan)
that occurs in the course of conducting the Ongoing Clinical Studies and/or a [***] being conducted by Protalix, Chiesi shall have
the right (subject to Section 5.3(h)) to assume responsibility for conducting, or having conducted on its behalf, and to
be the sponsor of, such Ongoing Clinical Studies and/or [***] (as applicable), upon no less than sixty (60) days’ prior written
notice to Protalix. Promptly following Protalix’s receipt of such notice, the Parties shall cooperate in good faith to develop
a written plan for the orderly transfer of responsibility for conducting the Ongoing Clinical Studies and/or [***] to Chiesi, with
due regard for patient safety and the rights of any subjects that are participants in the Ongoing Clinical Studies and/or the [***],
and in compliance with all applicable Laws and agreements with Third Parties; provided, that Chiesi shall assume sole responsibility
for the conduct of, and any liability arising out of, the conduct of the Ongoing Clinical Studies and/or [***] immediately upon
the completion of such transfer, including responsibility for all Development Costs (subject to Section 5.3(h)).

 

(c)       Chiesi’s
Regulatory Approval Responsibilities. Chiesi shall be responsible for conducting [***]. For the avoidance of doubt, Chiesi
shall be solely responsible for conducting [***]. This Section 3.2(c) hereby amends, replaces and supersedes in its entirety
Section 3.2(c) of the Ex-US Agreement, which shall be of no further force or effect.

 

[***] Redacted pursuant to confidential
treatment request.

    		21	 

     

    

 

(d)       Pediatric
Study. Notwithstanding anything to the contrary in this Agreement or the Ex-US Agreement, the Parties shall agree, through
the Steering Committee, and in accordance with Section 3.3, on which Party will conduct the Pediatric Study.

 

(e)       Extension
Studies. Notwithstanding anything to the contrary in this Agreement or in the Ex-US Agreement, the Parties acknowledge and
agree that (i) for the avoidance of doubt, the Extension Studies are and shall be deemed to be included in the definition of Additional
Studies hereunder and under the Ex-US Agreement [***]; provided that Protalix shall conduct the Extension Studies (as Additional
Studies) based on a protocol to be approved by Chiesi until Chiesi assumes responsibility for the conduct of the Extension Studies
in accordance with this Section 3.2(e). [***]. Chiesi shall assume full control of and responsibility for the conduct of
all Extension Studies relating to the Licensed Product in the Field as soon as reasonably practicable after the date on which the
transfer contemplated in Section 3.6(c) occurs. Promptly following the Effective Date, the Parties shall cooperate in good
faith to develop a written plan for the orderly transfer of responsibility for conducting the Extension Studies to Chiesi, including
transfer of sponsorship thereof (subject to the transfer contemplated in Section 3.6(c)) and an interim report to be provided
to Chiesi therefor, with due regard for patient safety and the rights of any subjects that are participants in the Extension Studies,
and in compliance with all applicable Laws and agreements with Third Parties; provided that Chiesi shall assume sole responsibility
for the conduct of such Extension Studies immediately upon the completion of such transfer.

 

(f)       Chiesi’s
Post-Regulatory Approval Responsibilities. Except as described in Sections 3.2(a) and 3.2(b), immediately following
obtaining Regulatory Approval for which Chiesi submitted a regulatory filing in its own name in the Territory, Chiesi will assume
sole responsibility for (i) the Commercialization of the Licensed Product in the Field in the Territory, and (ii) all post-approval
commitments in respect of the Licensed Product in the Field in the Territory, including interactions or communications with the
FDA (subject to Section 3.6(g)), the conduct of any Post-Approval Studies (subject to Section 5.3(g)), pharmacovigilance
reporting (subject to Section 3.6(f)), medical affairs (subject to Section 3.6(d)(iv)) and related requirements.

 

(g)       Responsibility
for Costs. Each Party’s responsibility for paying the costs associated with such Development activities is set forth
in Section 5.3.

 

(h)       Rights
Outside the Territory. Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that, at all relevant
times during the Term, any and all rights relating to the Compound, Drug Substance or Licensed Product in the Field outside of
the Territory shall be governed exclusively by the Ex-US Agreement.

  

3.3       Steering
Committee.

 

(a)       Formation
and Membership. Pursuant to and in accordance with the Ex-US Agreement, the Parties have formed (and shall maintain) a steering
committee (the “Steering Committee”), which the Parties acknowledge
and agree shall also address matters relating to the Territory pursuant to this Agreement, as provided in this Section 3.3.
As provided in the Ex-US Agreement, the Steering Committee shall consist of three (3) representatives appointed by Protalix and
three (3) representatives appointed by Chiesi; provided that at least one (1) person appointed by each Party is a senior
officer of such Party, vested with the appropriate decision-making and resource-allocating authority, and the requisite experience,
to participate in discussion of, and decide on, the matters set out in Section 3.3(c) below. Each Party shall nominate a
representative as contact point to discuss the agenda (such representative, the “Alliance
Manager”), who can be selected or not among the three members nominated by the Parties as Steering Committee representatives.
As provided in the Ex-US Agreement, the Steering Committee shall be chaired by the Protalix Chair. From time to time, each Party
may substitute its representatives on the Steering Committee in its sole discretion (but subject to the terms of this section and
Section 3.3 of the Ex-US Agreement), effective upon written notice to the other Party of such change. Additional representatives
or consultants may from time to time, in the Steering Committee’s discretion, be invited to attend Steering Committee Meetings,
subject to such representatives’ and consultants’ written agreement to comply with the requirements of Section 8.

 

[***]
Redacted pursuant to confidential treatment request.

    		22	 

     

    

 

(b)       Meetings.
During the Term, the Steering Committee shall meet at least once each Calendar Quarter or as otherwise determined by the Parties
(each such meeting, a “Steering Committee Meeting”); provided
that such meetings may be combined with the meetings provided for under the Ex-US Agreement (with matters discussed based on the
relevant territory). As provided in the Ex-US Agreement, (i) upon the reasonable request of the Steering Committee, Protalix will
provide written materials relating to its activities under the Development Plan in advance of a Steering Committee Meeting, (ii)
all Steering Committee Meetings may be conducted in person, by videoconference or by teleconference at such times and such Chiesi
or Protalix locations as shall be determined by the Steering Committee Alliance Managers, and (iii) in-person meetings of the Steering
Committee shall be held at least once every six (6) months (unless otherwise agreed by the Parties) and will alternate between
appropriate offices of each Party. The Parties shall each bear all expenses of their respective representatives relating to their
participation on the Steering Committee. The members of the Steering Committee also may convene or be polled or consulted from
time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate.

 

(c)       Responsibilities.
In addition to the matters provided for under the Ex-US Agreement, the Steering Committee shall have the following roles and responsibilities
in relation to the Territory:

 

(i)       review
and approve any material amendments to the Development Plan (subject to Section 3.3(d)). Any proposed material amendment
to the Development Plan, including arguments to support such amendment, shall be made available to the Steering Committee with
reasonable advance notice and at least five (5) Business Days ahead of the scheduled meeting;

 

(ii)       provide
reasonably detailed updates, data and other information regarding Protalix’s progress in Developing the Licensed Product
in the Field;

  

    		23	 

     

    

 

(iii)       provide
updates in respect of any New Use in accordance with Section 2.5 of the Ex-U.S. Agreement;

 

(iv)       discuss
the timing of transferring any regulatory filings in the Territory with respect to the Compound, Drug Substance, Drug Product or
Licensed Product from Protalix to Chiesi in accordance with the terms of Section 3.6(c), and discuss and agree upon appropriate
timelines for, and the responsibilities of each Party in respect of, preparing any regulatory filings for obtaining Regulatory
Approval in the Territory. As part of such discussions, the Steering Committee shall discuss and agree on appropriate timelines
and processes for the orderly transfer of all medical affairs functions from Protalix to Chiesi in accordance with Section 3.6(d)(iv);

 

(v)       act
as a forum pursuant to which the Parties will review and discuss plans and strategies relating to (x) the Development of the Licensed
Product in the Field, (y) regulatory matters with respect to the Licensed Product in the Field in the Territory, and (z) Commercialization
of the Licensed Product in the Field in the Territory to ensure aligned communication at medical congresses and other scientific
events as well as scientific publication plans;

 

(vi)       modify
the division of regulatory responsibilities as between the Parties in accordance with Section 3.6(d)(v);

 

(vii)       subject
to the terms of Section 8.5, review and/or approval of each Party’s scientific publication plans;

 

(viii)       oversee
any Early Access Programs for the Licensed Product in the Field in the Territory;

 

(ix)       review
and agree upon the final version of the Initial Commercialization Plan, in accordance with Section 3.7(a), and review and
provide comment upon any proposed revisions to, or any subsequent versions of, the Commercialization Plan (such comments to be
considered in good faith by Chiesi);

 

(x)       subject
to Section 4.8(c), review and in good faith seek to resolve any disputes regarding any Notice of Non-Conformance issued
in respect of a shipment of Drug Substance or Drug Product under the terms of this Agreement;

 

(xi)       subject
to Section 7.6(a), discuss any pertinent Third Party Patent Rights and decide upon whether a license to or acquisition of
such Third Party Patent Rights or Technology is appropriate;

 

(xii)       in
the event the Ex-US Agreement expires or is terminated, discuss the possibility, from time to time, of sharing Licensed Product
positioning and promotional materials for the Licensed Product in the Field, inside and outside the Territory;

 

(xiii)       define
the manner and timelines for Chiesi’s access to sites and records of the Ongoing Clinical Studies and [***] conducted by
Protalix;

 

[***] Redacted pursuant
to confidential treatment request.

    		24	 

     

    

 

(xiv)       appoint
the Referent Persons in accordance with Section 8.5;

 

(xv)       establish,
if deemed necessary, the creation of a Joint Project Team (“JPT”) to
oversee operations or activities. The composition of the JPT will be decided by the Steering Committee according to the type of
activity and decision making in accordance with Section 3.3(d). The JPT shall be comprised of representatives from each
Party with appropriate competence and level of decision-making authority. The JPT shall meet with a frequency to be agreed on by
the Parties; and

 

(xvi)       such
other roles and responsibilities provided for in this Agreement or as may be assigned to the Steering Committee in writing by mutual
agreement of the Parties.

 

(d)       Decision-Making
by the Steering Committee. All decisions of the Steering Committee made pursuant to this Agreement shall be made by consensus
with each Party having one vote; provided, however, that in the event of a disagreement between Chiesi and Protalix
with respect to any such proposed decision for which another decision-making mechanism is not expressly provided for herein and
subject to the relevant provisions hereunder:

 

(i)       the
Chiesi Chair shall have the final decision-making authority with respect to (A) Commercialization of the Licensed Product in the
Field in the Territory, (B) regulatory plans and strategies relating to the Licensed Product in the Field in the Territory (but
excluding, for the avoidance of doubt, any clinical matters relating to the Licensed Product in the Field), (C) following Launch,
Commercial Medical Affairs and Pharmacovigilance in the Territory, and (D) at any point after six (6) months following the Effective
Date, any and all regulatory matters concerning the Licensed Product, including in respect of any Regulatory Approvals, associated
regulatory filings, or post-approval communications with or requirements of the FDA (but excluding, for the avoidance of doubt,
any clinical matters relating to the Licensed Product in the Field), subject to the obligation to consider the other Party’s
comments in good faith [***];

  

(ii)       the
Protalix Chair shall have the final decision-making authority with respect to (A) any regulatory matters concerning the Licensed
Product until six (6) months after the Effective Date, and any medical affairs and pharmacovigilance functions prior to the transfers
contemplated in Section 3.6(d) (but excluding, for the avoidance of doubt, any clinical matters relating to the Licensed
Product in the Field), subject to the obligation to consider the other Party’s comments in good faith [***], (B) the Protalix
Patent Rights and Protalix Technology and Protalix’s rights in or to the Protalix Patent Rights and Protalix Technology,
(C) any CMC (and pre-clinical) matters in respect of the Licensed Product; provided that neither Party shall be permitted
to commence any new preclinical activities in respect of the Licensed Product in the Field without first reaching agreement with
the other Party as to the conduct of such preclinical activities, and (D) any [***] or other issues relating to the Licensed Product
outside the Field; and

 

[***]
Redacted pursuant to confidential treatment request.

    		25	 

     

    

 

(iii)       in
respect of all clinical matters relating to the Licensed Product in the Field: (1) for any such matter relating to the Bridge Study
or that otherwise do not affect Chiesi’s rights in the Territory in any material respect, the governance principles set out
in Section 3.3(d) of the Ex-US Agreement shall apply, (2) for any such matter relating to the Extension Studies, the Chiesi Chair
shall have the final decision-making authority, and (3) for so long as this Agreement is in effect, notwithstanding anything in
the contrary in the Ex-US Agreement, for all other such matters, neither Party shall have final decision-making authority with
respect to any such clinical matters relating to the Licensed Product in the Field, and such matters shall be resolved by the Parties
by consensus through the Steering Committee within ninety (90) days of such matter first being brought to the attention of the
Steering Committee. In the event that the Parties are unable to resolve any such clinical matter by consensus through the Steering
Committee within such ninety (90) day period, such matter shall be escalated to the Parties’ respective Chief Executive Officers,
who shall attempt to resolve such issue within a subsequent thirty (30) day period.

 

(iv)       in
the event of a disagreement in respect of a matter unrelated to the subject-matter of Sections 3.3(d)(i), 3.3(d)(ii) or
3.3(d)(iii), such matters shall be subject to the escalation and dispute resolution procedures set out in Section 14.2.

 

For the avoidance of doubt, to the extent that Protalix, in
its sole discretion, deems it necessary due to a request or demand of a Regulatory Authority (but only where such request is mandatory
or where failure to comply with such request could result in a penalty or actions against Protalix being imposed by such Regulatory
Authority or a violation of applicable Law) or identified and immediate risk to patient safety, Protalix shall have the sole authority
and the exclusive right to decide any matter in respect of the Development of the Licensed Product in the Field (other than with
respect to (i) approving regulatory plans and strategies, and (ii) preparing and submitting regulatory filings and obtaining Regulatory
Approvals after the transfer contemplated in Section 3.6(c)) without the approval of or any decision by the Steering Committee;
provided, however, that Protalix shall use its reasonable efforts to provide notice to, and consult with, members
of the Steering Committee, prior to exercising such discretion.

   

(e)       Minutes.
As provided in the Ex-US Agreement, (i) the Alliance Managers will coordinate and alternate in preparing draft of the minutes
collecting input from the attendees and distributing to all members of the Steering Committee the final minutes of each meeting
reasonably promptly after a Steering Committee Meeting, (ii) such minutes will report in reasonable detail actions taken by the
Steering Committee during such meeting, issues requiring resolution and resolutions of previously reported issues, and (iii) such
minutes will be reviewed and, if reasonably complete and accurate, signed by one Steering Committee member from each Party.

 

    		26	 

     

    

 

3.4       Records.
During the Term, each Party will prepare and maintain accurate records and books relating to the progress and status of its activities
under the Development Plan and otherwise in relation to the Development of the Drug Substance and Licensed Product.

 

3.5       Diligence.
Subject to Chiesi’s compliance with Section 5.3, Protalix will use Commercially Reasonable Efforts to carry out the
Development Plan in order to Develop the Licensed Product in the Field in the Territory (subject to Section 3.2(d)). Subject
to Protalix’s compliance with Section 3.6(c), Chiesi will use Commercially Reasonable Efforts to seek as soon as
reasonably practicable Regulatory Approval for the Licensed Product in the Field in the Territory. Chiesi will use Commercially
Reasonable Efforts to Launch and Commercialize the Licensed Product in the Territory, promptly following such Regulatory Approval
of the Licensed Product in the Field. The previous sentence above notwithstanding, if, prior to the submission of the NDA seeking
Regulatory Approval for the Licensed Product in the Territory, Chiesi notifies Protalix in writing of any specific Competing Product
Patents that, in Chiesi’s good faith evaluation may pose risks in relation to Chiesi’s Launch of the Licensed Product,
and if, within ten (10) Business Days of receiving such written notice, Protalix provides Chiesi with written notice that Protalix
desires to jointly engage a law firm to advise regarding the same in accordance with this Section 3.5: (i) Protalix and
Chiesi promptly shall jointly engage a law firm of reputable stature and experienced in patent matters related to biologic products
and approved by both Parties (such approval not to be unreasonably withheld, conditioned or delayed) to provide its legal opinion
as to whether a judge or jury would be highly unlikely to conclude, in exercising its discretion in applying the applicable Laws
to the facts, that the Launch of the Licensed Product in the Field in the Territory would infringe the Third Party Patent(s) or
Patent Application(s) (which the law firm concludes could reasonably be issued within eighteen (18) months of the anticipated
Regulatory Approval for the Licensed Product in the Territory) specified in such notice (with each Party paying an equal share
of all costs, fees and expenses to be paid to such law firm therefor, and the law firm shall be instructed to try to provide such
opinion within sixty (60) days of the engagement), and (ii) in the event that such law firm does not, prior to Regulatory Approval
of the Licensed Product in the Field in the Territory, render a legal opinion that a judge or jury would be highly unlikely to
conclude, in exercising its discretion in applying the applicable Laws to the facts, that the Launch of the Licensed Product in
the Field in the Territory would infringe the Third Party Patent(s) or Patent Application(s) (which the law firm concludes could
reasonably be issued within eighteen (18) months of the anticipated Regulatory Approval for the Licensed Product in the Territory)
specified in such notice (including where Protalix fails to provide written notice that it desires to jointly engage a law firm
in accordance with this Section 3.5), Chiesi will have the ultimate decision-making authority on the timing of the Launch
(subject to Section 12.1(f)), based upon Chiesi’s good faith evaluation of any risks associated with such specified
Third Party Patents or Patent Applications. The Parties acknowledge and agree that (x) all communications with such law firm with
respect to the foregoing, such law firm’s related work product, and such opinion (the “Privileged
Materials”) shall be privileged and confidential and shall not be disclosed to anyone other than the Parties,
except that a Party may disclose the Privileged Materials in confidence to a court, tribunal or other authority of competent jurisdiction
if reasonably necessary to enforce its rights under this Agreement; provided that such Party seeks the highest level of
confidential treatment for such Privileged Materials and limits the disclosure to the portion of the Privileged Material reasonably
necessary to enforce its rights under this Agreement, and (y) prior to engaging the law firm, the Parties shall enter into a reasonable
and customary joint defense agreement or common interest agreement; provided that, for the avoidance of doubt, the failure
of the Parties to enter into such a joint defense agreement or common interest agreement shall not be construed or deemed as evidence
of any waiver by any of the Parties of any applicable legal privilege or any of its or their rights in this Agreement, or as an
indication that an applicable legal privilege has not attached to any Privileged Materials.

 

    		27	 

     

    

 

3.6       Regulatory
Affairs.

 

(a)       Copies
of Regulatory Filings. Protalix shall provide to Chiesi, at Chiesi’s expense, copies in electronic form of any regulatory
filings in the Territory relating to the Licensed Product, including any clinical trial authorizations (including any regulatory
filings in the Territory seeking approval to conduct a study or clinical trial of the Licensed Product), other filings with Regulatory
Authorities, supplements or amendments thereto, written correspondence with Regulatory Authorities regarding such regulatory filings,
and existing written minutes of meetings and memoranda of formal conversations between Protalix (including, to the extent practicable,
Protalix’s investigators) and Regulatory Authorities and any other document required to maintain the Regulatory Approvals
(e.g. Trial Master Files) in Protalix’s possession (but, for clarity, excluding any informal communications, i.e.,
e-mails) to the extent Protalix has the right to access and provide to Chiesi such materials.

 

(b)       Regulatory
Responsibilities. Subject to Section 3.3(d), and prior to the transfer contemplated in Section 3.6(c) below,
Protalix shall, subject to Chiesi’s direction and approval (by and through the Steering Committee or otherwise), be responsible
for implementing all pre-Regulatory Approval regulatory plans and strategies for, and making any regulatory filings in respect
of, the Licensed Product in the Field in the Territory (excluding, for the avoidance of doubt, any application to a Regulatory
Authority seeking Regulatory Approval, which shall in each case, be in the name of, and submitted by, Chiesi). Without limiting
the foregoing, following the transfer contemplated in Section 3.6(c):

 

(i)       Chiesi
(or one or more of its designated Affiliates) will own and be responsible for preparing, seeking, and submitting such regulatory
filings as are necessary to obtain Regulatory Approval and then maintaining all Regulatory Approvals and any post-approval regulatory
filings, for the Licensed Product in the Field in the Territory, including preparing all reports necessary as part of such Regulatory
Approvals or post-approval regulatory filings. Protalix shall have the right and be responsible to prepare and promptly submit
to Chiesi any non-clinical, clinical and Manufacturing portions (including CMC) of such regulatory filings and any related reports
(subject to Chiesi’s approval rights with respect to such regulatory filing as a whole), at Chiesi’s sole cost and
expense (unless such costs are Development Costs or other costs expressly addressed hereunder or by a separate agreement between
the Parties). Protalix shall consider in good faith any proposed revision reasonably made by Chiesi thereto and Protalix shall
otherwise provide such assistance as Chiesi reasonably requires, at Chiesi’s sole cost and expense (unless such costs are
Development Costs or other costs expressly addressed hereunder or by a separate agreement between the Parties), to obtain Regulatory
Approvals for the Licensed Product in the Field in the Territory.

 

    		28	 

     

    

 

(ii)       Following
the transfer contemplated in Section 3.6(c), but in any event, no later than the grant of Regulatory Approval, Chiesi shall
(A) subject to Section 5.3(e), assume sole responsibility for seeking authorization in respect of, conducting, and otherwise
interacting with the FDA in respect of, any Post-Approval Studies, and (B) have the right to apply for, and secure, exclusivity
rights that may be available under Law in the Territory, including any Regulatory Exclusivity. Protalix shall reasonably cooperate
with Chiesi, and take such reasonable actions to assist Chiesi, at Chiesi’s sole cost and expense, in obtaining such exclusivity
rights in the Territory, as Chiesi may reasonably request from time to time.

 

For the avoidance of doubt (A) at all relevant times during
the Term, Chiesi shall have the final decision-making authority in respect of all regulatory plans and strategies for the Licensed
Product in the Field in the Territory; provided that Chiesi shall reasonably consider any comments on such plans and strategies
that Protalix may communicate (through the Steering Committee or otherwise); and (B) following Regulatory Approval in the Territory,
Chiesi shall be solely responsible for any such activities as are initiated after the date of such Regulatory Approval that would
otherwise constitute Development activities had they been initiated prior to the grant of such Regulatory Approval.

 

(c)       Transfer
of Regulatory Filings. To the extent permitted by applicable Law, at a time to be agreed by and through the Steering Committee,
with such time to be prior to any application to the FDA seeking Regulatory Approval for the Licensed Product in the Field in the
Territory (and, in any event, but subject to the proviso set forth below, as soon as reasonably practicable after [***], and at
Chiesi’s sole cost and expense, Protalix shall assign and transfer to Chiesi Protalix’s entire right, title and interest
in and to all regulatory filings in the Territory with respect to the Compound, Drug Substance, Drug Product or Licensed Product
in the Field, and shall perform all other actions reasonably requested by Chiesi to effect and confirm such assignment and transfer,
at Chiesi’s sole cost and expense; provided, however, that, for the avoidance of doubt, all right, title and
interest in and to any clinical trial authorizations or other clinical regulatory filings as are necessary to support the continued
conduct of and completion of the Ongoing Clinical Studies and any [***] shall remain vested in Protalix, until completion of such
studies.

  

(d)       Transfer
of Regulatory Responsibilities. Subject to the terms of the Development Plan:

 

(i)       The
Parties shall cooperate through the Steering Committee to ensure that any such assignments and transfers
under Section 3.6(c), do not impede Protalix’s ability to conduct and
complete the Ongoing Clinical Studies and [***]. After each such assignment and transfer is effective, Chiesi shall (and does hereby)
grant Protalix a right to use and make reference to such regulatory filings so assigned and transferred (and any subsequent regulatory
filings made or Regulatory Approvals in such Countries as are obtained by Chiesi in respect of the Licensed Product in the Field)
as necessary for Protalix (x) to conduct and complete the Ongoing Clinical Studies and any [***], and (y) to conduct and complete
any other clinical studies as necessary for Protalix to complete in order to file, and to file, for Regulatory Approval for (A)
the Licensed Product outside the Territory in accordance with the Ex-US Agreement, or (B) any New Use (or other drug product containing
the Drug Substance outside of the Field) anywhere in the world.

 

[***]
Redacted pursuant to confidential treatment request.

    		29	 

     

    

 

(ii)       After
such transfer of ownership of such regulatory filings relating to the Drug Substance (or Drug Product) as incorporated into the
Licensed Product (and for the avoidance of doubt, excluding any regulatory filings and Regulatory Approvals with respect to the
Drug Substance (or Drug Product) as part of any New Use), or Licensed Product in the Field in the Territory, during the Term, all
regulatory filings seeking Regulatory Approval in the Territory and all subsequent post-approval regulatory filings that are filed
with the FDA and which pertain to the Drug Substance (or Drug Product) as incorporated into the Licensed Product (and for the avoidance
of doubt, excluding any such regulatory filings with respect to the Drug Substance (or Drug Product) as part of any New Use), or
Licensed Product in the Field, in each case, in the Territory, shall be made in the name of Chiesi or its Affiliates in accordance
with Section 3.6(e), and any Post-Approval Studies shall be conducted in the name of, and shall be the sole responsibility
of, Chiesi and its Affiliates (subject to Section 5.3(g)).

 

(iii)       For
the avoidance of doubt, Protalix shall remain responsible for the preparation of any non-clinical (including pre-clinical and CMC),
clinical, and Manufacturing portions of regulatory filings submitted by Chiesi seeking Regulatory Approval with the FDA, and shall
otherwise provide reasonable assistance to Chiesi in finalizing such regulatory filings for submission to the FDA (in each case
subject to Chiesi’s approval rights with respect to the regulatory filing as a whole).

 

(iv)       As
part of the process of fixing a time for the regulatory transfer contemplated under Section 3.6(c), and subject to the
terms of the Pharmacovigilance Agreement, the Steering Committee shall also set out a timeline for the orderly transfer of any
pharmacovigilance (for post-Launch Commercialization) and medical affairs functions in the Territory from Protalix to Chiesi (as
well as the role of primary contact for KOL management and patient advocacy) (such functions, following the completion of such transfer from Protalix to Chiesi, to be referred to as “Commercial
Medical Affairs and Pharmacovigilance”), with such medical affairs functions to be fully transferred within twelve (12)
months of the Effective Date, but prior to the grant of Regulatory Approval, and with such pharmacovigilance functions to be fully
transferred upon Launch; provided, that until such time as each of the Ongoing Clinical Trials and any [***] are completed,
and the clinical study reports for each such clinical study are finalized, Protalix shall retain responsibility for patient safety
monitoring, and shall remain the primary contact with each applicable KOL, in respect of such clinical studies.

 

[***] Redacted pursuant
to confidential treatment request.

    		30	 

     

    

  

(v)       Notwithstanding
anything to the contrary herein, but subject to the terms of the Pharmacovigilance Agreement, the Steering Committee may by mutual
agreement modify the division of regulatory responsibilities as between the Parties, including by having Protalix retain certain
regulatory responsibilities following the transfer contemplated by Section 3.6(c), or by having Chiesi assume certain regulatory
responsibilities prior to the transfer contemplated by Section 3.6(c) (including, for the avoidance of doubt, where such
division of responsibilities differs from the terms of the Development Plan); provided, however, that (i) in no
circumstances may Chiesi assume responsibility for or control over any clinical aspects of the Development Plan, including the
conduct of the Ongoing Clinical Studies (except in the case of Chiesi exercising its step-in rights as provided for in Section
3.2(b) or the conduct by Chiesi of any Additional Studies, Pediatric Study, Registry or [***] as provided hereunder); and
(ii) in any event, all regulatory responsibilities in respect of the Licensed Product in the Field in the Territory (including,
for clarity, each of the transfers of regulatory responsibility contemplated in this Section 3.6), shall be completely
assumed by Chiesi as soon as reasonably practicable after [***]; provided, that until such time as each of the Ongoing
Clinical Trials and any [***] are completed, and the clinical study reports for each such clinical study are finalized, Protalix
shall retain responsibility for patient safety monitoring, and shall remain the primary contact with each applicable KOL, in respect
of such clinical studies.

 

(e)       Rights
of Reference and Access to Data. Chiesi shall (and does hereby) grant to Protalix a non-exclusive “Right
of Reference,” as that term is defined in 21 C.F.R. § 314.3(b), or an equivalent non-exclusive right of
access/reference in the United States and in the EU and in each other Country (A) solely for use by Protalix in connection with
the Development and/or Commercialization of any New Use (or other drug product containing the Drug Substance outside of the Field),
to any data in any regulatory filing in the Territory Controlled by Chiesi that relates to the Drug Substance or Licensed Product,
and (B) solely for use by Protalix in connection with the Development of drug products made using the System, to any safety data
(but not efficacy data) in any regulatory filing in the Territory Controlled by Chiesi that relates to the Drug Substance or Licensed
Product. Chiesi shall provide a signed statement to this effect, if requested by Protalix, in accordance with 21 C.F.R. §
314.50(g)(3), or otherwise provide appropriate notification of such right of Protalix to the applicable Regulatory Authority.
To the extent Chiesi shall need an equivalent “Right of Reference,” as that term is defined in 21 C.F.R. §
314.3(b), to exploit the rights granted hereunder in the Territory, Protalix shall (and does hereby) grant to Chiesi a non-exclusive
Right of Reference, or an equivalent non-exclusive right of access/reference in the United States and in the EU and in each other
Country, solely for use by Chiesi in connection with the Development and/or Commercialization of the Licensed Product in the Field
in the Territory, and solely if and to the extent that Chiesi is authorized under this Agreement to conduct such Development and/or
Commercialization, (A) to any data in any regulatory filing Controlled by Protalix that relates to the Drug Substance or Licensed
Product, and (B) to any safety data (but not efficacy data) in any regulatory filing that relates to the Drug Substance or Licensed
Product. Protalix shall provide a signed statement to this effect, if requested by Chiesi, in accordance with 21 C.F.R. §
314.50(g)(3), or otherwise provide appropriate notification of such right of Chiesi to the applicable Regulatory Authority.

 

[***]
Redacted pursuant to confidential treatment request. 

    		31	 

     

    

  

(f)       Pharmacovigilance.
After the Effective Date [***], the safety units of each of the Parties shall meet and agree upon a written pharmacovigilance
agreement that defines Chiesi’s pharmacovigilance responsibilities for the post-Launch Commercialization of Licensed Product
in the Territory and Protalix’s pharmacovigilance responsibilities for the Licensed Product for pre-Launch Development activities
in the Territory, and the process for exchanging adverse event reports and other safety information relating to a Licensed Product
that will permit each Party to comply with applicable Laws and requirements of Regulatory Authorities (such agreement, the “Pharmacovigilance
Agreement”); provided, that until such time as each of the Ongoing Clinical Trials and any [***] conducted
by Protalix are completed, and the clinical study reports for each such clinical study are finalized, Protalix shall retain sole
responsibility and be the primary contact for pharmacovigilance matters in respect of the Licensed Product.

 

(g)       Communications
with Regulatory Authorities.

 

(i)       For
so long as [***], Protalix, and after the assignment and transfer to Chiesi of such regulatory filings pursuant to Section 3.6(c),
Chiesi, shall provide the other Party with notice of all meetings, conferences, and discussions (including advisory committee meetings
or any other meeting of experts convened by a Regulatory Authority concerning any topic relevant to the Licensed Product) scheduled
with a Regulatory Authority concerning any regulatory matters relating to the Licensed Product in the Field promptly after the
scheduling of such meeting, conference, or discussion. The Party that does not, at the time of such meeting, own the regulatory
filings described in Section 3.6(c) for the Licensed Product shall be entitled to have one or more representatives present
at all such meetings to the extent permissible under applicable Law and reasonably practicable under the circumstances. Protalix
and Chiesi shall use all reasonable efforts to agree in advance on the scheduling of such meetings, conferences and discussions
and on the objectives to be accomplished at such meetings, conferences and discussions and the agenda for the meetings, conferences
and discussions with the applicable Regulatory Authority, if any [***].

 

[***]
Redacted pursuant to confidential treatment request. 

    		32	 

     

    

 

(ii)       For
so long [***], Protalix, and after [***], Chiesi, shall provide the other Party with copies, which copies may be in draft form,
of all material submissions to any Regulatory Authority in the Territory relating to the Licensed Product in the Field. Such copies
shall be provided sufficiently in advance of such planned submission to the applicable Regulatory Authority in order to allow such
other Party to provide comments regarding such submission. The Party making the submission shall consider the other Party’s
comments in good faith with respect to such submission [***].

 

(iii)       Each
Party shall provide to the other Party, as soon as reasonably practicable but in no event more than [***] after its receipt, copies
of any material documents or other material correspondence received from a Regulatory Authority pertaining to the Licensed Product
in the Field.

 

(h)       Regulatory
Information. Each Party agrees to provide the other with all reasonable assistance and take all actions reasonably requested
by the other Party that are necessary or desirable to enable the other Party to comply with any Law applicable to the Licensed
Product. For clarity, to the extent that either Party provides reasonably requested assistance to the other Party in compliance
with this Section 3.6(h), the requesting Party shall reimburse such Party for any reasonable costs and expenses incurred
in respect thereof.

 

(i)       Recalls
or Other Corrective Action. Each Party shall promptly notify the other Party of any material actions to be taken by such Party
in the Territory or outside the Territory (as the case may be), with respect to any recall or market withdrawal or other corrective
action related to the Licensed Product prior to such action, if reasonably practicable under the circumstances, to permit the other
Party a reasonable opportunity to consult with such Party with respect thereto. [***].

 

(j)       Ownership
and Use of Clinical Data. Subject to Section 3.6(e), and subject to and solely to the extent expressly approved
by the relevant IRB and permitted under applicable Law (and without violating the rights of any Third Party), all Clinical
Data generated under this Agreement (solely in the Field and excluding (i) any regulatory filings submitted to any
Governmental Authority, and (ii) rights in and to any Inventions or Patent Rights that arise out of or in relation to, or are
otherwise embodied in, such data) shall be jointly owned by Protalix and Chiesi (the “Jointly
Owned Clinical Data”), with each Party having an undivided one-half interest therein. If any such joint
ownership cannot occur because such joint ownership is precluded by applicable Law, violates the rights of a Third Party or
has not been expressly approved by the relevant IRB, the Party that owns such Clinical Data hereby grants the other Party a
non-exclusive, perpetual, irrevocable, worldwide license to such Clinical Data, without any accounting to such Party, solely
for use in a manner consistent with such Party’s rights under this Agreement and the Ex-US Agreement (and, with respect
to Chiesi as licensee, solely in the Field in the Territory). For the avoidance of doubt, the ownership rights to Jointly
Owned Clinical Data provided for in this Section 3.6(j) shall not include or apply to any Inventions or Patent Rights
that arise out of or in relation to, or are otherwise embodied in, any such Clinical Data (or the collection, generation or
use thereof). For the avoidance of doubt, Chiesi’s use of Jointly Owned Clinical Data is restricted to exercising its
rights hereunder with respect to Licensed Product in the Field in the Territory and under the Ex-US Agreement with respect to
Licensed Product in the Field outside the Territory.

 

[***]
Redacted pursuant to confidential treatment request. 

    		33	 

     

    

 
  

3.7       Commercialization
and Pricing.

 

(a)       An
initial draft Commercialization plan for the Licensed Product in the Field in the Territory prepared by Chiesi is attached as Schedule
3.7 hereto, and the final version of such Commercialization plan shall be discussed and agreed upon between the Parties within
[***] after the Effective Date (the “Initial Commercialization Plan”).
Chiesi shall update such plan (any such updated plan, the “Commercialization Plan”)
at least once per Calendar Year. Each such subsequent Commercialization Plan shall be submitted to the Steering Committee for review
and discussion no later than thirty (30) days prior to the beginning of the immediately succeeding Calendar Year. Protalix may,
through its representatives on the Steering Committee, propose to Chiesi revisions to any such subsequent Commercialization Plan,
and any proposed material updates or amendments to the Initial Commercialization Plan and any subsequent Commercialization Plan,
that Protalix reasonably believes are appropriate, and Chiesi shall consider any such proposed revisions in good faith, but such
Initial Commercialization Plan or Commercialization Plan, or any material amendments or updates thereto, shall not require approval
of the Steering Committee.

 

(b)       Chiesi
shall have the sole authority and exclusive right to Commercialize, and shall be responsible for paying all costs and expenses
associated with the Commercialization of, the Licensed Product in the Field in the Territory, including marketing, promoting, advertising,
distributing, disposing, offering for sale, selling, Labeling and Packaging, final product release testing, exporting and importing,
and [***] in its sole discretion. Chiesi hereby agrees to refrain from selling the Licensed Product in the Territory to any Person
if Chiesi has knowledge or reason to believe that such Licensed Product is intended for transshipment or delivery by such Person
outside the Territory.

 

3.8       Early
Access Programs. The Parties shall discuss at the Steering Committee the appropriate mechanism for considering, approving,
providing for supply of Licensed Product in respect of, and otherwise administering, any Early Access Programs [***].

 

3.9       Trademarks.

 

(a)       License
to Chiesi. Protalix hereby grants to Chiesi an exclusive (except as to Protalix) license, free of charge, to use the Protalix
Trademarks in the Territory (and, for so long as the Ex-US Agreement remains in effect, outside the Territory) solely in connection
with the Commercialization of the Licensed Product in the Field during the Term in the Territory (and, for so long as the Ex-US
Agreement remains in effect, outside the Territory), solely to the extent requested to be used
by Protalix pursuant to, and solely for the purposes set forth in, Section 3.10. If Chiesi decides to use the Protalix Trademarks
in the Territory or outside the Territory, then Chiesi shall cooperate with Protalix in respect of [***] recording the trademark
license instrument with the appropriate Governmental Authorities.

 

[***]
Redacted pursuant to confidential treatment request. 

    		34	 

     

    

 

(b)       Choice
of Trademarks. Chiesi may choose, in its sole discretion, to use any trademarks to Commercialize the Licensed Product in the
Field in the Territory (and, for so long as the Ex-US Agreement remains in effect, outside the Territory), and Chiesi shall own
all such trademarks, in accordance with the terms and conditions set forth in the Side Letter, other than the Protalix Trademarks
or any other trademark owned or Controlled by Protalix at such time (such trademarks of Chiesi, the “Product
Marks”).

 

(c)       Quality
Control.

 

(i)       The
quality of the Licensed Product sold by Chiesi in the Territory and outside of the Territory under or in connection with the Protalix
Trademarks must be of a sufficiently high quality (in the event of the expiration or termination of the Ex-US Agreement, to be
generally comparable to the quality of any Licensed Product sold by Protalix outside of the Territory under or in connection with
the Protalix Trademarks).

 

(ii)       Chiesi
shall comply with all applicable Laws pertaining to the proper use and designation of the Protalix Trademarks.

 

(iii)       Chiesi
agrees to use the Protalix Trademarks only in the form and manner and with appropriate legends as prescribed from time to time
during the Term by Protalix.

 

(iv)       Chiesi
shall display the proper form of trademark notice associated with the Protalix Trademarks.

 

(v)       Chiesi
shall not use any Protalix Trademark as a corporate name, business name, or trade name.

 

(vi)       Chiesi
shall not use any Protalix Trademark in a manner that would reasonably be expected to materially impair the validity, reputation,
or distinctiveness of any Protalix Trademark.

 

(vii)       Chiesi
shall not use any Protalix Trademark in a manner that would reasonably be expected to materially impair the reputation of Protalix
or any of its Affiliates.

 

    		35	 

     

    

 

(d)       Prosecution
and Maintenance of Trademarks. Chiesi shall have the sole right, but not the obligation, through counsel of its choosing, to
prosecute and maintain the Product Marks in the Territory and outside the Territory. [***] Protalix shall have the sole right,
but not the obligation, through counsel of its choosing, to prosecute and maintain the Protalix Trademarks. [***].

 

(e)       Enforcement
of Trademarks. Each Party will promptly notify the other in the event of any actual, potential or suspected infringement of
a Protalix Trademark or Product Mark by any Third Party. Chiesi shall have the sole right, but not the obligation, to institute
litigation or take other remedial measures in connection with Third Party infringement of Product Marks in the Territory and outside
of the Territory. Any recoveries obtained by Chiesi resulting from such litigation or other appropriate action in the Territory
and outside of the Territory in relation to the Product Marks, will be deemed Net Sales (under this Agreement or the Ex-US Agreement,
as applicable) after having deducted any amount necessary to cover all costs and expenses incurred by Chiesi pursuant to the following
sentence. All costs and expenses incurred by Chiesi in enforcing the Product Marks in the Territory and outside of the Territory
shall be at Chiesi’s sole cost and expense. Protalix shall have the sole right, but not the obligation, to institute litigation
or take other remedial measures in connection with Third Party infringement of Protalix Trademarks. Upon request of Protalix, Chiesi
agrees to timely join as party-plaintiff in any litigation in relation to the Protalix Trademarks, and in any event to cooperate
with Protalix in connection with any infringement action in relation to the Protalix Trademarks, at Protalix’s cost and expense.
All costs and expenses incurred by Protalix in enforcing the Protalix Trademarks [***]. Protalix shall retain all recoveries received
by Protalix as a result of its enforcement of the Protalix Trademarks. For so long as this Agreement remains in effect, this Section
3.9 hereby amends, replaces and supersedes in its entirety Section 3.9 of the Ex-US Agreement, which shall be of no further
force or effect for so long as this Agreement remains in effect. In the event that the Ex-US Agreement expires or is terminated,
then this Section 3.9 shall continue to apply, but solely in respect of the Territory.

 

3.10       Use
of Names. No right, expressed or implied, is granted by this Agreement to a Party to use in any manner the name or any other
trade name of the other Party or its Affiliates in connection with this Agreement. Notwithstanding the foregoing, Chiesi agrees,
during the Term, to display the Protalix corporate name and logo (the “Protalix Trademarks”)
on the trade packaging used for the Licensed Product in the Field in the Territory in a reasonable manner (or as may be required
under applicable Law), unless to do so would be prohibited under applicable Laws, or is not in accordance with the request of
a Regulatory Authority, subject to Protalix’s trademark usage guidelines applicable to the Protalix Trademarks provided
from time to time during the Term, including at least sixty (60) days prior to the date of Chiesi’s first use of the Protalix
Trademarks. Upon the written request of Protalix, Chiesi shall submit to Protalix a sample of each proposed use of the Protalix
Trademarks.

 

3.11       [***]

 

[***] Redacted pursuant to confidential
treatment request. 

    		36	 

     

    

 

		Section 4.	MANUFACTURE AND SUPPLY.

 

4.1       Commercial
Supply of Licensed Product.

 

(a)       In
respect of the Territory, other than to the extent this provision would be a violation of any applicable Laws in the Territory,
Protalix shall Manufacture and supply, and Chiesi shall purchase from Protalix, all of Chiesi’s and its Affiliates’
requirements of the Drug Product (and, after [***]) for incorporation into Licensed Product for commercial sale in the Field in
the Territory pursuant to and in accordance with this Agreement. Such supply shall be subject to and in accordance with the terms
of this Section 4 and the Quality Agreement.

 

(b)       Supply
of Licensed Product for Extension Studies. To the extent that Chiesi conducts any Extension Studies, solely in respect of any
quantities of Licensed Product required for the purposes of such studies, Protalix shall Manufacture and supply, and Chiesi shall
purchase from Protalix, all of Chiesi’s and its Affiliates’ requirements of the Drug Product (and, after [***]) for
the sole purposes of being administered to patients enrolled in such studies. Such supply shall be subject to and any accordance
with the terms of this Section 4 and the Quality Agreement, except that the Price to be paid by Chiesi for such supply shall
be equal to: (i) [***] per vial of [***] of Drug Product (or, after [***] per mg of Drug Substance) for all such supply used prior
to the date of submission of the first regulatory filing for Regulatory Approval for the Licensed Product, or (ii) [***] per vial
of [***] of Drug Product (or, after [***] per mg of Drug Substance) for all such supply used on or after the date of submission
of the first regulatory filing for Regulatory Approval for the Licensed Product (in each case, shipping and delivery terms in respect
of such purchased units shall be as otherwise set out in Section 4.7 below). For the avoidance of doubt, the Price paid
by Chiesi in respect of such supply shall not be included in the Development Costs or [***] and shall not be subject to the cost-sharing
arrangements, Development Costs Cap or Annual Cap set forth in this Agreement or the Ex-US Agreement. Chiesi shall keep and maintain
records of (x) each delivery of Drug Product (and, after [***]) it receives in respect of supply for use in Extension Studies,
and (y) the administration of such Licensed Product, on a patient-by-patient and site-by-site basis, in respect of such Extension
Studies. Chiesi shall provide copies of the foregoing records to Protalix on a calendar quarterly basis (and otherwise on Protalix’s
reasonable request), together with a written report indicating then-current inventory levels of Drug Product (and, after [***])
intended for use in such Extension Studies.

 

4.2       [***].

 

4.3       Protalix
Manufacturing Activities. Protalix shall have the sole authority and exclusive right for, and Protalix shall be responsible
for, the Manufacture of Drug Product and, after [***].

 

[***] Redacted pursuant to confidential
treatment request. 

    		37	 

     

    

 

4.4       Compliance
of Third Parties. In the event that Protalix conducts any Manufacturing activities through an Affiliate or Third Party, Protalix
shall be responsible for the performance of such Affiliate or Third Party in accordance with the terms of this Section 4.
In the event that Chiesi conducts any Labeling and Packaging or, after [***] activities through an Affiliate or Third Party (such
performance by an Affiliate or Third Party to comply with the terms of Section 2.4), Chiesi shall be responsible for the
performance of such Affiliate or Third Party in accordance with the terms of this Section 4.

 

4.5       Forecasting
and Ordering.

 

(a)       Forecasts;
Purchase Orders. [***], Chiesi shall deliver to Protalix Chiesi’s quarterly projection of the quantities of Drug Product
(or, after [***]) that Chiesi anticipates ordering from Protalix pursuant to this Agreement for the four (4) Commercial Quarters
commencing with the first Commercial Quarter that includes the first requested delivery date (the “Initial
Forecast”), together with a firm purchase order (a “Purchase Order”)
for such Drug Product (or, after [***]) for the first Commercial Quarter covered by such Initial Forecast and for at least [***]
of the second Commercial Quarter covered by such Initial Forecast. The quantities of Drug Product (or, after [***]) specified for
the following [***] of such Initial Forecast shall be non-binding. Thereafter, [***] prior to the first Business Day of each subsequent
Commercial Quarter during the Term, Chiesi shall deliver to Protalix a rolling [***] Commercial Quarter forecast updating the prior
forecast (together with the Initial Forecast, each a “Forecast”), together
with a Purchase Order for such Drug Product (or, after [***]) for the first Commercial Quarter covered by such Forecast and for
at least [***] of the second Commercial Quarter covered by such Forecast. The quantities of Drug Product (or, after [***]) specified
for the following two (2) Commercial Quarters of such Forecast shall be non-binding. Unless agreed separately between the Parties,
each Purchase Order shall (i) specify no more than one (1) delivery date for the Drug Product (or, after [***]) in each Commercial
Quarter (unless each such delivery date in such Commercial Quarter is for a quantity of vials equal to the Minimum Batch Size or
an exact multiple thereof), and (ii) be for a minimum quantity of the Minimum Batch Size. For the avoidance of doubt, for so long
as this Agreement and the Ex-US Agreement are both in effect, the Minimum Batch Size shall apply on a combined basis with respect
to unlabeled vials ordered and released in respect of anticipated sales in the Territory and outside of the Territory (i.e.,
Chiesi may split the ordered unlabeled vials included in the Minimum Batch Size (currently [***] vials) between amounts ordered
for anticipated sales in the Territory and outside of the Territory, so long as such Purchase Order is for the Minimum Batch Size
or an exact multiple thereof). Purchase Orders shall be in writing and no verbal communications or e-mail shall be construed to
mean a commitment to purchase or sell. Each Purchase Order delivered by Chiesi to Protalix pursuant to this Section 4.5(a)
shall be binding on Protalix, unless Protalix notifies Chiesi in writing of its rejection thereof within [***] of receipt of such
Purchase Order; provided that Protalix may only reject Purchase Orders that do not comply with the terms of this Agreement
or are otherwise not valid Purchase Orders (e.g., do not contain the requisite details).

 

[***] Redacted pursuant
to confidential treatment request.

    		38	 

     

    

 

(b)       Long
Range Capacity Planning. Concurrent with the Initial Forecast, for the purposes of discussion and planning of Manufacturing
capacity, Chiesi shall provide a non-binding forecast of its projected Drug Product [***] needs for the [***] Commercial Quarters
following that specified in the Initial Forecast as described in Section 4.5(a) (a “Long
Range Forecast”). Each Long Range Forecast shall be deemed to be revised by any subsequent Forecast. In the event
Protalix anticipates that it will be unable to supply the quantities of Drug Product [***] reflected in a Long Range Forecast,
Protalix shall promptly notify Chiesi and the Parties shall work to remedy the shortfall in accordance with and subject to the
terms of this Section 4 in an effort to assure that the necessary capacity exists. Unless otherwise agreed to by the Parties
during the Term, the Long Range Forecast shall be updated by Chiesi annually by July 1 of each Commercial Year during the Term.

 

(c)       Receipt
and Acceptance. Chiesi shall purchase all Drug Product [***] ordered and specified in a Purchase Order. Purchase Orders may
be delivered electronically or by other means to such location as Protalix shall designate. Nothing in any such Purchase Order
or written acceptance shall supersede the terms and conditions of this Agreement or the Quality Agreement. All Purchase Orders,
confirmations of receipt of Purchase Orders and other notices contemplated under this Section 4.5(c) shall be sent to the
attention of such persons as each Party may identify to the other in writing from time to time in accordance with Section 15.8.

 

(d)       First-Expired
First-Out. Chiesi shall use its inventory of Licensed Product, and any shipments of Drug Product [***], and each Party shall
use its Safety Stock Amounts (as and when necessary), in each case, on a first-expired first-out (FEFO) basis in order to ensure
that the Licensed Product in Chiesi’s inventory (and the supply of Drug Product or, after [***], used in the production of
such Licensed Product inventory) always has the maximum period of time remaining on the retest period.

 

4.6       Pricing,
Invoicing and Supply Price Reconciliation.

 

(a)       Supply
Delivery Price; Invoices.

 

(i)       Each
delivery of Drug Product [***] under a Purchase Order hereunder shall be accompanied by an invoice. Protalix shall invoice such
Drug Product [***] at the Price as at the date of such invoice. Chiesi shall issue payment against such invoices within [***] days
of the invoice date. Protalix shall include the following information, where applicable, on all invoices: the type, description,
and quantity of the product delivered; the date of shipment; the prices; any applicable taxes, transportation charges or other
charges provided for in the applicable Purchase Order; and the applicable Purchase Order number.

 

[***] Redacted pursuant
to confidential treatment request. 

    		39	 

     

    

 

(b)       Taxes.
All sales and use taxes which Protalix is required by applicable Law to collect from Chiesi with respect to the Manufacture and
supply of Drug Product [***] to Chiesi shall be separately stated in Protalix’s invoice and shall be paid by Chiesi to Protalix.
For the avoidance of doubt, any and all applicable taxes shall be payable by Chiesi in addition to the Price payable on such Licensed
Products. Protalix shall be solely responsible for the timely payment of all such taxes to the applicable taxing authority.

 

(c)       Initial
Price. Subject to the terms and conditions of this Agreement, before the start of the first Commercial Year in which Protalix
is obligated to deliver Drug Product [***] pursuant to a Purchase Order issued by Chiesi, Protalix shall sell, and Chiesi shall
purchase, the amount of Drug Product [***] ordered for delivery in the first Commercial Year at a Price determined by the Parties
in good faith at least one Commercial Quarter prior to the anticipated start of the first Commercial Year in the Territory, reflecting
[***] in the Territory.

 

(d)       Ongoing
Price. Subject to the terms and conditions of this Agreement, in any Commercial Year other than the first Commercial Year,
Protalix shall sell, and Chiesi shall purchase, the amount of Drug Product [***] ordered for delivery in such Commercial Year at
a Price equal to [***].

 

(e)       [***]

 

(f)       For
the purposes of this Agreement, the “Applicable Rate” shall mean [***]:

 

	
         

        Aggregate Annual Net Sales of Licensed Products 
	Applicable Rates
	 	 
	Less than [***]	[***]
	 	 
	Equal to or greater than [***] and

less than [***]	[***]
	 	 
	Equal to or greater than [***] and

less than [***]	[***]
	 	 
	Equal to or greater than [***] and

less than [***]	[***]
	 	 
	Equal to or greater than [***] and

less than [***]	[***]
	 	 
	Equal to or greater than [***]	[***]

  

[***] Redacted pursuant
to confidential treatment request. 

    		40	 

     

    

 

(g)       Quarterly
Reconciliation. Notwithstanding the foregoing, in no event shall the Price paid by Chiesi for the Drug Product [***] ordered
for delivery hereunder in any Commercial Quarter be less than [***]. If, at the end of a Commercial Quarter, the Price paid by
Chiesi for the supply hereunder of Drug Product [***] during any Commercial Quarter is less than [***] in the aggregate, Chiesi
shall pay Protalix the difference between such amounts against receipt of a proper invoice within [***] of the invoice date. For
the avoidance of doubt, such amounts shall be in addition to (and in no way are intended to replace or subtract from) the amounts
set forth in Section 4.6(g) of the Ex-US Agreement, which separately addresses the quarterly reconciliation of the Price paid for
delivery under the Ex-US Agreement. In the event that the Ex-US Agreement expires or is terminated (other than termination by Chiesi
for Protalix’s material breach pursuant to and in accordance with Section 12.1(b) of the Ex-US Agreement), the references
above to the minimum Price to be paid by Chiesi for the Drug Product [***] ordered for delivery hereunder in any Commercial Quarter
shall be increased to [***], and such increase shall be effective in respect of both the Commercial Quarter in which such expiration
or termination of the Ex-US Agreement occurred and any subsequent Commercial Quarters during the Term, until such time as Protalix
enters into a new exclusive license agreement with a Third Party for the Commercialization of the Licensed Product in the Field
in the territory (or substantially all of the territory) covered by the Ex-US Agreement.

 

(h)       Yearly
Reconciliation. The amounts due from Chiesi for Drug Product [***] ordered for delivery in each Commercial Year, as listed
on the first invoice delivered to Chiesi for such Commercial Year, shall be increased or decreased, as the case may be, by the
amount of a Reconciliation Adjustment aggregated in the Territory and meant to compensate in such Commercial Year for any inaccuracy
in the Price paid in the Territory in the prior Commercial Year (the “Yearly Reconciliation”);
provided that, notwithstanding anything to the contrary herein, in no event shall the amount due from Chiesi for the Drug
Product [***] ordered for delivery in any Commercial Year be less than [***] in the aggregate for any Commercial Year (the “Minimum
Payment”), subject to the potential pro-rata reduction of the Minimum Payment for failure to supply provided for
in Section 4.14(f). For purposes of this Agreement, the “Reconciliation Adjustment”
shall mean the aggregate in the Territory of the difference between:

 

(i)       [***];
and,

 

(ii)       [***].

 

Each Reconciliation Adjustment shall be settled against receipt
of a proper credit note or debit note within [***] of the note date; provided that if any Reconciliation Amount is in the
favor of Chiesi, such amounts shall be credited against the amount stated on the next issued invoice relating to the delivery
of Drug Product [***] by Protalix to Chiesi under this Agreement. For the avoidance of doubt, such amounts shall be in addition
to (and in no way are intended to replace or subtract from) the amounts set forth in Section 4.6(h) of the Ex-US Agreement, which
separately addresses the yearly reconciliation of the Price paid for delivery under the Ex-US Agreement. In the event that the
Ex-US Agreement expires or is terminated (other than termination by Chiesi for Protalix’s material breach pursuant to and
in accordance with Section 12.1(b) of the Ex-US Agreement), the references above to the Minimum Payment to be paid by Chiesi for
the Drug Product [***] ordered for delivery in any Commercial Year shall be increased to [***] in the aggregate, and such increase
shall be effective in respect of both the Commercial Year in which such expiration or termination of the Ex-US Agreement occurred
and any subsequent Commercial Years during the Term, until such time as Protalix enters into a new exclusive license agreement
with a Third Party for the Commercialization of the Licensed Product in the Field in the territory (or substantially all of the
territory) covered by the Ex-US Agreement.

 

[***] Redacted pursuant to confidential
treatment request. 

    		41	 

     

    

  

(i)       Maximum
Order Quantity. [***], the Parties shall agree in good faith on a maximum order quantity for the [***] and subsequent Commercial
Years (the “Maximum Order Quantity”), expressed as a percentage above
the amount of vials sold in the Territory in the prior Commercial Year [***] to mitigate the risk to Protalix of Chiesi ordering
more Licensed Product than will be sold in such Commercial Year. If the Parties are unable to reach agreement on the Maximum Order
Quantity in the Territory by [***], (i) the Parties shall attempt to reach an agreement by consensus through the Steering Committee,
and (ii) if the Parties are still unable to reach an agreement within [***] of commencement of such Steering Committee discussions,
the issue shall be escalated to the Parties’ respective Chief Executive Officers, who shall attempt to resolve the issue
within [***]. Notwithstanding anything to the contrary in this Agreement, Protalix shall have no obligation to supply Drug Product
[***] in excess of the Maximum Order Quantity for the Territory.

 

(j)       [***]

 

4.7       Shipping
and Delivery.

 

(a)       Delivery.
Protalix shall deliver (or have delivered) to Chiesi in accordance with this Section 4.7 the quantities of the Drug Product
[***] specified for a given delivery date in each Purchase Order [***]. Protalix shall deliver (or have delivered) (i) after [***]
with a remaining shelf-life of [***], or (ii) prior to [***], with a remaining shelf life [***].

 

(b)       Delivery
Terms. The Drug Product [***] shall be supplied to Chiesi [***]. The Drug Product [***] shall be shipped at [***]. Chiesi shall
be [***]. For the avoidance of doubt, Protalix shall be responsible for the importation of the Drug Substance in the EU with respect
to the shipment of Drug Substance from Protalix to [***], and for compliance with all applicable Laws relating to such importation.

 

(c)       Retention.
Unless the Parties agree otherwise, Protalix shall maintain analytical samples of each batch of Drug Product (or, if necessary,
Drug Substance) in storage for a time period based upon Protalix’s sample retention policy.

 

[***] Redacted pursuant to confidential
treatment request. 

    		42	 

     

    

 

4.8       Certificate
of Analysis; Acceptance and Returns.

 

(a)       Certificate
of Analysis; Notice of Non-Conformance.

 

(i)       Protalix
shall supply to Chiesi the applicable batch number for the Drug Product [***] delivered, as well as such other information as the
Parties may set forth in the Quality Agreement with respect to Manufacture (a “Manufacturing
Certificate of Analysis”) for all Drug Product [***] shipped to Chiesi hereunder. Chiesi shall (within the time
period specified in Section 4.8(b)) inspect, or cause to have inspected, each shipment of the Drug Product [***] for any
material damage, defect or shortage and give Protalix written notice of any such material damaged, defective or short shipment
(a “Notice of Non-Conformance”) within the time periods specified in
Sections 4.8(a)(ii) and 4.8(b), as applicable.

 

(ii)       Latent
defects shall be communicated to Protalix, together with appropriate detail, within fifteen (15) Business Days of the date on which
such latent defect was first discovered by Chiesi or was notified to Chiesi by the relevant Party discovering the defect.

 

(b)       Rejection.
Chiesi shall have [***] following its receipt of each shipment of the Drug Product [***] to inspect such shipment. If Chiesi determines
that any shipment of the Drug Product [***] does not conform to the Product Specifications (or is otherwise a short shipment) in
any material respect, it shall promptly notify Protalix within [***] following such determination in compliance with the procedures
set forth in the Quality Agreement(s). Failure to provide such written notice with such time periods specified in Sections 4.8(a)(ii)
and this 4.8(b), as applicable, shall be deemed acceptance of such shipment of Drug Product [***] by Chiesi.

 

(c)       Disputes.
If Chiesi delivers a Notice of Non-Conformance in respect of all or any part of a shipment of the Drug Product [***], and Protalix
does not agree with Chiesi’s determination that such shipment fails to meet the Product Specifications (or is otherwise
a short shipment) in any material respect, the Parties shall in good faith attempt to resolve such dispute at the Steering Committee;
provided, however, that the Steering Committee must resolve any such dispute by consensus, and for the avoidance
of doubt, neither the Protalix Chair nor Chiesi Chair shall have final decision-making authority in respect of such Steering Committee
discussions; provided, however, that for the duration of such Steering Committee discussions, Protalix shall use
Commercially Reasonable Efforts to promptly replace such alleged non-conforming Drug Product [***] (or short shipment) in order
to avoid any possible out-of-stock situation. The dispute shall be resolved at the Steering Committee within thirty (30) days,
unless otherwise agreed in writing by the Parties, from the date of Protalix’s receipt of a Notice of Non-Conformance to
resolve such dispute regarding whether all or any part of such shipment was not Manufactured in conformance with the Product Specifications
(or was otherwise a short shipment) in any material respect. If the dispute regarding whether all or any part of a shipment rejected
by Chiesi was not Manufactured in conformance with the Product Specifications (or was otherwise a short shipment) in any material
respect is not resolved by the Steering Committee in such thirty (30) day period, [***].

 

[***] Redacted pursuant
to confidential treatment request. 

    		43	 

     

    

  

(d)       Remedies.
In the event any shipment of Drug Product [***] is rejected pursuant to this Section 4.8 as a result of any act or omission
of Protalix, then (i) Chiesi shall, at the direction of Protalix, either (x) destroy such rejected Drug Product [***] (in accordance
with applicable Law) or (y) return such rejected Drug Product [***] to Protalix, at a location designated by Protalix [***]; and
(ii) Protalix [***] shall (in its sole discretion) either (x) use its Commercially Reasonable Efforts to promptly replace such
non-conforming Drug Product [***] (or short shipment) or (y) give Chiesi a credit in an amount equal to the amount paid or payable
by Chiesi with respect to such rejected Drug Product [***] (or short shipment).

 

4.9       Product
Specification and Manufacturing Changes. Prior to the Parties entering into the Quality Agreement, Protalix shall inform Chiesi
of material Product Specification and Manufacturing changes, including those resulting from a request received by Protalix from
a Governmental Authority. Protalix shall notify Chiesi within a reasonable time prior to implementing such change, to allow Chiesi
to assess the potential impact of such change upon the Drug Product supplied or its use by Chiesi and the implementation of such
change shall not occur prior Chiesi’s written approval (which approval shall not be unreasonably withheld, conditioned or
delayed). After the Parties enter into the Quality Agreement, Product Specification and Manufacturing changes, including those
resulting from a request received by either Party from a Governmental Authority, shall be dealt with pursuant to the Quality Agreement;
provided that all applicable Regulatory Approvals shall be prepared and filed by the Parties in accordance with the provisions
of Section 3.

 

4.10       Labeling.
Chiesi shall be responsible for the design of the Label for the Licensed Product in the Territory and for ensuring that such Label
is accurate and complies with all applicable Laws. Chiesi shall be responsible for obtaining approval from applicable Governmental
Authorities for any new Label or packaging or change to Label or packaging and shall bear all costs arising therefrom, including
in respect of any write-off of materials and work-in-progress unless otherwise included or required as part of the Development
of the Licensed Product.

 

4.11       Shortages.
In the event that the materials and/or Manufacturing capacity required to Manufacture and to deliver in a timely manner to Chiesi
the Drug Product [***] required under outstanding Purchase Orders are in short supply (“Shortage”),
Protalix shall notify Chiesi of such Shortage and the Steering Committee shall promptly meet to discuss the Shortage. Protalix
shall provide to the Steering Committee a written plan of action stating in reasonable detail the proposed measures to address
such Shortage and the date such Shortage is expected to end. Protalix shall use its Commercially Reasonable Efforts to minimize
the duration of any Shortage. During any such Shortage, Protalix shall allocate the materials and resources used in the supply
of the Drug Product [***] both in the Territory and outside the Territory, in such percentage proportions as determined by Chiesi
in its sole discretion; provided that, in the event that the Ex-US Agreement expires or is terminated, the foregoing sentence
shall not apply, and instead Chiesi shall be allocated [***] of such materials and resources for use in the supply of the Drug
Product [***] for use in the Territory. For so long as this Agreement remains in effect, this Section 4.11 hereby amends,
replaces and supersedes in its entirety Section 4.11 of the Ex-US Agreement, which shall be of no further force or effect for
so long as this Agreement remains in effect.

 

[***] Redacted pursuant to confidential
treatment request. 

    		44	 

     

    

  

4.12       Safety
Stock Obligations

 

(a)       Build-Up.
[***], Protalix shall operate its Facility in order to start building inventory of [***], Drug Substance and Drug Product (the
“Safety Stock”) with the quantity of [***], Drug Substance and Drug
Substance remaining after Protalix supplies the quantities of Drug Product and, if applicable, Drug Substance necessary to conduct
the Ongoing Clinical Studies and any [***] and, after the Launch in the Territory, to meet commercial demand. Protalix shall operate
its Facility in such manner until there is a quantity of Safety Stock consisting of (i) Drug Product capable of fulfilling the
[***] commercial needs for Licensed Product in the Territory [***], based on the rolling Forecasts submitted by Chiesi pursuant
to Section 4.5, (ii) Drug Substance capable of fulfilling the [***] commercial needs for Licensed Product in the Territory,
based on the rolling Forecasts submitted by Chiesi pursuant to Section 4.5, and (iii) [***] capable of fulfilling the [***]
commercial needs for Licensed Product in the Territory, based on the rolling Forecasts submitted by Chiesi pursuant to Section
4.5 (collectively, the “Safety Stock Amount”). Thereafter, subject
to Section 4.12(b), Protalix shall operate its Facility as necessary to maintain the Safety Stock Amount. The Safety Stock
may be used to fulfill Protalix’s obligations to supply in the event there is a shortage as described in Section 4.11
or a Supply Failure (so long as such Safety Stock complies with the remaining shelf life required under Section 4.7(a),
unless otherwise reasonably agreed by the Parties in a given circumstance); provided that [***] of such Safety Stock Amount
shall be maintained for the exclusive use of Chiesi (i.e. [***]) in total, when taking into account the [***] provided for
under Section 4.12(a) of the Ex-US Agreement).

 

(b)       Sharing
of Responsibility and Cost.

 

(i)       For
so long as subclause (x) of Section 4.6(h)(ii) applies in the Territory, (A) Chiesi shall bear the [***] responsibility
for maintaining the Drug Product included in the Safety Stock Amount for the Territory through the inclusion of and payment for
such Drug Product (as part of, and not in addition to) in applicable Purchase Orders placed in accordance with Section 4.5
and, for clarity, in the Yearly Reconciliation provided for under Section 4.6(h), and (B) Protalix shall bear the [***]
responsibility for maintaining the Drug Substance included in the Safety Stock Amount in the Territory. On and from the date that
such subclause (x) of Section 4.6(h)(ii) no longer applies in the Territory in accordance with such Section, the Parties
shall share equally the responsibility [***] of building and maintaining the Safety Stock Amount for Drug Substance and Drug Product
in the Territory, in a manner to be mutually agreed upon by the Parties in good faith at the same time the Maximum Order Quantity
is agreed upon in accordance with Section 4.6(i) (and, for clarity, such Safety Stock Amount shall not be included in the
Drug Product [***] ordered for the Territory for purposes of the Yearly Reconciliation). For clarity, following [***], Chiesi
shall be solely responsible for the maintenance of any Safety Stock Amount of Drug Product [***]. Chiesi shall reimburse Protalix
for its [***] share of the Safety Stock consisting of [***] within forty-five (45) days of Protalix providing Chiesi an invoice
therefor.

 

[***] Redacted pursuant
to confidential treatment request. 

    		45	 

     

    

  

(ii)       The
Forecasts and Purchase Orders submitted by Chiesi pursuant to Section 4.5 shall make a distinction between the amounts
of Drug Product and Drug Substance required by Chiesi for commercial needs in the Territory and the amounts of Drug Product and
Drug Substance needed for Safety Stock. For the avoidance of doubt, Protalix shall hold and keep the Safety Stock Amount of Drug
Substance and, at Chiesi’s option, Chiesi or [***] shall hold and keep the Safety Stock Amount (or a portion thereof) of
Drug Product. Protalix shall, upon reasonable request and during regular business hours with as minimal disruption to Protalix’s
operations as reasonably practicable, allow Chiesi to audit the quantity of Safety Stock in Protalix’s possession.

 

4.13       [***]

 

4.14       Failure
to Supply.

 

(a)       “Failure
to Supply” shall occur in the event that Protalix does not supply according to the terms of this Agreement (to
the Person responsible for [***]) for reasons within Protalix’s reasonable control (and, for clarity, not for reasons
outside Protalix’s reasonable control, i.e., a Force Majeure Event) at least [***] of the quantities of Drug Substance
specified by Chiesi on Purchase Orders covering [***] (a “Supply Failure”),
and such Supply Failure is not cured in the following [***] period (whether by using Safety Stock or otherwise). For clarity, notwithstanding
anything to the contrary herein, a failure to supply will not be treated as a Supply Failure under this Section 4.14(a)
if such failure to supply was due to the failure to conduct [***] or Labeling and Packaging. For the sake of this Section 4.14(a),
“cure” means supplying at least [***] of the quantities of Drug Substance specified by Chiesi on the applicable Purchase
Orders that are the subject of the Supply Failure.

 

(b)       Rights
of Chiesi upon Failure to Supply. In the event of a Failure to Supply, at the option of Chiesi by giving written notice to
Protalix, Chiesi shall have the right to, in compliance with applicable Laws and each Party’s agreements with Third Parties,
[***].

 

(c)       Allocation
of Costs. Protalix shall be responsible for [***]. This Section 4.14(c) hereby amends, replaces and supersedes in its
entirety Section 4.14(c) of the Ex-US Agreement, which shall be of no further force or effect.

  

(d)       Right
of Protalix to Resume Manufacturing. Should Protalix provide Chiesi with commercially reasonable evidence that it is ready,
willing and able, directly or through subcontractors reasonably acceptable to Chiesi, to resume its supply obligations hereunder,
Chiesi and Protalix will work together in good faith to [***]; provided that notwithstanding anything to the contrary in
this Agreement or the Ex-US Agreement, any exercise of this right or of the corollary right in Section 4.14(d) of the Ex-US Agreement,
may only be exercised concurrently with such corollary right under the other agreement.

 

[***] Redacted pursuant
to confidential treatment request.

    		46	 

     

    

 

(e)       [***]

 

(f)       [***]

 

		Section 5.	FINANCIAL PROVISIONS

 

5.1       Effective
Date Payment. In consideration for and as reimbursement of the costs sustained by Protalix up to the Effective Date for the
Development of the Compound, Drug Substance, Drug Product and Licensed Product (such costs hereby acknowledged and accepted by
Chiesi, without any right of further review, challenge or audit with respect to such costs) and in a manner consistent with Section
5.3(b) and Section 5.3(i), Chiesi shall pay to Protalix within twenty (20) days after the Effective Date, the non-refundable,
non-creditable amount of Twenty-Five Million Dollars (US $25,000,000). For the avoidance of doubt, and notwithstanding the foregoing
reference to Section 5.3(b), such amount shall not be included in or subject to the Development Costs Cap, Annual Cap,
or any other cap on reimbursement provided for herein or in the Ex-US Agreement.

 

5.2       Event
Milestone Payments.

 

(a)       Subject
to the terms and conditions of this Agreement, Chiesi shall pay to Protalix the amount set forth in the table below opposite the
corresponding event milestone (each an “Event Milestone”) within thirty
(30) days after the occurrence of such Event Milestone:

 

	
         

        Event Milestone
	Event Milestone

Payment
	[***] (“Event Milestone 1”)	[***]
	[***] (“Event Milestone 2”)	[***]
	[***] (“Event Milestone 3”)	[***]
	[***] (“Event Milestone 4”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 5”)	[***]
	
        Annual Net Sales of the Licensed Product in the Territory
equal to or in excess of [***] (“Event Milestone 6”) 
	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 7”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 8”)	[***]

 

[***] Redacted pursuant
to confidential treatment request.

    		47	 

     

    

 

	
         

        Event Milestone
	Event Milestone

Payment
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 9”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 10”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 11”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 12”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 13”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 14”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 15”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 16”)	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 17”)	[***]
	
        Annual Net Sales of the Licensed Product in the Territory
equal to or in excess of [***] (“Event Milestone 18”) 
	[***]
	Annual Net Sales of the Licensed Product in the Territory equal to or in excess of [***] (“Event Milestone 19”)	[***]

 

(b)       [***]

 

(c)       For
the avoidance of doubt: (i) subject to Section 5.2(d) below, each Event Milestone Payment shall be payable only on the first
occurrence of the corresponding Event Milestone; and (ii) none of the Event Milestone Payments shall be payable more than once.

 

[***] Redacted pursuant to confidential treatment
        request.

    		48	 

     

    

 

(d)       In
respect of Event Milestones 5 through 19, should more than one Event Milestone occur in any Commercial Year, then only the highest
of such Event Milestone Payments shall be due and payable in such Commercial Year (however, any Deferred Milestones may also be
due and payable in such Commercial Year, subject to the below). For example, if Protalix achieves Event Milestone 5, Event Milestone
6, Event Milestone 7, and Event Milestone 8 in the first Commercial Year of this Agreement, only the Event Milestone Payment for
Event Milestone 8 shall be due and the Event Milestone Payments for Event Milestone 5, Event Milestone 6 and Event Milestone 7
shall be deferred as set forth below and not paid in that Commercial Year (each, a “Deferred
Milestone”). Such Deferred Milestones shall become due and payable in any subsequent Commercial Year in which
the corresponding Event Milestone for each such Deferred Milestone is again achieved (irrespective of whether a higher Event Milestone
is also achieved in such Commercial Year); provided, that the aggregate Net Sales for such subsequent Commercial Year have
not decreased, as compared to the highest amount of Net Sales achieved in any previous Commercial Year. If the aggregate Net Sales
for such subsequent Commercial Year has decreased, than only the highest Event Milestone achieved in such year will be payable
(i.e., any unpaid Deferred Milestones again shall be deferred to the next Commercial Year). Following on from the above
example, if in the subsequent Commercial Year Protalix achieves Event Milestone 5 and Event Milestone 6 only (meaning that there
has been a decrease), then in such Commercial Year, the Deferred Milestone for Event Milestone 6 shall be due and payable (being
the highest unpaid Event Milestone achieved in such Commercial Year), but the Deferred Milestone for Event Milestone 7 shall remain
unpaid (as the corresponding Event Milestone was not achieved in that Commercial Year), and the Deferred Milestone for Event Milestone
5 shall also remain unpaid (as there was a decrease in Net Sales). If instead, the Net Sales increased (for example, Event Milestone
9 had been achieved), than each of the Deferred Milestones for Event Milestone 5, Event Milestone 6 and Event Milestone 7 will
be due and payable in such Commercial Year (in addition to the Event Milestone Payment for Event Milestone 9). Following the above
example, and assuming that in that second Commercial Year there had been a decrease in aggregate Net Sales, but that in the third
Commercial Year, Protalix achieves each of Event Milestone 5, Event Milestone 6, Event Milestone 7, Event Milestone 8, and Event
Milestone 9, then in such year, the Event Milestone Payment for Event Milestone 9 shall be due (as that is the highest of the
Event Milestones achieved), as well as any unpaid Deferred Milestones (in the above example, the remaining Deferred Milestones
would be Event Milestone 5 and Event Milestone 7).

 

(e)       Protalix
acknowledges and agrees that the right to receive Event Milestone Payments is not a security, shall not be represented by a certificate
or other instrument and shall not represent a security or ownership interest in Chiesi, its Affiliates or any of their respective
assets.

 

(f)       NOTWITHSTANDING
THIS SECTION 5.2, PROTALIX MAKES NO REPRESENTATION, WARRANTY OR COVENANT, EITHER EXPRESS OR IMPLIED, THAT IT WILL BE ABLE
TO SUCCESSFULLY DEVELOP AND CHIESI MAKES NO REPRESENTATION, WARRANTY OR COVENANT, EITHER EXPRESS OR IMPLIED, THAT IT WILL BE ABLE
TO SUCCESSFULLY COMMERCIALIZE THE LICENSED PRODUCT.

 

    		49	 

     

    

 

5.3       Development
Costs.

 

(a)       Development
Costs in the Territory. The Parties acknowledge and agree that the provisions of this Section 5.3 regarding Development
Costs are separate from, and in addition to, the provisions of Section 5.3 of the Ex-US Agreement regarding Development Costs.
For the avoidance of doubt, the sharing of the Development Costs in the Territory, and the Development Costs Cap and Annual Cap,
described in this Section 5.3 are each in addition to (and are in no way intended to replace or subtract from) the provisions
governing the sharing of Development Costs, and the Development Costs Cap and Annual Cap, as provided in the Ex-US Agreement.

 

(b)       Share
of Costs. Subject to the Development Costs Cap and Annual Cap, and subject to Section 5.3(e), Chiesi shall reimburse
Protalix for [***] of all Development Costs incurred on and after the Effective Date (i.e. totaling [***]of the total Development
Costs, when taking into account the provisions of the Ex-US Agreement), within [***] of a receipt of an invoice therefor; provided
that, until Regulatory Approval is obtained in the Territory for the Licensed Product, Chiesi may deduct from such reimbursable
amounts payable to Protalix pursuant to this Section 5.3(b), [***] of any such amounts that comprise reimbursement hereunder
for Development Costs that are indirect, internal costs of Protalix (e.g., Protalix employee hours).

 

(c)       Development
Costs Cap. Notwithstanding Section 5.3(b), if Chiesi’s reimbursement obligation in respect of its share of the
Development Costs under Section 5.3(b) at any point during the Term exceeds twenty million dollars (US$20,000,000) in the
aggregate under this Agreement (i.e., totaling US$45,000,000 when taking into account the provisions of the Ex-US Agreement)
during the Term (the “Development Costs Cap”), then Chiesi shall have
the right but not the obligation to reimburse the amount exceeding the Development Costs Cap. If Chiesi decides to so reimburse,
then Chiesi shall be entitled to credit any such amounts in excess of the Development Costs Cap that it pays to Protalix in accordance
with Section 5.3(b) against the last invoice payment obligations of Chiesi to Protalix in respect of the Development Costs
to be reimbursed by Chiesi as set forth under Sections 5.3(b) and 5.3(i). The reimbursement mechanism set forth
under the previous sentence of this Section 5.3(c) hereby amends, replaces and supersedes the mechanism set forth in the
last sentence of Section 5.3(b) of the Ex-US Agreement, which shall be of no further force or effect.

  

(d)       Annual
Cap. Notwithstanding Section 5.3(b), and subject to Section 5.3(c) above, Chiesi’s reimbursement obligation
in respect of its share of the Development Costs under Section 5.3(b) shall not, in any single Calendar Year during the
Term, exceed seven million and five hundred thousand dollars (US$7,500,000) (the “Annual
Cap”) under this Agreement (i.e. totaling $17,500,000 when taking into account the provisions of the Ex-US
Agreement); provided, however, that if in any Calendar Year during the Term Chiesi’s reimbursement obligation
in respect of its share of the Development Costs is less than the Annual Cap, the difference between Chiesi’s actual reimbursement
obligation for such Calendar Year and the Annual Cap for that Calendar Year shall carry forward to the next Calendar Year, such
that the Annual Cap for that next Calendar Year shall increase by such amount (and in respect of such next Calendar Year, any
references in this Agreement to Annual Cap shall be read as referring to such increased amount). If [***] of Development Costs
for any Calendar Year exceeds the Annual Cap for that Calendar Year, then the difference between such actual Development Costs
in that Calendar Year and the Annual Cap for such Calendar Year multiplied by 2.5 shall be deemed added to such Development
Costs for the next Calendar Year (i.e., such amount will be subject to Chiesi’s reimbursement obligation of [***]
per Section 5.3(b) of such amount during the next Calendar Year, subject to the Annual Cap for such Calendar Year and the
Development Costs Cap).

 

[***] Redacted pursuant
to confidential treatment request.

    		50	 

     

    

 

(e)       [***].
In the event that either Party is obligated to undertake one or more [***] under the terms of this Agreement, subject to this Section
5.3(e), [***], in [***] of a receipt of an invoice therefor; [***]. For the avoidance of doubt, the [***] shall not in any
event be included as a part of the Development Costs Cap or Annual Cap under Sections 5.3(c) and 5.3(d).

 

(f)       Registry
Costs. Notwithstanding anything to the contrary herein or in the Ex-US Agreement, Chiesi shall be responsible for maintaining
the Registry (including the conduct of any post-Regulatory Approval obligations and fulfilling the requirements of any Regulatory
Authority related thereto). For the avoidance of doubt, the Parties acknowledge and agree upon the desirability of maintaining
one global Registry for both the Licensed Product in the Territory and outside the Territory. Chiesi shall be responsible for one
hundred percent (100%) of the costs of the Registry.

  

(g)       Clinical
Studies Following Regulatory Approval and Additional Studies. Notwithstanding anything to the contrary herein but without prejudice
to Sections 3.2(e) and 3.3(d)(iii): (i) Chiesi may only conduct Post-Approval Studies or Additional Studies (other than
the Extension Studies) with the prior written consent of Protalix, such consent not to be unreasonably delayed, withheld or conditioned;
and (ii) Chiesi shall be responsible for paying [***], and to the extent Protalix is required to (or is requested by Chiesi to)
provide assistance in relation to the conduct of such Post-Approval Studies or Additional Studies, Chiesi shall [***] incurred
in providing such assistance (and such reimbursement shall not be subject to the Development Costs Cap, Annual Cap, or any other
cap on reimbursement provided for herein).

 

(h)       Chiesi
Step-in Rights. In the event that Chiesi exercises its step-in rights under Section 3.2(b) of this Agreement (or Section
3.2(b) of the Ex-US Agreement), and in the event that neither this Agreement nor the Ex-US Agreement have expired or been terminated,
then each of Sections 5.3(a) through 5.3(d), as applicable, shall continue to apply with the obligation shifting
to Protalix to reimburse Chiesi for [***] of all Development Costs for the Ongoing Clinical Studies incurred by Chiesi after the
exercise of such step-in rights (i.e., replacing references to “Chiesi” with “Protalix” and vice-versa)
in relation thereto, subject to the balances remaining under each of the Development Costs Cap and the Annual Cap, as applicable,
as of the date on which Chiesi first exercises such step-in rights; provided that any such reimbursement obligation of Protalix
shall not be required to be paid by Protalix, but rather shall only be applied by deducting such amounts from immediately applicable
future payment obligations of Chiesi to Protalix under this Agreement or the Ex-US Agreement. For example, if one million dollars
($1,000,000) remains in the Development Costs Cap for the Ongoing Clinical Studies at the time Chiesi exercises its step-in rights,
Protalix’s responsibility to reimburse [***] of Chiesi’s Development Costs in relation thereto shall be limited to
a maximum of [***]. In the event that the remaining amount of the Development Costs Cap is exceeded during the course of Chiesi’s
exercise of its step-in rights, Chiesi shall be responsible for [***] of the Development Costs incurred in excess of such cap.
[***]. For so long as this Agreement remains in effect, this Section 5.3(h) hereby amends, replaces and supersedes in its
entirety Section 5.3(g) of the Ex-US Agreement, which shall be of no further force or effect for so long as this Agreement remains
in effect. In the event that the Ex-US Agreement expires or is terminated, then this Section 5.3(h) shall continue to apply,
but Protalix’s obligation to reimburse Chiesi shall be for [***] of all Development Costs for the Ongoing Clinical Studies
incurred by Chiesi after the exercise by Chiesi of such step-in rights (solely for the period after such expiration or termination
of the Ex-US Agreement), and the examples set out herein shall be modified accordingly.

 

[***] Redacted pursuant
to confidential treatment request.

    		51	 

     

    

 

(i)       Reimbursement
Payments. Where either Party is required to reimburse the other Party in accordance with the terms of this Agreement (including,
for the avoidance of doubt, if Protalix has incurred certain Development Costs but Chiesi is responsible for paying such Development
Costs pursuant to this Section 5.3), then the Party to whom such reimbursement is owed (the “Reimbursed
Party”) may, on a monthly basis, send an invoice to such other Party (the “Reimbursing
Party”) with respect to such reimbursable amounts, along with reasonable evidence thereof (such evidence to consist
of a report in substantially the form set out in Schedule 5.3(i), unless otherwise agreed in writing by the Parties), and
such Reimbursing Party shall issue payment against such invoices within forty five (45) days of the invoice date (other than as
set forth in this Section 5.3 or elsewhere in this Agreement, including Section 5.1). Without limiting the foregoing,
in the event that a Governmental Authority responsible for the determination and collection of taxes conducts an audit of Chiesi
and, in the course of such audit, requests certain back-up invoices, Protalix shall provide Chiesi with copies of such requested
back-up invoices in Protalix’s possession within five (5) Business Days of receiving notice of such Governmental Authority’s
request.

  

(j)       CRO
Agreements. Upon Chiesi’s request, Protalix shall reasonably facilitate Chiesi being added as a party to Protalix’s
agreements with Third Parties that are contract research organizations performing Development services in respect of the Licensed
Product in the Field (on terms agreeable to such Third Parties), for the primary purpose of enabling Chiesi to make direct payments
of the costs of those Development services to such Third Parties (as opposed to Protalix making such payments and Chiesi reimbursing
Protalix for Chiesi’s share of such costs pursuant to Section 5.3); provided, however, that any such
direct payments by Chiesi to such Third Parties shall be subject to (and shall count towards) (i) Chiesi’s obligation to
reimburse Protalix for Development Costs under Section 5.3(b) of this Agreement and Section 5.3(a) of the Ex-US Agreement,
and (ii) the Development Costs Cap and Annual Cap as set forth in Sections 5.3(c) and 5.3(d) of this Agreement and
Sections 5.3(b) and 5.3(c) of the Ex-US Agreement, in each case, in a manner that does not disadvantage either Party (i.e.,
with the intent of the Parties being that Chiesi’s and Protalix’s respective share of the Development Costs be economically
the same whether Chiesi is paying such Third Parties directly or Protalix is paying such amounts to such Third Parties and being
reimbursed by Chiesi in respect thereof pursuant to and in accordance with Section 5.3 of this Agreement and Section
5.3 of the Ex-US Agreement).

 

    		52	 

     

    

 

		Section 6.	ACCOUNTING AND PROCEDURES FOR PAYMENT

 

6.1       Periodic
Reporting and Reconciliation Payments.

 

(a)       Reports;
Payments. Within [***], Chiesi shall provide Protalix with a report stating the Net Sales and computation thereof (including
sales in units and in value of the Licensed Product made by or on behalf of Chiesi and its Affiliates in the Territory), and any
permitted deductions from Net Sales, during such preceding Commercial Quarter, together with the calculation of the Price reconciliations
as set out in Section 4.6(g) and, if applicable, Section 4.6(h) (together with any other supporting documentation
reasonably requested by Protalix).

 

(b)       Disputes.
In the event of a dispute regarding any amount reported by a Party pursuant to Section 6.1(a), the disputing Party shall
provide a notice of the dispute to the other Party, and the Parties will promptly meet and negotiate in good faith a resolution
to such dispute. In the event that the Parties are unable to resolve such dispute within thirty (30) days after notice by the
disputing Party, the Parties will (i) use Commercially Reasonable Efforts to reach agreement on the appointment of one internationally-recognized
independent accounting firm to determine the matter, or (ii) if the Parties cannot reach agreement on such accounting firm within
sixty (60) days after notice by the disputing Party, then each Party will appoint one internationally-recognized accounting firm
and such firms will choose a third internationally-recognized independent accounting firm to make the final determination, which
shall be binding on the Parties.

   

6.2       Currency.
All payments to be made hereunder by one Party to the other Party shall be computed and paid in United States dollars.

 

6.3       Method
of Payments. Each payment to be made hereunder by either Party to the other Party shall be made by electronic transfer in
immediately available funds via either a bank wire transfer, an ACH (automated clearing house) mechanism, or any other means of
electronic funds transfer, at the other Party’s election, to the account designated (in writing) by the other Party on or
before the Effective Date. With respect to any payment invoiced by either Party to the other Party, the other Party may designate
a different bank account on such invoice. With respect to any other payment, either Party may designate a different bank account
at least thirty (30) days before such payment is due.

 

6.4       No
Set-Off. Except as otherwise expressly provided hereunder, all payments which either Party is required to make under this
Agreement shall be made without any set-off, counterclaim or condition.

  

[***] Redacted pursuant
to confidential treatment request.

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6.5       Interest
for Late Payments. If either Party fails to make any payment due under this Agreement within [***] of the date upon which
such payment is due, then interest shall accrue on such payment on a daily basis from the date such payment was originally due
at a rate equal to weekly LIBOR (as published in The Wall Street Journal, New York edition and as officially confirmed
by an officer of the respective Party) plus [***], or at the maximum rate permitted by applicable Law, whichever is the lower,
and such interest shall be paid when such payment is made.

 

6.6       Inspection
of Records. Chiesi shall, and shall cause its Affiliates to, keep accurate books and records with respect to the Commercialization
of Licensed Product hereunder, setting forth gross sales of the Licensed Product and Net Sales sufficient to enable the calculation
of amounts payable hereunder to be verified. Protalix shall, and shall cause its Affiliates and sublicensees to, keep accurate
books and records setting forth the Price for the Licensed Products purchased by Chiesi from Protalix hereunder, sufficient to
enable the calculation of the Price to be verified (the foregoing books and records of Chiesi and Protalix and their respective
Affiliates and sublicensees, the “Financial Records”). Additionally,
each Party shall keep sufficiently detailed books and records to enable the other Party to monitor such Party’s compliance
with the provisions of Sections 9.1(i) and 9.1(j) below (such additional books and records, “Compliance
Records”). Each Party will retain such Financial Records and Compliance Records for [***] after the end of the
Calendar Year, in which they are generated in order to enable audit of such records as set forth below. Each Party will have the
right to request that an independent certified public accountant selected by it examine the other Party’s Financial Records,
or that such Party’s nominated representative examine the other Party’s Compliance Records, in each case, at any reasonable
time, upon reasonable notice and at the facility(ies) where the other Party’s Financial Records or Compliance Records are
normally kept (an “Audit”). The foregoing rights of examination may
be exercised only [***] during each twelve (12)-month period of the Term and only [***] during each twelve (12)-month period in
the three (3) years after final payment has been made. The audited Party may require such accountants (or nominated representative)
to enter into a reasonably acceptable confidentiality agreement. In respect of an Audit of a Party’s Financial Records,
the opinion of said independent accountants regarding such payments shall be binding on the Parties, other than in the case of
manifest error. Except as set forth below, [***] shall bear the cost of any such examination and review. In respect of a Party’s
Financial Records, if such Audit by either Party of the other Party’s books and records reveals that such other Party has
made an underpayment (or received an overpayment) under this Agreement, then the Party in receipt of any such overpayment, or
the Party responsible for any such underpayment, shall promptly reimburse the other Party in the amount of such overpayment or
underpayment (as applicable) as was revealed by such Audit. If the discrepancy revealed by the Audit is greater than [***] of
the amount due, then the Party responsible for the inaccurate reporting resulting in such overpayment or underpayment shall also
promptly reimburse the other Party for any and all costs incurred in connection with such Audit.

 

[***] Redacted pursuant to confidential
treatment request.

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6.7       Tax
Matters.

 

(a)       Taxes.
Subject to Section 6.7(c) below, Chiesi shall assume and pay any and all taxes, customs, duties, assessments, excises and
other charges levied upon the importation of or assessed against the Drug Product [***] supplied or rights licensed by Protalix
hereunder, or for or on account of the Commercialization of the Licensed Product in the Territory. Prior to [***], Protalix shall
assume and pay any and all taxes, customs, duties, assessments, excises and other charges levied upon the importation of or assessed
against the Drug Substance in the EU with respect to the shipment of Drug Substance from Protalix to [***].

 

(b)       VAT.
It is understood and agreed between the Parties that any payments made by Chiesi under this Agreement are exclusive of any value
added or similar tax imposed upon such payments.

 

(c)       Withholding
Tax. Payments made by Chiesi to Protalix pursuant to this Agreement shall be made free and clear of any withholding in respect
of taxes. [***]. Section 6.7(c) of the Ex-US Agreement is hereby amended to add the words “or Section 5.3”
following the words “Section 5.1” in the first sentence of such Section 6.7(c) of the Ex-US Agreement.

  

(d)       Cooperation.
Each Party shall provide the other with reasonable assistance to enable a reduction in, elimination of, or the recovery, as permitted
by applicable Law, of withholding taxes, VAT, or similar obligations resulting from payments made under this Agreement, such recovery
to be for the benefit of the Party bearing such withholding tax or VAT. Chiesi shall provide reasonable notice to Protalix of its
intent to withhold any amount in respect of taxes, and Protalix shall provide to Chiesi any tax forms that may be reasonably requested
by and necessary for Chiesi not to withhold tax or to withhold tax at a reduced rate under applicable Law (including an applicable
income tax treaty). Each Party further agrees to provide reasonable cooperation to the other Party, at the other Party’s
expense, in connection with any official or unofficial tax audit or contest relating to payments made by Chiesi to Protalix under
this Agreement. Chiesi assumes the sole responsibility of procuring any required permits, authorizations, licenses or consents
of Governmental Authorities for the export of funds as may be required in the Territory; provided, however, that
to the extent that it is impossible to make such payments due to the “blocking” of funds by applicable Law, such “blocked”
funds shall be deposited to the credit of Protalix in such depository as Protalix designates subject to such applicable Law or
Chiesi or its Affiliates shall otherwise pay Protalix an amount equal to such “blocked” funds.

 

		Section 7.	PATENTS AND INFRINGEMENT

 

7.1       Filing
and Prosecution.

 

(a)       Except
as set forth in Section 7.1(b), Protalix shall have the exclusive right, subject to Sections 7.2 through 7.5,
to:

 

[***] Redacted pursuant
to confidential treatment request.

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(i)       file
Patent Applications on any Invention included in the Protalix Patent Rights or otherwise arising from the collection, generation
or use of Clinical Data or its performance of Development activities under this Agreement;

 

(ii)       take
all reasonable steps to prosecute all pending and new Patent Applications included within the Protalix Patent Rights;

 

(iii)       maintain
in force any patents in the Territory included within the Protalix Patent Rights by duly filing all necessary papers and paying
any fees required by the relevant patent Laws of the United States.

 

[***].

 

(b)       With
respect to the Patent Applications set forth on Schedule 7.1(b) and any future Patent Applications covering the Compound
or Licensed Product in the Field in the Territory claiming priority to, or common priority with, the Patent Applications set forth
on Schedule 7.1(b) (in each case, solely to the extent not related to the System), Chiesi shall have the option, upon thirty
(30) days’ notice to Protalix, to take over the prosecution and maintenance of any or all of such Patent Applications (which
shall remain in Protalix’s name), including the sole right to file new Patent Applications in Protalix’s name covering
the Compound or Licensed Product in the Field in the Territory. [***]. Chiesi will notify Protalix of any decision to cease prosecution
and/or maintenance of any of such Patent Applications (or resulting Patents) for which it opts to take over the prosecution and
maintenance pursuant to this Section 7.1(b), or not to pursue, or to cease to [***], any such Patent Applications or resulting
Patents. In such event, Protalix shall have the right to make the filing, or to continue and take back control over the prosecution
and maintenance of such Patent Rights.

  

7.2       Correspondence.

 

(a)       Protalix
will keep Chiesi informed of the status of the Protalix Patent Rights to the extent the Protalix Patent Rights [***].

 

(b)       Protalix
will, upon Chiesi’s request, provide Chiesi with copies of all substantive documentation submitted to, or received from,
the United States Patent and Trademark Office in connection therewith. With respect to any Protalix Patent Rights that are not
Protalix System Patent Rights, Protalix shall consider in good faith all comments provided by Chiesi with respect to a Protalix
Patent Right in the Territory to the extent relating to the Compound or Licensed Product and/or other recombinant form of alpha
Galactosidase in the Field in the Territory or the Commercialization of the Licensed Product in the Field in the Territory. Protalix
shall have final-decision making authority with respect to filings and prosecution of Protalix Patent Rights.

 

(c)       Notwithstanding
anything to the contrary in this Agreement, Chiesi shall have the sole right in electing which Patent shall receive any patent
term extension under 35 U.S.C. § 156 related to the Licensed Product in the Territory. Protalix and Chiesi shall cooperate
in timely filing and obtaining the patent term extension for such Patent elected by Chiesi.

 

[***] Redacted pursuant
to confidential treatment request.

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7.3       Maintenance.
Protalix will use [***] to maintain for the full life thereof all Patent Rights under the Protalix Patent Rights where the abandonment
for non-payment [***]. Protalix will notify Chiesi of any decision (a) not to file a Patent Application for, or (b) not to enter
the national phase for a PCT Patent Application for, or (c) to cease prosecution and/or maintenance (including the occurrences
as set out in Section 7.2) of, or (d) not to pursue, or (e) to cease to pay the expenses of prosecution or maintenance
of, any Protalix Patent Rights in the Field in the Territory. In such event, Chiesi shall have the right to make the filing, or
to continue the prosecution and maintenance of such Patent Rights (other than Protalix System Patent Rights) in Protalix’s
name [***]. Notwithstanding the foregoing, Protalix shall have no obligation to provide such notice where the subject Protalix
Patent Rights are directed [***].

 

7.4       Notices.
Protalix agrees that it will, and will cause its Affiliates to execute and file those notices and other filings as Chiesi shall
reasonably request be made, from time to time with the United States Patent and Trademark Office with respect to the rights granted
under this Agreement, at Chiesi’s sole cost and expense.

  

7.5       Interpretation
of Patent Judgments. If any claim relating to a Patent under the Protalix Patent Rights becomes the subject of a judgment,
decree or decision of a court, tribunal, or other authority of competent jurisdiction in the Territory, which judgment, decree,
or decision is or becomes final (there being no further right of review) and adjudicates the validity, enforceability, scope,
or infringement of the same, the construction of such claim in such judgment, decree or decision shall be followed thereafter
in the Territory not only as to such claim but also as to all other claims in the Territory to which such construction reasonably
applies, in determining whether there are any Valid Claims in the Territory. If at any time there are two or more conflicting
final judgments, decrees, or decisions with respect to the same claim, the decision of the higher tribunal shall thereafter control,
but if the tribunal be of equal rank, then the final judgment, decree, or decision more favorable to such claim shall control
unless and until the majority of such tribunals of equal rank adopt or follow a less favorable final judgment, decree, or decision,
in which event the latter shall control.

 

7.6       Third
Party Royalty Obligations.

 

(a)       If
either Party reasonably determines in good faith that in order to avoid infringement of any Patent Right not licensed hereunder,
it is reasonably necessary to obtain a license or acquire the relevant Patent Right or Technology from a Third Party in order
to make, use, sell, offer for sale, supply, cause to be supplied, or import the Licensed Product in the Territory and to pay a
royalty or other consideration under such license or acquisition (including in connection with the settlement of a patent infringement
claim), then the Steering Committee shall discuss the pertinent Third Party Patent Right and/or Technology and such Party’s
determination. If the Steering Committee decides (by mutual agreement of the Steering Committee members) that Chiesi should enter
into such license or acquisition, whether as part of a settlement of an allegation or claim of infringement of a Third Party Patent
or otherwise, Chiesi shall use Commercially Reasonable Efforts to negotiate and enter into a license or acquisition for such Third
Party Patent Right and/or Technology and the Steering Committee (by mutual agreement of the Steering Committee members) shall
determine each Party’s respective share of any payments to the relevant Third Party, other than as provided in Section
13.2. If the Steering Committee is unable to decide (by mutual agreement of the Steering Committee members) whether Chiesi
should enter into such a license or acquisition, whether as part of a settlement of an allegation or claim of infringement of
a Third Party Patent or otherwise, and Chiesi enters into a license or acquisition for such Third Party Patent Right and/or Technology
in good faith on arms-length terms, Protalix’s share of any payments to the relevant Third Party, other than as provided
in Section 13.2, shall be equal to [***] of the Applicable Rate in effect at the time Chiesi enters into such agreement;
provided, that if (i) Chiesi enters into any such agreement with respect to an infringement (or possible infringement)
occurring within eighteen (18) months of the receipt of Regulatory Approval for the Licensed Product in the Territory; (ii) the
Third Party Patent Right being licensed or acquired is a Competing Product Patent; and (iii) the Event Milestone 2 has been paid,
or is payable, to Protalix, then Protalix shall be responsible for [***] of any such payments due to any such Third Parties in
respect of any such licenses or acquisitions, up until Protalix’s responsibility reaches [***] in the aggregate, with any
remaining payments due to any such Third Parties in respect of any such licenses or acquisitions being shared by the Parties,
with Protalix’s share of any such remaining payments being equal to the Applicable Rate in effect at the time Chiesi enters
into such agreement. To the extent this Section 7.6(a) provides for any costs or expenses to be shared between the Parties,
Protalix’s share of such costs and expenses are only to be deducted from future payment obligations of Chiesi to Protalix
under this Agreement (and, for clarity, shall not otherwise be separately payable by Protalix).

 

[***] Redacted pursuant
to confidential treatment request.

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(b)       Other
than as provided in Section 13.2, if Chiesi is subject to a final court or other binding order or ruling requiring any
payments, including the payment of a royalty to a Third Party Patent holder in respect of Commercialization of the Licensed Product
in the Territory, then the amount of such payments made by Chiesi to the Third Party shall be in addition to, and separate from,
any payments due to Protalix under this Agreement; provided that the Steering Committee (by mutual agreement of the Steering
Committee members) shall determine each Party’s respective share of any such payments to the relevant Third Party; provided
further that if (i) such final court or other binding order or ruling is made with respect to an infringement occurring within
eighteen (18) months of the receipt of Regulatory Approval for the Licensed Product in the Territory; (ii) the required payments
are with respect to a Competing Product Patent; and (iii) the Event Milestone 2 has been paid, or is payable, to Protalix, then
Protalix shall be responsible for [***] of any such payments to any such Third Parties, up until Protalix’s responsibility
reaches [***] in the aggregate, with any remaining required payments due any such Third Parties being shared by the Parties, with
Protalix’s share of any such remaining payments being equal to the Applicable Rate in effect at the time of the final court
or other binding order or ruling. To the extent this Section 7.6(b) provides for any costs or expenses to be shared between
the Parties, Protalix’s share of such costs and expenses are only to be deducted from future payment obligations of Chiesi
to Protalix under this Agreement (and, for clarity, shall not otherwise be separately payable by Protalix). For clarity, the reference
to the [***] under the foregoing proviso and under the proviso in the last sentence of Section 7.6(a) shall be an aggregated
amount, such that if Protalix’s responsibility reaches ) under either proviso, it should not have an obligation to share
[***] under the other proviso (e.g., if Protalix’s responsibility has already reached [***] under the proviso in
the last sentence of Section 7.6(a), then the [***] threshold will have been deemed to already be reached and Protalix’s
share of the responsibility under the proviso in this Section 7.6(b) would thus be equal to the Applicable Rate then in
effect).

 

[***] Redacted pursuant
to confidential treatment request.

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7.7       Third-Party
Infringement. Each Party will promptly notify the other in the event of any actual, potential or suspected infringement of
a Patent under the Protalix Patent Rights by any Third Party.

 

(a)       Infringement
of Protalix Patent Rights in the Field.

 

(i)       Chiesi
shall have the sole right, but not the obligation, to institute litigation or take other remedial measures in connection with
Third Party infringement of the Protalix Patent Rights occurring in the Field within or for the Territory, including, without
limitation, any [***] in or for the Territory (other than Protalix Patent Rights directed solely to an Outside of the Scope Product).
Protalix, upon request of Chiesi, agrees to timely commence or to join in any such litigation [***], and in any event to reasonably
cooperate with Chiesi [***]. Any costs and expenses incurred by Chiesi with respect to any such litigation or remedial measures
shall be borne by Chiesi, and any recoveries resulting from such litigation or measures relating to a claim of a Third Party infringement
in pursuing such claim, will be deemed Net Sales after having deducted any amount necessary to cover all costs and expenses incurred
by Chiesi pursuant to the preceding sentence. With respect to any [***] in or for the Territory, Chiesi shall have sole control
of, and decision making authority with respect to, the communications, exchange of information, procedures and actions set forth
or described in [***]; provided, however, that, prior to engaging in any of the foregoing acts or exercising such
decision-making authority, Chiesi shall provide written notice to Protalix thereof and consult and cooperate in good faith with
Protalix with respect thereto (including considering any suggestions made by Protalix in respect thereof in good faith).

 

(ii)       Chiesi
shall have sole authority to settle any litigation, action or proceeding brought by Chiesi pursuant to Section 7.7(a)(i),
provided that Chiesi shall not effect any settlement of any litigation, action or proceeding in which Protalix has any potential
liability, unless such settlement involves solely monetary damages for which Protalix is not responsible and includes an unconditional
release of Protalix for all liability on Claims that are the subject matter of such litigation, action or proceeding.

 

[***] Redacted pursuant
to confidential treatment request.

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(iii)       Protalix
shall have the sole right, but not the obligation, to institute litigation or take other remedial measures in connection with Third
Party infringement of any Protalix Patent Rights directed solely to any Outside of the Scope Product or occurring outside the Field
(within or outside of the Territory) [***].

 

7.8       Other
Actions by a Third Party.

 

(a)       Each
Party shall promptly notify the other in the event of any (i) claims by a Third Party of alleged patent infringement by Chiesi
or Protalix or any of their respective Affiliates with respect to the research, Development, Manufacture, use, sale, offer for
sale or importation of a Compound (other than as used in New Use) or the Licensed Product, in each case, in the Field in the Territory
or (ii) legal or administrative action by any Third Party involving a Protalix Patent Right in the Field in the Territory [***]
of which it becomes aware, including any petition for ex parte reexamination, Inter Partes Review (IPR), or Post Grant Review
(PGR), nullity, revocation, reexamination or compulsory license proceeding. Unless subject to the indemnity provided by Protalix
under Section 13.2 (in which case Protalix shall have sole control of such action and the defense thereof as provided under
Section 13.2) or for a Third Party Claim for which Chiesi irrevocably waives Protalix’s obligation to indemnify Chiesi
under Section 13.2, Chiesi shall have the first right, but no obligation, to defend against any such action involving such
alleged infringement or such Protalix Patent Right, in each case, in the Field in the Territory [***]; provided, that if
the action involves an assertion that a Competing Product Patent is, or would be, infringed by the Compound (other than as used
in a New Use) or the Licensed Product, in each case, in the Field in the Territory, Protalix shall be [***]. Without prejudice
to the foregoing proviso, Protalix, upon request of Chiesi, agrees to join in any such action [***] and in any event to reasonably
cooperate with Chiesi [***]. If Chiesi declines to defend against any such action involving the Compound (other than as used in
New Use) or the Licensed Product or a Protalix Patent Right, then Protalix shall have the right to defend such action [***]. Chiesi,
upon request of Protalix, shall reasonably cooperate with Protalix in any such action [***]. The Party defending against such
action in accordance with this Section 7.8 shall assume direction and control of the defense, litigation, settlement, appeal
or other disposition of such Claim (including the right to settle the Claim solely for monetary consideration for which such Party
will be responsible) with counsel selected by such Party and reasonably acceptable to the other Party. The other Party shall have
the right to reasonably participate in (including the right to participate in all settlement conferences and provide suggestions,
which the controlling Party shall consider in good faith), but not control, at its own expense, the defense of any Claim that
such Party is defending as provided in this Section 7.8.

  

(b)       In
the event an injunction is entered against Chiesi or Chiesi is otherwise enjoined by a court of competent jurisdiction from Commercializing
the Licensed Product in the Territory based on a claim that the Compound or Licensed Product infringes, or would infringe, a Third
Party’s Patent, until such injunction is lifted or such binding order or ruling is overturned, (i) Chiesi may cancel or
suspend any outstanding Purchase Orders for the Territory and its ordering and forecasting obligations under this Agreement (provided
that Chiesi ceases any ordering hereunder), and shall not be obligated to make the Minimum Payment hereunder, (ii) Protalix’s
obligations under Sections 4.11 and 4.12 shall cease (in each case, solely in respect of the Territory), and (iii)
Chiesi shall use Commercially Reasonable Efforts to seek to promptly have such injunction lifted or such binding order or ruling
overturned.

 

[***] Redacted pursuant
to confidential treatment request.

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(c)       With
respect to any action brought pursuant to Section 7.8, neither Party will enter into any settlement of any suit involving
Licensed Products that materially affects the other Party’s rights or obligations with respect to the Licensed Product without
the other Party’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned). Without
limiting the foregoing, neither Party shall, without the written consent of the other Party (which consent shall not be unreasonably
withheld, delayed or conditioned), effect any settlement of any pending or threatened litigation in which the other Party has any
potential liability, unless such settlement involves solely monetary damages and includes an unconditional release of such other
Party from all liability on Claims that are the subject matter of such litigation.

 

7.9       Patent
Marking. Each Party shall comply with the patent marking statutes in the Territory in which a Licensed Product in the Field
is made, offered for sale, sold or imported by such Party and its Affiliates and sublicensees.

  

		Section 8.	CONFIDENTIALITY; PUBLICATION

 

8.1       Confidentiality.
Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, the Parties agree that
for the Term and for [***] years thereafter, each Party shall keep confidential and shall not publish or otherwise disclose and
shall not use for any purpose any Confidential Information furnished to it by the other Party pursuant to this Agreement, in a
manner no less protective than the actions it would customarily take to preserve the confidentiality of its own similar types
of confidential information.

 

8.2       Permitted
Disclosures. Notwithstanding the foregoing, each Party may disclose the other Party’s Confidential Information (a) to
such Party’s employees, consultants (including, for greater certainty, financial advisors), Affiliates, agents, contractors,
or permitted sublicensees who are bound by obligations relating to confidentiality at least as restrictive of those contained
herein and who have a need to know such information in connection with such Party’s performance of its obligations or practice
or enforcement of its rights under this Agreement, (b) to Regulatory Authorities in connection with any Regulatory Approvals required
for Development of Licensed Product pursuant to the Development Plan or in compliance with applicable Law, including any requirements
under or pursuant to the Food and Drug Administration Amendments Act of 2007, or (c) pursuant to Sections 8.3 and 8.4.

 

[***] Redacted pursuant
to confidential treatment request.

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8.3       Terms
of Agreement. The Parties agree that the material terms of this Agreement will be considered Confidential Information of both
Parties. Subject to Section 8.4 below, no Party shall, without the prior written consent of the other Party, disclose in
any manner to any Third Party the material terms and conditions of this Agreement, except for terms or subject matter which has
been the subject of prior public disclosure or has been mutually approved for such disclosure and except as set forth below. Chiesi
acknowledges that Protalix or its Affiliates may be legally required to file this Agreement as an exhibit to filings with the
U.S. Securities and Exchange Commission. In addition: (a) either Party may disclose such terms as are required to be disclosed
in its publicly-filed financial statements or other public statements, pursuant to applicable Laws, regulations and stock exchange
rules (e.g., the rules of the U.S. Securities and Exchange Commission, the NYSE American, the NYSE, NASDAQ, or any other
stock exchange on which securities issued by either Party may be listed); provided that such Party shall provide the other
Party with a copy of the proposed text of such statements or disclosure (including any exhibits containing this Agreement) sufficiently
in advance of the scheduled release or publication thereof to afford such other Party a reasonable opportunity to review and comment
upon the proposed text (including redacted versions of this Agreement), (b) either Party shall have the further right to disclose
the terms of this Agreement under a confidentiality obligation no less protective than those set forth in this Agreement, to any
potential sublicensee, acquirer, merger partner, investor, business partner or potential providers of financing and their advisors
or, in the case of Protalix, to the owner of any Protalix Patent Rights or Protalix Technology Controlled by Protalix, and (c)
Protalix and Chiesi shall have the right to disclose information regarding the development or commercialization status of the
Licensed Product in the Field in the Territory to the extent such disclosure by Protalix or Chiesi, as applicable, is required
by applicable Laws or stock exchange rules.

 

8.4       Mandatory
Disclosure.

 

(a)       Notification
and Consultation. In the event that a Party is required by applicable Law (including rules of an applicable stock exchange),
or pursuant to legal, governmental or self-regulatory organization proceedings (including by court order or judicial or administrative
process) to disclose any part of the other Party’s Confidential Information (including material terms or conditions of this
Agreement), such Party shall (i) promptly notify the other Party of each such requirement and identify the documents so required
thereby, so that the other Party may seek an appropriate protective order, confidential treatment or other remedy concerning any
such disclosure and/or waive compliance by such Party with the provisions of this Agreement and (ii) consult with the other Party
with respect to taking legally available steps to resist or narrow the scope of such requirement.

 

(b)       Limited
Disclosure. If, in the absence of such a protective order, confidential treatment request, other remedy or waiver by the other
Party, such Party is nonetheless required to disclose any part of the other Party’s Confidential Information or any material
terms or conditions of this Agreement, such Party may disclose such Confidential Information or material terms or conditions without
liability under this Agreement, except that such Party shall furnish only that portion of the Confidential Information or material
terms or conditions that in its good faith judgment, after consultation with legal counsel, it is legally required to provide.

 

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8.5       Publication.
Subject to the restrictions set out below, nothing herein shall prevent Protalix and its Affiliates (and their respective employees,
consultants, contractors, licensees and agents) from publishing or presenting information relating to the development or use of
the System, Compound or Licensed Product or otherwise (a) limit the rights of Protalix’s Third Party clinical investigators
to publish the results of their studies or (b) prevent Protalix or its Affiliates from complying with applicable Law with respect
to the disclosure of clinical study data and results or of any other material matter or information. Each Party recognizes that
the publications regarding results of and other information regarding Development of Licensed Products in the Field in the Territory,
including oral presentations and abstracts, may be beneficial to both Parties, provided that publications are subject to reasonable
controls to protect Confidential Information and the Parties’ mutual interest in obtaining rights in patent and protecting
trade secret information. The Steering Committee shall appoint one referent person for each Party for reviewing and approving
such publications (“Referent Person”). Accordingly, the Party proposing
to submit any such publication or presentation shall first deliver to the Referent Person for review a copy of such Party’s
proposed publication or presentation that pertains to the Compound, Drug Substance, Drug Product or Licensed Product in the Field
in the Territory prior to submitting the material to a publisher or initiating any such publication thereof. The Referent Person
of the non-proposing Party must make a reasonable, good faith determination as to (solely in respect of publications to scientific
journals or similar mediums and submission of abstracts to medical congresses) whether the proposing Party may submit such publication,
and may (x) require modifications of such publication prior to it being submitted (i) to protect each Party’s respective
Confidential Information, or (ii) for trade secret reasons or other material commercial reasons; (y) request that the proposing
Party delay such submission for an additional period as may be reasonably necessary to seek patent protection for the information
disclosed in such proposed written submission; and (z) withhold its approval for such publication if it makes a reasonable, good
faith determination that such publication will have an adverse effect on the non-publishing Party’s ability to procure a
patent or Develop or Commercialize any Licensed Product. The Referent Person of the non-publishing Party shall conduct its review
and provide its approval as promptly as reasonably practicable, but in any event within [***] days in case of publications to
scientific journals or similar medium and any abstracts to medical congresses (and the failure to provide any such response with
such [***] day period shall be deemed approval hereunder). If the Parties are unable to reach agreement on whether the proposing
Party may submit such publication, or on the scope of any reasonably necessary modifications or delay in respect of such publication,
the issue shall be escalated to the Parties’ respective Chief Executive Officers, who shall attempt to resolve the issue
within [***] days. In respect of any oral or in-person presentations at medical conferences or medical congresses, posters, trade
shows, or similar activities (but, for clarity, excluding business forums), the Referent Person of the non-publishing Party shall
be afforded at least [***] Business Days to review and provide comment on any initial working draft thereto and [***] Business
Days to review and provide comment on any revised draft (unless a working draft or revised draft is not available or, acting in
good faith, the publishing Party considers such review period would risk delaying submission or missing a relevant deadline),
and the publishing Party shall consider any such comments received during such [***] Business Day period in good faith; provided,
however, that in respect of such oral or in-person presentations, the publishing Party shall not require the approval of
the Referent Person of the non-publishing Party to proceed with such presentation.

 

[***] Redacted pursuant
to confidential treatment request.

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8.6       Publicity.
A draft public announcement of the execution of this Agreement is set forth on Exhibit C attached hereto and, subject to
Protalix’s further review and comment, shall be promptly disseminated as a press release following the execution of this
Agreement by both Parties and the approval by Protalix of the final form thereof. Other than with respect to the matters addressed
in Section 8.5 and disclosures required by applicable Law or stock exchange rules, each Party shall only issue press releases
that contain material new information (i.e., material information that has not been previously disclosed) concerning the
terms of, or events related to, this Agreement or concerning the Compound, Drug Substance, Drug Product or Licensed Product after
having provided the other Party with an opportunity to review and approve (such approval not to be unreasonably withheld, conditioned
or delayed) such statement; provided that failure to disapprove of such press release in writing within two (2) Business
Days shall be deemed approval hereunder. Such Party shall give due consideration to any specific reasonable comments of the other
Party on such text timely received from the other Party, subject to such Party’s compliance with applicable Laws and stock
exchange rules with respect to disclosure.

  

8.7       Filing,
Registration or Notification of the Agreement. Protalix shall provide Chiesi with a proposed form of redacted copy of this
Agreement (the “Redacted Agreement”) for Chiesi’s review and
comment as soon as reasonably practicable after the Effective Date, and Protalix shall consider any comments from Chiesi in good
faith; provided, however, that the final form of such Redacted Agreement shall be determined by Protalix. If a Party
determines that it is required by Law to publicly file, register or notify this Agreement with a Governmental Authority, such
Party shall (a) initially file the Redacted Agreement, (b) request, and use Commercially Reasonable Efforts to obtain, confidential
treatment of all terms redacted from this Agreement, as reflected in the Redacted Agreement, for a period of at least [***] years,
(c) permit the other Party to review and approve such request for confidential treatment and any subsequent correspondence with
respect thereto at least [***] Business Days prior to its submission to such Governmental Authority, (d) promptly deliver to the
other Party any written correspondence received by it or its representatives from such Governmental Authority with respect to
such confidential treatment request and promptly advise the other Party of any other communications between it or its representatives
with such Governmental Authority with respect to such confidential treatment request, (e) upon the written request of the other
Party, request an appropriate extension of the term of the confidential treatment period, and (f) if such Governmental Authority
requests any changes to the redactions set forth in the Redacted Agreement, use Commercially Reasonable Efforts to support the
redactions in the Redacted Agreement as originally filed and shall not agree to any changes to the Redacted Agreement without
first discussing such changes with the other Party and taking the other Party’s comments into consideration when deciding
whether to agree to such changes. Each Party shall be responsible for its own legal and other external costs in connection with
any such filing, registration or notification.

 

[***] Redacted pursuant
to confidential treatment request.

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		Section 9.	REPRESENTATIONS, WARRANTIES AND COVENANTS

 

9.1       Mutual
Representations, Warranties and Covenants. Each of Chiesi and Protalix hereby represents and warrants to the other Party as
of the Effective Date (and covenants as set forth in Sections 9.1(h), 9.1(i), 9.1(j), 9.1(k) and 9.1(l)
below) as follows:

 

(a)       It
is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or formation,
as applicable. It has the requisite corporate power and authority to conduct its business as presently being conducted and as proposed
to be conducted by it.

 

(b)       It
has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. All corporate
actions on its part, necessary for (i) the authorization, execution, delivery and performance by it of this Agreement, and (ii)
the consummation of the transactions contemplated hereby, have been duly taken.

 

(c)       Assuming
the due authorization, execution and delivery by the other Party, this Agreement constitutes a legally valid and binding obligation
of such Party, enforceable against it in accordance with its terms (except in all cases as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting the enforcement of creditors’
rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court or other tribunal before which any proceeding may be brought).

  

(d)       There
is no contractual restriction or obligation binding on such Party which would be materially contravened by execution and delivery
of this Agreement or by the performance of its terms. Apart from expiration or termination of any applicable waiting periods (including
any extensions thereof) required by any applicable Law or governmental entity for antitrust purposes in the Territory, there are
no governmental filings or consents necessary for the consummation of this Agreement and the transactions contemplated hereby.

 

(e)       Such
Party is not debarred, and such Party in relation to the Licensed Product is not using, has not used, and will not use in any capacity
the services of any person debarred, in each case under Subsection 306(a), (b) of the Generic Drug Enforcement Act of 1992, or
any non-U.S. equivalent Law to the foregoing.

 

(f)       To
such Party’s knowledge, no representation or warranty made by it in this Agreement, nor any statement contained in any schedule
hereto furnished by it, contains any untrue statement of a material fact or omits any material fact necessary to make the statements
contained herein or therein not misleading.

 

(g)       There
is no litigation, proceeding or investigation pending or, to such Party’s knowledge, threatened against such Party in any
court or before any agency or regulatory body which would reasonably be expected to materially adversely affect such Party’s
ability or right to carry out the transactions contemplated by this Agreement.

 

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(h)       During
the Term, each Party shall promptly notify the other Party in writing upon learning of any actual or threatened investigation,
inquiry, action or proceeding before the FDA or any other Regulatory Authority in the Territory with respect to the Compound, Drug
Substance, Drug Product or Licensed Product.

 

(i)       Each
Party shall (i) comply in all material respects with applicable anti-bribery Laws and the Chiesi Anti-Bribery Policy, attached
hereto as Exhibit D, and (ii) adopt, implement and keep for the Term, reasonably adequate measures aimed at preventing the
commission, even attempted, of conduct in violation in any material respect of anti-bribery Laws by its Affiliates, directors,
representatives, employees, and/or consultants involved in the performance of this Agreement.

 

(j)       Each
Party and its Affiliates, directors, representatives, employees, and/or consultants involved in the performance of this Agreement,
in performing their obligations under this Agreement shall not, directly or indirectly:

 

(i)       offer,
transfer, promise or pay money, commissions, compensation or any other benefit (including gifts, entertainment, or any other similar
benefit, even low value or non-material benefits, unless they can be considered as low value courtesy benefits) in favor of public
or private parties, in violation of applicable anti-bribery Laws, the Chiesi Anti-Bribery Policy and/or with the intention of or
as a condition to obtaining illegal benefits in favor of Chiesi or Protalix;

 

(ii)       direct
a Third Party to carry out the activities set out in subsection (i) above;

 

(iii)       give,
transfer or promise money, commissions, compensation and rewards in kind (including gifts, entertainment or any other similar benefit,
even low value or non-material benefits, unless they can be considered as low value courtesy benefits) to the other Party’s
directors, legal representatives, employees or whoever acts on behalf of such other Party, in violation of any applicable anti-bribery
Law and beyond the limits set forth within the Chiesi Anti-Bribery Policy.

 

(k)       Unless
to the extent this provision would be a violation of any applicable Laws, Protalix shall promptly notify Chiesi at the following
Chiesi e-mail address: groupcompliance@chiesi.com, and Chiesi shall promptly notify Protalix at the following Protalix e-mail address:
moshe.manor@protalix.com, if such Party becomes aware of:

 

(i)       any
request, promise, offer, or donation of money, commission, compensation or rewards in kind (including gifts, entertainments, or
any other similar benefit, even low value or non-material benefits) made to public officers, private parties or the other Party’s
directors, legal representatives or employees (or whoever acts on behalf of such other Party), in relation to the activities prohibited
under Section 9.1(j);

 

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(ii)       any
gift, entertainment or any other similar benefit, even non-material benefits, carried out by either Party in breach of the provisions
of Section 9.1(j); or

 

(iii)       any
investigation, administrative suit, law suit or other procedure involving such Party in relation to corruption, bribery or any
other similar harmful act to the public treasury.

 

(l)       Each
Party shall conduct, and shall use reasonable efforts to cause its Affiliates to conduct, all its activities contemplated under
this Agreement in accordance with all applicable Laws of the Country in which such activities are conducted.

 

(m)       Each
Party hereby acknowledges and agrees that the Protalix Patent Rights and the Protalix Technology, to the extent licensed under
this Agreement, constitute intellectual property as defined in Section 101 of the United States Bankruptcy Code subject to the
provisions of Section 365(n) of the United States Bankruptcy Code; provided that no decision is made at this time with respect
to any potential acceptance or rejection of this Agreement pursuant to the United States Bankruptcy Code at any time. The Parties
further agree that Chiesi, as licensee of Protalix Patent Rights and Protalix Technology under this Agreement, will retain and
may fully exercise all of its rights and elections under the U.S. Bankruptcy Code and any foreign equivalent thereto in any Country
having jurisdiction over Protalix or its assets subject to Chiesi’s compliance in all material respects with all of its obligations
thereunder. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against Protalix
under the U.S. Bankruptcy Code and any foreign equivalent thereto in any Country having jurisdiction over Protalix or its assets,
Chiesi will be entitled, subject to applicable Laws, and at Chiesi’s sole cost and expense, to a complete duplicate of (or
full access to, as appropriate) any such Protalix Patent Rights and Protalix Technology and all embodiments of such intellectual
property, and same, if not already in its possession, will be promptly delivered to Chiesi (or, as appropriate, Chiesi will be
promptly provided access thereto) (i) upon any such commencement of a bankruptcy proceeding with respect to Protalix upon its written
request therefor, unless Protalix elects to continue to perform all of its obligations under this Agreement, or (ii) if not delivered
under (i) above, following any such commencement of a bankruptcy proceeding with respect to Protalix and the rejection of this
Agreement by or on behalf of Protalix upon written request therefor by Chiesi.

 

9.2       Additional
Representations, Warranties and Covenants of Protalix. Protalix hereby further represents and warrants to Chiesi as of the
Effective Date (and covenants as set forth in Sections 9.2(f), 9.2(g), 9.2(h), 9.2(i), 9.2(n),
9.2(r) and 9.2(s) below), that, except as set forth in any publically available filings of Protalix or its Affiliates,
and solely in respect of the Territory:

 

(a)       Exhibit
A contains a complete and correct list as of the Effective Date of all Patents and Patent Applications owned by Protalix covering
the Compound, any Licensed Product and the System.

 

(b)       Protalix
is the sole and exclusive owner of, or has exclusive rights to, all of the Protalix Patent Rights in existence on the Effective
Date that relate to the Compound and/or the Licensed Product in the Field, and the Protalix Patent Rights set forth on Exhibit
A are in full force and effect and free and clear of all liens and other encumbrances, security interests or options (other
than pursuant to any agreements, secured debt or other financing referenced in Protalix’s or its Affiliates’ publically
available filings).

 

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(c)       Protalix
has the right to grant the licenses and rights in the Protalix Technology it purports to grant to Chiesi hereunder. For the avoidance
of doubt, the foregoing representation and warranty shall not be deemed a representation or warranty with respect to non-infringement,
which representation and warranty is solely addressed in Section 9.2(k).

 

(d)       The
Protalix Patent Rights and Protalix Technology include all of the Patent and other intellectual property rights owned or Controlled
by Protalix or its Affiliates that are necessary for the Commercialization of the Licensed Product. The Protalix Patent Rights
have been prosecuted and maintained in accordance with all applicable Laws in all material respects.

 

(e)       No
government funding, facilities or resources of a university, college, other educational institution, research center or Regulatory
Authority was used in the creation or development of any Protalix Patent Rights and Protalix Technology, other than grants received
from the Office of Chief Scientist of the Israeli Ministry of Industry, Trade and Labor.

 

(f)       Any
Third Party License relating to the rights licensed to Chiesi under Section 2.1 (and, as a consequence, may also relate
to other provisions of this Agreement) is a legal and valid obligation binding upon Protalix and, to Protalix’s knowledge,
the relevant Third Party licensor (in each case, subject to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)), and authorizes,
as necessary, Protalix to grant the sublicense(s) granted to Chiesi under this Agreement. As of the Effective Date, Protalix is
in compliance in all material respects with any such Third Party License and Protalix covenants that during the Term it shall not
modify or amend any Third Party License in a manner that would materially adversely affect Chiesi’s access or rights hereunder
without the prior written consent of Chiesi. Protalix has received no notices, whether written or oral, from any Third Party licensor
alleging any past or present breach by Protalix of the terms of any such Third Party License. Protalix has issued no notices, whether
written or oral, to any Third Party licensor alleging any past or present breach by any Third Party licensor of the terms of the
relevant Third Party License. Protalix has provided Chiesi with true, correct and complete copy of any Third Party License, including
any amendments thereto.

 

(g)       Protalix
shall not take any action that would materially adversely affect the rights granted to Chiesi hereunder with respect to any Third
Party License, including selling, assigning or transferring the rights of Protalix under any Third Party License with respect to
the Protalix Patent Rights and Protalix Technology, in each case, as relate to the Compound and/or the Licensed Product in the
Field in the Territory, without Chiesi’s prior written consent. Protalix shall: (i) comply in all material respects with
and perform all of its material duties and obligations under any Third Party License relating to the Protalix Patent Rights and
Protalix Technology, in each case, as relate to the Compound and/or the Licensed Product in the Field in the Territory; (ii) not
intentionally take or fail to take any action within Protalix’s reasonable control under any Third Party License that would
materially adversely affect Chiesi’s rights under this Agreement; (iii) use its Commercially Reasonable Efforts to enforce
the provisions of any Third Party License against the relevant Third Party licensor; and (iv) not modify, amend or terminate any
Third Party License with respect to the Protalix Patent Rights or Protalix Technology, in each case, as relate to the Compound
and/or the Licensed Product in the Field in the Territory, in a manner that would materially adversely affect Chiesi’s rights
under this Agreement, without the prior written consent of Chiesi.

 

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(h)       Subject
to Section 8, Protalix shall promptly notify Chiesi (other than to the extent Protalix, acting reasonably, determines that
such notice could waive attorney-client privilege or any other legal privilege held by Protalix, or would otherwise breach a confidentiality
provision or obligation) in writing of (i) any actual or threatened in writing default (including failure to pay royalties when
due, if applicable), breach, suspension of compliance or performance, or termination (in whole or in part) under any Third Party
License that relates to the Protalix Patent Rights or Protalix Technology, in each case, as relates to the Compound and/or the
Licensed Product in the Field in the Territory, and which would materially adversely affect Chiesi’s rights under this Agreement;
and (ii) the actual or threatened in writing commencement of any dispute, claim, suit, litigation or arbitration proceeding related
to the any Third Party License that relates to the Protalix Patent Rights or Protalix Technology, in each case, as relates to the
Compound and/or the Licensed Product in the Field in the Territory, and which would materially adversely affect Chiesi’s
rights under this Agreement. Each such notification shall contain a summary of the event described therein. At the request of Chiesi,
and subject to Section 8, Protalix shall (other than to the extent Protalix, acting reasonably, determines that to do so
could waive attorney-client privilege or any other legal privilege held by Protalix, or would otherwise breach a confidentiality
provision or obligation) (x) promptly provide to Chiesi full particulars, of which it is aware, in writing of the applicable matter;
and (y) keep Chiesi reasonably informed as to the status and proposed resolution of each such matter.

 

(i)       In
the event that Protalix receives notice of any default (including failure to pay royalties or other amounts when due) or breach
under any Third Party License that relates to the Protalix Patent Rights or Protalix Technology, in each case, as relates to the
Compound and/or the Licensed Product in the Field in the Territory and which would materially adversely affect Chiesi’s rights
under this Agreement, and (i) has not cured such breach or default within ten (10) Business Days of receiving such notice, (ii)
has not procured the entry by Chiesi into a Standby License as described in Section 2.2(d), and (iii) the amount of, and
liability for, such breach or default is not disputed by Protalix (acting in good faith) or has been resolved in Chiesi’s
favor under Section 14.3, then Chiesi shall be entitled, but not obligated, to undertake payment or performance of the applicable
underlying obligation on behalf of Protalix as necessary to cure such default or breach and to offset, against amounts payable
to Protalix under this Agreement, any reasonable out-of-pocket costs and expenses incurred by Chiesi in the course thereof. In
the event and to the extent that Protalix disputes the existence of such breach or default (acting in good faith), either Party
may by written notice escalate the matter for discussions between the Chief Executive Officers of each Party to negotiate an agreed
approach to the alleged breach or default and, to the extent the Parties cannot reach such agreement within thirty (30) days of
the receipt of such notice, the Parties shall refer the matter for expert determination in accordance with Section 14.3.

 

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(j)       There
is no material active, pending or, to Protalix’s knowledge, threatened litigation or re-examination, pre- or post-grant or
inter partes review, interference, derivation, opposition, claim of invalidity or other claim or proceeding (including in the form
of any offer to obtain a license) alleging the invalidity, misuse, unregisterability, unenforceability or non-infringement of any
Protalix Patent Rights, or challenging Protalix’s ownership of, or Protalix’s right to practice or license, any Protalix
Patent Rights, or alleging any adverse right, title or interest with respect thereto (in each case, solely as relates to the Compound
and/or the Licensed Product in the Field in the Territory).

 

(k)       To
the knowledge of Protalix after a reasonable internal inquiry of its executive officers and legal personnel, the practice of the
Protalix Patent Rights and Protalix Technology in relation to the Compound and/or the Licensed Product in the Field in the Territory,
and the Manufacture, use of the Compound, Drug Substance and/or Drug Product or Commercialization of Licensed Product (as now formulated)
as contemplated under this Agreement, does not and will not infringe any issued Patent of any Third Party that exists on the Effective
Date or, if and when issued, any Valid Claim within any Third Party Patent Application published before the Effective Date.

 

(l)       Protalix
and its Affiliates have complied in all material respects with all applicable Laws, with respect to the Development, Manufacture,
use and handling of Compound, Drug Substance, Drug Product and Licensed Product.

 

(m)       Protalix
has not received any Form 483 observations, warning letters or other communications from a Regulatory Authority which would reasonably
be expected to adversely impact the Development, Manufacture, use, handling of Compound, Drug Substance and/or Drug Product or
the Commercialization of Licensed Product in any material respect.

 

(n)       Drug
Product (and Compound and Drug Substance) supplied by Protalix to Chiesi hereunder, prior to delivery by Protalix under Section
4.7: (i) will be Manufactured and stored in material compliance with the Product Specifications, GMP and all other provisions
of this Agreement, the Quality Agreement and applicable Laws, including applicable environmental Laws, in force at the time of
Manufacture, (ii) will not contain any material that would cause the Compound, Drug Substance and/or Drug Product to be adulterated
or misbranded within the meaning of any applicable Laws and (iii) shall be free from defects in material and workmanship in all
material respects.

 

(o)       To
Protalix’s knowledge, there are no material investigations, inquiries, actions or other proceedings pending before FDA, EMA
or any other Regulatory Authority with respect to the Compound, Drug Substance, Drug Product or Licensed Product.

 

(p)       Protalix
has not withheld any data or information known to Protalix related to the Compound, Drug Substance, Drug Product or Licensed Product,
including, but not limited to, preclinical and clinical data, regulatory filings and regulatory communications, in each case, that
would reasonably be expected to be material to Chiesi’s decision to enter into this Agreement.

 

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(q)       The
information contained in the excel file provided by Protalix to Chiesi via e-mail on July 18, 2018 relating to the costs sustained
by Protalix through May, 2018 for the Development of the Compound, Drug Substance, Drug Product and Licensed Product is accurate
in all material respects.

 

(r)       During
the Term, Protalix shall not grant any rights in violation of the rights and licenses granted herein, and Protalix shall not assign
the Protalix Patent Rights and/or material Protalix Technology in the Territory except to a permitted assignee of this Agreement
pursuant to Section 15.6.

 

(s)       Protalix
shall perform its obligations under this Agreement in compliance in all material respects with applicable provisions of the International
Federal of Pharmaceutical Manufacturers & Associations Code of Practice and applicable provisions of the Chiesi Code of Ethics
and Conduct, attached hereto as Exhibit E.

 

(t)       Protalix
has obtained the assignment from the inventors of all inventorship rights in the Protalix Patent Rights owned by Protalix.

 

(u)       As
of the Effective Date, each of Protalix and Protalix Parent has complied, and upon and after the Effective Date each of Protalix
and Protalix Parent shall comply, in all material respects with its respective obligations under the Indenture and each of the
Indenture Security Documents, and Protalix covenants that during the Term neither it nor Protalix Parent shall modify or amend
any provisions of the Indenture or any of the Indenture Security Documents in a manner that would constitute a breach of the terms
of this Agreement. Without limitation of the foregoing, Protalix and Protalix Parent covenant to direct the proceeds of the Effective
Date Payment as set forth under Section 5.1 of both this Agreement and the Ex-US Agreement, and of all Event Milestone Payments
as set forth under Section 5.2 of both this Agreement and the Ex-US Agreement, as required by the terms of the Indenture.
Neither Protalix nor Protalix Parent has received any notices, whether written or oral, from the Indenture Trustee, the Israeli
Security Trustee, or the Collateral Agent alleging any past or present breach by Protalix or Protalix Parent of the terms of the
Indenture or any of the Indenture Security Documents. Protalix has provided Chiesi with true, correct and complete copies of the
Indenture and the Indenture Security Documents, including any amendments to any documentation thereof.

 

(v)       Other
than to the extent Protalix, acting reasonably, determines that to do so could waive attorney-client privilege or any other legal
privilege held by Protalix, or would otherwise breach a confidentiality provision or obligation of Protalix: (i) Protalix shall
promptly notify Chiesi in writing of any event, act or condition which with notice or lapse of time, or both, would constitute
an Event of Default (as defined in the Indenture) under the Indenture, and of any notice of any default or breach under the Indenture
or the Indenture Security Documents; (ii) each such notification shall contain a summary of the event, act or condition described
therein, (iii) at the reasonable request of Chiesi, Protalix shall (x) promptly provide to Chiesi full particulars, of which it
is aware, of the applicable matter; and (y) keep Chiesi reasonably informed as to the status and proposed resolution of each such
matter. In the event that Protalix and Protalix Parent have not cured any breach or default of Protalix’s financial obligations
under the Indenture or Indenture Security Documents with respect to payment of amounts required to be paid thereunder (excluding
repayment of principal) within five (5) Business Days of receiving notice of such breach or default then Chiesi shall be entitled,
but not obligated, to undertake payment or performance of such applicable underlying payment obligation on behalf of Protalix or
Protalix Parent as necessary to cure such default or breach and to offset, against amounts payable to Protalix under this Agreement
and the Ex-US Agreement, any such amounts paid by Chiesi.

 

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(w)       Upon
and following the Effective Date, Protalix and Protalix Parent promptly shall (at Chiesi’s sole cost and expense) (i) use
Commercially Reasonable Efforts to obtain the release of that portion of Collateral (as defined in the Indenture) relevant under
this Agreement and the Ex-US Agreement from the Note Liens (as defined in the Indenture) in accordance with the Note Documents
(as defined in the Indenture), including, if reasonably necessary, by seeking the consent of the holders of a majority of the
aggregate principal amount of the outstanding Notes (as defined in the Indenture) should that be required thereunder, and (ii)
use Commercially Reasonable Efforts to cause the Indenture Trustee, the Collateral Agent and the Israeli Security Trustee to execute
and deliver all documents, and to take all other actions, reasonably required to evidence such release. Notwithstanding the foregoing,
prior to incurring any such cost or expense in Protalix’s control (for example, not including legal costs incurred by the
Indenture Trustee or Israeli Security Trustee for which Protalix may be responsible) for which Chiesi is responsible under this
Section 9.2(w) in excess of [***], Protalix shall obtain Chiesi’s approval to incur such costs; provided that
if Chiesi does not grant such consent with respect to any costs or expenses reasonably required to be incurred for Protalix to
comply with its obligations in this Section 9.2(w), Protalix shall not be obligated to take any actions under this Section
9.2(w), unless and until Chiesi consents to Protalix incurring such costs.

  

9.3       Additional
Representation and Warranty of Chiesi. Chiesi hereby further represents and warrants to Protalix as of the Effective Date,
that to the knowledge of Chiesi, neither Chiesi nor any of its Affiliates (a) is engaged in the Development or Commercialization
of a Competing Product on the Effective Date nor (b) has in effect on the Effective Date a written plan to Develop a Competing
Product.

 

9.4       Disclaimer
of Warranty. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY DISCLAIMS ALL,
REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPOUND, DRUG SUBSTANCE, LICENSED PRODUCT,
SUCH PARTY’S TECHNOLOGY OR PATENT RIGHTS, OR ANY OTHER MATTER, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

[***] Redacted pursuant to confidential treatment
request.

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		Section 10.	NON-COMPETITION

 

[***]

 

		Section 11.	TERM

 

This Agreement shall be effective as of
the Effective Date and shall remain in effect until the later of (i) the expiration of the last enforceable Protalix Patent Right,
or (ii) the 15th anniversary of Launch in the Territory, unless earlier terminated pursuant to Section 12 (the
“Term”) [***].

 

		Section 12.	TERMINATION

 

12.1       Termination
Rights. This Agreement may be terminated as follows:

 

(a)       Mutual
Agreement. This Agreement may be terminated in its entirety at any time upon mutual written agreement between the Parties.

 

(b)       Material
Breach. Either Party may terminate this Agreement at any time upon written notice to the other Party if the other Party is
in material default or breach of this Agreement and such material default or breach is not cured within (i) thirty (30) days after
written notice thereof is delivered to the defaulting or breaching Party, or (ii) in the case of a breach that cannot be cured
within thirty (30) days, within a reasonable period not exceeding ninety (90) days after written notice thereof is delivered to
the defaulting or breaching Party, so long as the breaching Party is making a good faith effort to cure such default. For the
avoidance of doubt, a [***] does not constitute a material breach of this Agreement and shall not entitle Chiesi to terminate
this Agreement. Termination shall not be the sole remedy for material breach of this Agreement, and a Party may choose to continue
to perform hereunder and in response to any material breach may bring a claim for damages and other available remedies under this
Agreement including, where applicable, a claim for injunctive relief, and bringing such a claim in good faith shall not constitute
a breach of this agreement.

  

(c)       Insolvency.
Either Party may terminate this Agreement upon written notice to the other Party, if the other Party (i) files, or has filed against
it, a petition for voluntary or involuntary bankruptcy or pursuant to any other insolvency Law, or (ii) applies for, or consents
to, the appointment of a trustee, receiver or custodian for a substantial part of its property or business.

 

(d)       Change
of Control. Protalix may terminate this Agreement upon written notice, and agreement to pay the Buy-Back Payment, to Chiesi,
upon the occurrence of a Change of Control in respect of Chiesi; provided, however, that such written notice must
be provided within thirty (30) days of Protalix first becoming aware of the Change of Control. For purposes of this Section
12.1(d), “Buy-Back Payment” means [***]; provided, however
that if prior to the occurrence of such Chiesi Change of Control one or more of Event Milestones 2 through 4 have been achieved,
such [***] figure in Section 12.1(d)(ii) shall be increased by an amount equal to [***] of the amount of such achieved
Event Milestone (for example, if Event Milestones 2 and 3 have been achieved prior to such Chiesi Change of Control, the figure
in Section 12.1(d)(ii) shall be increased to [***]). Upon receipt of the termination notice from Protalix, Chiesi must
within [***] issue an invoice for the applicable Buy-Back Payment. Such termination will take effect on the first Business Day
following written agreement by Protalix to pay the applicable Buy-Back Payment, which must be delivered within [***] of receipt
of an invoice provided by Chiesi for a Buy-Back Payment amount that is not disputed by Protalix in good faith. For the avoidance
of doubt, until such dispute is resolved pursuant to Section 14.2, such termination will not take effect. For the avoidance
of doubt, for so long as this Agreement and the Ex-US Agreement are both in effect, this Section 12.1(d) and Section
12.1(d) under the Ex-US Agreement shall both apply. 

 

[***] Redacted pursuant to confidential treatment
request.

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(e)       Patent
Challenge. Protalix may terminate this Agreement as provided in and in accordance with Section 2.7(b).

 

(f)       [***].
Without limiting its rights under Section 12.1(b):

 

(i)       Protalix
may terminate this Agreement (i) in its entirety, upon at least [***] written notice to Chiesi if within [***] of receipt of Regulatory
Approval of the Licensed Product in the Territory, Chiesi has not Launched for reasons within its reasonable control (and, for
clarity, not for reasons outside Chiesi’s reasonable control, i.e., a Force Majeure Event) the Licensed Product in
Territory; provided that, if Chiesi delays Launch of the Licensed Product in excess of such [***] period pursuant to the
exercise of its decision-making authority on the timing of the Launch based upon Chiesi’s good faith evaluation of any risks
associated with Competing Product Patents, pursuant to and in accordance with Section 3.5, then such [***] period shall
be increased to (A) [***], if Event Milestone 2 has been achieved, or (B) [***], if Event Milestone 2 has not been achieved (in
each case, solely for the period of such delay in accordance with Section 3.5), or (ii) upon at least [***] written notice
to Chiesi, if for a period of [***] at any time following Launch of the Licensed Product in the Territory, [***].

  

(ii)       Protalix
may terminate this Agreement in its entirety, in the event that Chiesi or any of its Affiliates (including through any acquisition),
directly or indirectly, alone or in collaboration with any Third Party, Develop or Commercialize in the Territory any Competing
Product; provided that, and for the avoidance of any doubt, if Chiesi acquires a Competing Product through an acquisition
of all or substantially all of the assets of a Third Party, whether by merger, sale of stock, all or substantially all of such
Third Party’s assets or other similar transaction, Chiesi or its successor entity, as applicable, shall have ninety (90)
days from such acquisition to, at Chiesi’s option, (x) permanently cease the Development and Commercialization of (and agree
to not in the future to Develop or Commercialize) such Competing Product in the Territory, or (y) sell or otherwise dispossess
ownership of the Competing Product in the Territory, prior to Protalix being able to exercise its termination rights under this
Section 12.1(f)(ii). For so long as this Agreement remains in effect, this Section 12.1(f)(ii) hereby amends, replaces
and supersedes in its entirety Section 12.1(f)(ii) of the Ex-US Agreement, which shall be of no further force or effect for so
long as this Agreement remains in effect.

 

[***] Redacted pursuant
to confidential treatment request. 

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12.2       Continuing
and Accrued Obligations. After notice of termination is given and, subject to the further provisions of this Section 12.2,
prior to the effective date of termination, this Agreement, including all payment obligations hereunder, shall continue in full
force and effect, and the Parties shall continue to carry out and perform their respective Development, Manufacturing and Commercialization
activities in accordance with this Agreement through the effective date of termination. Without limitation of the foregoing, expiration
or termination of this Agreement for any reason (i) shall be without prejudice to and shall not impair or limit in any manner
(A) Protalix’s right to receive payment from Chiesi of the Price (and any reconciliation amounts calculated in accordance
with Section 4.6(h)) in respect of sales of Licensed Product in the Territory occurring prior to the effective date of
such expiration or termination, whether or not the due date for such payment is after such effective date of expiration or termination,
(B) Protalix’s right to receive the applicable Event Milestone Payment in respect of any Event Milestone which occurs prior
to the effective date of expiration or termination, whether or not the due date for such payment is after such effective date
of expiration or termination, (C) Protalix’s right to receive payment from Chiesi in accordance with this Agreement for
any Licensed Product ordered by Chiesi pursuant to this Agreement prior to the effective date of such expiration or termination,
whether or not the due date for such payment is after such effective date of expiration or termination, and (D) any remedies that
either Party may have and (ii) shall not release a Party hereto from any indebtedness, liability, payment or other obligation
incurred hereunder (including liability for breach of this Agreement) by such Party prior to the effective date of expiration
or termination.

  

12.3       Effects
of Termination. Upon expiration or the earlier effective date of termination of this Agreement in accordance with this Section
12 or Section 4.14(e), all licenses and rights provided for herein, and all obligations of the Parties hereunder, shall
terminate and this Agreement shall cease to be of further force or effect except as otherwise provided for in Section 15.5.

 

(a)       Upon
expiration or termination of this Agreement for any reason:

 

(i)       Chiesi
shall, promptly after such expiration or termination, provide to Protalix or its designee the following materials; provided
that such materials shall be provided in the form and format in which such materials are maintained
by Chiesi in the ordinary course of business (provided that Chiesi shall use Commercially Reasonable Efforts to provide
such materials in a form and format useable by Protalix), and Chiesi shall not be required to prepare any new data, reports or
information solely for purposes of transfer to Protalix:

 

(A)       all
regulatory filings and Regulatory Approvals to the extent related to the Drug Substance, Drug Product or Licensed Product;

 

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(B)       all
pre-clinical and clinical data, reports and information (including drug master files) in Chiesi’s possession or control to
the extent relating to a Licensed Product, Drug Product or Drug Substance (including any Jointly Owned Clinical Data);

 

(C)       all
reports, records, regulatory correspondence and other materials in Chiesi’s possession or control to the extent relating
to the pre-clinical and clinical development of the Drug Substance, Drug Product or Licensed Product, and also including, if applicable,
any information contained in the global safety database established and maintained by Chiesi for the Licensed Product; and

 

(D)       all
Product Marks actually used in commerce by Chiesi or its Affiliates for the Licensed Product, excluding the corporate or trade
name or logo of Chiesi or its Affiliates.

 

(ii)       Effective
upon such expiration or termination:

 

(A)       Chiesi
hereby does (and shall) assign to Protalix, or a Protalix Affiliate identified by Protalix, (i) all of Chiesi’s right, title
and interest in and to the materials transferred or delivered or deliverable by Chiesi pursuant to Section 12.3(a)(i), including
the goodwill attendant to any Product Marks, to the extent Chiesi Controls such materials, and (ii) in respect of any Jointly Owned
Clinical Data, its undivided one-half interest in such Jointly Owned Clinical Data; with respect to the Product Marks, Chiesi shall
execute an assignment of such Product Marks in favor of Protalix and Protalix shall be responsible for recording such assignment
with the appropriate governmental trademark authorities. Chiesi shall cooperate in facilitating such assignment and recordation
by timely executing all necessary documents provided to it by Protalix;

 

(B)       Chiesi
hereby does (and shall) assign to Protalix any applicable sublicenses to the extent related to the Licensed Product and/or Third
Party agreements, with respect to significant services to be performed by Third Parties to the extent related to the Licensed Product
in the Field, unless Protalix has advised Chiesi that it will not require such assignment.

 

(iii)       Without
limitation of the generality of the foregoing, the Parties shall use diligent efforts to complete the transition of the Commercialization
of the Licensed Product in the Field in the Territory hereunder to Protalix (or its sublicensee or Third Party designee) as soon
as is reasonably possible.

 

(b)       Following
any expiration or termination of this Agreement, each of Chiesi and Protalix shall, upon request of the other Party, return or
destroy all Protalix Confidential Information and Chiesi Confidential Information, respectively, disclosed to it pursuant to this
Agreement, including all copies and extracts of documents, as promptly as practicable following receipt of such request, except
(i) that one (1) copy may be kept for the purpose of complying with continuing obligations under this Agreement and (ii) to the
extent and for so long as necessary to perform its obligations or exercise its rights under this Section 12.2.

 

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(c)       Following
termination of this Agreement, other than termination by Protalix pursuant to Sections 12.1(b), 12.1(c), 12.1(d),
12.1(e), or 12.1(f), notwithstanding the termination of the licenses and rights granted by Protalix to Chiesi hereunder,
Chiesi and its Affiliates shall have the right to continue to sell their existing inventories of the Licensed Product for a period
not to exceed [***] after the effective date of such termination and Protalix shall continue to receive any amounts due hereunder
in respect of such Net Sales, including any applicable Event Milestone Payments, or reconciliation amounts calculated in accordance
with Section 4.6(h). Following termination of this Agreement (or, in the event of termination by Protalix pursuant to Sections
12.1(b), 12.1(c), 12.1(d), 12.1(e) or 12.1(f), following such [***] period), Chiesi and its Affiliates
shall promptly return to Protalix or destroy (at Protalix’s sole discretion) all inventory of Licensed Products in its possession
as of the effective date of termination (or as of the end of such [***] period, as applicable).

 

		Section 13.	INDEMNIFICATION AND INSURANCE

 

13.1       Indemnification
by Chiesi. Subject to Sections 13.3 and 13.4, Chiesi shall indemnify, defend and hold Protalix, its Affiliates,
and their respective directors, officers, employees, consultants, contractors, sublicensees and agents (collectively, the “Protalix
Indemnitees”) harmless from and against any and all claims, suits, proceedings or causes of action (“Claims”)
brought by a Third Party against such Protalix Indemnitee, including any damages or other amounts payable to such Third Party
and reasonable attorneys’ fees and costs of litigation (collectively, “Damages”),
in each case to the extent resulting from or based on: (a) any Extension Studies conducted by Chiesi for the Licensed Product
and the Registry; (b) the Commercialization of the Licensed Product or the performance of [***] activities after [***] or Commercial
Medical Affairs and Pharmacovigilance activities by Chiesi or any of its Affiliates; (c) any taxes for which Chiesi is responsible
under Sections 4.6(b) and 6.7; (d) Chiesi’s breach of this Agreement or of any of its representations,
warranties or covenants herein; or (e) the negligence or willful misconduct of, or violation of applicable Laws by, Chiesi or
its Affiliates, or their respective employees, contractors or agents in the performance of this Agreement; in each case, to the
extent not resulting from or related to Protalix’s breach of its obligations under this Agreement or its negligence or willful
misconduct.

  

13.2       Indemnification
by Protalix. Subject to Sections 13.3 and 13.4, Protalix shall indemnify, defend and hold Chiesi, its Affiliates,
and their respective directors, officers, employees, consultants, contractors and agents (collectively, the “Chiesi
Indemnitees”) harmless from and against any and all Claims brought by a Third Party against such Chiesi Indemnitee,
including any Damages, in each case to the extent resulting from or based on: (a) any Development work conducted by Protalix for
the Licensed Product (including, for clarity, the Extension Studies conducted by Protalix pursuant to Section 3.2(e));
(b) Protalix’s breach of this Agreement or of any of its representations, warranties or covenants herein; (c) any claim
of infringement of an issued Patent or Technology to the extent such claim arises from a breach or alleged breach of Section
9.2(k); or (d) the negligence or willful misconduct of, or violation of applicable Laws by, Protalix, its Affiliates or sublicensees,
or their respective employees, contractors or agents in the performance of this Agreement; in each case, to the extent not resulting
from or related to Chiesi’s breach of its obligations under this Agreement or its negligence or willful misconduct.

 

[***] Redacted pursuant to confidential
treatment request. 

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13.3       Indemnification
of Product Liability Claims. Notwithstanding any other provision of this Agreement, this Section 13.3 shall govern
the allocation of liability with respect to any Third Party product liability Claim, including Claims of property injury, bodily
injury or deaths related to the Licensed Product in the Territory (a “Third Party Product
Claim”).

 

(a)       Subject
to Section 13.4, Protalix shall indemnify and hold harmless the Chiesi Indemnitees from and against any and all Damages
which a Chiesi Indemnitee may incur or suffer arising out of any Third Party Product Claim to the extent caused by or arisen from
any defect in the Manufacturing of the Licensed Product by Protalix.

 

(b)       Subject
to Section 13.4 and except to the extent provided in subsection (a) above, Chiesi shall defend, indemnify and hold harmless
the Protalix Indemnitees from and against any and all Damages arising out of any Third Party Product Claims to the extent caused
by or arising out of any sale, use, importation, storage, handling, distribution, offer for sale (or other Commercialization) or
sale of Licensed Product in the Territory.

 

13.4       Defense
Procedures; Procedures for Third Party Claims.

 

(a)       For
purposes of this Agreement, “Third Party Claim” means a Claim asserted
by a Third Party (in no event to include any Affiliate of either Party) against a Party or any of its Affiliates, or any of their
respective directors, officers, employees, consultants, contractors, sublicensees and agents. In the event a Third Party Claim
is asserted with respect to any matter for which a Party or any of its Affiliates, or any of their respective directors, officers,
employees, consultants, contractors, sublicensees and agents (the “Indemnified Party”)
is entitled to indemnification hereunder, then the Indemnified Party shall promptly notify in writing the Party obligated to indemnify
the Indemnified Party hereunder (the “Indemnifying Party”) thereof;
provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then only to the extent that) the Indemnifying Party is prejudiced
thereby.

 

(b)       Except
as set forth in Section 7.8, the Indemnifying Party shall assume direction and control of the defense, litigation, settlement,
appeal or other disposition of the Third Party Claim (including the right to settle the Claim solely for monetary consideration)
with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnified Party. The Indemnified Party shall
have the right to join in (including the right to conduct discovery, interview and examine witnesses and participate in all settlement
conferences), but not control, at its own expense, the defense of any Third Party Claim that the Indemnifying Party is defending
as provided in this Agreement. Notwithstanding anything to the contrary contained herein, an Indemnified Party shall be entitled
to assume the defense of any Third Party Claim with respect to the Indemnified Party, upon written notice to the Indemnifying Party,
in which case, the Indemnifying Party shall be relieved of liability under Section 13.1, as applicable, solely for such
Third Party Claim and related Damages.

 

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(c)       Without
limiting the settlement rights set forth in Sections 7.7 and 7.8, neither Party will enter into any settlement of
any suit involving Licensed Products that materially affects the other Party’s rights or obligations with respect to the
Licensed Product without the other Party’s prior written consent (which consent shall not be unreasonably withheld, delayed
or conditioned). The Indemnifying Party shall not, without the written consent of the Indemnified Party (which consent shall not
be unreasonably withheld, delayed or conditioned), effect any settlement of any pending or threatened litigation in which the Indemnified
Party has sought indemnification hereunder by the Indemnifying Party, unless such settlement involves solely monetary damages and
includes an unconditional release of the Indemnified Party from all liability on Claims that are the subject matter of such litigation.

 

13.5       Insurance.
The Parties shall maintain insurance with creditworthy insurance companies in full force and effect during the Term and, with
respect to “claims made” policies, for a period of [***] after expiration or termination of this Agreement as follows:
worker’s compensation (if applicable), general liability, employers liability, clinical trial liability and product liability
insurance coverage in such amounts and with such scope of coverages as are adequate to cover such Party’s obligations under
this Agreement and as are customary in the industry for companies of like size and activities. Upon written request, each Party
shall provide evidence of such insurance to the other Party and ensure that the other Party will receive no less than thirty (30)
days’ notice of any cancellation or material change in such coverage.

 

13.6       Disclaimer
of Liability for Consequential Damages. IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE UNDER
THIS AGREEMENT FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE, INCLUDING LOSS OF PROFITS OR REVENUE, SUFFERED BY CHIESI, PROTALIX OR ANY OF THEIR RESPECTIVE AFFILIATES.
THE FOREGOING SENTENCE SHALL NOT LIMIT THE OBLIGATIONS OF EITHER PARTY TO INDEMNIFY THE OTHER PARTY FROM AND AGAINST THIRD PARTY
CLAIMS UNDER Section 13 OR LIABILITIES RESULTING FROM A BREACH OF THE CONFIDENTIALITY OBLIGATIONS UNDER Section 8
ABOVE, OR ANY LIABILITY ARISING OUT OF THE INFRINGEMENT OF THE PROTALIX PATENT RIGHTS OR PROTALIX TECHNOLOGY INCLUDING, FOR CLARITY,
ANY USE BY CHIESI OR ITS AFFILIATES OF THE PROTALIX PATENT RIGHTS OR PROTALIX TECHNOLOGY OTHER THAN AS EXPRESSLY PROVIDED FOR
IN Section 2 AND PROVIDED THAT THIS SECTION 13.6 SHALL NOT RELIEVE EITHER PARTY FROM ITS PAYMENT OBLIGATIONS UNDER
THIS AGREEMENT.

 

[***] Redacted pursuant
to confidential treatment request.

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13.7       Sole
Remedy. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND EXCEPT FOR ANY EQUITABLE REMEDIES THAT MAY BE AVAILABLE TO A PARTY,
INDEMNIFICATION PURSUANT TO Section 13 SHALL BE THE SOLE AND EXCLUSIVE REMEDY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
LEGAL THEORY) AVAILABLE TO PROTALIX OR CHIESI FOR THE MATTERS COVERED THEREIN.

 

13.8       Concurrency
of Agreement and Ex-US Agreement. Notwithstanding anything to the contrary herein or in the Ex-US Agreement, each Party acknowledges
and agrees (a) a Party shall not be entitled to duplicate recovery under a claim for indemnification or for other damages or losses
under both this Agreement and the Ex-US Agreement with respect to the same indemnified Claim or the same damages or loss, respectively,
and (b) any action taking under this Agreement or the Ex-US Agreement may also satisfy an obligation of such Party under the other
such agreement (i.e., shall action will not be required to be taken twice if its single performance is able to satisfy
obligations under both this Agreement and the Ex-US Agreement).

 

		Section 14.	GOVERNING LAW AND JURISDICTION

 

14.1       Governing
Law. This Agreement shall be governed by and construed in accordance with the substantive Laws of the State of New York, without
regard to conflicts of law rules. The provisions of the U.N. Convention on Contracts for the International Sale of Goods shall
not apply to this Agreement.

 

14.2       Jurisdiction
and Dispute Resolution Process. With the exception of those matters referred for resolution by independent accountants under
Section 6.1(b), Section 6.6 or Section 6.7(c) or by independent consultants under Section 4.8(c) or
by Joint Legal Counsel under Section 14.3, any dispute, controversy or claim arising out of or relating to this Agreement,
or the interpretation or breach thereof, including disputes regarding the existence, validity or termination of this Agreement
or the scope of the agreement to arbitrate herein (each, a “Dispute”),
shall be determined in accordance with the provisions of this Section 14.2:

 

(a)       If
any Dispute arises, either Party may provide written notice of the Dispute to the other Party and request negotiation between the
executive officers of each Party (“Dispute Notice”). Within fifteen
(15) days after the delivery of a Dispute Notice, the executive officers shall confer in person or by teleconference to attempt
to settle the Dispute. All communication between such executive officers shall not be construed as an admission or agreement as
to the liability of any Party, nor be admitted in evidence in any related arbitration, litigation, or other adversary proceeding.

 

(b)       If,
within thirty (30) days after the delivery of a Dispute Notice, the Parties are unable to resolve the Dispute in writing, upon
written notice by any Party to the other Party, such Dispute shall be determined exclusively by arbitration in London, England,
before a panel of three (3) arbitrators in accordance with the Rules of Arbitration of the International Chamber of Commerce (“ICC
Rules”), except as modified herein;

 

(c)       In
any arbitration commenced pursuant to this Section 14.2:

 

(i)       There
shall be three arbitrators, one of which shall be nominated by Protalix and another of which shall be nominated by Chiesi, as provided
in the ICC Rules. The third arbitrator, who shall serve as the president of the tribunal, shall be jointly nominated by the two
Party-nominated arbitrators within twenty (20) days of the date of confirmation of the second arbitrator by the ICC. Any arbitrator
not timely nominated as provided herein shall be appointed by the ICC Court.

 

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(ii)       The
seat of arbitration shall be London, England. The language of the arbitration shall be English. The Parties agree that the award
rendered by the arbitral tribunal shall be final and binding and enforceable against the Parties and their respective assets in
any court of competent jurisdiction. Unless determined otherwise by the arbitral tribunal, [***]. The arbitral tribunal shall not
award any damages excluded by Section 13.6.

 

(iii)       Any
arbitration hereunder shall be confidential, and neither the Parties nor their agents shall disclose to any Third Party the existence
or status of the arbitration, any information made known or documents produced in the arbitration not otherwise available to them
or in the public domain, or any awards arising from the arbitration, except and to the extent that disclosure is required by applicable
Law or is required to protect or pursue a legal right.

 

(iv)       For
any proceeding in aid of arbitration or for preliminary relief to preserve the status quo or avoid irreparable harm prior to the
appointment of an arbitral tribunal, each Party irrevocably and unconditionally consents and submits to the exclusive jurisdiction
and venue of the courts located in England, and waives, to the fullest extent possible, any objection to the laying of venue in
such courts. The arbitral tribunal also shall have full authority to grant provisional remedies and to direct the Parties to request
that any court modify or vacate any provisional, temporary or preliminary relief issued by a court hereunder.

  

(v)       In
any action pursuant to Section 14.2 and in any action with respect to any arbitration award obtained pursuant to this Agreement
or to the enforcement of such an award, the Parties agree to accept service of process in the manner provided for notices in this
Agreement, and to waive any other requirements for service of process in any jurisdiction to the fullest extent permitted by Law.

 

(vi)       Each
Party shall continue to perform obligations hereunder, when any bona fide Dispute is pending.

 

14.3       Expert
Legal Determination.

 

(a)       In
the event that the Parties are unable to agree on an approach to an alleged breach or default by Protalix of a Third Party License
(in accordance with Section 9.2(i)), the Parties shall jointly engage an agreed-upon, independent law firm of reputable
stature with relevant licensing expertise (specifically in respect of life science agreements) in the relevant jurisdiction (“Joint
Legal Counsel”) to provide its legal opinion as to existence of, and liability in respect of, such alleged breach
or default of such Third Party License (“Joint Legal Opinion”).

 

[***] Redacted pursuant
to confidential treatment request.

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(b)       [***].
Communications with Joint Legal Counsel, its work product, and the Joint Legal Opinion shall be privileged and confidential and
shall not be disclosed to anyone other than the Parties, who will be Joint Legal Counsel’s joint clients, except that a Party
may disclose the Joint Legal Opinion in confidence to a court or arbitration tribunal if necessary to enforce its rights under
this Agreement.

 

(c)       If
the Joint Legal Counsel takes the position in the Joint Legal Opinion that the alleged breach or default exists and is able to
quantify the amount of liability relating to such breach or default, Chiesi shall be entitled to (but not obligated to) exercise
the right set out in Section 9.2(i) to undertake payment or performance of the underlying obligation on behalf of Protalix
as necessary to cure such default or breach and to offset, against amounts payable to Protalix under this Agreement, any reasonable
out-of-pocket costs and expenses incurred by Chiesi in the course thereof.

 

(d)       If
the Joint Legal Counsel takes the position in the Joint Legal Opinion that the alleged breach or default does not exist (or if
the Joint Legal Counsel is unable to reach a conclusion in the Joint Legal Opinion as to the existence or otherwise of the alleged
breach or default), then Chiesi may not exercise the right set out in Section 9.2(i), and such alleged breach or default
may not be again referred for determination under this Section 14.3.

 

		Section 15.	MISCELLANEOUS

 

15.1       Force
Majeure. Neither Party hereto shall be liable to the other Party for any losses or damages attributable to a default under
or breach of this Agreement that is the result of war (whether declared or undeclared), acts of God, revolution, acts of terror,
fire, earthquake, flood, pestilence, riot, enactment or change of Law (following the Effective Date), accident(s), labor trouble,
shortage of or inability to obtain material equipment or transport or any other cause beyond the reasonable control of such Party
(each, a “Force Majeure Event”); provided that if such a cause
occurs, then the Party affected will promptly notify the other Party of the nature and likely result and duration (if known) of
such cause and use its Commercially Reasonable Efforts to avoid or remove such causes of nonperformance as soon as is reasonably
practicable. Upon termination of the Force Majeure Event, the performance of any suspended obligation or duty shall promptly recommence.
If the event lasts for a period of longer than one (1) month, the Parties shall meet and work diligently to implement appropriate
remedial measures.

  

15.2       Severability.
If and solely to the extent that any provision of this Agreement shall be invalid or unenforceable, or shall render this entire
Agreement to be unenforceable or invalid, such offending provision shall be of no effect and shall not affect the enforceability
or validity of the remainder of this Agreement or any of its provisions; provided, however, the Parties shall use
their respective reasonable efforts to mutually agree to replace the invalid provisions in a manner that best accomplishes the
original intentions of the Parties.

 

[***] Redacted pursuant
to confidential treatment request.

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15.3       Waivers.
Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such
term or condition. Neither the waiver by any Party of any term or condition of this Agreement nor the failure on the part of any
Party, in one or more instances, to enforce any of the provisions of this Agreement or to exercise any right or privilege, shall
be deemed or construed to be a waiver of such term or condition for any similar instance in the future or of any subsequent breach
hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none
of them shall be a limitation of any other remedy, right, undertaking, obligation or agreement.

 

15.4       Entire
Agreements; Amendments. This Agreement, together with the Quality Agreement(s), sets forth the entire agreement and understanding
between the Parties as to the subject matter hereof and supersedes all agreements or understandings, verbal or written, made between
Protalix and Chiesi before the date hereof with respect to the subject matter hereof, including the Confidential Disclosure Agreement
between the Parties, dated May 24, 2017; provided, however, that, for the avoidance of doubt, the parties acknowledge
and agree on behalf of themselves and their respective Affiliates that the Ex-US Agreement shall remain in full force and effect
other than as expressly amended, superseded or supplemented hereby, and in consideration of the agreements and promises made by
Chiesi herein, all provisions herein related to the Indenture, the Indenture Security Documents, the Indenture Collateral Agent,
the Indenture Trustee, and the Israeli Security Trustee shall apply with equal force and effect with respect to the Ex-US Agreement,
and shall remain in full force and effect and continue to apply under the Ex-US Agreement regardless of the termination of this
Agreement at any time. All Confidential Information disclosed by either Party to the other Party prior to the Effective Date will
be deemed to have been disclosed pursuant to this Agreement. None of the terms of this Agreement shall be amended, supplemented
or modified except in writing signed by the Parties.

 

15.5       Survival.
The provisions of Section 2.3 (Non-Assertion of Rights), Section 6.6 (Inspection of Records), Sections 8.1-8.6
and 8.7 (Confidentiality), Section 9.4 (Disclaimer of Warranty), Sections 12.2 and 12.3 (Continuing
and Accrued Obligations; Effects of Termination), Sections 13.1-13.4, 13.6, 13.7 and 13.8 (Indemnification;
Disclaimer of Liability for Consequential Damages; Sole Remedy; Concurrency of Agreement with Ex-US Agreement), Section 14
(Governing Law and Jurisdiction), and Section 15 (Miscellaneous), as well as (x) any other Sections or defined terms
referred to in such Sections or necessary to give them effect and (y) any other provision that by its terms expressly survives
termination of this Agreement, shall survive termination of this Agreement and remain in force until discharged in full. Furthermore,
any other provisions required to interpret and enforce the Parties’ rights and obligations or to wind up their outstanding
obligations under this Agreement shall survive to the extent required.

 

15.6       Assignment;
Binding Effect.

 

(a)       Neither
this Agreement nor any rights or obligations of either Party to this Agreement may be assigned or otherwise transferred by either
Party without the consent of the other Party; provided, however, either Party may, without such consent, assign this
Agreement, in whole or in part: (i) to any of its respective Affiliates; provided that such assigning Party shall remain
jointly and severally liable with such Affiliate in respect of all obligations so assigned, or (ii) to a Third Party successor
to all or substantially all of the assets of such Party whether by merger, sale of stock, all or substantially all of a Party’s
assets or other similar transaction, so long as such Third Party agrees in writing to be bound by the terms of this Agreement.
Notwithstanding anything to the contrary herein, nothing herein shall prevent Protalix or Protalix Parent from engaging in any
merger, consolidation, reorganization, sale or purchase of stock, or sale or purchase of assets, or undergoing any Change of Control.

 

    		83	 

     

    

 

(b)       Any
purported assignment in violation of this Section 15.6 shall be void. Any permitted assignee shall assume all obligations
of its assignor under this Agreement.

 

15.7       Independent
Contractor. The relationship between Protalix and Chiesi is that of independent contractors. Protalix and Chiesi are not joint
venturers, partners, principal and agent, employer and employee, and have no other relationship other than independent contracting
parties.

 

15.8       Notices.
Each communication and document made or delivered by one Party to another under this Agreement shall be made in the English language.
All notices, consents, approvals, requests or other communications required hereunder given by one Party to the other hereunder
shall be in writing and made by registered or certified air mail, facsimile, express overnight courier or delivered personally
to the following addresses of the respective Parties:

 

If to Protalix:

 

Moshe Manor

P.O. Box 455,

Carmiel 20100, Israel

 

with a copy to:

 

Yossi Maimon

 

If to Chiesi:

 

Chief Executive Officer

Largo F. Belloli 11/A,

43122 Parma, Italy

 

with a copy to:

 

General Counsel; and

Head of Global Corporate Development

 

Notices hereunder shall be deemed to be effective (a) upon receipt
if personally delivered, (b) on the tenth (10th) Business Day following the date of mailing if sent by registered or certified
air mail and (c) on the second (2nd) Business Day following the date of transmission or delivery to the overnight courier if sent
by facsimile or overnight courier. A Party may change its address listed above by sending notice to the other Party in accordance
with this Section 15.8.

 

    		84	 

     

    

 

15.9       Third-Party
Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any Third Party, including
any creditor of either Party. No Third Party shall obtain any right under any provision of this Agreement or shall by reason of
any such provision make any claim in respect of any debt, liability or obligation (or otherwise) against either Party.

 

15.10       Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors
and permitted assigns.

 

15.11       Performance
by Affiliates. To the extent that this Agreement imposes obligations on Affiliates of a Party, such Party agrees to cause
its Affiliates to perform such obligations. Chiesi may use one or more of its Affiliates to exercise its rights or perform its
obligations and duties hereunder, provided that Chiesi shall remain liable hereunder for the prompt payment and performance
of all of its obligations hereunder, including, for the avoidance of doubt, in respect of any Net Sales of Licensed Products attributable
to the Commercialization activities of any of Chiesi’s Affiliates.

 

15.12       Counterparts.
This Agreement may be executed in any counterparts, each of which, when executed, shall be deemed to be an original and which
together shall constitute one and the same document. Signatures provided by facsimile transmission or in AdobeTM Portable
Document Format (PDF) sent by electronic mail shall be deemed to be original signatures.

 

15.13       Headings.
Headings in this Agreement are included herein for ease of reference only and shall have no legal effect.

 

15.14       Equitable
Remedies. The Parties agree that irreparable damage may occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, without limitation
of other remedies which may be available to a Party for breach of this Agreement by the other Party, the Parties shall be entitled
to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement.

 

[Signature Page Follows]

 

    		85	 

     

    

 

IN WITNESS WHEREOF the Parties hereto have
caused this Agreement to be executed by their duly authorized officers as of the date first written above.

 

 

	CHIESI FARMACEUTICI S.p.A.	 	CHIESI FARMACEUTICI S.p.A.
	 	 	 
	By:	
        /s/ Alberto Chiesi
	 	By:	
        /s/ Ugo Di Francesco

	 	
        Name: Alberto Chiesi

        Title:   President
	 	 	
        Name: Ugo Di Francesco

        Title:   Chief Executive Officer

  

	PROTALIX LTD.	 	 
	 	 	 
	By:	
        /s/ Moshe Manor
	 	 
	 	
        Name: Moshe Manor

        Title:   President and Chief Executive Officer
	 	 

  

    	 		 

     

    

 

Schedule 3.1 – Development Plan

 

[***]

 

[***] Redacted pursuant to confidential treatment
request. 

    	 		 

     

    

 

Schedule 3.7 – Initial Draft Commercialization
Plan

 

[***]

 

[***] Redacted pursuant to confidential treatment
request. 

    	 		 

     

    

 

Schedule 5.3(i) – Example of Development
Cost Detail

 

[***]

 

[***] Redacted pursuant to confidential
treatment request. 

    	 		 

     

    

  

Schedule 7.1(b) – Specified Patent
Applications

 

[***]

 

[***] Redacted pursuant to confidential treatment
request. 

    	 		 

     

    

  

Exhibit A – Protalix Patent Rights

 

[***]

 

[***] Redacted pursuant to confidential treatment
request. 

    	 		 

     

    

  

Exhibit B – Third Party Licenses

 

[***]

 

[***] Redacted pursuant to confidential treatment
request. 

    	 		 

     

    

 

Exhibit C – Press Release

 

Protalix BioTherapeutics Expands Partnership
with Chiesi Farmaceutici to Include Exclusive U.S.

Rights for the Development and Commercialization of PRX-102 (pegunigalsidase
alfa)

for the Treatment of Fabry Disease

 

Protalix to
receive $25 million upfront, an additional up to $20 million in development costs and an additional up to $760 million in potential
regulatory and commercial milestone payments for the U.S. rights

 

U.S. partnership
includes tiered royalties ranging from 15% to 40% on net sales

 

CARMIEL, Israel, July 24, 2018 — GlobeNewswire /Protalix
BioTherapeutics, Inc. (NYSE American:PLX, TASE:PLX), a biopharmaceutical company focused on the development and commercialization
of recombinant therapeutic proteins expressed through its proprietary plant cell-based expression system, ProCellEx®, today
announced the expansion of its partnership with Chiesi Farmaceutici S.p.A., or Chiesi. Protalix and Chiesi entered into an exclusive
U.S. license and supply agreement which grants to Chiesi the United States rights for the development and commercialization of
PRX-102 (pegunigalsidase alfa), the Company’s chemically modified version of the recombinant protein alpha-Galactosidase-A
protein, for the treatment of Fabry disease. In October 2017, Protalix announced an exclusive partnership with Chiesi for the development
and commercialization of PRX-102 for the treatment of Fabry disease outside the United States.

 

Under the terms of the U.S. license and supply agreement, Protalix
is entitled to an upfront payment of $25 million from Chiesi and additional payments of up to a maximum of $20 million in development
costs, capped at $7.5 million per year. Protalix is also eligible to receive an additional up to a maximum of $760 million, in
the aggregate, in regulatory and commercial milestone payments, and tiered royalties ranging from 15% to 40% on net sales as consideration
for product supply. Protalix will continue to be the manufacturer of PRX-102 for clinical development and commercial purposes.

 

“We are very pleased to expand our collaboration with
Chiesi, a growing global company with well-established global commercial infrastructure with a fast growing commercial presence
in the U.S. Chiesi’s global investment of $95 million in upfront payments and development costs reimbursement, and additional
up to a maximum of $1 billion in potential milestone payments, combined in the two agreements reflects Chiesi’s true commitment
to the Fabry space,” commented Moshe Manor, Protalix’s President and Chief Executive Officer. “Taking into consideration
a $25 million upfront payment and shared development expenses, we expect our cash runaway to take us through the read outs of all
of the Fabry clinical trials.”

 

In pre-clinical trials, PRX-102 demonstrated a significantly
enhanced circulatory half-life and higher enzyme activity in the target organs affected by Fabry disease when compared to currently
available versions of the molecule. In clinical development, PRX-102 demonstrated strong positive safety and efficacy data in a
phase I/II clinical trial. Fabry patients are currently being enrolled in a global, pivotal phase III clinical trial, and Protalix
anticipates starting to report data from these studies in the first half of 2019.

 

    	 		 

     

    

 

“We
believe PRX-102 has the potential to transform the treatment of Fabry disease and are excited to now have exclusive commercial
rights to PRX-102 worldwide,” said Ugo Di Francesco, Chiesi’s Chief Executive Officer. “The more we work
with Protalix and see the progress made in the development and the product’s characteristics, it becomes abundantly clear
the significant role PRX 102 could have in the underserved Fabry market and to potentially change the treatment paradigm to the
benefit of all stake holders. We believe this U.S. license agreement will bring many synergies in our fast growing U.S. presence
in rare diseases.”

 

Additional details regarding the collaboration
can be found in Protalix's Form 8-K to be filed with the Securities and Exchange Commission.

 

About Protalix
BioTherapeutics, Inc.

 

Protalix
is a biopharmaceutical company focused on the development and commercialization of recombinant therapeutic proteins expressed through
its proprietary plant cell-based expression system, ProCellEx®. Protalix’s unique expression system presents a proprietary
method for developing recombinant proteins in a cost-effective, industrial-scale manner. Protalix’s first product manufactured
by ProCellEx, taliglucerase alfa, was approved for marketing by the U.S. Food and Drug
Administration (FDA) in May 2012 and, subsequently, by the regulatory authorities of other countries. Protalix has licensed to
Pfizer Inc. the worldwide development and commercialization rights for taliglucerase alfa, excluding Brazil, where Protalix retains
full rights. Protalix’s development pipeline includes the following product candidates: pegunigalsidase alfa, a modified
version of the recombinant human alpha-GAL-A protein for the treatment of Fabry disease; OPRX-106, an orally-delivered anti-inflammatory
treatment; alidornase alfa for the treatment of Cystic Fibrosis; and others. Protalix has partnered with Chiesi Farmaceutici S.p.A.,
both in the United States and outside the United States, for the development and commercialization of pegunigalsidase alfa.

 

About Chiesi Farmaceutici
S.p.A. 

 

Based in Parma, Italy,
Chiesi Farmaceutici is an international research-focused Healthcare Group, with over 80 years of experience in the pharmaceutical
industry. Chiesi researches, develops and markets innovative drugs in the respiratory therapeutics, specialist medicine and rare
disease areas. Its R&D organization is headquartered in Parma (Italy), and integrated with 6 other key R&D groups in France,
the USA, the UK, Sweden and Denmark to advance Chiesi's pre-clinical, clinical and registration programmes.  Chiesi employs
nearly 5,300 people. For more information, visit www.chiesi.com.

 

    	 		 

     

    

 

Forward-Looking
Statements

 

To the extent that
statements in this press release are not strictly historical, all such statements are forward-looking, and are made pursuant to
the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.  The terms “expect,” “anticipate,
“believe,” “estimate,” “project,” “plan,” “should” and “intend”
and other words or phrases of similar import are intended to identify forward-looking statements. These forward-looking statements
are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially
from the statements made. These statements are based on our current beliefs and expectations as to such future outcomes. Drug discovery
and development involve a high degree of risk. Factors that might cause material differences include, among others: failure or
delay in the commencement or completion of our preclinical and clinical trials which may be caused by several factors, including:
slower than expected rates of patient recruitment; unforeseen safety issues; determination of dosing issues; lack of effectiveness
during clinical trials; inability to monitor patients adequately during or after treatment; inability or unwillingness of medical
investigators and institutional review boards to follow our clinical protocols; and lack of sufficient funding to finance clinical
trials; the risk that the results of the clinical trials of our product candidates will not support our claims of superiority,
safety or efficacy, that our product candidates will not have the desired effects or will be associated with undesirable side effects
or other unexpected characteristics; risks related to our ability to maintain and manage our relationship with Chiesi Farmaceutici
and any other collaborator, distributor or partner; risks related to the ultimate purchase by Fundação Oswaldo
Cruz of alfataliglicerase pursuant to the stated purchase intentions of the Brazilian Ministry of Health of the
stated amounts, if at all; risks related to the successful conclusion of our negotiations with the Brazilian Ministry of Health regarding
the purchase of alfataliglicerase generally; risks related to our commercialization efforts for alfataliglicerase in Brazil;
risks relating to the compliance by Fundação Oswaldo Cruz with its purchase obligations and related milestones
under our supply and technology transfer agreement; risks related to the amount and sufficiency of our cash and cash equivalents;
risks related to the amount of our future revenues, operations and expenditures; risks related to the amount and sufficiency of
our cash and cash equivalents; the risk that despite the FDA’s grant of fast track designation for pegunigalsidase alfa for
the treatment of Fabry disease, we may not experience a faster development process, review or approval compared to applications
considered for approval under conventional FDA procedures; risks related to the FDA’s ability to withdraw the fast track
designation at any time; risks relating to our ability to make scheduled payments of the principal of, to pay interest on or to
refinance our outstanding notes or any other indebtedness; our dependence on performance by third party providers of services and
supplies, including without limitation, clinical trial services; delays in our preparation and filing of applications for regulatory
approval; delays in the approval or potential rejection of any applications we file with the FDA or other health regulatory
authorities, and other risks relating to the review process; our ability to identify suitable product candidates and to complete
preclinical studies of such product candidates; the inherent risks and uncertainties in developing drug platforms and products
of the type we are developing; the impact of development of competing therapies and/or technologies by other companies and institutions;
potential product liability risks, and risks of securing adequate levels of product liability and other necessary insurance coverage;
and other factors described in our filings with the U.S. Securities and Exchange Commission.  The statements in this
press release are valid only as of the date hereof and we disclaim any obligation to update this information, except as may be
required by law.

 

    	 		 

     

    

 

Investor Contact

 

Marcy Nanus

Solebury Trout

646-378-2927

mnanus@soleburytrout.com

 

Source: Protalix
BioTherapeutics, Inc.

 

    	 		 

     

    

 

Exhibit D – Chiesi Anti-Bribery
Policy

 

[***]

 

[***] Redacted pursuant to confidential treatment
request. 

    	 		 

     

    

 

Exhibit E – Chiesi Code of Ethics
and Conduct

 

[***]

 

[***] Redacted pursuant to confidential treatment
request.achv-ex101_450.htm

 

EXHIBIT 10.1

 

ACHIEVE LIFE SCIENCES, INC.

2018 EQUITY INCENTIVE PLAN

 

1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents, Subsidiaries and Affiliates that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 28.

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available. Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is 1,000,000, plus (a) any reserved shares not issued or subject to outstanding grants under the Company’s 2017 Equity Incentive Plan (the “Prior Plan”) on the Effective Date, (b) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be subject to such stock options or other awards, by forfeiture or otherwise, after the Effective Date, (c) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are forfeited after the Effective Date, (d) shares issued under the Prior Plan that are repurchased by the Company at the original issue price and (e) shares that are subject to stock options or other awards under the Prior Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award.

2.2 Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. To the extent an Award under the Plan is paid out in cash or other property rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.

2.3 Minimum Share Reserve. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

2.4 Automatic Share Reserve Increase. The number of Shares available for grant and issuance under the Plan shall be increased on January 1, of each of 2018 through 2027, by the lesser of (a) five percent (5%) of the number of Shares issued and outstanding on each December 31 immediately prior to the date of increase or (b) such number of Shares determined by the Board.

2.5 Limitations. No more than 2,000,000 Shares shall be issued pursuant to the exercise of ISOs.

2.6 Adjustment of Shares. If the number of outstanding Shares is changed by a stock dividend, extraordinary dividends or distributions (whether in cash, shares or other property, other than a regular cash dividend), spin-off, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, including Shares reserved under sub-clauses (a)–(e) of Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, and (d) the maximum number of Shares that may be issued 

 

 

as ISOs set forth in Section 2.5 shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

If, by reason of an adjustment pursuant to this Section 2.6, a Participant’s Award Agreement or other agreement related to any Award or the Shares subject to such Award covers additional or different shares of stock or securities, then such additional or different shares, and the Award Agreement or such other agreement in respect thereof, shall be subject to all of the terms, conditions and restrictions which were applicable to the Award or the Shares subject to such Award prior to such adjustment.

3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction.

4. ADMINISTRATION.

4.1 Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to:

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

(c) select persons to receive Awards;

(d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;

(e) determine the number of Shares or other consideration subject to Awards;

(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary;

(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent, Subsidiary or Affiliate;

(h) grant waivers of Plan or Award conditions;

(i) determine the vesting, exercisability and payment of Awards;

 

(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

(k) determine whether an Award has been earned or has vested;

 

 

(l) determine the terms and conditions of any, and to institute any Exchange Program;

(m) reduce or waive any criteria with respect to Performance Factors;

(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships;

(o) adopt rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States or qualify Awards for special tax treatment under laws of jurisdictions other than the United States;

(p) make all other determinations necessary or advisable for the administration of this Plan;

(q) delegate any of the foregoing to one or more executive officers pursuant to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law; and

(r) to exercise negative discretion on Performance Awards, reducing or eliminating the amount to be paid to Participants.

4.2 Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.

4.3  Section 16 of the Exchange Act. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act).

4.4 Documentation. The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.

4.5 Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws and practices in other countries in which the Company and its Subsidiaries and Affiliates operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries and Affiliates shall be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan, which may include individuals who provide services to the Company, Subsidiary or Affiliate under an agreement with a foreign nation or agency; (c) modify the terms and conditions of any Award granted to individuals outside the United States or foreign nationals to comply with applicable foreign laws, policies, customs and practices; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 2.1 hereof; and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.

 

 

5. OPTIONS. An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee may grant Options to eligible Employees, Consultants and Directors and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following terms of this section.

5.1 Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option; and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.

5.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

5.3 Exercise Period. Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

5.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (a) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.

5.5 Method of Exercise. Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option (and/or via electronic execution through the authorized third-party administrator), and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

5.6 Termination of Service. If the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter time period not less than thirty 

 

 

(30) days or longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s Service terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options.

(a) Death. If the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the date Participant’s Service terminates (or such shorter time period not less than six (6) months or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options.

(b) Disability. If the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (or such shorter time period not less than six (6) months or longer time period as may be determined by the Committee, with any exercise beyond (a) three (3) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options.

(c) Cause. If the Participant’s Service is terminated for Cause, then Participant’s Options shall expire on such Participant’s date of termination of Service, or at such later time and on such conditions as are determined by the Committee, but in any event no later than the expiration date of the Options. Unless otherwise provided in an employment agreement or the Award Agreement, Cause shall have the meaning set forth in the Plan.

5.7 Limitations on Exercise. The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.

5.8 Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.

5.10 No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

6. RESTRICTED STOCK AWARDS. A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant, or Director Shares that are subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, 

 

 

the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.

6.1 Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.

6.2 Purchase Price. The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company.

6.3 Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.

6.4 Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

7. STOCK BONUS AWARDS. A Stock Bonus Award is an award to an eligible Employee, Consultant, or Director of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent, Subsidiary or Affiliate. All Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.

7.1. Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.

7.2. Form of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.

7.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

8. STOCK APPRECIATION RIGHTS. A Stock Appreciation Right (“SAR”) is an award to an eligible Employee, Consultant, or Director that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any 

 

 

maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement.

8.1 Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.

8.2 Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.

8.3 Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (a) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (b) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or Dividend Equivalent Right, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.

8.4 Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

9. RESTRICTED STOCK UNITS. A Restricted Stock Unit (“RSU”) is an award to an eligible Employee, Consultant, or Director covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award Agreement.

9.1 Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participant’s termination of Service on each RSU; provided that no RSU shall have a term longer than ten (10) years. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.

9.2 Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may also permit a Participant to 

 

 

defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.

9.3 Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).

 

10. PERFORMANCE AWARDS. A Performance Award is an award to an eligible Employee, Consultant, or Director of the Company or any Parent, Subsidiary or Affiliate that is based upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee, and may be settled in cash, Shares (which may consist of, without limitation, Restricted Stock), other property, or any combination thereof. Grants of Performance Awards shall be made pursuant to an Award Agreement that cites Section 10 of the Plan.

10.1 Types of Performance Awards. Performance Awards shall include Performance Shares, Performance Units, and cash-based Awards as set forth in Sections 10.1(a), 10.1(b), and 10.1(c) below.

(a) Performance Shares. The Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and determine the number of Performance Shares and the terms and conditions of each such Award.

(b) Performance Units. The Committee may grant Awards of Performance Units, designate the Participants to whom Performance Units are to be awarded and determine the number of Performance Units and the terms and conditions of each such Award.

(c) Cash-Settled Performance Awards. The Committee may also grant cash-settled Performance Awards to Participants under the terms of this Plan.

The amount to be paid under any Performance Award may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.

10.2 Terms of Performance Awards. Performance Awards will be based on the attainment of performance goals using the Performance Factors within this Plan that are established by the Committee for the relevant Performance Period. The Committee will determine, and each Award Agreement shall set forth, the terms of each Performance Award including, without limitation: (a) the amount of any cash bonus, (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (d) the consideration to be distributed on settlement, and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria.

10.3 Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee).

11. PAYMENT FOR SHARE PURCHASES. Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):

(a) by cancellation of indebtedness of the Company to the Participant;

(b) by surrender of Shares held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;

 

 

 

(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent, Subsidiary or Affiliate;

(d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan;

(e) by any combination of the foregoing; or

(f) by any other method of payment as is permitted by applicable law.

The Committee may limit the availability of any method of payment, to the extent the Committee determines, in its discretion, that such limitation is necessary or advisable to comply with applicable law or facilitate the administration of the Plan.

12. GRANTS TO NON-EMPLOYEE DIRECTORS. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. The aggregate grant date fair value of Awards granted to a Non-Employee Director pursuant to this Section 12 in any calendar year shall not exceed $500,000, except that the aggregate grant date fair value of Awards granted to a new Non-Employee Director pursuant to this Section 12 in the calendar year in which they commence their service to the Company shall not exceed $1,000,000.

12.1. Eligibility. Awards pursuant to this Section 12 shall be granted only to Non-Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.

12.2. Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.

12.3. Election to receive Awards in Lieu of Cash. A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee. Such Awards shall be issued under the Plan. An election under this Section 12.3 shall be filed with the Company on the form prescribed by the Company.

13. WITHHOLDING TAXES.

13.1. Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or a tax event occurs, the Company may require the Participant to remit to the Company, or to the Parent, Subsidiary or Affiliate, as applicable, to which the Participant provides Service, an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax or social insurance liability (collectively, “Tax-Related Items”) legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable Tax-Related Items legally due from the Participant. Unless otherwise determined by the Committee, the Fair Market Value of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares shall be valued based on the value of the actual trade or, if there is none, the Fair Market Value of the Shares as of the previous trading day.

13.2. Stock Withholding. The Committee, or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such Tax-Related Items legally due from the Participant, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or 

 

 

Shares having a Fair Market Value equal to the Tax-Related Items to be withheld, (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the Tax-Related Items to be withheld or (d) withholding from proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. The Company may withhold or account for these Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, including up to the maximum permissible statutory tax rate for the applicable tax jurisdiction, to the extent consistent with applicable laws.

14. TRANSFERABILITY.

14.1. Transfer Generally. Unless determined otherwise by the Committee or pursuant to Section 14.2, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards shall be exercisable: (a) during the Participant’s lifetime only by (i) the Participant, or (ii) the Participant’s guardian or legal representative; (b) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (c) in the case of all awards except ISOs, by a Permitted Transferee.

14.2. Award Transfer Program. Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (a) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (b) amend or remove any provisions of the Award relating to the Award holder’s continued Service to the Company or its Parent, Subsidiary, or Affiliate, (c) amend the permissible payment methods with respect to the exercise or purchase of any such Award, (d) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (e) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion. Notwithstanding anything to the contrary in the Plan, in no event will the Committee have the right to determine and implement the terms and conditions of any Award Transfer Program without stockholder approval.

15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

15.1 Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. The Committee may provide that any Dividend Equivalent Rights permitted by an applicable Award Agreement shall be deemed to have been reinvested in additional Shares or otherwise reinvested. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2. However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares underlying an Award during the period beginning on the date the Award is granted and ending, with respect to each Share subject to the Award, on the earlier of the date on which the Award is exercised or settled or the date on which it is forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant in the form of additional whole Shares as of the date of payment of such cash dividends on Shares. Notwithstanding the foregoing, dividends and Dividend Equivalent Rights may accrue with respect to unvested Awards, but will not be paid or issued until such Award is fully vested and the Shares are issued to Participant and such Shares are no longer subject to any vesting requirements or repurchase rights on behalf of the Company.

 

 

15.2 Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.

16. CERTIFICATES. All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.

17. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

18. EXCHANGE AND BUYOUT OF AWARDS. Without prior stockholder approval, the Committee may, with the consent of the respective Participants (unless not required pursuant to Section 5.9 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.

19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent, Subsidiary or Affiliate or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate to terminate Participant’s employment or other relationship at any time.

21. CORPORATE TRANSACTIONS.

21.1. Assumption or Replacement of Awards by Successor. In the event that the Company is subject to a Corporate Transaction, outstanding Awards acquired under the Plan shall be subject to the agreement evidencing the Corporate Transaction, which need not treat all outstanding Awards in an identical manner. Such agreement, without 

 

 

the Participant’s consent, shall provide for one or more of the following with respect to all outstanding Awards as of the effective date of such Corporate Transaction:

(a) The continuation of an outstanding Award by the Company (if the Company is the successor entity).

(b) The assumption of an outstanding Award by the successor or acquiring entity (if any) of such Corporate Transaction (or by its parents, if any), which assumption, will be binding on all selected Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable.

(c) The substitution by the successor or acquiring entity in such Corporate Transaction (or by its parents, if any) of equivalent awards with substantially the same terms for such outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable).

(d) The full or partial acceleration of exercisability or vesting and accelerated expiration of an outstanding Award and lapse of the Company’s right to repurchase or re-acquire shares acquired under an Award or lapse of forfeiture rights with respect to shares acquired under an Award.

(e) The settlement of the full value of such outstanding Award (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the successor entity (or its parent, if any) with a Fair Market Value equal to the required amount, followed by the cancellation of such Awards; provided however, that such Award may be cancelled if such Award has no value, as determined by the Committee, in its discretion. Subject to Section 409A of the Code, such payment may be made in installments and may be deferred until the date or dates the Award would have become exercisable or vested. Such payment may be subject to vesting based on the Participant’s continued service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which the Award would have become vested or exercisable. For purposes of this Section 21.1(e), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

(f) The cancellation of outstanding Awards in exchange for no consideration.

The Board shall have full power and authority to assign the Company’s right to repurchase or re-acquire or forfeiture rights to such successor or acquiring corporation. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction.

21.2. Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not be deducted from the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in a calendar year.

 

 

21.3 Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.

22. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.

23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules).

24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted. No termination or amendment of the Plan shall affect any then-outstanding Award unless expressly provided by the Committee; in any event, no termination or amendment of the Plan or any outstanding Award may adversely affect any then outstanding Award without the consent of the Participant, unless such termination or amendment is necessary to comply with applicable law, regulation or rule.

25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

26. INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.

27. ALL AWARDS SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT POLICY. All Awards shall, subject to applicable law, be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law, may require the cancelation of outstanding Awards and the recoupment of any gains realized with respect to Awards.

28. DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:

28.1. “Affiliate” means any person or entity that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Company, including any general partner, managing member, officer or director of the Company, in each case as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such person or entity, whether through the ownership of voting securities or by contract or otherwise.

28.2 “Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.

 

 

28.3 “Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and country-specific appendix thereto for grants to non-U.S. Participants, which shall be in substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.

28.4 “Award Transfer Program” means any program instituted by the Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee.

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

28.6 “Cause” means (i) Participant’s willful failure substantially to perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful breach of any of his or her obligations under any written agreement or covenant with the Company. The determination as to whether a Participant’s Service is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 20 above, and the term “Company” will be interpreted to include any Subsidiary or Parent, as appropriate. Notwithstanding the foregoing, the foregoing definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement or Award Agreement with any Participant, provided that such document supersedes the definition provided in this Section 28.6.

28.7 “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

28.8 “Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.

28.9 “Common Stock” means the common stock of the Company.

28.10 “Company” means Achieve Life Sciences, Inc., or any successor corporation.

28.11 “Consultant” means any natural person, including an advisor or independent contractor, engaged by the Company or a Parent, Subsidiary or Affiliate to render services to such entity.

28.12 “Corporate Transaction” means the occurrence of any of the following events:

(a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; provided, however, that for purposes of this subclause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction;

(b) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

(c) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being 

 

 

converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation;

(d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the capital stock of the Company) or

(e) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by members of the Board whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purpose of this subclause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction.

For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount shall become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time.

28.13. “Director” means a member of the Board.

28.14. “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash, stock or other property dividends in amounts equal equivalent to cash, stock or other property dividends for each Share represented by an Award held by such Participant.

28.15. “Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

28.16. “Effective Date” means the date on which this Plan is adopted by the Board.

28.17. “Employee” means any person, including Officers and Directors, employed by the Company or any Parent, Subsidiary or Affiliate. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

28.18. “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

28.19. “Exchange Program” means a program pursuant to which outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof).

28.20. “Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.

28.21. “Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

 

 

(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

(c) if none of the foregoing is applicable, by the Board or the Committee in good faith.

28.22. “Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

28.23. “IRS” means the United States Internal Revenue Service.

28.24. “Non-Employee Director” means a Director who is not an Employee of the Company or any Parent, Subsidiary or Affiliate.

28.25. “Option” means an award of an option to purchase Shares pursuant to Section 5.

28.26. “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

28.27. “Participant” means a person who holds an Award under this Plan.

28.28. “Performance Award” means an award covering cash, Shares or other property granted pursuant to Section 10 or Section 12 of the Plan.

28.29. “Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied:

(a) Profit Before Tax;

(b) Sales;

(c) Expenses;

(d) Billings;

(e) Revenue

(f) Net revenue;

(g) Earnings (which may include earnings before interest and taxes, earnings before taxes, net earnings, stock-based compensation expenses, depreciation and amortization);

(h) Operating income;

(i) Operating margin;

 

 

(j) Operating profit;

(k) Controllable operating profit, or net operating profit;

(l) Net profit;

(m) Gross margin;

(n) Operating expenses or operating expenses as a percentage of revenue;

(o) Net income;

(p) Earnings per share;

(q) Total stockholder return;

(r) Market share;

(s) Return on assets or net assets;

(t) The Company’s stock price;

(u) Growth in stockholder value relative to a pre-determined index;

(v) Return on equity;

(w) Return on invested capital;

(x) Cash Flow (including fee cash flow or operating cash flows);

(y) Balance of cash, cash equivalents and marketable securities;

(z) Cash conversion cycle;

(aa) Economic value added;

(bb) Individual confidential business objectives;

(cc) Contract awards or backlog;

(dd) Overhead or other expense reduction;

(ee) Credit rating;

(ff) Completion of an identified special project;

(gg) Completion of a joint venture or other corporate transaction;

(hh) Strategic plan development and implementation;

(ii) Succession plan development and implementation;

(jj) Improvement in workforce diversity;

(kk) Employee satisfaction;

 

 

(ll) Employee retention;

(mm) Customer indicators and/or satisfaction;

(nn) New product invention or innovation;

(oo) Research and development expenses;

(pp) Attainment of research and development milestones;

(qq) Improvements in productivity;

(rr) Bookings;

(ss) Working-capital targets and changes in working capital;

(tt) Attainment of objective operating goals and employee metrics; and

(uu) Any other metric that is capable of measurement as determined by the Committee.

The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.

28.30. “Performance Period” means one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Factors will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance Award.

28.31. “Performance Share” means an Award granted pursuant to Section 10 or Section 12 of the Plan, consisting of a unit valued by reference to a designated number of Shares, the value of which may be paid to the Participant by delivery of Shares or, if set forth in the instrument evidencing the Award, of such property as the Committee shall determine, including, without limitation, cash, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee.

28.32. “Performance Unit” means an Award granted pursuant to Section 10 or Section 12 of the Plan, consisting of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee.

28.33. “Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests.

28.34. “Plan” means this Achieve Life Sciences, Inc., 2018 Equity Incentive Plan.

28.35. “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.

 

 

28.36. “Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option.

28.37. “Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of the Plan.

28.38. “SEC” means the United States Securities and Exchange Commission.

28.39. “Securities Act” means the United States Securities Act of 1933, as amended.

28.40. “Service” shall mean service as an Employee, Consultant, Director or Non-Employee Director, to the Company or a Parent, Subsidiary or Affiliate, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence approved by the Company; provided, that such leave is for a period of not more than 90 days (x) unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or (y) unless provided otherwise pursuant to formal policy adopted from time to time by the Company’s Board and issued and promulgated to employees in writing. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of or modification to vesting of the Award while on leave from the employ of the Company or a Parent, Subsidiary or Affiliate or during such change in working hours as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military or other protected leave, if required by applicable laws, vesting shall continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from such leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act or other applicable law), he or she shall be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide Service to the Company throughout the leave on the same terms as he or she was providing Service immediately prior to such leave. An employee shall have terminated employment as of the date he or she ceases to provide Service (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law, provided, however, that a change in status from an employee to a consultant or advisor shall not terminate the service provider’s Service, unless determined by the Committee, in its discretion. The Committee will have sole discretion to determine whether a Participant has ceased to provide Service and the effective date on which the Participant ceased to provide Service.

28.41. “Shares” means shares of Common Stock and the common stock of any successor entity.

28.42. “Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 12 of the Plan.

28.43. “Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of the Plan.

28.44. “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

28.45. “Treasury Regulations” means regulations promulgated by the United States Treasury Department.

28.46. “Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

 

 

NOTICE OF STOCK OPTION GRANT
(UNITED STATES, CANADA, UNITED KINGDOM)

ACHIEVE LIFE SCIENCES, INC.
2018 EQUITY INCENTIVE PLAN
GRANT NUMBER:  

Unless otherwise defined herein, the terms defined in the Achieve Life Sciences, Inc. (the “Company”), 2018 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Stock Option Grant (the “Notice of Grant”) and the attached Stock Option Agreement, including any special terms and conditions for your country set forth in the appendix attached thereto (collectively, the “Option Agreement”). You have been granted an Option to purchase shares of Common Stock of the Company under the Plan subject to the terms and conditions of the Plan, this Notice of Grant and the Option Agreement.

															
	
 
	
Name:
	
 

	
 
	
Address:
	
 

	
 
	
Number of Shares:
	
 

	
 
	
Exercise Price Per Share:
	
 

	
 
	
Date of Grant:
	
 

	
 
	
Vesting Commencement Date:
	
 

	
 
	
Type of Option:
	
____ Non-Qualified Stock Option
____ Incentive Stock Option

	
 
	
Expiration Date:
	
_____________; this Option expires earlier if your Service terminates earlier, as described in the Option Agreement.
	
	
 
	
Vesting Schedule:  
	
[Sample vesting language:] [This Option becomes exercisable with respect to the first 25% of the Shares subject to this Option when you complete 12 months of Service from the Vesting Commencement Date.  Thereafter, this Option becomes exercisable with respect to an additional 1/48th of the Shares subject to this Option when you complete each month of Service.] [Note:  actual vesting language to match vesting schedule approved by the Board or Committee]
	
	
 
	
Additional Terms:
	
If your address set forth above is an address located outside the United States, the additional terms and conditions set forth on an Appendix attached hereto (as executed by the Company) are applicable and are incorporated herein by reference.  (No Appendix need be attached if your address set forth above is an address located within the United States.)
	

(Signature page follows.)

 

 

You understand that your employment or consulting relationship with the Company or a Parent, Subsidiary or Affiliate is for an unspecified duration, can be terminated at any time, and that nothing in this Notice of Grant, the Option Agreement or the Plan changes the nature of that relationship.  By accepting this Option, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, this Notice of Grant and the Option Agreement.  By accepting this Option, you consent to the electronic delivery and acceptance as further set forth in the Option Agreement.

 

PARTICIPANT

 

By: 
Name:

ACHIEVE LIFE SCIENCES, INC.

 

By: 
Name: 
Title:

 

 

 

STOCK OPTION AGREEMENT
ACHIEVE LIFE SCIENCES, INC.
2018 EQUITY INCENTIVE PLAN

 

You have been granted an Option by Achieve Life Sciences, Inc. (the “Company”), under the 2018 Equity Incentive Plan (the “Plan”) to purchase Shares (the “Option”), subject to the terms, restrictions and conditions of the Plan, the Notice of Stock Option Grant (the “Notice of Grant”) and this Stock Option Agreement, including any special terms and conditions for your country set forth in the appendix attached hereto (the “Appendix”) (collectively, the “Agreement”).

1.Grant of Option.  You have been granted the Option for the number of Shares set forth in the Notice of Grant at the Exercise Price per Share set forth in the Notice of Grant.  In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code.  However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 limit under Code Section 422(d), it shall be treated as a Nonqualified Stock Option (“NSO”).

2.Termination.

(a)General Rule.  If your Service terminates for any reason except death or Disability, and other than for Cause, then this Option will expire at the close of business at Company headquarters on the date three months after your termination of Service (subject to the expiration detailed in Section 6).  If your Service is terminated for Cause, this Option will expire upon the date of such termination.

You acknowledge and agree that the vesting schedule set forth in the Notice of Grant may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards.  You acknowledge that the vesting of the Shares pursuant to this Agreement is earned only by continuing Service.

(b)Death; Disability.  If you die before your Service terminates (or you die within three months of your termination of Service other than for Cause), then this Option will expire at the close of business at Company headquarters on the date 12 months after the date of death (subject to the expiration detailed in Section 6).  If your Service terminates because of your Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after your termination date (subject to the expiration detailed in Section 6).

(c)Termination Date.  For purposes of this Option, your Service will be considered terminated as of the date you are no longer actively providing services to the Company or a Parent, Subsidiary or Affiliate (regardless of the reason for such termination and whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are employed or engaged or the terms of your employment or consulting agreement, if any), and your period of 

 

 

Service will not include any contractual notice period or any period of “garden leave” or similar period mandated under labor laws in the jurisdiction where you are employed or engaged or the terms of your employment or consulting agreement, if any.  The Committee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of this Option (including whether you may still be considered to be providing services while on a leave of absence).

(d)No Notice.  You are responsible for keeping track of these exercise periods following your termination of Service for any reason.  The Company will not provide further notice of such periods.  In no event shall this Option be exercised later than the Expiration Date set forth in the Notice of Grant.

3.Exercise of Option.

(a)Right to Exercise.  This Option is exercisable during its term in accordance with the vesting schedule set forth in the Notice of Grant and the applicable provisions of the Plan and this Agreement.  In the event of your death, Disability, or other cessation of Service, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice of Grant and this Agreement.  This Option may not be exercised for a fraction of a Share.

(b)Method of Exercise.  This Option is exercisable by delivery of an exercise notice in a form specified by the Company (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan.  The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company.  The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares.  This Option shall be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by the aggregate Exercise Price and any applicable withholding of Tax-Related Items as detailed in Section 8 below.

(c)Exercise by Another.  If another person wants to exercise this Option after it has been transferred to him or her in compliance with this Agreement, that person must prove to the Company’s satisfaction that he or she is entitled to exercise this Option.  That person must also complete the proper Exercise Notice form (as described above) and pay the Exercise Price (as described below) and any applicable withholding of Tax-Related Items as described below.

4.Method of Payment.  Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at your election:

(a)your personal check, wire transfer, or a cashier’s check;

(b)for U.S. taxpayers only: certificates for shares of Company stock that you own, along with any forms needed to effect a transfer of those shares to the Company; the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price.  Instead of surrendering shares of Company stock, you may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted 

 

 

from the Exercised Shares issued to you.  However, you may not surrender, or attest to the ownership of, shares of Company stock in payment of the Exercise Price of your Option if your action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes;

(c)cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Exercised Shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price and any withholding of Tax-Related Items.  The balance of the sale proceeds, if any, will be delivered to you.  The directions must be given by signing a special notice of exercise form provided by the Company; or

(d)other method authorized by the Company.

5.Non-Transferability of Option.  In general, except as provided below, only you may exercise this Option prior to your death.  You may not transfer or assign this Option, except as provided below.  For instance, you may not sell this Option or use it as security for a loan.  If you attempt to do any of these things, this Option will immediately become invalid.  

However, if you are a U.S. taxpayer, you may dispose of this Option in your will or in a beneficiary designation.  If you are a U.S. taxpayer and this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow you to transfer this Option as a gift to one or more family members.  For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in- law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest.  In addition, if you are a U.S. taxpayer and this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow you to transfer this Option to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights.  The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement.  

This Option may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of you only by you, your guardian, or legal representative, as permitted in the Plan and applicable local laws.  The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of you.

6.Term of Option.  This Option shall in any event expire on the expiration date set forth in the Notice of Grant, which date is ten years after the grant date (five years after the grant date if this Option is designated as an ISO in the Notice of Grant and Section 5.3 of the Plan applies).

 

 

7.Tax Consequences.  You should consult a tax adviser for tax consequences relating to this Option in the jurisdiction in which you are subject to tax.  YOU SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a)Exercising the Option.  You will not be allowed to exercise this Option unless you make arrangements acceptable to the Company to pay any withholding of Tax-Related Items.  

(b)Notice of Disqualifying Disposition of ISO Shares.  If you sell or otherwise dispose of any of the Shares acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, you shall immediately notify the Company in writing of such disposition.  You agree that you may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current compensation paid to you.

8.Responsibility for Taxes.  Regardless of any action the Company or, if different, your actual employer (the “Employer”) takes with respect to any or all income tax, social insurance contributions, payroll tax, fringe benefits tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including the grant, vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of this Option to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result.  You acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to exercise of the Option, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Item withholding and payment on account obligations of the Company and/or the Employer.  In this regard, you authorize the Company and/or the Employer, and their respective agents, at their discretion, to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer.  With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when you exercise this Option, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf and pursuant to this authorization), (c) your payment of a cash amount, or (d) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding from alternatives (a)-(d) above, and the Committee shall establish the method prior to the taxable or withholding event.  The Fair Market 

 

 

Value of these Shares, determined as of the effective date of the Option exercise, will be applied as a credit against the Tax-Related Items.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case you will receive a refund of any over-withheld amount in cash and will have no entitlement to the Shares equivalent.  If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

Finally, you agree to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your purchase of Shares that cannot be satisfied by the means previously described.  You acknowledge that the Company has no obligation to deliver Shares to you until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section.

9.Nature of Grant.  In accepting this Option, you acknowledge, understand and agree that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b)the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future grants of stock options, or benefits in lieu of stock options, even if stock options have been granted in the past;

(c)all decisions with respect to future stock options or other grants, if any, will be at the sole discretion of the Company;

(d)you are voluntarily participating in the Plan;

(e)this Option and any Shares acquired under the Plan, and the income and value of same, are not intended to replace any pension rights or compensation;

(f)this Option and any Shares acquired under the Plan, and the income and value of same, are not part of normal or expected compensation for purpose of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or payments or welfare benefits or similar payments;

(g)unless otherwise agreed with the Company, this Option and any Shares acquired under the Plan, and the income and value of same, are not granted as consideration for, or in connection with, any Service you may provide as a director of any Parent, Subsidiary or Affiliate;

 

 

(h)the future value of the Shares underlying this Option is unknown, indeterminable, and cannot be predicted with certainty;

(i)if the underlying Shares do not increase in value, this Option will have no value;

(j)if you exercise this Option and acquire Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;

(k)no claim or entitlement to compensation or damages shall arise from forfeiture of this Option resulting from the termination of your Service (for any reason whatsoever, whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are employed or engaged or the terms of your employment or service agreement, if any), and in consideration of the grant of this Option to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, the Employer or any Parent, Subsidiary or Affiliate, waive your ability, if any, to bring any such claim, and release the Company, the Employer or any Parent, Subsidiary or Affiliate from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim; and

(l)if you are providing Service outside the United States, neither the Employer, the Company nor any Parent, Subsidiary or Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of this Option or of any amounts due to you pursuant to the exercise of this Option or the subsequent sale of any Shares acquired upon exercise.

10.Data Privacy.  You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and any Parent, Subsidiary or Affiliate for the exclusive purpose of implementing, administering and managing your participation in the Plan.

You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all stock options or any other entitlement to shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

You understand that Data will be transferred to third parties in connection with the implementation, administration and management of the Plan.  You understand that the recipients of Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country.  You understand that if you reside outside the United States, he or she may request a list with the names and addresses of any potential recipients of Data by contacting your local human resources representative.  You authorize the Company and any other possible recipients which may assist 

 

 

the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan.  You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan.  You understands that if you reside outside the United States, you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative.  Further, you understand that you are providing the consents herein on a purely voluntary basis.  If you do not consent, or if you later seek to revoke your consent, your Service status and career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing your consent is that Company would not be able to grant you stock options or other equity awards or administer or maintain such awards.  Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan.  For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

11.Acknowledgement.  The Company and you agree that this Option is granted under and governed by the Notice of Grant, this Agreement and the provisions of the Plan (incorporated herein by reference).  You: (i) acknowledge receipt of a copy of the Plan prospectus, (ii) represent that you have carefully read and are familiar with the provisions in the grant documents, and (iii) hereby accept this Option subject to all of the terms and conditions set forth in this Agreement and those set forth in the Plan and the Notice of Grant.  You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice of Grant and this Agreement.

12.Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures.  By your acceptance of this Option, you consent to the electronic delivery of the Notice of Grant, this Agreement, account statements, Plan prospectuses required by the SEC, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its stockholders (including, without limitation, annual reports and proxy statements) or other communications or information related to this Option.  Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion.  You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at [insert email].  You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.  Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert email]. Finally, you understand that you are not required to consent to electronic delivery.

 

 

13.Compliance with Laws and Regulations.  The exercise of this Option will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer, which compliance the Company shall, in its absolute discretion, deem necessary or advisable.  You understand that the Company is under no obligation to register or qualify the Common Stock with any state, federal or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares.  Further, you agree that the Company shall have unilateral authority to amend the Plan and this Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares.  Finally, the Shares issued pursuant to this Agreement shall be endorsed with appropriate legends, if any, determined by the Company.

14.No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares.  You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.

15.Governing Law; Venue.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.  For purposes of litigating any dispute that may arise directly or indirectly from the Plan, the Notice of Grant and this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California in San Diego County, California or the federal courts of the United States for the Southern District of California and no other courts.

16.Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms.  

17.No Rights as Employee, Director or Consultant.  Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent, Subsidiary or Affiliate of the Company, to terminate your Service, for any reason, with or without Cause.

18.Adjustment.  In the event of a stock split, a stock dividend or a similar change in Company stock, the number of Shares covered by this Option and the Exercise Price per Share may be adjusted pursuant to the Plan.

19.Lock-Up Agreement.  In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, you hereby agree not to sell, make any short sale of, loan, grant any Option for the purchase of, or otherwise dispose of any securities of the 

 

 

Company however and whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the public offering; provided however that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen (16)-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this Section shall continue to apply until the end of the third trading day following the expiration of the fifteen (15)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.  In no event will the restricted period extend beyond two hundred sixteen (216) days after the effective date of the registration statement.

20.Award Subject to Company Clawback or Recoupment.  To the extent permitted by applicable law, the Option shall be subject to clawback or recoupment pursuant to any clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other Service that is applicable to you.  In addition to any other remedies available under such policy, applicable law may require the cancellation of your Option (whether vested or unvested) and the recoupment of any gains realized with respect to your Option.

21.Entire Agreement; Enforcement of Rights.  This Agreement, the Plan and the Notice of Grant constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning this Option are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

22.Insider Trading Restrictions/Market Abuse Laws.  You acknowledge that you may be subject to insider trading restrictions and/or market abuse laws, which may affect your ability to acquire or sell the Shares or rights to Shares under the Plan during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in your country).  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to speak to your personal advisor on this matter.

23.Language.  If you have received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

24.Appendix. Notwithstanding any provisions in this Agreement, this Option shall be subject to any special terms and conditions set forth in any Appendix hereto for your country.  

 

 

Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.

25.Imposition of Other Requirements.  The Company reserves the right to impose other requirements on your participation in the Plan, on this Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

26.Waiver.  You acknowledge that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other Participant.

BY ACCEPTING THIS OPTION, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

 

 

 

APPENDIX

 

ADDITIONAL TERMS AND CONDITIONS TO
STOCK OPTION AGREEMENT
ACHIEVE LIFE SCIENCES, INC.
2018 EQUITY INCENTIVE PLAN

 

Capitalized terms, unless explicitly defined in this Appendix, shall have the meanings given to them in the Stock Option Agreement, the Notice of Grant or in the Plan.

Terms and Conditions

This Appendix includes special terms and conditions that govern this Option if you reside and/or work in one of the countries listed below.  If you are a citizen or resident (or are considered as such for local law purposes) of a country other than the country in which you are currently residing and/or working, or if you transfer to another country after receiving this Option, the Company shall, in its discretion, determine to what extent the special terms and conditions contained herein shall be applicable to you.

Notifications

This Appendix also includes information regarding securities, exchange control, tax and certain other issues of which you should be aware with respect to your participation in the Plan.  The information is based on the securities, exchange control, tax and other laws in effect in the respective countries as of October 2017.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that you not rely on the information contained herein as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time you exercise this Option or at the time you sell any Shares acquired under the Plan.  In addition, the information is general in nature and may not apply to your particular situation, and the Company is not in a position to assure you of any particular result.  Therefore, you are advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your individual situation.

If you are a citizen or resident (or are considered as such for local tax purposes) of a country other than the country in which you are currently residing and/or working, or if you transfer to another country after the grant of this Option, the information contained herein may not be applicable to you in the same manner.

CANADA

Terms and Conditions

Manner of Exercising Option.

Due to regulatory requirements, you are prohibited from surrendering certificates for Shares that you already own to pay the Exercise Price or any Tax-Related Items in connection with the exercise of your Shares.

 

 

You hereby authorize the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan.  You further authorize the Employer, the Company and Parent, Subsidiaries and Affiliates and the administrator of the Plan to disclose and discuss the Plan with their advisors.  You further authorize the Employer to record such information and to keep such information in your employee file.

Language Consent.

The following provisions will apply if you are a resident of Quebec:

The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Les parties reconnaissent avoir exigé la redaction en anglais de cette convention (“Agreement”), ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées, directement ou indirectement, relativement à la présente convention.

UNITED KINGDOM

Terms and Conditions

Data privacy

The following provision replaces Section 10 of the Global Stock Option Grant Agreement:

To the satisfaction and on the direction of the Committee, all operations of the Plan and this Option (at the time of its grant and as necessary thereafter) shall include or be supported by appropriate agreements, notifications and arrangements in respect of  Data and its use and processing under the Plan, in order to secure:

 

(a)     the reasonable freedom of the Employer, the Company and any Parent or Subsidiary (together, the "Group"), as appropriate, to operate the Plan and for connected purposes; and

 

(b)     compliance with the data protection requirements applicable from time to time, including, without limitation:

 

(aa)  the Data Protection Act 1998;

(bb) Regulation EU 2016/679 of the European Parliament and of the Council of 27 April 2016 (the "GDPR"); and

 

 

(cc)  the Group's relevant policies and practices.

The above shall include, and other provision may also be made as the Committee decides:

 

(a)        the collection, use, processing and transfer of your Data by any member of the Group or any Affiliate or third parties in connection with the implementation, administration and management of the Plan;

 

(b)        the transfer of your Data amongst themselves by members of the Group or any Affiliate or third parties in connection with the implementation, administration and management of the Plan;

 

(c)        the use of such Data by any such person for any appropriate purpose; and

 

(d)        as reasonably necessary, the transfer to and retention of your Data by third parties in connection with the implementation, administration and management of the Plan (whether or not any such third party is situated outside the European Economic Area) for or in connection with any appropriate purpose, on such terms and by such means as may be required by applicable data protection law and guidance.

 

A data privacy notice, in a form approved by the Committee, setting out applicable provisions in respect of Data, and any related information or disclosure that may be required or appropriate, [was provided to you on [DATE]] / [accompanies this Option Agreement and you acknowledge receipt of that notice].  Further information, disclosures or other measures in respect of Data and your participation in the Plan may be notified to you in future, as may be required.

 

"Data" for these purposes includes, but is not limited to your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares or directorships held in the Company, details of all stock options or any other entitlement to shares awarded, canceled, exercised, vested, unvested or outstanding in your favor and any other personal information which could identify you.

Responsibility for Taxes.

The following provision supplements Section 8 of the Global Stock Option Agreement:

If payment or withholding of the income tax is due in connection with the Option and is not made within ninety (90) days after the end of the year in which the event giving rise to the income tax liability occurs or such other period specified in Section 222(1)(c) of the ITEPA 2003 (the “Due Date”), the amount of any uncollected income tax will constitute a loan owed by you to the Employer, effective on the Due Date.  You agree that the loan will bear interest at then-current Official Rate of Her Majesty’s Revenue and Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in the Agreement.

 

 

Notwithstanding the foregoing, if you are a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities Exchange Act of 1934, as amended), you will not be eligible for such a loan to cover the income tax due as described above.  In the event that you are a director or executive officer and the income tax is not collected from or paid by you by the Due Date, the amount of any uncollected tax will constitute a benefit to you on which additional income tax and National Insurance Contributions (“NICs”) will be payable.  You acknowledge that the Company or the Employer may recover any such additional income tax and NICs at any time thereafter by any of the means referred to in the Agreement.  You will also be responsible for reporting and paying any income tax and NICs due on this additional benefit directly to HMRC under the self-assessment regime.

Employer NICs.

As a condition of participation in the Plan, you agree and undertake to the Company and to the Employer to accept any liability for secondary Class 1 National Insurance Contributions that may be payable by the Company or the Employer (or any successor to the Company or the Employer) in connection with the Option and any event giving rise to Tax-Related Items (the “Employer NICs”).  The Employer NICs may be collected by the Company or the Employer using any of the methods described in the Plan or in Section 8 of the Global Stock Option Agreement.

You further agree, if required to do so, to execute a joint election with the Company and/or the Employer (a “Joint Election”), the form of such Joint Election being formally approved by HMRC, and any other consent or elections required by the Company or the Employer in respect of the Employer NICs liability.  You further agree to execute such other elections as may be required by any successor to the Company and/or the Employer for the purpose of continuing the effectiveness of your Joint Election.

 

* * *

 

 

NOTICE OF RESTRICTED STOCK UNIT AWARD
(UNITED STATES, CANADA, UNITED KINGDOM)

ACHIEVE LIFE SCIENCES, INC.

2018 EQUITY INCENTIVE PLAN

GRANT NUMBER:  

Unless otherwise defined herein, the terms defined in the Achieve Life Sciences, Inc. (the “Company”), 2018 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Restricted Stock Unit Award (the “Notice”) and the attached Award Agreement (Restricted Stock Unit Agreement, including any special terms and conditions for your country set forth in the appendix attached thereto (collectively, the “RSU Agreement”)).  You (“you”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms and conditions of the Plan, this Notice and the attached RSU Agreement.

													
	
 
	
Name:
	
 

	
 
	
Address:
	
 

	
 
	
Number of RSUs:
	
 

	
 
	
Date of Grant:
	
 

	
 
	
Vesting Commencement Date:
	
 

	
 
	
Expiration Date:
	
The settlement of all vested RSUs granted hereunder.  The RSUs expire earlier if your Service terminates earlier, as described in the RSU Agreement.

	
 
	
Vesting Schedule:  
	
[Sample vesting language:] [25% of the total number of RSUs will vest on the twelve month anniversary of the Vesting Commencement Date and 25% of the total number of RSUs will vest on each annual anniversary thereafter so long as your Service continues.][Note:  actual vesting language to match vesting schedule approved by the Board or Committee]

	
 
	
Additional Terms:
	
If your address set forth above is an address located outside the United States, the additional terms and conditions set forth on an Appendix attached hereto (as executed by the Company) are applicable and are incorporated herein by reference.  (No Appendix need be attached if your address set forth above is an address located within the United States.)
	

(Signature page follows.)

 

 

You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing Service.  By accepting this award, you and the Company agree that this award is granted under and governed by the terms and conditions of the Plan, this Notice and the RSU Agreement.  By accepting this award of RSUs, you consent to the electronic delivery and acceptance as further set forth in the RSU Agreement.

PARTICIPANT

 

By: 
Name:

ACHIEVE LIFE SCIENCES, INC.

 

By: 
Name: 
Title:

 

 

 

RESTRICTED STOCK UNIT AGREEMENT

ACHIEVE LIFE SCIENCES, INC.

2018 EQUITY INCENTIVE PLAN

 

You have been granted Restricted Stock Units (“RSUs”) by Achieve Life Sciences, Inc. (the “Company”), subject to the terms, restrictions and conditions of the Plan, the Notice of Restricted Stock Unit Award (the “Notice”) and this Restricted Stock Unit Agreement, including any special terms and conditions for your country set forth in the appendix attached hereto (the “Appendix”) (collectively, this “RSU Agreement”).

1.Nature of Grant.  In accepting this award of RSUs, you acknowledge, understand and agree that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b)the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future awards of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;

(c)all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company;

(d)you are voluntarily participating in the Plan;

(e)the RSUs and the Shares subject to the RSUs, and the income and value of same, are not intended to replace any pension rights or compensation;

(f)the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(g)unless otherwise agreed with the Company, the RSUs and any Shares acquired under the Plan, and the income and value of same, are not granted as consideration for, or in connection with, any service you may provide as a director of the Company, or a Parent or Subsidiary of the Company;

(h)the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(i)no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the termination of your Service (for any reason whatsoever whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are providing Service or the terms of your employment or service agreement, if any), and in consideration of the grant of the RSUs to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, the Employer (as defined below), or any other Parent or 

 

 

Subsidiary of the Company, waive your ability, if any, to bring any such claim, and release the Company, the Employer and its Parent or Subsidiaries from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim; and

(j)the following provisions apply only if you are providing Service outside the United States:

(i)the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purpose; and

(ii)neither the Company, the Employer nor any Parent or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the RSUs or the subsequent sale of any Shares acquired upon settlement.

2.Settlement.  Settlement of RSUs shall be made in the same calendar year as the applicable date of vesting under the vesting schedule set forth in the Notice; provided, however, that if the vesting date under the vesting schedule set forth in the Notice is in December, then settlement of any RSUs that vest in December shall be within 30 days of vesting.  Settlement of RSUs shall be in Shares.  Settlement means the delivery to you of the Shares vested under the RSUs.  Fractional Shares will not be issued.

3.No Stockholder Rights.  Unless and until such time as Shares are issued in settlement of vested RSUs, you shall have no ownership of the Shares allocated to the RSUs and shall have no right to dividends or to vote such Shares.

4.Dividend Equivalents.  Dividends, if any (whether in cash or Shares), shall not be credited to you.

5.No Transfer.  RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.

6.Termination.  If your Service terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights you have to such RSUs shall immediately terminate, without payment of any consideration to you.  For purposes of this award of RSUs, your Service will be considered terminated as of the date you are no longer providing Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of labor laws in the jurisdiction where you are employed or the terms of your employment or service agreement, if any) and will not be extended by any notice period mandated under local employment laws (e.g., Service would not include a period of “garden leave” or similar period).  In case of any dispute as to whether your termination of Service has occurred, the Committee shall have sole discretion to determine whether such termination has occurred (including whether you may still be considered to be providing Services while on a leave of absence) and the effective date of such termination.

 

 

7.Tax Consequences.  You acknowledge that there will be certain consequences with regard to income tax, national or social insurance contributions, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”) upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and you should consult a tax adviser regarding your tax obligations prior to such settlement or disposition in the jurisdiction where you are subject to tax.

8.Responsibility for Taxes.  Regardless of any action the Company or, if different, your actual employer (the “Employer”) takes with respect to any or all Tax-Related Items withholding or required deductions, you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the award, including the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the award or any aspect of the RSUs to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result.  You acknowledge that if you are subject to Tax-Related Items in more than one jurisdiction, the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to the settlement of your RSUs, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items withholding and payment on account obligations of the Company and/or the Employer.  In this regard, you authorize the Company and/or the Employer, and their respective agents, at their discretion, to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when your RSUs are settled, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), (c) payment by you of an amount equal to the Tax-Related Items directly by cash, cheque, wire transfer, bank draft or money order payable to the Company, or (d) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided, however, that if you are a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding from alternatives (a)-(d) above, and the Committee shall establish the method prior to the taxable or withholding event.  The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the Tax-Related Items.  

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case you will receive a refund of any over-withheld amount in cash and will have no entitlement to the Shares equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are 

 

 

deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

Finally, you agree to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or the vesting and settlement of the RSUs that cannot be satisfied by the means previously described.  You acknowledge that the Company has no obligation to deliver Shares to you until you have satisfied the obligations in connection with the Tax-Related Items as described in this Section.

9.Data Privacy.  You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this RSU Agreement and any other RSU grant materials by and among, as applicable, the Company, the Employer and any other Parent or Subsidiaries, for the exclusive purpose of implementing, administering and managing your participation in the Plan.

You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

You understand that Data will be transferred to the stock plan service provider as may be designated by the Company from time to time, which is assisting the Company with the implementation, administration and management of the Plan.  You understand that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than your country.  You understand that if you reside outside the United States, you may request a list with the names and addresses of any potential recipients of Data by contacting your local human resources representative.  You authorize the Company, the designated broker and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan.  You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan.  You understand that if you reside outside the United States, you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative.  Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Employer will not be adversely affected.  The only adverse consequence of refusing or withdrawing your consent is that the Company would not be able to grant you RSUs or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan.  For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

 

 

10.Acknowledgement.  The Company and you agree that the RSUs are granted under and governed by the Notice, this RSU Agreement and the provisions of the Plan.  You: (i) acknowledge receipt of a copy of the Plan prospectus, (ii) represent that you have carefully read and are familiar with the provisions in the grant documents, and (iii) hereby accept the RSUs subject to all of the terms and conditions set forth in this RSU Agreement and those set forth in the Notice.  You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this RSU Agreement.

11.Entire Agreement; Enforcement of Rights.  This RSU Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this RSU Agreement, nor any waiver of any rights under this RSU Agreement, shall be effective unless in writing and signed by the parties to this RSU Agreement.  The failure by either party to enforce any rights under this RSU Agreement shall not be construed as a waiver of any rights of such party.

12.Compliance with Laws and Regulations.  The issuance of Shares will be subject to and conditioned upon compliance by the Company and you with all applicable state, federal and foreign laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer, which compliance the Company shall, in its absolute discretion, deem necessary or advisable.  You understand that the Company is under no obligation to register or qualify the Common Stock with any state, federal or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares.  Further, you agree that the Company shall have unilateral authority to amend the Plan and this RSU Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares.  Finally, the Shares issued pursuant to this RSU Agreement shall be endorsed with appropriate legends, if any, determined by the Company.

13.No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares.  You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.

14.Governing Law; Venue.  This RSU Agreement, all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.  For purposes of litigating any dispute that may arise directly or indirectly from the Plan, the Notice and this RSU Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California in San Diego County, California or the federal courts of the United States for the Southern District of California and no other courts.

15.Severability.  If one or more provisions of this RSU Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that 

 

 

the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this RSU Agreement, (ii) the balance of this RSU Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this RSU Agreement shall be enforceable in accordance with its terms.

16.No Rights as Employee, Director or Consultant.  Nothing in this RSU Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate your Service, for any reason, with or without Cause.

17.Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures.  By your acceptance of this award of RSUs, you consent to the electronic delivery of the Notice, this RSU Agreement, the Plan, account statements, Plan prospectuses required by the SEC, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its stockholders (including, without limitation, annual reports and proxy statements) or other communications or information related to the RSUs. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. You acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost if you contact the Company by telephone, through a postal service or electronic mail at [insert email].  You further acknowledge that you will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, you understand that you must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. You agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Also, you understand that your consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if you have provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert email]. Finally, you understand that you are not required to consent to electronic delivery.

18.Insider Trading Restrictions/Market Abuse Laws.  You acknowledge that, depending on your country, you may be subject to insider trading restrictions and/or market abuse laws, which may affect your ability to acquire or sell the Shares or rights to Shares under the Plan during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in your country).  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to speak to your personal advisor on this matter.

19.Language.  If you have received this RSU Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

20.Appendix. Notwithstanding any provisions in this Restricted Stock Unit Agreement, this award of RSUs shall be subject to any special terms and conditions set forth in any Appendix hereto for your country.  Moreover, if you relocate to one of the countries included in the Appendix, the 

 

 

special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this RSU Agreement.

21.Imposition of Other Requirements.  The Company reserves the right to impose other requirements on your participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

22.Waiver.  You acknowledge that a waiver by the Company of breach of any provision of this RSU Agreement shall not operate or be construed as a waiver of any other provision of this RSU Agreement, or of any subsequent breach by you or any other Participant.

23.Code Section 409A.  For purposes of this RSU Agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”).  Notwithstanding anything else provided herein, to the extent any payments provided under this RSU Agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the six-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral.  To the extent any payment under this RSU Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A.  Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

24.Award Subject to Company Clawback or Recoupment.  The RSUs shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of your employment or other Service that is applicable to executive officers, Employees, Directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law may require the cancellation of your RSUs (whether vested or unvested) and the recoupment of any gains realized with respect to your RSUs.

BY ACCEPTING THIS AWARD OF RSUS, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

 

 

 

APPENDIX

 

ADDITIONAL TERMS AND CONDITIONS TO

RESTRICTED STOCK UNIT AGREEMENT

ACHIEVE LIFE SCIENCES, INC.

2018 EQUITY INCENTIVE PLAN

Capitalized terms, unless explicitly defined in this Appendix, shall have the meanings given to them in the RSU Agreement, the Notice or in the Plan.  

Terms and Conditions

This Appendix includes additional terms and conditions that govern the RSUs granted to you under the Plan if you reside in one of the countries listed below.  If you are a citizen or resident (or is considered as such for local law purposes) of a country other than the country in which you are currently residing and/or working, or if you transfer to another country after receiving the RSUs, the Company shall, in its discretion, determine to what extent the special terms and conditions contained herein shall be applicable to you.

Notifications

This Appendix also includes information regarding securities, exchange control, tax and certain other issues of which you should be aware with respect to your participation in the Plan.  The information is based on the securities, exchange control, tax and other laws in effect in the respective countries as of October 2017.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that you not rely on the information in this Appendix as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time that the RSUs vest or you sell Shares acquired under the Plan.

In addition, the information contained herein is general in nature and may not apply to your particular situation and the Company is not in a position to assure you of a particular result.  Accordingly, you are advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your individual situation. 

Finally, if you are a citizen or resident (or are considered as such for local tax purposes) of a country other than the one in which you are currently residing and/or working, or if you transfer to another country after the grant of the RSUs, the information contained herein may not be applicable to you in the same manner.

CANADA

Terms and Conditions

Settlement.

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The following provision supplements Section 2 of the Restricted Stock Unit Agreement:  Notwithstanding anything to the contrary in the Plan, including Section 9.2 of the Plan, the RSUs will be settled in Shares only, not cash.

Termination.

The following sentence replaces the second sentence of Section 6 of the Restricted Stock Unit Agreement:  For purposes of this award of RSUs, your Service will be considered terminated as of the date that is the earliest to occur of: (1) the date of termination of Service, (2) the date you receive notice of termination from the Employer, and (3) the date you are no longer actively providing services, regardless of any notice period or period of pay in lieu of such notice required under applicable law (including, but not limited to statutory law, regulatory law and/or common law).

Language Consent.

The following provisions will apply to you if you are a resident of Quebec:

The parties acknowledge that it is their express wish that the RSU Agreement, as well as all appendices, documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Les parties reconnaissent avoir exigé la rédaction en anglais de cette Convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaries intentées, directement ou indirectement, relativement à ou suite à la présente convention.

Data Privacy.

The following provision supplements Section 9 of the Restricted Stock Unit Agreement:  You hereby authorize the Company and the Company’s representatives to discuss and obtain all relevant information from all personnel, professional or non-professional, involved in the administration of the Plan.  You further authorize the Company, the Employer, its Parent or other Subsidiaries and the Committee to disclose and discuss the Plan with their advisors.  You further authorize the Company, the Employer and its Parent or other Subsidiary to record such information and to keep such information in your employee file.

Notifications

Securities Law Information.

You are permitted to sell Shares acquired under the Plan through the designated broker appointed under the Plan, if any, provided the sale of the Shares acquired under Plan takes place outside of Canada through the facilities of a stock exchange on which the Common Stock is listed.

Foreign Asset/Account Reporting Information.

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Canadian taxpayers must report annually on Form T1135 (Foreign Income Verification Statement) the foreign property (including Shares acquired under the Plan) held if the total value of such foreign property exceeds C$100,000 at any time during the year.  Unvested RSUs also must be reported (generally at nil cost) on Form 1135 if the C$100,000 threshold is exceeded due to other foreign property held.  The Form T1135 must be filed at the same time the individual's files his or her annual tax return.  You should consult your personal legal advisor to ensure compliance with applicable reporting obligations.

UNITED KINGDOM

Terms and Conditions

Settlement.

The following provision supplements Section 2 of the Restricted Stock Unit Agreement:  Notwithstanding anything to the contrary in the Plan, including Section 9.2 of the Plan, the RSUs will be settled in Shares only, not cash.

Responsibility for Taxes.

The following provision supplements Section 8 of the Restricted Stock Unit Agreement:

You agree that, if you do not pay or the Employer or the Company does not withhold from you the full amount of income tax that you owe at vesting of the RSUs, or the release or assignment of the RSUs for consideration, or the receipt of any other benefit in connection with the RSUs (the “Taxable Event”) within 90 days of the U.K. tax year within which the Taxable Event occurs, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), then the amount that should have been withheld shall constitute a loan owed by you to the Employer, effective as of the Due Date.  You agree that the loan will bear interest at the Her Majesty’s Revenue and Customs (“HMRC”) official rate and will be immediately due and repayable by you, and the Company and/or the Employer may recover it at any time thereafter by any of the means set forth in this Section 8.

Notwithstanding the foregoing, if you are an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act), the terms of the immediately foregoing provision will not apply.  In the event that you are an executive officer or director and income tax is not collected from or paid by you by the Due Date, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and National Insurance contributions (“NICs”) may be due.  You will be responsible for reporting and accounting for any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit.

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Employer NICs.

As a condition of participation in the Plan, you agree and undertake to the Company and to the Employer to accept any liability for secondary Class 1 National Insurance Contributions that may be payable by the Company or the Employer (or any successor to the Company or the Employer) in connection with the RSUs and any event giving rise to Tax-Related Items (the “Employer NICs”).  The Employer NICs may be collected by the Company or the Employer using any of the methods described in the Plan or in Section 8 of the Restricted Stock Unit Agreement.  

You further agree, if required to do so, to execute a joint election with the Company and/or the Employer (a “Joint Election”), the form of such Joint Election being formally approved by HMRC, and any other consent or elections required by the Company or the Employer in respect of the Employer NICs liability.  You further agree to execute such other elections as may be required by any successor to the Company and/or the Employer for the purpose of continuing the effectiveness of your Joint Election.

* * *

 

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