Document:

ex-10.6

 SPINDLE, INC. 
 2012 STOCK INCENTIVE PLAN
 

 1.        Purpose
 The Spindle, Inc. 2012 Stock Incentive Plan is intended to promote the best interests of the Corporation, and its stockholders by (i) assisting the Corporation and its Affiliates in the recruitment and retention of persons with ability and initiative, (ii) providing an incentive to such persons to contribute to the growth and success of the Corporation’s businesses by affording such persons equity participation in the Corporation and (iii) associating the interests of such persons with those of the Corporation and its affiliates and stockholders.
  
 2.        Definitions
 As used in this Plan the following definitions shall apply:
 
 A.   
 “Administrator” means the Board or any party to which the Board has delegated any responsibility for the administration of the Plan pursuant to Section 3.A hereof.
 
 B.   
  “Affiliate” means (i) any Subsidiary, (ii) any Parent, (iii) any entity (including, without limitation, a partnership or limited liability company) which is directly or indirectly controlled fifty percent (50%) or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Corporation or one of its Affiliates, (iv) any other entity in which the Corporation or any of its Affiliates has a material equity interest and which is designated as an “Affiliate” by resolution of the Administrator, and (v) any entity (including, without limitation, a partnership or limited liability company) which directly or indirectly controls fifty percent (50%) or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Corporation or one of its Affiliates.
 
 C.   
 “Board” means the Board of Directors of the Corporation.
 
 D.   
 “Cause” means  (i) in the case where the Participant does not have an employment, consulting or similar agreement in effect with the Corporation or its Affiliate at the time of grant of the Option or Stock Award or where there is such an agreement but it does not define “cause” (or words of like import), conduct related to the Participant’s service to the Corporation or an Affiliate for which either criminal or civil penalties against the Participant may be sought, misconduct, insubordination, material violation of Corporation or its Affiliate’s policies,   disclosing or misusing any confidential information or material concerning the Corporation or any Affiliate or material breach of any employment, consulting agreement or similar agreement, or (ii) in the case where the Participant has an employment agreement, consulting agreement or similar agreement in effect with the Corporation or its Affiliate at the time of grant of the Option or Stock Award that defines a termination for “cause” (or words of like import), “cause” as defined in such agreement; provided, however, that with regard to any agreement that defines “cause” on occurrence of or in connection with change of control, such definition of  “cause” shall not apply until a change of control actually occurs and then only with regard to a termination thereafter.
 
 E.   
  “Code” means the Internal Revenue Code of 1986, and any amendments thereto.
 
 F.   
 “Common Stock” means the common stock, par value ($.001) par value, of the Corporation.
 

 Stock Option Plan 11-08-05
 

 
  

 G.   
 “Consultant” means (i) any person performing consulting or advisory services for the Corporation or any Affiliate, or (ii) a director of an Affiliate.
 
 H.   
  “Continuous Service” means that the Participant’s service with the Corporation or an Affiliate, whether as an employee, Director or Consultant, is not interrupted or terminated.  A Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Corporation or an Affiliate as an employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service.  The Participant’s Continuous Service shall be deemed to have terminated either upon an actual termination or upon the entity for which the Participant is performing services ceasing to be an Affiliate of the Corporation.  The Administrator shall determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Corporation, including sick leave, military leave or any other personal leave.
 
 I.   
 “Corporation” means Spindle, Inc., a Delaware corporation.
 
 J.   
 “Corporation Law” means the general corporation law of the jurisdiction of incorporation of the Corporation.
 
 K.   
 “Director” means a member of the Board. 
 
 L.   
 “Disability” shall mean a physical or mental condition of a Participant that, (i) in the judgment of the Administrator, permanently prevents such Participant from being able to continue to serve actively in a capacity comparable to that in which the Participant served prior to the disability, or (ii) causes the Participant to become eligible for long-term disability benefits under any long-term disability insurance plan then in effect with the Corporation or its Affiliate.  
 
 M.   
 “Eligible Person” means an employee (including officers) of the Corporation or an Affiliate (including an entity that becomes an Affiliate after the adoption of this Plan), a Director or a Consultant to the Corporation or an Affiliate (including an entity that becomes an Affiliate after the adoption of this Plan) .
 
 N.   
 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
 O.   
 “Fair Market Value” means, on any given date, the current fair market value of the shares of Common Stock as determined as follows:
 
 (i)    
 If the Common Stock is traded on The Nasdaq Stock Market or is listed on a national securities exchange, the closing price for the day of determination as quoted on such market or exchange which is the primary market or exchange for trading of the Common Stock or if no trading occurs on such date, the last day on which trading occurred, or such other appropriate date as determined by the Administrator in its discretion, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
 
 (ii)    
 If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high and the low asked prices for the Common Stock for the day of determination; or 
 
 (iii)    
 In the absence of an established market for the Common Stock, Fair Market Value shall be determined by the Administrator in good faith.
 

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 Stock Option Plan 
 

 
  

 P.   
 “Incentive Stock Option” means an Option (or portion thereof) intended to qualify for special tax treatment under Section 422 of the Code.
 
 Q.   
 “Non-exempt Employee” means an employee of the Corporation or an Affiliate who is a “non-exempt” employee under the Fair Labor Standards Act of 1938.
 
 R.   
 “Nonqualified Stock Option” means an Option (or portion thereof) which is not intended or does not for any reason qualify as an Incentive Stock Option.
 
 S.   
 “Option” means any option to purchase shares of Common Stock granted under this Plan. 
 
 T.   
 “Parent” means any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation if each of the corporations (other than the Corporation) owns stock possessing at least fifty percent (50%) of the total combined voting power of all classes of stock in one of the other corporations in such chain.
 
 U.   
 “Participant” means an Eligible Person who is selected by the Administrator to receive an Option or Stock Award and is party to any Stock Option Agreement or Stock Award Agreement required by the terms of such Option or Stock Award.
 
 V.   
 “Plan” means this Spindle, Inc. 2012 Stock Incentive Plan.
 
 W.   
 “Restricted Stock Award” means an award of Common Stock under Section 7.A. 
 
 X.   
 “Securities Act” means the Securities Act of 1933 as amended.
 
 Y.   
 “Stock Award” means a Restricted Stock Award or Stock Appreciation Right.
 
 Z.   
 “Stock Appreciation Right” means an award of a right of the Participant to receive a payment in accordance with the provisions of Section 7.B. 
 
 AA.   
 “Stock Award Agreement” means an agreement (written or electronic) between the Corporation and a Participant setting forth the specific terms and conditions of a Stock Award granted to the Participant under Section 7.  Each Stock Award Agreement shall be subject to the terms and conditions of the Plan and shall include such terms and conditions as the Administrator shall authorize.  
 
 BB.   
 “Stock Option Agreement” means an agreement (written or electronic) between the Corporation and a Participant setting forth the specific terms and conditions of an Option granted to the Participant.  Each Stock Option Agreement shall be subject to the terms and conditions of the Plan and shall include such terms and conditions as the Administrator shall authorize. 
 
 CC.   
 “Subsidiary” means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing at least fifty percent (50%) of the total combined voting power of all classes of stock in one of the other corporations in such chain.
 
 DD.   
 “Ten Percent Owner” means any Eligible Person owning at the time an Option is granted more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or of an Affiliate.  An individual shall, in accordance with Section 424(d) of the Code, be considered to own any voting stock owned (directly or indirectly) by or for his brothers, sisters, spouse, ancestors and lineal descendants and any voting stock owned (directly or indirectly) by or for a corporation, partnership, estate, trust or other entity shall be considered as being owned proportionately by or for its stockholders, partners or beneficiaries.
 

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 Stock Option Plan 
 

 
 

 3.        Administration
 
 A.   
 Delegation of Administration.  The Board shall be the sole Administrator of the Plan unless the Board delegates all or any portion of its authority to administer the Plan to another Administrator.  To the extent not prohibited by the charter or bylaws of the Corporation, the Board may delegate all or a portion of its authority to administer the Plan to a committee of the Board appointed by the Board and constituted in compliance with the Corporation Law.   If permitted by the Corporation Law, and not prohibited by the charter or bylaws of the Corporation, the Board may also delegate all or a portion of its authority to administer the Plan to an officer or officers of the Corporation designated by the Board.  
 
 B.   
 Powers of the Administrator.  Subject to the provisions of the Plan, and, in the case of an Administrator other than the Board, subject at all times to the terms and conditions of the delegation of authority from the Board, the Administrator shall have the authority to implement, interpret and administer the Plan.  Such authority shall include, without limitation, the authority:
 
 (i)    
 To construe and interpret all provisions of this Plan and all Stock Option Agreements and Stock Award Agreements under this Plan.
 
 (ii)    
 To determine the Fair Market Value of Common Stock.
 
 (iii)    
 To select the Eligible Persons to whom Options or Stock Awards, are granted from time to time hereunder.
 
 (iv)    
 To determine the number of shares of Common Stock covered by an Option or Stock Award; determine whether an Option shall be an Incentive Stock Option or Nonqualified Stock Option; and determine such other terms and conditions, not inconsistent with the terms of the Plan, of each such Option or Stock Award.  Such terms and conditions include, but are not limited to, the exercise price of an Option, purchase price of Common Stock subject to a Stock Award, the time or times when Options or Stock Awards may be exercised or Common Stock issued thereunder, the right of the Corporation to repurchase Common Stock issued pursuant to the exercise of an Option or a Stock Award and other restrictions or limitations (in addition to those contained in the Plan) on the forfeitability or transferability of Options, Stock Awards or Common Stock issued upon exercise of an Option or pursuant to a Stock Award.   Such terms may include conditions shall be as determined by the Administrator and need not be uniform with respect to Participants.
 
 (v)    
 To determine whether and under what circumstances an Option may be settled in cash, shares of Common Stock or other property under Section 6.H instead of Common Stock.
 
 (vi)    
 To amend, cancel, extend, renew, accept the surrender of, modify or accelerate the vesting of or lapse of restrictions on all or any portion of an outstanding Option or Stock Award; to determine the time at which a Stock Award or Common Stock issued under the Plan may become transferable or nonforfeitable; and to reduce the exercise price of any Option. 
 
 (vii)    
 To prescribe the form of Stock Option Agreements and Stock Award Agreements; to adopt policies and procedures for the exercise of Options or Stock Awards, including the satisfaction of withholding obligations; to adopt, amend, and rescind policies and procedures pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan.  
 Any decision made, or action taken, by the Administrator or in connection with the administration of this Plan shall be final, conclusive and binding on all persons having an interest in the Plan.
 

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 Stock Option Plan 
 

 
  

 C.   
 Administration When Common Stock is Publicly Traded.  On and following the date on which the Corporation has a class of equity securities registered under Section 12 of the Securities Act, the Administrator authorized by the Board to administer the Plan shall, if so determined by the Board, consist solely of two (2) or more Non-Employee Directors (within the meaning of Rule 16b-3 under the Exchange Act); provided that the Board may delegate administrative authority with respect to Eligible Persons who are not subject to Section 16 of the Exchange Act to a committee of other than Non-Employee Directors.
 

 4.        Eligibility
 
 A.   
 Eligibility for Awards.  Nonqualified Stock Options and Stock Awards may be granted to any Eligible Person selected by the Administrator.  Incentive Stock Options may be granted only to employees of the Corporation or a Parent or Subsidiary.
 
 B.   
 Substitution Awards.  The Administrator may make Stock Awards and may grant Options under the Plan by  assumption, substitution or replacement of performance shares, phantom shares, stock awards, stock options, stock appreciation rights or similar awards granted by another entity (including an Affiliate), if such assumption, substitution or replacement is connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Corporation (and/or its Affiliate) and such other entity (and/or its affiliate).  Notwithstanding any provision of the Plan (other than the maximum number of shares of Common Stock that may be issued under the Plan), the terms of such assumed, substituted or replaced Stock Awards or Options shall be as the Administrator, in its discretion, determines is appropriate.
 

 5.        Common Stock Subject to Plan
 
 A.   
 Share Reserve.  Subject to adjustment as provided in Section 8, the maximum aggregate number of shares of Common Stock that may be (i) issued under this Plan pursuant to the exercise of Options, (ii) issued pursuant to Restricted Stock Awards, and (iii) covered by Stock Appreciation Rights is three million (3,000,000) shares. 
 
 B.   
 Reversion of Shares.  If an Option or Stock Award is terminated, expires or becomes unexercisable, in whole or in part, for any reason, the unissued or unpurchased shares of Common Stock (or shares subject to an unexercised Stock Appreciation Right) which were subject thereto shall become available for future grant under the Plan.   Shares of Common Stock that have been actually issued under the Plan shall not be returned to the share reserve for future grants under the Plan; except that shares of Common Stock issued pursuant to a Stock Award which are repurchased by the Corporation at the original purchase price of such shares, shall be returned to the share reserve for future grant under the Plan.
 
 C.   
 Source of Shares.  Common Stock issued under the Plan may be shares of authorized and unissued Common Stock or shares of previously issued Common Stock that have been reacquired by the Corporation. 
 

 6.        Options
 
 A.   
 Award.  In accordance with the provisions of Section 4, the Administrator will designate each Eligible Person to whom an Option is to be granted and will specify the number of shares of Common Stock covered by such Option.  The Stock Option Agreement shall specify whether the Option is an Incentive Stock Option or Nonqualified Stock Option, the vesting schedule applicable to such Option and any other terms of such Option. No Option that is intended to be an Incentive Stock Option shall be invalid for failure to qualify as an Incentive Stock Option.
 

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 Stock Option Plan 
 

 
  

 B.   
 Exercise Price.  The exercise price per share for Common Stock subject to an Option shall be determined by the Administrator.  The exercise price per share for Common Stock subject to a Nonqualified Stock Option or an Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value on the date of grant.
 
 C.   
 Maximum Option Period.  The maximum period during which an Option may be exercised shall be determined by the Administrator on the date of grant, except that no Option that is intended to be an Incentive Stock Option shall be exercisable after the expiration of ten years from the date such Option was granted.  In the case of an Incentive Stock Option that is granted to a Participant who is or is deemed to be a Ten Percent Owner on the date of grant, such Option shall not be exercisable after the expiration of five years from the date of grant.  The terms of any Option that is an Incentive Stock Option may provide that it is exercisable for a period less than such maximum period.
 
 D.   
 Maximum Value of Options which are Incentive Stock Options.  To the extent that the aggregate Fair Market Value of the Common Stock with respect to which Incentive Stock Options granted to any person are exercisable for the first time during any calendar year (under all stock option plans of the Corporation or any of its Subsidiaries or Parent) exceeds $100,000 (or such other amount provided in Section 422 of the Code), the Options are not Incentive Stock Options.  For purposes of this section, the Fair Market Value of the Common Stock will be determined as of the time the Incentive Stock Option with respect to the Common Stock is granted.  This section will be applied by taking Incentive Stock Options into account in the order in which they are granted.
 
 E.   
 Nontransferability.  Options granted under this Plan which are intended to be Incentive Stock Options shall be nontransferable except by will or by the laws of descent and distribution and during the lifetime of the Participant shall be exercisable by only the Participant to whom the Incentive Stock Option is granted.  If the Stock Option Agreement so provides or the Administrator so approves, a Nonqualified Stock Option may be transferred by a Participant to [This only applies to company's that aren't reporting.]the Participant’s children, stepchildren, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners; provided, however, that Participant may not receive any consideration for the transfer.  The holder of a Nonqualified Stock Option transferred pursuant to this section shall be bound by the same terms and conditions that governed the Option during the period that it was held by the Participant.  Except to the extent transferability of a Nonqualified Stock Option is provided for in the Stock Option Agreement or is approved by the Administrator, during the lifetime of the Participant to whom the Nonqualified Stock Option is granted, such Option may be exercised only by the Participant.  No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant.
 
 F.   
 Vesting and Termination of Continuous Service.  Except as provided in a Stock Option Agreement, the following rules shall apply:
 
 (i)    
 Options will vest as provided in the Stock Option Agreement.  An Option will be exercisable only to the extent that it is vested on the date of exercise.  Vesting of an Option will cease on the date of the Participant’s termination of Continuous Service and the Option will be exercisable only to the extent the Option is vested on the date of termination of Continuous Service.  
 
 (ii)    
 In the case of Options intended to be Qualified Options:
 
 a.
 Options Granted to Employees.  An Option granted to a Participant who is not a Consultant or an officer or director of the Corporation, a Parent or a Subsidiary shall be exercisable at the minimum rate of thirty three percent (33%) per year  for each of the first three (3) years starting from the date of grant, subject to reasonable conditions such as continued service.
 

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 Stock Option Plan 
 

 
  

 b.
 Options Granted to Outside Directors, Consultants or Officers.  An Option granted to a Participant who is a Consultant or an officer or Director of the Corporation, a Parent or a Subsidiary shall be exercisable at any time or during any period established by the Board, subject to reasonable conditions such as continued service.
 
 (iii)    
 If the Participant’s termination of Continuous Service is for reason of death or Disability, the right to exercise the Option (to the extent vested) will expire on the earlier of (i) one (1) year after the date of the Participant’s termination of Continuous Service, or (ii) the expiration date under the terms of the Agreement.  Until the expiration date, the Participant’s heirs, legatees or legal representative may exercise the Option, except to the extent the Option was previously transferred pursuant to Section 6.E.
 
 (iv)    
 If the Participant’s termination of Continuous Service is an involuntary termination without Cause or a voluntary termination (other than a voluntary termination described in Section 6.F.(v)), the right to exercise the Option (to the extent that it is vested) will expire on the earlier of (i) ninety days (90) after the date of the Participant’s termination of Continuous Service, or (ii) the expiration date under the terms of the Agreement. If the Participant’s termination of Continuous Service is an involuntary termination without Cause or a voluntary termination (other than a voluntary termination described in Section 6.F.(v)) and the Participant dies after his or her termination of Continuous Service but before the right to exercise the Option has expired, the right to exercise the Option (to the extent vested) shall expire on the earlier of (i) one (1) year after the date of the Participant’s termination of Continuous Service or (ii) the date the Option expires under the terms of the Stock Option Agreement, and, until expiration, the Participant’s heirs, legatees or legal representative may exercise the Option, except to the extent the Option was previously transferred pursuant to Section 6.E.
 
 (v)    
 If the Participant’s termination of Continuous Service is for Cause or is a voluntary termination at any time after an event which would be grounds for termination of the Participant’s Continuous Service for Cause, the right to exercise the Option shall expire as of the date of the Participant’s termination of Continuous Service.
 
 G.   
 Exercise.  An Option shall be exercised by completion, execution and delivery of notice (written or electronic) to Corporation of the Option which states (i) the Option holder’s intent to exercise the Option, (ii) the number of shares of Common Stock with respect to which the Option is being exercised, (iii) such other representations and agreements as may be required by the Corporation and (iv) the method for satisfying any applicable tax withholding as provided in Section 9.  Such notice of exercise shall be provided on such form or by such method as the Administrator may designate, and payment of the exercise price shall be made in accordance with Section 6.H.  Subject to the provisions of this Plan and the applicable Stock Option Agreement, an Option may be exercised to the extent vested in whole at any time or in part from time to time at such times and in compliance with such requirements as the Administrator shall determine.  A partial exercise of an Option shall not affect the right to exercise the Option from time to time in accordance with this Plan and the applicable Stock Option Agreement with respect to the remaining shares subject to the Option.  An Option may not be exercised with respect to fractional shares of Common Stock. 
 
 H.   
 Payment.  Unless otherwise provided by the Stock Option Agreement, payment of the exercise price for an Option shall be made in cash or a cash equivalent acceptable to the Administrator.  With the consent of the Administrator, payment of all or part of the exercise price of an Option may also be made (i) by surrendering shares of Common Stock to the Corporation that have been held for at least six (6) months prior to the date of exercise, (ii) if the Common Stock is traded on an established securities market, the Administrator may approve payment of the exercise price by a broker-dealer or by the Option holder with cash advanced by the broker-dealer if the exercise notice is accompanied by the Option holder’s written irrevocable instructions to deliver the Common Stock acquired upon exercise of the Option to the broker-dealer, or (iii) any other method acceptable to the Administrator.  If Common Stock is used to pay all or part of the exercise price, the sum of the cash or cash equivalent and the Fair Market Value (determined as of the date of exercise) of the shares surrendered must not be less than the exercise price of the shares for which the Option is being exercised. If all or part of the exercise price is 
 

 7
 Stock Option Plan 
 

 
 to be paid with a promissory note, the par value of the Common Stock, if newly issued, shall be paid in cash or cash equivalents.  The shares received upon exercise of the Option shall be pledged as security for payment of the principal amount of the promissory note and interest thereon and the interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code.  Subject to the foregoing, the Administrator (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note.
 
 I.   
 Stockholder Rights.  No Participant shall have any rights as a stockholder with respect to shares subject to an Option until the date of exercise of such Option and the certificate for shares of Common Stock to be received on exercise of such Option has been issued by the Corporation.
 
 J.   
 Disposition.  A Participant shall notify the Corporation of any sale or other disposition of Common Stock acquired pursuant to an Incentive Stock Option if such sale or disposition occurs (i) within two years of the grant of an Option or (ii) within one year of the issuance of the Common Stock to the Participant.  Such notice shall be in writing and directed to the Secretary of the Corporation.  
 

 7.        Stock Awards
 
 A.   
 Restricted Stock Awards.  Each Stock Award Agreement for a Restricted Stock Award shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate.  The terms and conditions of the Stock Award Agreements for Restricted Stock Awards may change from time to time, and the terms and conditions of separate Restricted Stock Awards need not be identical, but each Restricted Stock Award shall include (through incorporation of the provisions hereof by references in the agreement or otherwise) the substance of each of the following provisions.
 
 (i)    
 Purchase Price.  The purchase price, if any, of restricted stock awards shall be determined by the Administrator.  The purchase price of shares offered under the Plan for shares intended to be covered shall not be less than eighty-five percent (85%) of the Fair Market Value of such shares; provided, however, if the purchaser is a Ten-Percent Owner, the purchase price shall not be less than one hundred percent (100%) of the Fair Market Value of such shares.
 
 (ii)    
 Consideration.  The purchase price, if any, of Common Stock acquired pursuant to the Restricted Stock Award shall be paid either:  (i) in cash at the time of purchase; (ii) at the discretion of the Administrator, according to a deferred payment or other similar arrangement with the Participant; or (iii) in any other form of legal consideration that may be acceptable to the Administrator in its discretion; provided, however, that payment of the Common Stock’s “par value” shall not be made by deferred payment.
 
 (iii)    
 Vesting.  Shares of Common Stock acquired under a Restricted Stock Award may, but need not, be subject to a share repurchase option in favor of the Corporation in accordance with a vesting schedule to be determined by the Administrator.
 
 (iv)    
 Participant’s Termination of Service.  In the event of a Participant’s termination of Continuous Service, the Corporation, if so provided in the Stock Award Agreement, may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the Stock Award Agreement for such Restricted Stock Award.
 
 (v)    
 Transferability.  Rights to acquire shares of Common Stock under a Restricted Stock Award shall be transferable by the Participant only upon such terms and conditions as are set forth in the Stock Award Agreement for such Restricted Stock Award, as the Administrator shall determine in its discretion, so long as Common Stock granted under the Restricted Stock Award remains subject to the terms of the Stock Award Agreement.
 

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 Stock Option Plan 
 

 
  

 B.   
 Stock Appreciation Rights.  Each Stock Award Agreement for Stock Appreciation Rights shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate.  The terms and conditions of Stock Appreciation Rights may change from time to time, and the terms and conditions of separate Stock Appreciation Rights need not be identical, but each Stock Appreciation Right shall include (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
 
 (i)    
 Benefit Provided.  Each Stock Appreciation Right shall provide the Participant with the right to receive payment in cash or shares of Common Stock having a Fair Market Value, as designated in the Stock Award Agreement for such Stock Appreciation Rights, of an amount equal to the difference between the base amount provided for each share of Common Stock as described in the Stock Award Agreement and the Fair Market Value of the Common Stock on the date of exercise of such Stock Appreciation Right.
 
 (ii)    
 Tandem Awards.  Stock Appreciation Rights may be granted either alone or a tandem with other awards, including Options, under the Plan; provided, however, if that Stock Appreciation Rights are granted in tandem with another Stock Award, the base amount provided for each share of Common Stock in the applicable Stock Award Agreement shall be equal to the Fair Market Value of the Common Stock on the date of grant of such Stock Award.  
 
 (iii)    
 Vesting.  The Stock Award Agreement for a Stock Appreciation Right shall provide the vesting schedule applicable to such award and may, but need not, provide that shares of Common Stock acquired upon exercising a Stock Appreciation Right are subject to a repurchase option in favor of the Corporation.
 
 (iv)    
 Participant’s Termination of Service.  In the event of a Participant’s termination of Continuous Service, the Corporation may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the Stock Appreciation Right.
 
 (v)    
 Transferability.  Rights to acquire cash or shares of Common Stock under a Stock Appreciation Rights shall be nontransferable except by will or by the laws of descent and distribution and during the lifetime of the Participant shall be exercisable by only the Participant to whom the Stock Appreciation Rights are granted.  
 

 8.        Changes in Capital Structure
 
 A.   
 No Limitations of Rights.  The existence of outstanding Options or Stock Awards shall not affect in any way the right or power of the Corporation or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Corporation’s capital structure or its business, or any merger or consolidation of the Corporation, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
 
 B.   
 Changes in Capitalization.  If the Corporation shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Common Stock outstanding, without receiving consideration therefore in money, services or property, then (i) the number, class, and per share price of shares of Common Stock subject to outstanding Options and Stock Awards hereunder and (ii) the number and class of shares then reserved for issuance under the Plan and the maximum number of shares for which awards may be granted to a Participant during a specified time period shall be appropriately and proportionately adjusted.  The conversion of convertible securities of the Corporation shall not be treated as effected “without receiving consideration.” The Administrator shall make such adjustments, and its determinations shall be final, binding and conclusive. 
 

 9
 Stock Option Plan 
 

 
  

 C.   
 Merger, Consolidation or Asset Sale. If the Corporation is merged or consolidated with another entity or sells or otherwise disposes of substantially all of its assets to another entity while Options or Stock Awards remain outstanding under the Plan, unless provisions are made in connection with such transaction for the continuance of the Plan and/or the assumption or substitution of such Options or Stock Awards with new options or stock awards covering the stock of the successor entity, or parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices, then all outstanding Options and Stock Awards which have not been continued, assumed or for which a substituted award has not been granted shall, whether or not vested or then exercisable, vest immediately as of the effective date of any such merger, consolidation or sale.
 
 D.   
 Limitation on Adjustment. Except as previously expressly provided, neither the issuance by the Corporation of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Corporation convertible into such shares or other securities, nor the increase or decrease of the number of authorized shares of stock, nor the addition or deletion of classes of stock, shall affect, and no adjustment by reason thereof shall be made with respect to, the number, class or price of shares of Common Stock then subject to outstanding Options or Stock Awards.
 

 9.        Withholding of Taxes
 The Corporation or an Affiliate shall have the right, before any certificate for any Common Stock is delivered, to deduct or withhold from any payment owed to a Participant any amount that is necessary in order to satisfy any withholding requirement that the Corporation or Affiliate in good faith believes is imposed upon it in connection with Federal, state, or local taxes, including transfer taxes, as a result of the issuance of, or lapse of restrictions on, such Common Stock, or otherwise require such Participant to make provision for payment of any such withholding amount.  Subject to such conditions as may be established by the Administrator, the Administrator may permit a Participant to (i) have Common Stock otherwise issuable under an Option or Stock Award withheld to the extent necessary to comply with minimum statutory withholding rate requirements for supplemental income, (ii) tender back to the Corporation shares of Common Stock received pursuant to an Option or Stock Award to the extent necessary to comply with minimum statutory withholding rate requirements for supplemental income, (iii) deliver to the Corporation previously acquired Common Stock, (iv) have funds withheld from payments of wages, salary or other cash compensation due the Participant, or (v) pay the Corporation or its Affiliate in cash, in order to satisfy part or all of the obligations for any taxes required to be withheld or otherwise deducted and paid by the Corporation or its Affiliate with respect to the Option or Stock Award.  
 

 10.        Repurchase Rights
 The Corporation shall have the right to repurchase shares that have been acquired through an award or sale of shares or exercise of an Option upon termination of the Participant’s Continuous Service if provided in the applicable Stock Award Agreement or Stock Option Agreement.  Subject to the following restrictions, the Board in its sole discretion shall determine when the right to repurchase shall lapse as to all or any portion of the shares, and may, in its discretion, provide for accelerated vesting.  With respect to a stock award intended to be a Qualifed Option, the following restrictions shall apply in the case of a Participant who is not a Consultant or an officer or director of the Corporation, a Parent or Subsidiary:
 
 A.   
 Repurchase Price.  If the Corporation retains a right to repurchase the shares at the original purchase price or exercise price, then such repurchase right shall lapse at the minimum rate of twenty percent (20%) per year over the five (5) year period starting on the date of the award or sale of shares or grant of the Option.
 
 B.   
 Exercise of Repurchase Right.  The Corporation’s right of repurchase under this Section 10 may be exercised only within ninety (90) days of the date on which the Participant’s Continuous Service terminates or, if the Participant acquired the shares upon exercise of an Option after the date of termination, within ninety (90) days from the date of exercise.
 

 10
 Stock Option Plan 
 

 
  

 C.   
 Payment of Repurchase Price.  The Corporation shall pay the repurchase price in cash, cash equivalents or for cancellation of indebtedness incurred in purchasing the shares.
 

 11.        Compliance with Law and Approval of Regulatory Bodies
 
 A.   
 General Requirements.  No Option or Stock Award shall be exercisable, no Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Corporation is a party, and the rules of all domestic stock exchanges or quotation systems on which the Corporation’s shares may be listed.  The Corporation shall have the right to rely on an opinion of its counsel as to such compliance.  Any share certificate issued to evidence Common Stock when a Stock Award is granted or for which an Option or Stock Award is exercised may bear such legends and statements as the Administrator may deem advisable to assure compliance with federal and state laws and regulations.  No Option or Stock Award shall be exercisable, no Stock Award shall be granted, no Common Stock shall be issued, no certificate for shares shall be delivered, and no payment shall be made under this Plan until the Corporation has obtained such consent or approval as the Administrator may deem advisable from regulatory bodies having jurisdiction over such matters.  
 
 B.   
 Participant Representations.  The Administrator may require that a Participant, as a condition to receipt or exercise of a particular award, execute and deliver to the Corporation a written statement, in form satisfactory to the Administrator, in which the Participant represents and warrants that the shares are being acquired for such person’s own account, for investment only and not with a view to the resale or distribution thereof.  The Participant shall, at the request of the Administrator, be required to represent and warrant in writing that any subsequent resale or distribution of shares of Common Stock by the Participant shall be made only pursuant to either (i) a registration statement on an appropriate form under the Securities Act of 1933, which registration statement has become effective and is current with regard to the shares being sold, or (ii) a specific exemption from the registration requirements of the Securities Act of 1933, but in claiming such exemption the Participant shall, prior to any offer of sale or sale of such shares, obtain a prior favorable written opinion of counsel, in form and substance satisfactory to counsel for the Corporation, as to the application of such exemption thereto.
 
 C.   
 Financial Reports.
 At least annually, the Corporation shall furnish its financial statements, including a balance sheet regarding the Corporation’s financial condition and results of operations, to stockholders who have received shares under the Plan, Participants and purchasers, unless such persons are key employees whose duties at the Corporation assure them access to equivalent information.  Financial statements need not be audited.
 
 D.   
 Restrictions; Securities Listing. All certificates for Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. If the Shares or other securities are traded on NASDAQ or a securities exchange, the Company shall not be required to deliver any Shares or other securities covered by an Award unless and until such Shares or other securities have been admitted for trading on NASDAQ or such securities exchange.
 

 12.        General Provisions
 
 A.   
 Effect on Employment and Service.  Neither the adoption of this Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof) shall (i) confer upon any individual any right to continue in the employ or service of the Corporation or an Affiliate, (ii) in any way affect any right and power of the Corporation or an Affiliate to change an individual’s duties or terminate the employment or service of any individual at any time with or without assigning a reason therefor or (iii) except to the extent the Administrator grants an Option or Stock Award to such individual, confer on any individual the right to participate in the benefits of the Plan.
 

 11
 Stock Option Plan 
 

 
  

 B.   
 Use of Proceeds. The proceeds received by the Corporation from the sale of Common Stock pursuant to this Plan shall be used for general corporate purposes.
 
 C.   
 Unfunded Plan.  The Plan, insofar as it provides for grants, shall be unfunded, and the Corporation shall not be required to segregate any assets that may at any time be represented by grants under this Plan.  Any liability of the Corporation to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan.  No such obligation of the Corporation shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Corporation.
 
 D.   
 Rules of Construction.  Headings are given to the Sections of this Plan solely as a convenience to facilitate reference, and shall not be used in interpreting, construing or enforcing any provision hereof.  The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law.
 
 E.   
 Choice of Law.  The Plan and all Stock Option Agreements and Stock Award Agreements entered into under the Plan (except to the extent that any such Stock Option Agreement or Stock Award Agreement otherwise provides) shall be governed by and interpreted under the laws of the jurisdiction of incorporation of the Corporation excluding (to the greatest extent permissible by law) any rule of law that would cause the application of the laws of any jurisdiction other than the laws of the jurisdiction of incorporation of the Corporation.
 

 13.        Amendment and Termination
 The Board may amend or terminate this Plan from time to time; provided, however, that with respect to any amendment that (i) increases the aggregate number of shares of Common Stock that may be issued under the Plan, (ii) changes the class of employees eligible to receive Incentive Stock Options or (iii) is required by the terms of any applicable law, regulation, or rule, including, without limitation, any rule of The Nasdaq Stock Market, or any national securities exchange on which the Common Stock is publicly traded, each such amendment shall be subject to the approval of the stockholders of the Corporation within twelve (12) months of the date such amendment is adopted by the Board.  Except as specifically permitted by the Plan, Stock Option Agreement or Stock Award Agreement or as required to comply with applicable law, regulation or rule, no amendment shall, without a Participant’s consent, adversely affect any rights of such Participant under any Option or Stock Award outstanding at the time such amendment is made; provided, however, that an amendment that may cause an Incentive Stock Option to become a Nonqualified Stock Option, and any amendment that is required to comply with the rules applicable to Incentive Stock Options, shall not be treated as adversely affecting the rights of the Participant.  
 

 14.        Effective Date and Duration of Plan
 
 A.   
 The Plan became effective as of October 9, 2012 upon adoption by the Board, subject to approval within twelve (12) months by the stockholders holding of a majority of the shares of entitled to vote thereon. Unless and until the plan has been approved the stockholders of the Corporation, no Option or Stock Award may be exercised, and no shares of Common Stock may be issued under the Plan.  In the event that the stockholders of the Corporation shall not approve the Plan within such twelve (12) month period, the Plan and any previously granted Option or Stock Award shall terminate.  
 
 B.   
 Unless previously terminated, the Plan will terminate ten (10) years after the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders, except that Options and Stock Awards that are granted under the Plan prior to its termination will continue to be administered under the terms of the Plan until the Options and Stock Awards terminate or are exercised.  
 

 **********
 

 12
 Stock Option PlanExhibit 10.46

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS OF THIS EXHIBIT. THE REDACTIONS ARE INDICATED WITH “[**]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.

MASTER DISTRIBUTOR AGREEMENT
THIS MASTER DISTRIBUTOR AGREEMENT (the “Agreement”) is made the 11th day of March, 2013, but effective as of April 1, 2013 (the “Effective “Date”)  by and between  Pacira Pharmaceuticals, Inc., a California corporation (hereinafter called “Pacira”), and  Crosslink BioScience, LLC, a Georgia limited liability company  (hereinafter called “Master Distributor”).
WITNESSETH:
WHEREAS, the Parties hereto desire to enter into this Agreement upon the terms hereinafter set forth so as to promote the sale of  EXPAREL® (bupivacaine liposome injectable suspension (the “Product”) for all orthopedic and spine surgeries throughout the Territory (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereby agree as follows:
		
	1.
	APPOINTMENT OF MASTER DISTRIBUTOR

		
	1.01
	For the Term (as hereinafter defined) of this Agreement, Pacira appoints Master Distributor as its exclusive distributor (except as outlined in Exhibit A) for the sale of the Product (including without limitation any enhancements and improvements thereto) for all orthopedic and spine surgeries in the geographical area described in Exhibit A attached hereto (the “Territory”) and Master Distributor accepts this appointment, all subject to the terms and conditions of this Agreement.  The Parties acknowledge and agree that the foregoing surgery cases shall include, without limitation, all surgical procedures involving total hip, total knee, total shoulder, total ankle, trauma, upper and lower extremities, sports medicine, foot, ankle and spine.  

		
	2.
	MASTER DISTRIBUTOR’S RESPONSIBILITIES

		
	2.01
	Master Distributor agrees to act, through itself and its Sub-Distributors (as defined in Section 2.02 below), as the exclusive distributor (except as provided in Exhibit A) of the Product within the Territory; to diligently pursue a sales program to promote the Product; and to develop and increase the demand for the Product. Master Distributor also agrees to (i) meet with Pacira following the expiration of the Pilot Period as provided on Exhibit A hereto (ii) prepare an annual business and promotion plan for discussion, review, coordination and approval by Pacira  [**] prior to start of each annual period commencing on October 1, 2014 (iii) provide periodic information updates on market conditions and trends relating to the Product and forecasts on potential business opportunities, (iv) participate with Pacira in trade shows in the Territory, and (v) provide for transmission of sales bulletins, advertising literature and other information (as provided by Pacira) to actual or potential customers of Pacira. Such responsibilities shall be accomplished through prompt and efficient customer and potential customer services, the provision of adequate and timely sales effort, and the maintenance of a close working relationship with Pacira’s management.

 

		
	2.02
	Master Distributor shall be permitted to engage the services of independent contractors (“Sub-Distributors”) to promote the sale of the Product with respect to portions of the Territory, but only after each such Sub-Distributor has been presented to Pacira for review and approval, which approval shall not be unreasonably withheld.  In facilitating Pacira’s review of any potential Sub-Distributor, Master Distributor shall provide Pacira with the proposed form of contract between Master Distributor and Sub-Distributor containing, among other things, all material economic terms between Master Distributor and the potential Sub-Distributor.  Unless Master Distributor and Pacira agree otherwise in writing, Master Distributor shall remain exclusively responsible for the  servicing of all Sub-Distributor accounts and for all of the actions of each such Sub-Distributor;  provided, however, notwithstanding any provision in this Agreement to the contrary, Master Distributor may cure any potential breach of this Agreement resulting directly from the actions of a Sub-Distributor by either terminating its agreement with such Sub-Distributor within [**] of receiving notice of such breach from Pacira or taking such other action with such Sub-Distributor as is acceptable to Pacira to avoid breach or termination of this Agreement.  Master Distributor shall remain exclusively responsible for compensating any such Sub-Distributor. 

		
	2.03
	Master Distributor shall be responsible for all aspects of the management of any sales representatives retained by Master Distributor, including, without limitation, all matters relating to the recruiting, hiring, supervising, training (except as otherwise provided herein), equipping/outfitting (including vehicle leasing, laptops, sample bags and similar equipment), reimbursement for expenses and compensating (including compensation, incentives, benefits, supplies, discretionary spending funds, equipment, travel, food and lodging) such sales representatives. All employees and agents of Master Distributor are its sole employees and agents and nothing contained herein shall be construed to make them the employees or agents of Pacira. Notwithstanding the designation of “Master Distributor”, it is understood that Master Distributor is an independent contractor and not an employee or agent of Pacira and that nothing herein contained shall be deemed to constitute the parties as partners or joint venturers and that there are no rights conferred upon Master Distributor by this Agreement to contract for, or on behalf of, or otherwise obligate Pacira, in any manner.

		
	2.04
	Master Distributor will and shall require any Sub-Distributor to maintain complete and accurate records of all activities carried out by Master Distributor or Sub-Distributor, as the case may be, and each of their respective employees and representatives relating to the performance of Master Distributor’s hereunder for the duration of Term and for three (3) years thereafter. Pacira shall have the right to audit such records upon reasonable notice to Master Distributor.  Master Distributor shall, and shall cause its employees, agents and representatives to, comply, in all material respects, with all applicable laws, rules and regulations in connection with the promotion of the Product in the Territory.  Without limiting the generality of the foregoing, Master Distributor shall in the course of its promotion of the Product and performance of its obligations hereunder, (a) limit claims of efficacy and safety for the Product to those which are consistent with Pacira’s then approved promotional materials for the Product or as otherwise approved by Pacira, 

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in each case, consistent with any legal requirements, including FDA approved Product labeling, and (b) not delete or modify claims of efficacy and safety in the promotion of the Product so that they are different in any way from those which are contained in Pacira’s then approved promotional materials for the Product and the FDA approved Product labeling, or make any changes in promotional materials and literature provided by Pacira.  In addition, without limiting the generality of the foregoing, Master Distributor shall, and shall cause its  employees, agents and representatives and any Sub-Distributors to, in promoting the Product hereunder, comply in all material respects with (i) the PhRMA Code on Interactions with Healthcare Professionals (ii) the American Medical Association Gifts to Physicians From Industry Guidelines and (iii) Section 1128B(b) of the Social Security Act.  
		
	2.05
	Neither Master Distributor nor any Sub Distributor or any of their employees, agents or representatives will make any false or misleading representations to customers or others regarding Pacira or the Product and will not make any representations, warranties or guarantees with respect to the specifications, features or capabilities of the Product that are not consistent with the applicable current FDA approved labeling, package insert or other documentation accompanying or describing the Product, including Pacira’s (or any applicable Third Party’s) standard limited warranty and disclaimers, and that has been provided to Master Distributor by Pacira. Master Distributor shall not enlarge, modify or amend Pacira’s guarantees, warranties, prices or other conditions of sales, shall have no authority to do so, and shall not hold itself out as having authority to do so. All correspondence and negotiations pertaining to any sale or prospective sale of the Product shall be conducted by Master Distributor to clearly indicate that the Product is that of Pacira.

		
	2.06
	Information concerning any complaints, medical inquiries and/or drug information requests from consumers, physicians or other Third Parties received by Master Distributor regarding the Product in the Territory shall be forwarded to Pacira within forty eight (48) hours of Master Distributor’s receipt of the request and in accordance with Pacira’s policies and procedures as in effect and provided to Master Distributor from time to time and applicable laws, rules and regulations.  As between Pacira and Master Distributor, Pacira shall respond to all medical inquiries received from Master Distributor in the manner Pacira deems appropriate.  Pacira shall have sole responsibility for responding to any medical issues relating to the Product.  The necessary contact information and procedures will be provided by Pacira.

		
	2.07
	Master Distributor shall promptly notify Pacira upon being contacted by the FDA or any other Governmental Authority in the Territory for any regulatory purpose pertaining to this Agreement or to the Product.  Master Distributor shall not respond to the FDA or such other Governmental Authority before consulting with Pacira, unless under the circumstances pursuant to which FDA or such other Governmental Authority contacts Master Distributor, it is not practical or lawful for Company to give Pacira advance notice, in which event Master Distributor shall inform Pacira of such contact as soon as practical and lawful.  

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	2.08
	Master Distributor shall advise Pacira within forty eight (48) hours of any complaint, adverse reaction, injury or death in the Territory including name, contact information, product and lot number (if available) resulting from the use of any Product of which it becomes aware. Master Distributor shall within five (5) days thereafter provide Pacira with a report stating the full facts known to it and cooperate fully with Pacira in its investigation of the facts.

		
	2.09
	Master Distributor (through itself and its Sub-Distributors) shall carry on such activities within the Territory and maintain such offices and other facilities as are reasonably necessary and appropriate for the promotion and sale of the Product in the Territory, including making its representatives, employees, management and other personnel performing services hereunder available during normal business hours.

		
	2.10
	Unless this Agreement is terminated (as provided in Section 8.01 below) following the conclusion of the Pilot Period (as defined in Section 8.01 below), Master Distributor shall attain the Minimum Annual Performance Goals.  The performance goals for the [**] of the Subsequent Period (as defined in Section 8.01 below) are defined and set forth in Exhibit B attached hereto (the “Minimum Annual Performance Goals”).

		
	2.11
	Master Distributor shall be responsible for obtaining inquiries and/or requests for orders from customers and potential customers of Pacira and turning them into Pacira.  Inquiries and/or requests for orders will be processed by Pacira and filled using Pacira’s established distribution system.

		
	2.12
	Master Distributor shall indemnify, defend and hold harmless Pacira, its directors, officers, employees, and agents and its successors and assigns (the “Pacira Indemnitee(s)”) from and against all third party claims, losses, costs, and liabilities (including, without limitation, payment of reasonable attorneys' fees and other reasonable expenses of litigation), and shall pay any damages (including settlement amounts) finally awarded, with respect to claims, suits or proceedings brought by third parties against a Pacira Indemnitee, arising out of or relating to (a) a breach by Master Distributor (or any Distributor Indemnitee as defined in Section 3.03), (b) the negligence or willful misconduct of Master Distributor except, in each case to the extent caused by the negligence or willful misconduct of a Pacira Indemnitee or (c) damage to property, or injury to, or death of persons, occasioned by, or in connection with, the acts or omissions, of Master Distributor, or its agents, employees, or Sub-Distributors. 

		
	2.13
	Master Distributor shall maintain Commercial General Liability insurance (excluding Products and Completed Operations insurance)  in an amount not less than [**] per occurrence and [**] annual aggregate coverage, Automobile Liability of not less than [**] Combined Single Limit, Worker’s Compensation insurance as required  by applicable statute including Employer’s Liability with limits no less than [**] by bodily injury by accident/each accident; [**] by bodily injury by disease/policy limit; [**] by bodily injury by disease/policy/each employee.

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	2.14
	Master Distributor will comply in all material respects with all policies and procedures of Pacira as provided by Pacira to Master Distributor in writing from time to time.  

		
	2.15
	Master Distributor will be responsible for providing all required information for Pacira to completely and accurately prepare all schedules and documentation required under the Physician Payment Sunshine Act (“PPSA”). Any failure to comply with the requirements of the PPSA by Master Distributor, in which Pacira is fined for failure to properly report, will be the responsibility of Master Distributor and Pacira will require full reimbursement for any and all fines and costs.

		
	2.16
	Master Distributor’s sales personnel shall be familiar in all material respects with the Product, and Master Distributor shall conduct any training of its personnel which may be reasonably necessary to accomplish the foregoing. To that end, Master Distributor shall, and shall cause its employees, sales representatives and each of the Sub-Distributors and their employees and sales representatives to, participate in, and conduct their operations in accordance with, all of Pacira’s sales representative training and certification programs, as reasonably required by Pacira from time to time.

		
	2.17
	Master Distributor shall bear all the costs and expenses incurred in performing any and all of its responsibilities in this Section 2 including the cost of any requested printed promotional materials or reprints of publications with such expenses being [**]. Notwithstanding the foregoing, the cost for set up and additional licenses on Pacira’s Learning Management System shall be [**] and billed to Master Distributor by Pacira as incurred and payable within [**] of Pacira invoice. 

		
	3.
	PACIRA’S RESPONSIBILITIES

		
	3.01
	Pacira shall provide training to all of Master Distributor’s (and each Sub-Distributor’s) sales personnel involved in the promotion and sale of the Product during the Term of this Agreement.  In addition, Pacira will furnish to Master Distributor (and each Sub-Distributor) reasonable sales training and subject to Section 2.17 above,  other information which Master Distributor (or any Sub-Distributor) may reasonably need for promotion and sale of the Product.

		
	3.02
	Nothing contained herein shall be deemed to prevent Pacira from employing or utilizing, at its own expense, its own personnel for the purpose of advertising and promoting the sale of Product in the Territory; provided, however, Master Distributor shall receive [**] as set forth on Exhibit C on any sale of Product in the Territory during the Term related to the surgical cases described in Section 1.01.

		
	3.03
	Pacira shall indemnify, defend and hold harmless Master Distributor, the directors, officers, employees, agents and any Sub-Distributors of Master Distributor and its successors and assigns (the “Distributor Indemnitee(s)”) from and against all third party claims, losses, costs, and liabilities (including, without limitation, payment of reasonable attorneys' fees and other reasonable expenses of litigation), and shall pay any damages (including settlement amounts) finally awarded, with respect to claims, suits or 

- 5-

proceedings brought by third parties against a Distributor Indemnitee, arising out of or relating to (a) a material breach by Pacira or its employees, agents or representatives of its obligations under this Agreement, (b) the negligence or willful misconduct of Pacira, except, in each case, to the extent caused by the negligence of willful misconduct of a Distributor Indemnitee, (c) personal injury or death resulting from the use of the Product, (d) defects alleged by third parties in the design, manufacture or composition of the Product, (e) breaches of warranty alleged by third parties with respect to the Product, (f) infringement alleged by third parties of patents, copyrights, trademarks, or other intellectual property rights through the use of  the Product (except to the extent arising from Master Distributor's use of materials not approved by Pacira) or (g) recalls of the Product. 
		
	3.04
	During the Term of this Agreement, Pacira shall carry and continue in force a policy of product liability insurance for the Product promoted hereunder by Master Distributor (including, without limitation, its Sub-Distributors) with limits of not less than [**] per occurrence and [**] aggregate. Such policy shall name Master Distributor (including, without limitation, its Sub-Distributors) as an additional insured, and Pacira shall provide Master Distributor with proof of insurance, in the form of a certificate of insurance, within [**] of the Effective Date of this Agreement.  Pacira shall provide Master Distributor with notice of any cancellation of such policy of insurance

		
	4.
	COMPENSATION

		
	4.01
	Pacira shall pay to Master Distributor as its entire compensation [**] as set forth and described in Exhibit C attached hereto.

		
	5.
	SELLING TERMS

		
	5.01
	Subject to the provisions of this Agreement, the Product promoted by Master Distributor shall be sold or offered for sale only at prices and upon the terms fixed by Pacira.  All orders and contracts for the purchase of the Product shall be processed by Pacira through its established distribution systems. For the avoidance of doubt, Pacira shall book all sales of the Product in the Territory and shall be responsible for the pricing of the Product (including, the timing of pricing changes) and any discounting shall be at Pacira’s sole discretion.  Nothing in this Section 5.01 shall be construed to limit Pacira’s ability to set prices for the Product or engage in such pricing strategies as it considers appropriate under the circumstances. Pacira shall timely advise Master Distributor of any Product price changes.

		
	5.02
	All orders and contracts for the purchase of the Product are subject to acceptance or rejection by Pacira and not binding until such acceptance by Pacira.  Pacira reserves the right to refuse any business originated by Master Distributor in the Territory for any reason which in the judgment of Pacira is sufficient grounds for refusal, and Master Distributor shall not be entitled to any commission thereon.

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	5.03
	Master Distributor shall not acquire Product from Pacira. Title to the Product sold by Master Distributor hereunder shall pass directly from Pacira to the customer and shall not pass to Master Distributor.

		
	6.
	CONFIDENTIALITY AND NONCOMPETITION COVENANT

		
	6.01
	Pacira may, and the parties expect that it will, provide Proprietary Information to Master Distributor.  Master Distributor agrees, and will require each of its Sub-Distributors to agree, that it, or such Sub-Distributor, as the case may be, will hold confidential and will not disclose, make known, divulge or communicate Proprietary Information to third parties and will not use Proprietary Information, except in furtherance of and pursuant to this Agreement.  The term “Proprietary Information”, as that term is used herein, shall mean all drawings, designs, specifications, technical and manufacturing data, quality and performance standards, customer lists, and pricing strategies of Pacira, whether conveyed verbally or in writing.  Proprietary Information does not include, and the restrictions related thereto shall not apply to, information in the public domain prior to the date of disclosure.  Upon termination of this Agreement, Master Distributor shall surrender to Pacira all Proprietary Information of Pacira in the possession of Master Distributor and its Sub-Distributors.

		
	6.02
	Master Distributor covenants and agrees, and will require each of its Sub-Distributors to covenant and agree, that, during the term of this Agreement it, or such Sub-Distributor, as the case may be, will not, without the express written consent of Pacira:  (a) promote, sell or distribute any products of any other person, corporation or other entity which are in competition with the Product it is representing hereunder,  (b) act as a distributor or agent for any other person, corporation, or other entity with respect to products which are in competition with the Product it is representing hereunder or (c) intentionally promote the Product to any Carved Out Accounts as defined on Exhibit A.  The foregoing limitation shall apply to products delivered to, or performed in, the Territory. Notwithstanding the prohibition contained in Section 6.02(c) above, nothing herein shall prevent Master Distributor from promoting products which would not otherwise violate the prohibitions contained in Sections 6.02 (a) or 6.02(b) to Carved Out Accounts.

		
	6.03
	Master Distributor agrees that damages may be difficult to calculate and specifically agrees that the provisions of this section may be enforced by injunctive relief; provided, however, nothing herein shall be construed as prohibiting Pacira from pursuing any other remedies available to it for breach, including the recovery of damages.

		
	7.
	TRADEMARKS

		
	7.01
	Pacira hereby grants to Master Distributor and each of its Sub-Distributors, a non-exclusive right and nontransferable right and license, without the right to grant sublicenses to any party, to use the trademarks and trade names of Pacira (the “Trademarks”) during the Term of this Agreement in connection with the promotion and advertising of the Product and the solicitation of orders for the Product in the Territory, provided that (a) Master Distributor submits to Pacira for its prior written approval examples of any 

- 7-

and all materials, promotional literature, advertising and technical narrative in which any Trademark is used, and (b) the Trademarks shall be used by Master Distributor in accordance with Pacira’s standards, specifications and instructions.  Master Distributor shall acquire no right, title or interest in the Trademarks other than the foregoing limited license, and Master Distributor shall not use any Trademarks, or words, phrases or symbols confusingly similar to any Trademarks, as part of Master Distributor’s corporate or trade name or permit any third party to do so without the prior written consent of Pacira.  Master Distributor agrees that all of its uses of the Trademarks shall inure to the benefit of Pacira.
		
	7.02
	Master Distributor shall promptly notify Pacira of any use by any third party of the Trademarks or any use by such third parties of similar marks which may constitute an infringement or passing off of the Trademarks.  Pacira reserves the right, in its sole discretion, to institute any proceedings against such third party infringers and Master Distributor shall refrain from doing so.  Master Distributor agrees to cooperate fully with Pacira in any action taken by Pacira against such third parties, provided that all expenses of such action shall be borne by Pacira and all damages which may be awarded or agreed upon in settlement of such action shall accrue to Pacira.

		
	7.03
	Upon the termination or expiration of this Agreement, Master Distributor shall cease and desist, and cause each of its Sub-Distributors to cease and desist, from the use of the Trademarks in any manner, including but not limited to any use in connection with Master Distributor’s corporate or trade name.  In addition, Master Distributor hereby empowers Pacira and agrees to assist Pacira, if requested, to cancel, revoke or withdraw any governmental registration or authorization permitting Master Distributor to use the Trademarks.

		
	8.
	TERM AND TERMINATION

		
	8.01
	The term of this Agreement (the “Term”) shall be for an initial period of six (6) months (the “Pilot Period”), commencing April 1, 2013 and ending September 30, 2013.  Upon expiration of the Pilot Period, this Agreement shall automatically continue for an additional term of five (5) years, commencing October 1, 2013 and ending September 30, 2018 (such additional five (5) year period hereinafter referred to as the “Subsequent Period”), unless either party elects to terminate this Agreement by delivering notice to the other party within fifteen (15) days prior to expiration of the Pilot Period.  

		
	8.02
	This Agreement may be terminated at any time during the Term as follows (the effective date of any such termination referred to herein as the “Termination Date”):

		
	(a)
	by the non-breaching Party, in the event of a material breach by either Party, which breach (if capable of being cured) remains uncured within [**] of written notice of such breach;

- 8-

		
	(b)
	by either Party effective immediately upon written notice if any representation or warranty made herein by the other Party proves to be materially false and/or misleading when made; 

		
	(c)
	by either Party effective immediately if toxicity or safety findings or side effects of the Product actually causes the discontinuation of the commercialization of the Product; 

		
	(d)
	by either Party effective immediately upon written notice if the Product is withdrawn from the market for any reason (other than due to any act or omission of the terminating Party or any of its subsidiaries, or any of their respective employees, agents or representatives);

		
	(e)
	by either Party effective immediately upon written notice in the event (i) a court of competent jurisdiction enters a decree or order of relief appointing a receiver, liquidator, assignee, trustee or similar official of the other Party or any substantial part of its assets and such decree or order is consented to by the other Party or continues unstayed and in effect for a period of [**], (ii) the other Party files a voluntary petition or acquiesces in or fails to contest an involuntary petition under any bankruptcy, insolvency or similar law, (iii) an insolvency petition is filed against the other Party under any bankruptcy, insolvency or similar law which is not dismissed within [**], or (iv) the other Party makes a general assignment for the benefit of its creditors; and

		
	(f)
	upon the mutual written agreement of the Parties.

		
	8.03
	In addition to those termination rights set forth in Section 8.02, Pacira may terminate this Agreement upon the occurrence of any of the following: 

		
	(a)
	actual or threatened material regulatory or other action by the FDA or any other Governmental Authority relating to the Product;

		
	(b)
	Pacira is enjoined, prohibited or restricted from granting Master Distributor the rights granted to it by Pacira hereunder, in any such case, pursuant to a final, non-appealable award, judgment, decree or other order of any court or other Governmental Authority; provided that such injunction, prohibition or restriction does not result from any action or inaction of or caused by Pacira or any of its subsidiaries, or any of their respective employees, agents or representatives; 

		
	(c)
	Master Distributor is enjoined, prohibited or restricted  from Promoting the Product in the Territory in accordance with the terms hereof; provided that such injunction, prohibition or restriction does not result from any action or inaction of or caused by Pacira or any of its subsidiaries, or any of their respective employees, agents or representatives;

- 9-

		
	(d)
	In the event that Master Distributor fails to meet the Minimum Annual Performance Goal for any of the Measurement Periods set forth on Exhibit B unless such failure is reasonably attributable to the inability of Pacira to provide sufficient quantities of Product to Master Distributor’s customers in the Territory during the applicable Measurement Period.  

		
	(e)
	Voluntary abandonment of the business by Master Distributor as determined by a totality of the circumstances;

		
	(f)
	Conviction or a plea of guilty or no contest to a felony charge of violating any law relating to Master Distributor’s business;

		
	(g)
	Any act of Master Distributor which materially impairs the goodwill associated with Pacira’s name, trademark, trade name, service mark, logotype, or other commercial symbol;

		
	(h)
	Any material change of senior management, sales personnel or ownership of Master Distributor  which in the reasonable opinion of Pacira adversely impacts the performance of Master Distributor’s obligations hereunder;  or

		
	(i)
	Failure of Master Distributor to materially comply with Pacira’s sales policies and procedures, as provided to Master Distributor in writing; provided, however, this right of Pacira to terminate the Agreement shall only apply if Master Distributor does not cure such failure within [**] following notice thereof from Pacira.

		
	8.04
	Pacira shall have the right to terminate this Agreement without cause effective September 30, 2016 provided that Pacira delivers written notice of such election to terminate on or before [**]. 

		
	8.05
	Notice of termination of this Agreement, or election not to renew, shall be in writing and shall be sent to the other party: 

If to Pacira:    Pacira Pharmaceuticals, Inc.
5 Sylvan Way
Parsippany, NJ  07054
Attn: David Stack, President and CEO

With a copy to:
Pacira Pharmaceuticals, Inc.
5 Sylvan Way
Parsippany, NJ  07054
Attn: Kristen Williams, Corporate Counsel

- 10-

If to Master Distributor:    Crosslink BioScience, LLC
3300 NE Expressway
Building 7
Atlanta, GA 30341
Attn: Thomas Fleetwood and Gordon Ford

With a copy to:
Richard L. Haury, Jr., Esq.
Sr. VP/General Counsel
Master Distributor Life Sciences, LLC
3300 Northeast Expressway
Building 7
Atlanta, GA 30341

or to such other address as may be specified in a notice similarly sent.  All notices shall be deemed given when received.
		
	8.06
	Upon termination of this Agreement all promotional material, sales bulletins, advertising literature and other written information  relating to the Product in possession of Master Distributor and any Sub-Distributor shall at such time be returned to Pacira. 

		
	8.07
	[**]

		
	8.08
	Upon the expiration or termination of this Agreement, each Party shall (i)  return to the other Party all Confidential Information of the other Party that is in its possession; (ii) Master Distributor shall cease the promotion of the Product and return all Promotional Materials to Pacira; (iii) Pacira shall pay to Master Distributor any Performance based Payments earned up throughout the date of termination or expiration and (iv) the mutual rights and obligations of the Parties hereunder shall forthwith terminate; provided however, that the provisions of Sections 2.06, 2.07, 2.08, 2.12, 2.13, 2.15, 3.03,3.04, 4.01,6, 7.03,8.06,8.07,8.08, 11.01,11.02,11.08,11.09, 11.10 and Exhibit C shall survive any such expiration or termination of this Agreement as necessary to give full force and effect hereto or thereto, and such termination or expiration shall not terminate or otherwise affect any right or obligation accruing hereunder prior to such expiration or termination, or accruing thereafter in respect of any event occurring prior thereto. 

		
	9.
	REPRESENTATIONS AND WARRANTIES; COVENANTS 

		
	9.01
	Each Party hereby represents and warrants to the other Party as follows:

		
	9.01.2
	Such Party has all requisite corporate or company power and authority to enter into this Agreement and to perform the services contemplated hereunder (including, in the case of Master Distributor, the promotion of the Product hereunder).

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	9.01.3
	All actions on the part of such Party, the board of directors or managers of such Party and the equity holders or members of such Party necessary for (i) the authorization, execution, delivery and performance by such Party of this Agreement, and (ii) the consummation of the transactions contemplated hereby, having been duly taken.  This Agreement is legally valid and binding obligations of such Party, enforceable against such Party 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 before which any proceeding may be brought).

		
	9.01.4
	None of the execution and delivery of this Agreement, the consummation of the transactions provided for herein or contemplated hereby, or the fulfillment by such Party of the terms hereof or thereof, will (with or without notice or passage of time or both): (i) conflict with or result in a breach of any provision of the certificate of incorporation, by-laws, operating agreement or other governing documents of such Party, (ii) result in a default, constitute a default under, give rise to any right of termination, cancellation or acceleration, or require any consent or approval (other than approvals that have been obtained) under any of the terms, conditions, or provision of any material note, bond, mortgage, indenture, loan, arrangement, license, agreement, lease or other instrument or obligation to which such Party is a party or by which its assets may be bound, or (iii) violate any law or regulation applicable to such part or any of its assets.

		
	9.01.5
	There is no action, suit, proceeding or investigation pending or, to such Party’s knowledge, currently threatened, against such Party that questions the validity of this Agreement or the right of such Party to enter into this Agreement, or to consummate the transactions contemplated hereby, nor does such Party have knowledge that there is any basis for the foregoing.  Such Party is not a Party or subject to the provisions of any order, writ, injunction, judgment or decree of any Governmental Authority, which would adversely affect its rights or obligations hereunder or the transactions contemplated hereby.  All consents, approvals, qualifications, orders or authorizations of, filings with, or notices to any Governmental Authority or any other third party required in connection with (i) such Party’s valid execution, delivery or performance of this Agreement, and (ii) the consummation of any other transaction contemplated on the part of such Party hereby have been obtained, made or given. 

		
	9.01.6
	Such Party is not in violation of any law or regulation, which violation could reasonably be expected to affect such Party’s performance of its obligations hereunder, and, without limiting the generality of the foregoing, such Party holds each of the licenses, permits, approvals or authorizations necessary with respect to its current business and operations (and its right and obligations 

- 12-

contemplated hereby) in compliance with all laws and regulations except where the absence thereof does not materially impact the ability of such Party to perform its obligations hereunder. 
		
	9.01.7
	Such Party has not retained any finder, broker, agent, financial advisor or other intermediary in connection with the transactions contemplated by this Agreement. 

		
	9.02
	In addition to those representations and warranties of Master Distributor set forth above, Master Distributor further represents, warrants and covenants to Pacira as follows:

		
	9.02.2
	Master Distributor has, and will at all times during the term of this Agreement have, in all material respects, the requisite expertise, experience and skill to Promote the Product and that it shall cause the services to be performed hereunder by all affiliates, employees and/or agents or Sub-Distributors of Master Distributor to be performed, in all material respects, in a competent, efficient and professional manner. 

		
	9.02.3
	Neither Master Distributor nor any person employed or retained by Master Distributor or any Sub Distributor in connection with any work to be performed for or on behalf of Pacira has been debarred under Section 306(a) or (b) of the Food Drug and Cosmetic Act, 21 U.S.C.§ 301 et seq. as it may be amended from time to time and no debarred person will in the future be employed by Master Distributor or any Sub Distributor in connection with any work to be performed for or on behalf of Pacira.  If at any time after execution of this Agreement, Master Distributor becomes aware that Master Distributor or any person employed by Master Distributor or any Sub Distributor in connection with any work to be performed for or on behalf of Pacira shall become or shall be in the process of being debarred, Master Distributor hereby agrees to so notify Pacira immediately in writing and immediately take steps to prevent such person from performing any of the services contemplated by this Agreement, it being understood that if appropriate and prompt disciplinary action is taken and there is no material adverse effect on Pacira or its operations as a result of such person’s actions, then Master Distributor shall be deemed to have cured any potential breach of this Agreement caused by such person’s actions. 

		
	9.03
	EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NO PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, INCLUDING FITNESS FOR PURPOSE INTENDED OR MERCHANTABILITY, WHETHER EXPRESS OR IMPLIED. 

		
	9.04
	The representations and warranties of each Party set forth in this Section 9 shall survive until the expiration of the Term. 

		
	10.
	DISPUTES

- 13-

		
	10.01
	The Parties recognize that a bona fide dispute as to certain matters may from time to time arise during the Term that relates to either Party’s rights and/or obligations hereunder.  In the event of the occurrence of such a dispute, either Party may, by written notice to the other Party, have such dispute referred to their respective senior officials designated below or their successors, for attempted resolution by good faith negotiations within [**] after such notice is received.  Said designated senior officials are as follows:

For Master Distributor:    Chief Executive Officer, or its designee
For Pacira:    Chief Executive Officer, or its designee
In the event the designated senior officials are not able to resolve such dispute within the [**] period, either Party may invoke the provisions of Section 10.02.  Failure to invoke Section 10.02 may cause the Agreement to be subject to an assertion of termination.
		
	10.02
	Subject to Section 10.1, any dispute, controversy or claim initiated by either Party arising out of, resulting from or relating to this Agreement, or the performance by either Party of its obligations under this Agreement (other than bona fide Third Party actions or proceedings filed or instituted in an action or proceeding by a Third Party against a Party), whether before or after termination of this Agreement, shall be finally resolved by binding arbitration.  Whenever a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party.  Any such arbitration shall be conducted under the Commercial Arbitration Rules of the American Arbitration Association by a panel of three arbitrators appointed in accordance with such rules with the arbitration taking place in New Jersey.  The method and manner of discovery in any such arbitration proceeding shall be governed by the laws of the State of New Jersey.  The arbitrators shall have the authority to grant injunctions and/or specific performance and to allocate between the parties the costs of arbitration in such equitable manner as they determine.  Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be.  In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based upon such claim, dispute or other matter in question would be barred by the applicable statute of limitations.  Notwithstanding the foregoing, either Party shall have the right, without waiving any right or remedy available to such Party under this Agreement or otherwise, to seek and obtain from any court of competent jurisdiction any interim or provisional relief that is necessary or desirable to protect the rights or property of such Party, pending the selection of the arbitrators hereunder or pending the arbitrators’ determination of any dispute, controversy or claim hereunder. 

		
	11.
	GENERAL PROVISIONS

		
	11.01
	The failure of either party to exercise any of the provisions of this Agreement shall not be construed as a waiver of such provisions, at any future time, during the Term of this Agreement.

- 14-

		
	11.02
	This Agreement shall be binding upon the parties hereto and their respective representatives, heirs, successors and assigns.

		
	11.03
	It is expressly recognized by Pacira and Master Distributor that this Agreement is based upon Pacira’s reliance on senior management of Master Distributor and, therefore, this Agreement may not be assigned or transferred without prior written approval of Pacira.  Any change of control or merger of Master Distributor shall constitute an assignment for purposes of this Section 11.03.  Notwithstanding the foregoing and except as otherwise stated in Section 2.02, Master Distributor may engage the services of independent contractors to promote the sale of Product with respect to portions of the Territory, but only after each such independent contractor has been presented to Pacira for approval, which approval shall not be unreasonably withheld.   

		
	11.04
	THIS AGREEMENT, INCLUDING EXHIBITS A, B AND C ATTACHED HERETO AND INCORPORATED HEREIN AS AN INTEGRAL PART OF THIS AGREEMENT, CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND SUPERSEDES ALL PREVIOUS AGREEMENTS BY AND BETWEEN PACIRA AND MASTER DISTRIBUTOR AS WELL AS ALL PROPOSALS, ORAL OR WRITTEN, AND ALL NEGOTIATIONS, CONVERSATIONS OR DISCUSSIONS HERETOFORE HAD BETWEEN THE PARTIES RELATED TO THIS AGREEMENT.  MASTER DISTRIBUTOR ACKNOWLEDGES THAT IT HAS NOT BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY ANY REPRESENTATIONS OR STATEMENTS, ORAL OR WRITTEN, NOT EXPRESSLY CONTAINED HEREIN.

		
	11.05
	No modification of this Agreement shall be binding on either party unless it is in writing and signed by both parties.

		
	11.06
	No liability shall result from delay in performance or nonperformance caused by Force Majeure or circumstances beyond the reasonable control of the party affected, including, but not limited to, acts of God, fire, flood, war, embargo, terrorism, any United States government regulation, director or request, accident, labor trouble or shortage thereof or inability to obtain material equipment or transport.

		
	11.07
	Neither Party may publicly disclose the existence or terms or any other matter of fact regarding this Agreement and any ancillary agreements without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed; provided, however, that either Party may make such a disclosure and provide a copy of this Agreement and any ancillary agreements to the extent required by applicable Law or by the requirements of any nationally recognized securities exchange, quotation system or over-the-counter market on which such Party has its securities listed or traded.  In the event that such disclosure is required as aforesaid, the disclosing Party shall make reasonable efforts to provide the other Party with notice beforehand and to coordinate with the other Party with respect to the wording and timing of any such disclosure.  Notwithstanding the foregoing, either Party may disclose to a third party the existence or terms or any other matter of fact regarding this Agreement and any ancillary agreements 

- 15-

and provide a copy of this Agreement and any ancillary agreements without the prior written consent of the other Party: (i) pursuant to, and in accordance with, any existing contractual obligations with such party or (ii) if such Third Party is an investor or a prospective investor, purchaser, partner, lender, or other potential financing source, Sub-Distributor or potential Sub-Distributor (or a representative of any of the foregoing) who is obligated in writing to keep such information confidential.
		
	11.08
	The parties intend that this Agreement be construed consistently with the laws of the State of New Jersey.  If there is a provision herein which is invalid under applicable law or inconsistent with applicable law, it shall either not be enforced or shall be enforced as if amended so as to be consistent with applicable law; but the remainder of the Agreement shall be fully enforceable as written.  All disputes shall be resolved in accordance with New Jersey State law.

		
	11.09
	The Parties do not intend this Agreement to create any third party beneficiaries.

		
	11.10
	Neither Pacira nor Master Distributor (which for the purposes of this Section 11 shall include their respective affiliates, directors, managers, officers, employees, consultants, equity holders, representatives and agents) shall have any liability to the other for any punitive damages, special, incidental, consequential or indirect damages, relating to or arising from the loss of commercial or business opportunity, revenue or profit, in connection with or arising out of this Agreement, even if such damages may have been foreseeable; provided that such limitation shall not apply in the case of (a) fraud, (b) intentional misconduct and (c) any damages (including, without limitation, the types enumerated in this Section 11.10) claimed by or paid to a third party in connection with a third party claim.

		
	11.11
	This Agreement may be executed in any number of counterparts each of which will be deemed an original and all of which taken together will be deemed to constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have hereunto signed this Agreement, effective as of the Effective Date.
    
    
PACIRA PHARMACEUTICALS, INC. 

By:  /s/ David Stack                

Its: President, CEO                

- 16-

Date: March 11, 2013                

    
CROSSLINK BIOSCIENCE, LLC  
  
By:  /s/ Thomas Fleetwood            

Its:  President                    

Date:  March 11, 2013                

- 17-

EXHIBIT A 

THE TERRITORY
The Territory during the Pilot Period shall consist of those geographic regions in the United States as agreed to by Master Distributor and Pacira and those target accounts in such geographic regions which agreed upon target accounts shall be set forth on a list prepared by Master Distributor. Master Distributor shall focus its initial selling efforts on such target accounts. During the Pilot Period, the parties shall also discuss and agree on the number of Sub Distributors in certain regional markets recommended by the Master Distributor. Master Distributor and Pacira may expand this list of Master Distributor target accounts and Sub Distributors at any time.
Attached hereto as Schedule A-1 is a list of Pacira’s “Carved-Out Accounts” that are assigned under contract to third parties other than the Master Distributor as of the Effective Date.  Carved Out Accounts shall also include [**].  During the Pilot Period, Master Distributor shall not promote the Product to any of the Carved Out Accounts set forth on Schedule A-1 and no Performance Based Payments will be paid to Master Distributor for any sales to a Carved Out Account.
In the event this Agreement is not terminated by Pacira as provided in Section 8.01, during the Subsequent Period, the Territory shall be the United States of America. Within [**] following the expiration of the Pilot Period, the parties will meet and review the performance of Master Distributor or any Sub Distributors during the Pilot Period on a territory by territory basis and thereafter agree on the business plan and operational role out of additional Sub Distributors in the Territory for the first year of the Subsequent Period (10/1/13 – 9/30/14). Thereafter, Master Distributor and Pacira shall schedule [**] meetings to discuss the ongoing promotion of the Product and agree on the Master Distributor target list within the Territory so as to align resources to maximize the sales of Product in the Territory.. 
Master Distributor shall not promote the Product to any Carved Out Accounts set forth on Schedule A-1 and no Performance Based Payments will be paid to Master Distributor for any sales to such Carved Out Accounts. 

 

EXHIBIT A -1

SCHEDULE A-1

CARVED OUT ACCOUNTS
*[**]
[**]

SCHEDULE A-1 - 1 -

EXHIBIT B
PERFORMANCE GOALS
(QUOTAS)
Annual Territory Minimum and [**] (quotas) for orthopedic and spine surgeries, expressed in total net sales of the Product and boxes during [**] following the Pilot Period are scheduled below. Achievement is based upon [**] in the given measurement period:

	
			
	Measurement Period
	Minimum Performance Goal
	[**]

	[**]
	[**]
	[**]

	[**]
	[**]
	[**]

	[**]
	[**]
	[**]

The above box configuration being [**] vials. The vial size is [**].
Note that in calculating achievement of the above quotas, Master Distributor shall receive [**] for all boxes of Product for which a Performance Based Payment was made.

EXHIBIT B  -1-

EXHIBIT C
PERFORMANCE BASED PAYMENTS
Master Distributor shall be entitled to be paid Performance Based Payments for sale of the Product in the Territory as follows:
1.    Master Distributor shall be entitled to a Performance Based Payment and Pacira shall pay such Performance Based Payments for all reported orthopedic and spine surgery uses of Product in the Territory on or after April 1, 2013.
2.     The Performance Based Payment shall be [**] for each box of Product. The current selling configuration is [**] vials to a box. The vial size is [**].
(a)    Master Distributor shall report to Pacira by the [**] following the end of [**],[**] actual documented usage in vials by target account in the Territory for orthopedic and spine surgeries (the “[**] Report”).  The [**] Report shall contain the date of use, name of surgeon, type of surgery, vials used and Product Lot # (if available).  For the purposes of calculating the Performance Based Payments, vials will be converted to boxes by Pacira. If the number of total Product vials in a box changes during the Term of this Agreement, the above calculation for Performance Based Payments shall be proportionally adjusted to reflect such change, effective as of the date of such change.
(b)    During the Pilot Period for the purposes of calculating the Performance Based Payment amount, Pacira shall increase the reported actual documented vial usage by [**] as a “Usage Adjustment Factor” to capture by account any additional estimated usage of vials of Product resulting from the Master Distributor’s selling efforts. By way of example, [**].  On a [**] basis, Pacira has the right, but not the obligation, to modify the “Usage Adjustment Factor” (but not below [**] of actual usage), on an account by account basis, based on prior period capture rates.  For example, [**].  For the avoidance of doubt, the “Usage Adjustment Factor” may be modified, by account, and by [**], at the sole discretion of Pacira, provided only that the “Usage Adjustment Factor” represents Pacira’s good faith effort to estimate actual sales resulting from Master Distributor selling efforts and in no event shall the Usage Adjustment Factor for an account fall below [**]. 
(c)     Within [**] of the end of the Pilot Period the Parties shall agree on the “Usage Adjustment Factor” for the next preceding [**]. Thereafter the Usage Adjustment Factor shall be determined on a [**] basis by the [**] reviews and adjustments as agreed will continue for [**] of the Subsequent Period [**]. Thereafter the Usage Adjustment Factor shall be adjusted [**] for the balance of the Agreement with the review and adjustment agreed by the [**]. For purposes of developing each Subsequent Period’s Usage Adjustment Factor, the Parties shall review, evaluate and discuss all actual sales of Product in the Territory.
(d)    Master Distributor shall not be entitled to any Performance Based Payments for any sales in the Territory to Carved-Out Accounts.

Exhibit C -1-

(e)    [**].
(f)    in the event Pacira implements a sales price increase for a box of Product, the above Performance Based Payments per box [**] shall be increased by the same percentage increase in the sales price, effective as of the date of such sales price increase.
(g)    in the event Pacira introduces an alternative selling configuration (such as changing the number of vials in a box or the size of the vial from [**]) (an “Alternative Product Configuration”), Pacira shall notify Master Distributor of the introduction of the Alternative Product Configuration and the pricing for such Alternative Product Configuration. In such event, the Performance Based Payment shall be adjusted to provide Master Distributor with the same proportionate share of the net selling price of the Alternative Product Configuration as currently being paid to Master Distributor for sales of Product hereunder. [**]. 
3.     Upon notice to the Master Distributor, Pacira shall have the right to audit all uses of the Product reported by the Master Distributor during the Term. Master Distributor shall make available all records and documents requested by Pacira in order to enable the completion of the audit. If the results of such audit indicates any overpayment to the Master Distributor such overpayment shall be promptly refunded by the Master Distributor. If the results of such audit indicates an underpayment such underpayment shall promptly be paid to the Master Distributor  
4.Performance Based Payments earned shall be paid [**] to the Master Distributor as follows:  
(a)    Master Distributor will submit the [**] Report to Pacira.  Pacira shall promptly report back to Master Distributor if in any situation the account usage of vials as reported exceeds purchases by the account (after taking into account any inventory of Product that such account may have previously had on hand during such [**] reporting period). In such an occurrence Pacira shall reduce such reported amounts for this account only to no more than what has been ordered by such account in the period.
(b)    Within [**] for which the Performance Based Payments are earned,  Pacira shall pay to Master Distributor, [**], the  Performance Based Payments so calculated and follow up with all backup supporting the calculations.  
		
	5. 
	If this Agreement is terminated, Pacira shall pay Master Distributor all Performance Based Payments to which Master Distributor is entitled hereunder by reason of sales made prior to the Termination Date.  

		
	6. 
	A “sale” made prior to the Termination Date means a binding contract created by a specific offer to purchase, which has been accepted by Pacira by the actual shipment of Product prior to the Termination Date.  Pacira, from time to time, enters into supply agreements which call for issuance of blanket purchase orders or otherwise contemplate Pacira supplying Product, but which do not obligate the purchaser to purchase any particular Product or guaranty of Products and which does not release Product for delivery.  Such agreements even if entered into prior to the Termination Date or prior to the end of the notification period 

EXHIBIT C -2-

do not constitute sales made prior to the Termination Date for purposes of determining the amount of the Performance Based Payment.

EXHIBIT C -3-

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