Document:

Exhibit 10.11

 

[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is not material and would be competitively harmful if publicly disclosed.

 

EXECUTION VERSION  

CONFIDENTIAL

 

EXCLUSIVE LICENSE AGREEMENT

 

This EXCLUSIVE LICENSE AGREEMENT (this, “Agreement”), dated October 26, 2016 (the “Effective Date”), is by and between THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK, a New York corporation (“Columbia”), and APPLIED THERAPEUTICS, INC., a Delaware corporation (“Company”).

 

1.                                      Definitions.

 

a.                                                  “Affiliate” shall mean any corporation or other entity that directly or indirectly controls, is controlled by, or is under common control with, another corporation or entity. Control means direct or indirect ownership of, or other beneficial interest in, fifty percent (50%) or more of the voting stock, other voting interest, or income of a corporation or other entity.

 

b.                                              “Commercially Reasonable Efforts” shall mean the level of efforts and expenditure of resources required to carry out such obligation in a manner consistent with the efforts and resources Company typically devotes to a product of similar market potential, at a similar stage in its development or product life, taking into account all relevant factors, including, without limitation, safety and efficacy, product profile, cost to develop, cost and availability of supply, the time required to complete development, the competitiveness of the marketplace (including the proprietary position and anticipated market share of the product), the patent position with respect to such product (including the ability to obtain or enforce, or have obtained or enforced, such patent rights), the third-party patent landscape relevant to the product, the regulatory structure involved, the likelihood of regulatory approval, the anticipated or actual profitability of the applicable product and other technical, commercial, legal, scientific, regulatory and medical consideration.

 

c.                                                   “Cover” or “Covered By” shall mean with respect to a product and a claim of a patent or patent application, that the making, having made, use, selling, offering for sale or import of the product would, in the country in which such action occurs, (i) in the case of a claim in an issued patent, infringe the claim, or (ii) in the case of a claim in a pending patent application, infringe the claim if it existed in an issued patent; in each case of (i) and (ii) in the absence of the licenses granted under this Agreement.

 

d.                                                  “[*] Patents” shall mean all Patents with claims Covering [*] Technology.

 

e.                                               “[*] Technology” shall mean aldose reductase inhibitors and uses of thereof, as described in invention disclosure document [*].

 

f.                                                    “Designee” shall mean a corporation or other entity that is employed by, under contract to, or in partnership with (i) Company, (ii) a Sublicensee, (iii) an Affiliate of Company or (iv) an Affiliate of a Sublicensee, wherein such corporation or other entity is granted the right to make, use, sell, promote, distribute, market, import, or export Products.

 

g.                                       “Field” shall mean the diagnosis and treatment of [*].

 

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h.                                                  “License Year” shall mean the one year period from the Effective Date of this Agreement or an anniversary thereof to the next anniversary of the Effective Date.

 

i.                                                  “Net Sales” shall mean the actual consideration paid to Company, its Affiliates or Sublicensees by a Third Party customer for sales of Product, minus [*]. In the event a Product is co-packaged, co-formulated or otherwise sold in a manner that includes one or more active therapeutic ingredients in addition to a Product (such Product, a “Combination Product”), then Net Sales, for purposes of determining royalty payments on such Combination Product, will be calculated by multiplying the Net Sales of the Combination Product by the fraction A over A+B, in which A is the net selling price of the Product portion of the Combination Product when such Product is sold separately during the applicable accounting period in which the sales of the Combination Product were made, and B is the aggregate net selling price of the other active therapeutic ingredient of the Combination Product when such other active therapeutic ingredient are sold separately during the accounting period in question. All net selling prices of the Product portion of the Combination Product and of the other active therapeutic ingredient of such Combination Product will be calculated as the average net selling price of the said ingredients during the applicable accounting period for which the Net Sales are being calculated in the particular country where the Combination Product is sold. In the event that, in any country or countries, no separate sale of either such above designated Products or such above designated other active therapeutic ingredient of the Combination Product are made during the accounting period in which the sale was made or if the net retail selling price for an active therapeutic ingredient cannot be determined for an accounting period, Net Sales allocable to the Product in each such country will be determined by mutual agreement reached in good faith by Columbia and Company prior to the end of the accounting period in question based on an equitable method of determining same that takes into account, on a country by country basis, variations in potency, the relative contribution of the Product and each other active therapeutic ingredient in the combination, and relative value to the end user of the Product and each such other active therapeutic ingredient.

 

j.                                                 “Net Sublicensing Revenue” shall mean any and all payments received by Company from Sublicensees in consideration for granting such Sublicensees a sublicense of the rights granted to Company under this Agreement, including, without limitation, sublicense issue fees, lump sum payments, option fees, milestone payments (but only to the extent such milestone payments are in excess of the milestone payments required to be paid by Company under this Agreement) or other similar payments, provided, however, that Net Sublicensing Revenue shall exclude (i) payments made to finance research and development of Products, including without limitation, those payments intended to pay for the purchase or use of equipment, supplies, products or services, and/or the use of employees and/or consultants, (ii) payments made by a Sublicensee in consideration of the issuance by Company of equity or debt securities and not in consideration of the sublicense of rights under this Agreement, (iii) and royalties on Net Sales. To the extent Company receives compensation for both a grant of a sublicense of rights granted under this Agreement and the grant of other rights or licenses or undertaking of other obligations, such compensation will be reasonably apportioned between that amount attributable to the sublicense of rights granted hereunder, which shall be deemed Net Sublicensing Revenue, and that amount attributable to the grant of other rights or licenses or undertaking of other obligations, which shall be excluded from Net Sublicensing Revenue, such apportionment to be reasonably agreed upon by the parties. However, if the parties cannot agree upon such apportionment, senior management from each party will meet to discuss such apportionment and if senior management is unable to reach agreement, each party will select an independent expert with experience in valuation on intellectual property licenses in biotechnology, and the experts so chosen will agree upon such apportionment which shall be final and binding on the parties.

 

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k.                                                  “Other Product” shall mean any product that (i) is not a Patent Product and (ii) the manufacture, use, sale, offering for sale or importation of which would not have been possible but for the use of the Technical Information.

 

l.                                                  “Patent” or “Patents” shall mean: (i) the United States and foreign patents and/or patent applications listed in Exhibit A; (ii) any United States and foreign patents and/or patent applications that claim priority to the patents and/or patent applications listed in Exhibit A; (iii) any and all claims of continuation-in-part applications that claim priority to the United States or foreign patents and/or patent applications described in subsections (i) and (ii), but provided only where such claims are directed to inventions disclosed in the manner provided in the first paragraph of 35 U.S.C. Section 112 in the United States and foreign patents and/or patent applications described in subsections (i) and (ii), and such claims in any patents issuing from such continuation-in-part applications; (iv) any and all foreign patent applications, foreign patents or related foreign patent documents that claim priority or are otherwise foreign counterparts of the patents and/or patent applications described in subsections (i), (ii) or (iii); (v) any and all divisionals, continuations, reissues, re-examinations, renewals, substitutions and extensions of any of the foregoing; and (vi) any and all patents issuing from any of the foregoing. For the avoidance of doubt, “Patents” shall not include any patents or patent applications based on research conducted after the Effective Date, except as otherwise agreed in a separate writing.

 

m.                                          “Patent Product” shall mean any product, the manufacture, use, sale, offering for sale or importation of which is Covered by a Valid Claim of a Patent.

 

n.                                              “Product” or “Products” shall mean a Patent Product and/or an Other Product.

 

o.                                              “Royalty Term” shall mean, on a country-by-country and Product-by-Product basis, (a) with respect to a Patent Product, the period commencing on first commercial sale of the Patent Product in such country and ending on the last to expire Valid Claim Covering the Product in such country and (b) with respect to an Other Product, the period commencing on first commercial sale of the Other Product in such country and ending [*] thereafter.

 

p.                                              “Sublicensee” shall mean any Third Party that Company has granted a sublicense of the rights granted to it pursuant to this Agreement. An Affiliate of Company exercising rights hereunder shall not be considered a Sublicensee.

 

q.                                              “Technology” means (i) aldose reductase inhibitors and the use thereof, as described in invention disclosure documents [*] and (ii) the [*] Technology.

 

r.                                                 “Technical Information” shall mean any know-how, technical information and data provided by Columbia related to the Technology that (i) is developed by Columbia under the direction of [*] or an individual working under [*] direction prior to the Effective Date, (ii) has not been disclosed to or is not generally available to the public prior to the Effective Date, and (iii) is described and documented as disclosed to Company in a technology transfer memorandum signed by Columbia and Company.

 

s.                                                “Territory” shall mean: (i) with respect to all Patents other than the [*] Patents, global except China, Taiwan, Hong Kong and Macao and (ii) with respect to the [*] Patents only, global.

 

t.                                                 “Third Party” shall mean any entity or person other than Company, Columbia and their respective Affiliates.

 

u.                                              “Valid Claim” shall mean a claim of an issued and unexpired patent or a pending claim of a pending patent application that has not been (i) abandoned, finally rejected or expired without the

 

[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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possibility of appeal or refiling, (ii) held to be invalid, revoked or unenforceable through a final judgment of a court or other governmental agency of competent jurisdiction from which no appeal can be or is taken, (iii) admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; except that “Valid Claim” shall exclude any claim in a pending patent application that has not been granted within [*] following the earliest claimable priority date, unless and until such claim is granted.

 

2.                                      License.

 

a.                                              Columbia grants to the Company and any Affiliate thereof, upon and subject to all the terms and conditions of this Agreement (including Section 3(a) hereof):

 

i.                                        an exclusive license under the Patents to discover, develop, manufacture, have made, use, sell, offer to sell, have sold, import, export, distribute, rent or lease Products in the Field and throughout the Territory; and

 

ii.                                     a non-exclusive license to use Technical Information to discover, develop, manufacture, have made, use, sell, offer to sell, have sold, import, export, distribute, rent or lease Products in the Field and throughout the Territory.

 

b.                                              Columbia grants to Company the right to grant sublicenses of the licenses granted in Section 2(a) without Columbia’s consent, provided that: (i) the Sublicensee agrees to abide by and be subject to all the terms and provisions of this Agreement applicable to the Company; (ii) the Sublicensee shall [*] under this Agreement; (iii) in the event any Sublicensee (or any entity or person acting on its behalf) initiates any proceeding or otherwise asserts any claim challenging the validity or enforceability of any Patent in any court, administrative agency or other forum, Company shall, upon written request by Columbia, terminate forthwith the sublicense agreement with such Sublicensee, and the sublicense agreement shall provide for such right of termination by Company; (iv) the sublicense agreement shall provide that, in the event of any inconsistency between the sublicense agreement and this Agreement, this Agreement shall control; (v) the Sublicensee will submit quarterly reports to Company consistent with the reporting provision of Section 5(a) herein; (vi) Company remains fully liable for the performance of its and its Sublicensee’s obligations hereunder; (vii) Company notifies Columbia of any grant of a sublicense within [*] after execution of such sublicense and upon written request of Columbia, provides a copy of the executed sublicense to Columbia; and (viii) no such sublicense or attempt to obtain a Sublicensee shall relieve Company of its diligence obligations under this Agreement, nor shall it relieve Company of its obligations to pay Columbia any and all license fees, royalties and other payments due under this Agreement.

 

All rights and licenses granted by Columbia to Company under this Agreement are subject to (i) any limitations imposed by the terms of any government grant, government contract or government cooperative agreement applicable to the technology that is the subject of this Agreement, and (ii) applicable requirements of 35 U.S.C. Sections 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, Company agrees that, to the extent required under 35 U.S.C. Section 204, any Product used, sold, distributed, rented or leased by Company and its Affiliates and Sublicensees, and their respective Designees (collectively, the “Sellers”) in the United States will be manufactured substantially in the United States. In addition, Company agrees that, to the extent required under 35 U.S.C. Section 202(c)(4), the United States government is granted a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any Patent throughout the world.

 

c.                                              All rights not specifically granted herein are reserved to Columbia. Except as expressly provided under this Section 2, no right or license is granted (expressly or by implication or estoppel) by Columbia to Company or its Affiliates or Sublicensees under any tangible or intellectual

 

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property, materials, patent, patent application, trademark, copyright, trade secret, know-how, technical information, data or other proprietary right.

 

3.                                      Reservation of Rights for Research Purposes; Freedom of Publication.

 

a.                                             Notwithstanding the exclusive license granted to Company in Section 2(a)(i), Columbia reserves the right to (x) practice the Patents for academic research and educational purposes in the Field and (y) permit other entities (and such entities’ researchers) to practice and use such Patents for academic research and educational purposes in the Field; in each case of (i) and (ii) solely for non- commercial purposes which do not involve (i) [*] or (ii) [*]. Columbia shall obtain from all entities or individuals who are given permission to practice and use such Patents an agreement in writing to limit such use to academic research and educational purposes in accordance with the foregoing sentence. Nothing in this Agreement shall be interpreted to limit in any way the right of Columbia and its faculty or employees to practice and use such Patents for any purpose outside the Field or to license or permit such use outside the Field by third parties.

 

b.                                             Company acknowledges that Columbia is dedicated to free scholarly exchange and to public dissemination of the results of its scholarly activities. Columbia and its faculty and employees shall have the right to publish, disseminate or otherwise disclose any information relating to its research activities, including Technical Information.

 

4.                                      Fees, Royalties and Payment.

 

a.                                             Importance of Technical Information. Company has requested, and Columbia has agreed, to grant Company certain rights to Technical Information as set forth in Section 2(a)(ii). Company desires to exercise these rights in order to develop and commercialize the technology licensed under this Agreement. Because of the importance of Technical Information, Company has agreed to pay certain royalties to Columbia on Other Products, as specified below, even if it is not Covered by a Patent, in order to obtain rights to Technical Information. Company has agreed to these payments because of the commercial value of Technical Information, separate and distinct from the commercial value of the Patents. Company acknowledges that it would not have entered into this Agreement without receiving the rights to the Technical Information specified in Section 2(a)(ii). Company further acknowledges that licenses to Technical Information and each patent and application within the definition of Patents were separately available from a license to the Patents, and that for convenience and because of the preference of Company, the parties executed a combined license to the Patents and Technical Information.

 

b.                                             In consideration of the licenses granted under Section 2(a) of this Agreement, the Company shall pay to Columbia as follows:

 

i.                                       License Fee: A nonrefundable, non-recoverable and non-creditable license issue fee in the sum of [*], payable upon execution of this Agreement;

 

ii.                                    Royalties:

 

A.                                 During the Royalty Term, with respect to sales of Products by the Sellers in the Territory, a nonrefundable and non-recoverable royalty of:

 

(1)         [*]% on the first [*] cumulative, global Net Sales of Patent Products;

 

(2)         [*]% on all Net Sales of Patent Products after the first [*]

 

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cumulative, global Net Sales of Patent Products; and

 

(3)         [*]% on Net Sales of Other Products.

 

B.                                 If Company enters into any license agreement with a Third Party for patent rights that are necessary or essential for Company to commercialize a Product, Company may offset any royalty payments under such Third Party agreement from royalties payable under the Agreement, provided that (1) no single royalty payment may be reduced by more than [*], and (2) Company uses commercially reasonable efforts to procure from such Third Party similar royalty offset provisions.

 

C.                                 Notwithstanding the foregoing, beginning on the tenth (10th) anniversary of the Effective Date and continuing on each anniversary of the Effective Date thereafter during the Royalty Term, Company shall pay to Columbia a nonrefundable and non-recoverable minimum royalty payment in the amount of [*]. Each such minimum royalty payment will be credited against earned royalties accrued during the same License Year in which the minimum royalty payment is due and payable. To the extent minimum royalty payments exceed the earned royalties accrued during the same License Year, this excess amount cannot be carried over to any other subsequent License Year, either to decrease the earned royalties due in that License Year or to decrease the minimum royalty payments due in that License Year.

 

c.                                              In consideration of Company’s right to sublicense third parties granted under Section 2(b) of this Agreement, Company shall pay to Columbia the following nonrefundable, non- recoverable and non-creditable amounts:

 

i.                                       [*] of Net Sublicensing Revenue received by Company [*];

 

ii.                                    [*] of Net Sublicensing Revenue received by Company [*]; and

 

iii.                                 [*] of Net Sublicensing Revenue received by Company [*].

 

d.                                             Development Milestone Payments: In the event that the Company, Sublicensees, or their Affiliates (collectively “Developer”) develops a Product for potential commercial sale in the Territory, the following nonrefundable, non-recoverable and non-creditable milestone payments shall be made by Company to Columbia with respect to the first Product to achieve the following events (each, a “Milestone Event”):

 

[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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Milestone Event
    	
 
    	
Milestone Payment
    
	
[*]
    	
 
    	
[*]
    

 

For purposes of the foregoing Milestone Events, the following definitions shall apply:

 

i.                                         “[*]” means [*].

 

ii.                                      “[*]” means [*].

 

iii.                                   “[*]” means [*].

 

iv.                               “[*]” means [*].

 

v.                                     “[*]” means, [*].

 

e.                                                Highest Royalty Due. Columbia shall not be entitled to more than [*] on the same Product sale under Section 4b(ii)(A). To the extent a Product was a Patent Product as of the date of first commercial sale but subsequently ceases being a Patent Product but is still an Other Product, Columbia shall be entitled to the Other Product royalty rate on the Product, but only for the remainder of the Royalty Term for the Product as an Other Product, with the Royalty Term being deemed to have commenced as of the date first commercial sale of the Patent Product. By way of example, but not by way of limitation, if the manufacture of a Product is Covered by the claim of a Patent, and the

 

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manufacture of that Product would not have been possible but for the use of the Technical Information, the Product is a Patent Product, not an Other Product, and Company must pay the royalty specified in Section 4(b)(ii)(A)(1) or Section 4(b)(ii)(A)(2), as applicable. If, after some period of time (for example, five years) of paying the royalties specified in Section 4b(ii)(A)(1) or Section 4b(ii)(A)(2) on the Product, the Product ceases to be a Patent Product, Company must continue to pay royalties on the Product as an Other Product as specified in Section 4(b)(ii)(A)(3) for the remainder of the Royalty Term, which is measured from the first bona fide commercial sale of the Patent Product on a country-by-country and product-by-product basis.

 

g.                                               No Non-Monetary Consideration. Without Columbia’s prior written consent, the Sellers shall not solicit or accept any consideration for the sale of any Product other than as will be accurately reflected in Net Sales. Furthermore, Company shall not enter into any transaction with any Affiliate that would circumvent its monetary or other obligations under this Agreement.

 

h.                                              Sale Below Fair Market Value. In the event that any Seller sells Product to a Third Party to whom it also sells other products, the price for Licensed Product shall not be established such that Net Sales is below fair market value with the intent of increasing market share for other products sold by such Seller to such Third Party or for the purpose of reducing the amount of royalties payable on the Net Sales of Product. If the sale of Product under such circumstances results in Net Sales below the fair market value of Product, then the Net Sales of Product in such transaction shall be deemed to be the fair market value for purposes of calculating payments owed to Columbia under this Agreement.

 

i.                                                  Rate Adjustment on Challenge; Payment of Costs and Expenses.

 

(i)                                   In the event Company (or any entity or person acting on its behalf) initiates any proceeding or otherwise asserts any claim challenging the validity or enforceability of any Patent in any court, administrative agency or other forum (“Challenge”), all royalty rates set forth in Sections 4(b)(ii) shall be [*] on and after the date of such Challenge for the remaining term of this Agreement. Notwithstanding the foregoing, a Challenge excludes (A) any bona fide patent infringement defense against a claim of infringement of any Patent brought by Columbia or a Third Party or (B) in response to a claim by Columbia that a royalty payment is due, a claim brought by Company asserting that the Royalty Term for the applicable product has expired because there is no longer a Valid Claim of a Patent Covering such product in the applicable country.

 

(ii)                                If, after a final decision is rendered on a Challenge, there exists at least one Valid Claim among the claims Challenged by Company, Company shall pay all costs and expenses incurred by Columbia (including actual attorneys’ fees) in connection with defending a Challenge. Company shall make payment within [*] after receiving an invoice from Columbia, which invoice may be sent after a final decision is rendered on the Challenge.

 

Company acknowledges and agrees that the provisions set forth in this Section 4(i) reasonably reflect the value derived from the Agreement by Company in the event of a Challenge. In addition, Company acknowledges and agrees that any payments made under this Section 4(i) shall be nonrefundable and non- recoverable for any reason whatsoever.

 

j.                                                 Equity Grant and Related Rights.

 

i.                                        Upon the achievement of the Funding Milestone, Company shall issue to Columbia the number of shares of the Company that is equal to five percent (5%) of the outstanding common stock of the Company on a fully diluted basis, calculated based on the number of shares of

 

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capital stock of the Company issued and outstanding on a fully diluted basis immediately after the closing of the Funding Milestone, including all common stock equivalents and all shares directly or indirectly allocated to any equity plan or pool (and including the shares to be issued to Columbia) (the “Columbia Shares”). Such shares shall be issued pursuant to a Stock Purchase Agreement acceptable to Columbia. As a condition precedent to the issuance of the Columbia Shares, Columbia must either (a) become a party to that certain Voting Agreement by and among the Company and the shareholders named therein (the “Voting Agreement”), as a “Key Holder” and a “Stockholder” and therefore be bound by and subject to all terms and provisions of the Voting Agreement applicable to a “Key Holder” and a “Stockholder”, or (b) enter into an agreement with the Company and the other shareholders party to the Voting Agreement that provides for rights and obligations substantially similar to those rights and obligations applicable to “Key Holders” and “Stockholders” in the Voting Agreement; provided that the Voting Agreement or other agreement described in clause (b) above shall include the provisions set forth in Exhibit C annexed hereto. Notwithstanding the foregoing, if the Funding Milestone is not attained within [*] following the Effective Date or if the Company is involved in any merger, consolidation, share exchange, other business combination, recapitalization, sale of all or substantially all of its assets, liquidation or dissolution prior to the attainment of the Funding Milestone, Company shall issue the Columbia Shares to Columbia upon the [*] of the Effective Date or upon such earlier date that any such transaction is consummated, and shall maintain the percentage of the Columbia Shares at five percent (5%) (calculated as described above) by the issuance of additional shares of Common Stock to Columbia at all times through the time that Company has received [*] in total gross cash financing proceeds from the sale of capital stock,

 

ii.                                    In connection with the equity grant, Company shall grant to Columbia the right to designate a non-voting board observer (“Board Observer”) who may attend or otherwise participate in all meetings of the Board of Directors of the Company. Columbia will be required to enter into a mutually acceptable form confidentiality agreement prior to the Board Observer’s attending any meeting of the Board of Directors, and the Board of Directors may exclude the Board Observer from discussions of Company information and access to Company materials that the Board of Directors reasonably determines would present a conflict of interest to Columbia or are reasonably necessary to preserve the attorney-client privilege.

 

iii.                                 If the Company proposes to sell any equity securities or securities that are convertible into equity securities of the Company (“New Securities”), then Columbia and/or its Assignee (as defined below) will have the right to purchase up to [*] of the New Securities on the same terms and conditions as are offered to the other purchasers in each such financing. Company shall provide [*] written notice in advance of the closing of each such financing, including reasonable detail regarding the terms and purchasers in the financing. If all New Securities offered to Columbia are not elected to be purchased or acquired as provided in the immediately preceding sentence, the Company may, during the [*] following the expiration of the [*] provided in the immediately preceding sentence, offer and sell the remaining unsubscribed portion of such New Securities to any purchaser at a price not less than, and upon terms no more favorable to the offeree than, those specified in the notice to Columbia. If the Company does not enter into an agreement for the sale of the New Securities within such [*], or if such agreement is not consummated within [*] of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to Columbia in accordance with this Section 4(j)(iii). As used herein, the term “Assignee” means (A) any entity to which the University’s participation rights under this section have been assigned either by Columbia or another entity (solely as permitted pursuant to the assignment clause set forth in this Agreement), or (B) any entity that is controlled by Columbia, provided that any such Assignee is not a competitor of the Company (asreasonably determined by the Company’s Board of Directors). A venture or investment fund shall not be deemed to be a competitor of the Company by reason of its ownership of equity of entities that compete with the Company.

 

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iv.                                The right to purchase New Securities pursuant to this Section 4(j) shall not be applicable to (A) the Series A Preferred Stock of the Company issued pursuant to that certain Series A Preferred Stock Purchase Agreement, as amended from time to time, by and among the Company and the parties named therein, (B) Exempted Securities (as defined in the Company’s Certificate of Incorporation), and (C) shares of common stock issued in the Company’s first underwritten public offering of its common stock under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “IPO”).

 

v.                                   The covenants set forth in this Section 4(j) shall terminate and be of no further force or effect upon the first to occur of (A) that date immediately preceding the consummation of the IPO, (B) that date upon which the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or (C) except as provided in Section 4.j.i., a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation.

 

k.                                             Lock-Up.

 

i.                                       Agreement to Lock-Up. Columbia hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s IPO and ending on the date specified by the Company and the managing underwriter, or such other period of one hundred eighty (180) days and up to an additional thirty-four (34) days as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (A) the publication or other distribution of research reports; and (B) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto) (such period, the “Restricted Period”): (I) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock held immediately prior to the effectiveness of the registration statement for the IPO or (II) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the capital stock, whether any such transaction described in clause (I) or (II) above is to be settled by delivery of capital stock or other securities, in cash or otherwise. The foregoing provisions of this Section 4(k)(i) shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Company and any Assignees that acquire equity of the Company if all officers, directors and holders of more than one percent (1%) of the outstanding capital stock (after giving effect to the conversion into common stock of all outstanding capital stock) enter and continue to be bound by into similar agreements. The underwriters in connection with the IPO are intended third party beneficiaries of this Section 4(k)(i) and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. The Company further agrees to, and it will cause any Assignees that acquire equity of the Company to agree to, execute such agreements in customary form as may be reasonably requested by the underwriters in the IPO that are consistent with this Section 4(k)(i) or that are necessary to give further effect thereto.

 

ii.                                    Stop Transfer Instructions. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the shares of capital stock of the Company and any Assignees that acquire equity of the Company (and transferees and assignees thereof) until the end of the Restricted Period.

 

5.                                      Reports and Payments.

 

a.                                              Within [*] after the first business day of [*] of each License Year of this

 

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Agreement, Company shall submit to Columbia a written report with respect to the preceding calendar quarter (the “Payment Report”) stating:

 

i.           Gross and Net Sales of Products by the Sellers during such [*], together with detailed information sufficient to permit Columbia to verify the accuracy of reported Net Sales, including Product names, country where manufactured, country where sold, actual selling price and units sold;

 

ii.            Net Sublicensing Revenue received by Company from its Sublicensees during such [*] together with the respective payment reports received by Company from any Sublicensees; and

 

iii.           A calculation under Section 4 of the amounts due to Columbia, making reference to the applicable subsection thereof.

 

b.            Simultaneously with the submission of each Payment Report, Company shall make payments to Columbia of the amounts due for the [*] covered by the Payment Report. Payment shall be by check payable to The Trustees of Columbia University in the City of New York and sent to the following address:

 

The Trustees of Columbia University in the City of New York 

Columbia Technology Ventures

P.O. Box 1394

New York, NY 10008-1394

 

or to such other address as Columbia may specify by notice hereunder, or if requested by Columbia, by wire transfer of immediately available funds by Company to:

 

[*]

 

or to such other bank and account identified by notice to Company by Columbia. Company is required to send the [*] Payment Report whether or not royalty payments are due.

 

c.            Within [*] after the date of termination or expiration of this Agreement, Company shall pay Columbia any and all amounts that are due pursuant to this Agreement as of the date of such termination or expiration, together with a Payment Report for such payment in accordance with Section 5(a) hereof, except that such Payment Report shall cover the period from the end of the last [*] prior to termination or expiration to the date of termination or expiration. Nothing in the foregoing shall be deemed to satisfy any of Company’s other obligations under this Agreement upon termination or expiration.

 

d.            Minimum royalty payments are payable in accordance with Section 4(b)(ii)(C).

 

e.            With respect to revenues obtained by Company in foreign currency, Company shall make royalty payments to Columbia in the United States in United States Dollars. Royalty payments for transactions outside the United States shall first be determined in the currency of the country in which they are earned, and then converted to United States dollars using the buying rates of exchange quoted by The Wall Street Journal (or its successor) in New York, New York for the last business day of the [*] in which the royalties were earned. Any and all loss of exchange value, taxes, or other expenses incurred in the transfer or conversion of foreign currency into U.S. dollars, and any income, remittance, or other taxes on such royalties required to be withheld at the source shall be the exclusive responsibility of Company, and shall not be used to decrease the amount of royalties due to Columbia. Royalty statements shall show sales both in the local currency and US dollars, with the exchange rate used clearly stated.

 

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f.             Company shall maintain at its principal office usual books of account and records showing its actions under this Agreement, and sufficient to determine Company’s compliance with its obligations hereunder. Upon reasonable notice to Company, but not more than [*], Columbia may have an independent certified public accountant or auditor (reasonably acceptable to Company) inspect such books and records during business hours at Company’s principal offices for purposes of verifying the accuracy of the amounts paid under this Agreement. Prior to any such inspection, Company may require the accountant or auditor to sign Company’s form non-disclosure agreement, and the accountant or auditor will be entitled to provide only the results of the audit to Columbia with a copy to Company. The review may cover a period of not more than [*] before the first day of the [*] in which the review is requested. In the event that such review shows that Company has underpaid royalties by [*], Company shall pay, within [*] after demand by Columbia, the costs and expenses of such review (including the fees charged by Columbia’s accountant or auditor involved in the review), in addition to amount of any underpayment and any interest thereon. Company agrees to cooperate fully with the accountant or auditor in connection with any such review. During the review, Company shall provide the accountant or auditor with accurate and complete information as necessary to conduct the inspection, including, without limitation, such information relating to sales, inventory, manufacturing, purchasing, transfer records, customer lists, invoices, purchase orders, sales orders, shipping documentation, third-party royalty reports, cost information, pricing policies, and agreements with third parties (including, and to the extent applicable, such information from the Sellers).

 

g.            Notwithstanding anything to the contrary in this Agreement (including Section 16(b)), and without limiting any of Columbia’s rights and remedies hereunder, any payment required hereunder that is made late (including unpaid portions of amounts due) shall bear interest, [*], at the rate of [*]. Any interest charged or paid in excess of the maximum rate permitted by applicable New York State Law shall be deemed the result of a mistake and interest paid in excess of the maximum rate shall be credited or refunded (at the Company’s option) to Company.

 

h.            Company shall reimburse Columbia for any costs and expenses incurred in connection with collecting on any arrears of Company with respect to its payment and reimbursement obligations under this Agreement (such as Section 11(b) of this Agreement), including the costs of engaging any collection agency for such purpose.

 

6.                                      Diligence.

 

a.            Company shall use Commercially Reasonable Efforts to research, discover, develop and market Products for commercial sale and distribution in the Territory, and to such end, such efforts will include the following:

 

i.             Company shall adhere to its executive summary/business plan/development plan, a current version of which is attached as Exhibit B, subject to reasonable adjustments in the ordinary course of business as determined in the discretion of Company’s Board of Directors;

 

ii.            [*] within [*] of the Effective Date;

 

iii.           [*] within [*] of the Effective Date;

 

iv.           Secure [*] in total gross cash financing proceeds from the sale of capital stock within [*] of the Effective Date (the “Funding Milestone”).

 

b.            Notwithstanding any other provisions of this Agreement, failure to achieve any of

 

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Company’s diligence obligations under this Section 6 shall result in Columbia having the option of terminating all of the licenses granted under Section 2 in accordance with Section 16(c) of this Agreement, or converting any or all of such exclusive licenses to nonexclusive licenses with no right to sublicense, and no right by Company to initiate legal proceedings pursuant to Section 11; provided, however, that Columbia may not terminate this Agreement or convert the license to non-exclusive unless (i) Columbia has provided Company at least ninety (90) days’ prior written notice, and (ii) Company has failed to cure the breach within such ninety (90) day period. In addition, Columbia agrees to discuss in good faith any reasonable request for extension of the cure period by Company set forth above.

 

c.            No less often than every [*] after the Effective Date of this Agreement, Company shall [*].

 

7.                                      Confidentiality.

 

a.            “Confidential Information” shall mean means all information disclosed by or on behalf of one party (in such capacity, “Disclosing Party”) to the other party (in such capacity the “Disclosing Party”) or Disclosing Party’s Agents that is marked or identified as “confidential” or “proprietary” (or similar legend) or is of such a nature that would be readily recognized by a reasonable person to be proprietary or confidential to Disclosing Party; provided, however, that “Confidential Information” shall exclude any such information that the Receiving Party is able to demonstrate by written evidence: (i) was rightfully known to Receiving Party without restriction on use or disclosure before receipt from Disclosing Party; (ii) is or becomes generally available to the public through no fault of Receiving Party or its affiliates or any of their representatives; (iii) is obtained by Receiving Party from a Third Party having a lawful right to make such disclosure free from any obligation of confidentiality or non-use to Disclosing Party; or (iv) is independently developed by or for Receiving Party without reference to or use of any Confidential Information of Disclosing Party as evidenced by contemporaneous written records.

 

b.            Receiving Party agrees that it shall: (1) protect the Confidential Information with the same degree of care as it normally uses to preserve and safeguard its own Confidential Information of like importance, but not less than a reasonable degree of care; (2) use Confidential Information solely for purposes of performing its obligations and exercising its rights under this Agreement; and (3), except as otherwise consented to in writing by Disclosing Party, disclose Confidential Information only to its and its affiliates’ respective employees, directors, officers, advisors, agents and representatives (collectively, “Agents”) who have a need to know the Confidential Information for purposes of performance of Receiving Party’s obligations or exercising its rights under this Agreement undertaken an obligation of confidentiality substantially similar to that contained herein. Receiving Party shall be liable for any breach of its obligations under this Agreement by any of its Agents.

 

c.            The restrictions set forth in this Section 7 shall not apply to limit disclosure of Confidential Information to the extent that Receiving Party is required to disclose such Confidential Information pursuant to any law, court order or other governmental agency; provided Receiving Party: (i) promptly notifies Disclosing Party in writing of the existence, terms and circumstances of such required disclosure; (ii) consults with Disclosing Party on the advisability of taking legally available steps to resist or narrow such disclosure; and (iii) cooperates with Disclosing Party’s effort to seek a protective order or to otherwise limit disclosure.

 

d.            Neither party may disclose the terms and conditions of this Agreement to any Third Party, except that either party may provide or otherwise disclose the terms of this Agreement in connection with any financing transaction or due diligence inquiry pursuant to the terms of a confidentiality agreement that is at least as protective as the terms of this Section 7 and subject to the right of Receiving Party to use disclosed information solely for purposes of evaluating the financing or other transaction.

 

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e.              Upon the expiration or termination of this Agreement, or at any other time as requested by the Disclosing Party, the Receiving Party will return to Disclosing Party or, at Disclosing Party’s election, destroy, all Disclosing party’s Confidential Information, including any copies thereof or derivative, summaries or abstracts derived therefrom.

 

8.                                      Disclaimer of Warranty; Limitations of Liability.

 

COLUMBIA IS LICENSING THE PATENTS AND TECHNICAL INFORMATION ON AN “AS IS” BASIS. COLUMBIA MAKES NO WARRANTIES EITHER EXPRESS OR IMPLIED OF ANY KIND, AND HEREBY EXPRESSLY DISCLAIMS ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES OF ANY KIND AS TO THE PATENTS, TECHNICAL INFORMATION, PRODUCTS AND/OR ANYTHING DISCOVERED, DEVELOPED, MANUFACTURED, USED, SOLD, OFFERED FOR SALE, IMPORTED, EXPORTED, DISTRIBUTED, RENTED, LEASED OR OTHERWISE DISPOSED OF UNDER ANY LICENSE GRANTED HEREUNDER, INCLUDING BUT NOT LIMITED TO: ANY WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS, ADEQUACY OR SUITABILITY FOR A PARTICULAR PURPOSE, USE OR RESULT; ANY WARRANTIES AS TO THE VALIDITY OF ANY PATENT; AND ANY WARRANTIES OF FREEDOM FROM INFRINGEMENT OF ANY DOMESTIC OR FOREIGN PATENTS, COPYRIGHTS, TRADE SECRETS OR OTHER PROPRIETARY RIGHTS OF ANY PARTY.

 

a.            In no event shall Columbia, or its trustees, officers, faculty members, students, employees and agents, have any liability to Company, its Affiliates or any Third Party arising out of the use, operation or application of the Patents, Technical Information, Products, or anything discovered, developed, manufactured, used, sold, offered for sale, imported, exported, distributed, rented, leased or otherwise disposed of under any license granted hereunder by Company, its Affiliates, or any Third Party for any reason, including but not limited to, the unmerchantability, inadequacy or unsuitability of the Patents Technical Information, Products and/or anything discovered, developed, manufactured, used, sold, offered for sale, imported, exported, distributed, rented, leased or otherwise disposed of under any license granted hereunder for any particular purpose or to produce any particular result, or for any latent defects therein.

 

b.            In no event will Columbia, or its trustees, officers, faculty members, students, employees and agents, be liable to the Company, its Affiliates or any Third Party, for any consequential, incidental, special or indirect damages (including, but not limited to, from any destruction to property or from any loss of use, revenue, profit, time or good will) based on activity arising out of or related to this Agreement, whether pursuant to a claim of breach of contract or any other claim of any type.

 

c.            In no event shall Columbia’s liability to Company exceed the payments made to Columbia by Company under this Agreement.

 

d.            The parties hereto acknowledge that the limitations and exclusions of liability and disclaimers of warranty set forth in this Agreement form an essential basis of the bargain between the parties.

 

9.                                      Prohibition Against Use of Columbia’s Name.

 

Company will not use the name, insignia, or symbols of Columbia, its faculties or departments, or any variation or combination thereof, or the name of any trustee, faculty member, other employee, or student of Columbia for any purpose whatsoever without Columbia’s prior written consent.

 

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10.                               Compliance with Governmental Obligations.

 

a.            Notwithstanding any provision in this Agreement, Columbia disclaims any obligation or liability arising under the license provisions of this Agreement if Company or its Affiliates is charged in a governmental action for not complying with or fails to comply with governmental regulations in the course of taking steps to bring any Product to a point of practical application.

 

b.            Company and its Affiliates shall comply upon reasonable notice from Columbia with all governmental requests directed to either Columbia or Company or its Affiliates and provide all information and assistance necessary to comply with the governmental requests.

 

c.            Company and its Affiliates shall ensure that research, development, manufacturing and marketing under this Agreement complies with all government regulations in force and effect including, but not limited to, Federal, state, and municipal legislation.

 

11.                               Patent Prosecution and Maintenance; Enforcement.

 

a.            Columbia, by counsel it selects to whom Company has no reasonable objection, in consultation with Company and any counsel appointed by the Company, will prepare, file, prosecute and maintain all Patents in Columbia’s name and in countries designated by the Company. Columbia shall instruct its patent counsel (1) to copy Company on all correspondence related to Patents (including copies of each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination of any patent or patent application) and (2) as requested by Company, to provide an update as to the current status of all Patents. Columbia shall confer with Company to develop a strategy for the prosecution and maintenance of the Patents in the Territory, and shall give due consideration to Company’s comments and suggestions with respect to filing, prosecution, maintenance of the Patents in the Territory. Except as set forth above, Columbia shall not abandon (and/or fail to appeal a final rejection of) any claim of a Patent without Company’s prior written consent, subject to the provisions of Section 11(b)(iii) and Section 11(b)(iv). The parties agree that consultation between the parties relating to the Patents under this Section 11(a) shall be pursuant to a common interest in the validity, enforceability and scope of the Patents. Each party shall treat such consultation, along with any information disclosed by each party in connection therewith (including any information concerning patent expenses), on a strictly confidential basis, and shall not disclose such consultation or information to any party without the other party’s prior written consent. If Company initiates any Challenge, Columbia’s consultation obligation under this Section 11(a) shall automatically terminate; for the avoidance of doubt, any such termination shall not affect Company’s confidentiality and nondisclosure obligations with respect to consultation or disclosure of information prior to such termination, and shall not affect any other provisions of this Agreement (including Company’s reimbursement obligation under Section 11(b).

 

b.            Patent Expenses.

 

i.             Company will reimburse Columbia for all reasonable expenses Columbia has incurred prior to the Effective Date for patents and applications within the Territory, and will pay all reasonable expenses incurred in the future in so preparing, filing, prosecuting and maintaining the Patents. However, expenses incurred prior to Effective Date in connection with the Patents in the Territory that were not previously paid by Columbia’s licensee of such Patents outside the Territory are “Past Patent Expenses,” and Columbia, using reasonable efforts, estimates Past Patent Expenses as of [*] to be [*]. Past Patent Expenses shall be reimbursed by Company on the earliest of the following: (A) commencing on [*], and payable in [*] thereafter, (B) within [*] after the Company completes a financing or a series of related

 

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financings in which it has sold and issued shares of its capital stock with aggregate gross cash proceeds to the Company of at least [*], (C) the first day of February following the first full calendar year in which the Company records gross revenues of at least [*], or (D) in the event of a Change of Control. For purposes of the foregoing, “Change of Control” means any transaction or event or multiple transactions or events (including, without limitation, a merger, other business combination, share exchange, spin-off, liquidation or reorganization) as a result of which all or substantially all of the Company’s assets are sold, leased, licensed or otherwise transferred or a change of control shall occur or if there is an initial public offering of any securities of the Company.

 

ii.            Patent Expenses incurred by Columbia after the Effective Date with respect to the filing, prosecution and maintenance of the Patents in the Territory, including without limitation, attorneys’ fees, the costs of any interference proceedings, oppositions, reexaminations, or any other ex parte or inter partes administrative proceeding before patent offices, taxes, annuities, issue fees, working fees, maintenance fees and renewal charges (collectively “Future Patent Expenses”) shall be reimbursed to Columbia by Company within [*] of receiving Columbia’s invoice.

 

iii.           Upon failure of Company to pay any Past Patent Expenses or Future Patent Expenses as required by this Section 11(b), Columbia may, in its sole discretion, take either of the following actions: (A) abandon any said Patent(s) in its sole discretion, and in such event, Columbia will provide notice of abandonment to Company or (B) notify Company that Columbia will continue to prosecute such Patents at its expense, and in such event Company will have no further rights to such Patents under the Agreement.

 

iv.           With respect to non-US and non-PCT Future Patent Expenses, Columbia will send to Company a brief description of anticipated actions by country or region (e.g., conversion to applications in specific countries or regionals such as the EPO), when the action is due, and the associated expense for such actions on a county or regional basis in advance of such action due dates (hereinafter a “Patent Expense Estimate”). Within the later of (A) [*] prior to the action due dates or (B) [*] after Company’s receipt of the Patent Expense Estimate, Company shall ensure that Columbia receives payment of the reasonable Future Patent Expenses for the actions elected from the Patent Expense Estimate. Failure by Company to make the associated payment as described for a particular action will be considered an election not to secure the rights associated with the specific action, and Columbia may, in its sole discretion, abandon the Patents or in the event Columbia notifies Company that Columbia will continue to prosecute such Patents at its expense (“Returned Patents”), and Company will have no further rights to such Returned Patents under this Agreement, effective immediately upon Company receipt of Columbia’s notification to Company. Any over-payment will be applied to Future Patent Expenses. Upon Company’s request, any over-payment not used for Future Patent Expenses within [*] will be returned to the company promptly. Any expenses in excess of the Patent Expense estimate will be invoiced to Company.

 

c.            Patent Enforcement; Defense.

 

i.             Enforcement Action.

 

A.         In the event that Columbia or Company becomes aware of any actual or probable infringement of a patent within the Patents in the Field and Territory by a Third Party (“Third Party Infringer”), such Party shall promptly notify the other party in writing including evidence demonstrating prima facie infringement of specific claims of such Patent (“Infringement Notice”).

 

B.           Company will have the first right, but not the obligation to enforce the Patents against a Third Party Infringer of the Patent in the Field of Use and Territory at Company’s expense (an “Enforcement Action”). Company’s right to initiate an Enforcement Action shall apply only to claims of Patents that are exclusively licensed to Company under this Agreement and only in the Field and

 

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Territory which are exclusively licensed to Company under this Agreement. Company shall notify Columbia in writing of its intention to pursue an Enforcement Action not later than [*] after receipt of an Infringement Notice from Columbia or the delivery of an Infringement Notice to Columbia. In the event that Company does not pursue an Enforcement Action, Columbia shall have the right to initiate an Enforcement Action against the Third-Party Infringer at its own expense, unless Company has caused such infringement to cease. Company shall select counsel for any Company-initiated Enforcement Action that has substantial patent infringement litigation experience relating to pharmaceutical products, subject to Columbia’s approval, not to be unreasonably withheld or delayed. Company shall keep Columbia informed of the status of any Company-initiated Enforcement Action and shall consider any reasonable comments or suggestions made by Columbia in good faith. Columbia shall have the right to be represented by counsel of its own choice and at its own expense in any Company-initiated Enforcement Action, and to review and comment on papers to be filed during such action. Any proposed disposition or settlement of a Company-initiated Enforcement Action against any Third-Party Infringer shall be subject to Columbia’s prior written approval, which approval shall not be unreasonably withheld or delayed.

 

ii.            Defense Action.

 

A.         In the event that in the course of an Enforcement Action, the Third-Party Infringer initiates a proceeding seeking to invalidate, narrow or have claims declared unenforceable in the Field and Territory, including but not limited to declaratory judgement action in a United States District Court or inter partes review or interference proceedings in the United States Patent Office or similar proceedings in foreign jurisdictions (a “Defense Action”), the Party receiving notice of such action or proceeding shall promptly notify the other party in writing.

 

B.           To the extent that Company has control over the Enforcement Action, Company shall diligently defend the Patent in the Defense Action using counsel of its choice, subject to Columbia’s approval, not to be unreasonably withheld or delayed. Columbia shall be permitted to join and participate in such Defense Action at its own expense to the extent legally permitted. If Columbia is not legally permitted to join such Defense Action, Company shall consult with Columbia and Columbia shall have the right to review and comment on papers to be filed during such Defense Action. All comments and suggestions made by Columbia shall be considered in good faith by Company. To the extent that Columbia has control over the Enforcement Action, Company shall be permitted to join and participate in such Defense Action at its own expense to the extent legally permitted. If Company is not legally permitted to join such Defense Action, Columbia shall consult with and consider in good faith the comments and suggestions of Company with regard to such proceedings. Any proposed disposition or settlement of a Defense Action against any Third-Party Infringer shall be subject to prior written approval of both Parties, which approval shall not be unreasonably withheld or delayed.

 

iii.           Any recovery, whether by way of settlement or judgment, from a Third Party pursuant to a legal proceeding initiated in accordance with this Section 11(c) shall first be used to reimburse the party initiating such legal proceeding for its actual fees, costs and expenses incurred in connection with such proceeding and second to reimburse the other party for reasonable fees, costs and expenses actually incurred in connection with such proceeding, if any. Any remaining amounts from any such settlement or judgment shall be divided as follows: (A) [*], and (B) [*].

 

iv.           In the event a party initiates or defends a legal proceeding concerning any Patent pursuant to this Section 11, the other party shall cooperate fully with and supply all assistance reasonably requested by the party initiating such proceeding, including without limitation, joining the proceeding as a party if requested at the requesting party’s expense. Neither Party will make any admission or assert any position in any legal or administrative proceeding that is inconsistent with or adverse to any position asserted in an Enforcement Action or Defense Action, without prior written consent of the other

 

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party.

 

v.            Subject only to the rights granted to the Parties in this Section 11, the party that institutes any legal proceeding concerning any Patent pursuant to this Section 11 shall have sole control of that proceeding.

 

12.                               Indemnity and Insurance.

 

a.            Indemnity.

 

i.             Company will indemnify, defend, and hold harmless Columbia, its trustees, officers, faculty, employees, students and agents (“Indemnities”), from and against any and all actions, suits, claims, demands, prosecutions brought by a Third Party (each, a “Claim”), and indemnify the Indemnitees for any liabilities, costs, expenses, damages, deficiencies, losses or obligations (including attorneys’ fees) finally awarded or agreed to in settlement of any such Claim, to the extent any such Claim is based on, arises out of, or relates to this Agreement, including, without limitation, (i) the discovery, development, manufacture, packaging, use, sale, offering for sale, importation, exportation, distribution, rental or lease of Products, even if altered for use for a purpose not intended, (ii) the use of Patents or Technical Information by the Sellers or their customers, (iii) any representation made or warranty given by the Sellers with respect to Products, Patents or Technical Information, (iv) any infringement claims relating to Products, Patents or Technical Information, and (v) any asserted violation of the Export Laws (as defined in Section 15 hereof) by any of the Sellers. Company shall [*].

 

ii.            In the event Columbia is seeking the benefit of the defense and indemnification obligations set forth in Section 12(a)(i), Columbia must notify Company in writing, promptly after receipt of actual notice of any Claim for which it seeks to recover; provided, however, any delay or failure of notice shall not relieve Company of its obligations hereunder except to the extent that Company is actually prejudiced by such delay or failure to notify. Company shall have sole control and authority with respect to the defense, litigation, compromise or settlement of such Claim, except that any settlement involves any admission of wrongdoing or inequitable conduct by Columbia or any material commitments, responsibilities or obligations on the part of Columbia (other than the payment of money that can be fully satisfied by Company) shall require the prior written consent of Columbia, which consent shall not be unreasonably withheld, conditioned or delayed. Company shall not be responsible for any settlement it does not approve in writing. Columbia shall provide reasonable information, cooperation and assistance as required by Company (at Company’s expense). Columbia reserves the right to participate at its own cost in any proceedings with counsel of its own choosing, however, Columbia shall at all times be subject to Company’s sole control and authority with respect to defending, litigating or settling the Claim.

 

b.            Insurance.

 

i.             Company shall maintain, at all times during the term of this Agreement commencing at least [*] prior to [*], commercial general liability insurance (including product liability and contractual liability insurance applicable to Company’s indemnity obligations under Section 12(a)) with reputable and financially secure insurance carriers reasonably acceptable to Columbia to cover the activities of Company, Sublicensees, Designees, and their Affiliates, for minimum limits of [*] combined single limit for bodily injury and property damage per occurrence and in the aggregate. Such insurance shall include Columbia, its trustees, faculty, officers, employees and agents as additional insureds. Company shall furnish a certificate of insurance evidencing such coverage, with thirty days’ written notice to Columbia of cancellation or material change in coverage. The minimum amounts of insurance coverage required herein shall not be construed as creating any limitation on the Company’s indemnity obligation under Section 12(a) of this Agreement.

 

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ii.            Company’s insurance shall be primary coverage; any insurance Columbia may purchase shall be excess and noncontributory. The Company’s insurance shall be written to cover claims incurred, discovered, manifested, or made during or after the expiration of this Agreement.

 

iii.           Company shall at all times comply with all statutory workers’ compensation and employers’ liability requirements covering its employees with respect to activities performed under this Agreement.

 

13.          Marking. Prior to the issuance of patents falling within the definition of Patents, to the extent reasonably practical or required for the maintenance of Patent rights, Company shall mark all Patent Products made, sold, offered for sale, imported, or otherwise disposed of by Company under the license granted in this Agreement with the words “Patent Pending,” and following the issuance of one or more patents, with the numbers of such patents. The Company shall cause each of the Sellers to comply with the marking requirements of this Section 13.

 

14.          Global Social Responsibility. Company and Columbia shall take into consideration the principle of “Global Social Responsibility” when executing this Agreement. “Global Social Responsibility” means facilitating the availability of Licensed Products in Developing Countries (i.e., The World Bank’s listing of “Low Income Economies”) at locally affordable prices to improve access to such Products in Developing Countries.

 

15.                               Export Control Laws.

 

a.            Company agrees to comply with U.S. export laws and regulations pertaining to the export of technical data, services and commodities, including the International Traffic in Arms Regulations (22 C.F.R. § 120 et seq.), the Export Administration Regulations (15 C.F.R. § 730 et seq.), the regulations administered by the Treasury Department’s Office of Foreign Assets Control (31 C.F.R. § 500, et seq.), and the Anti-Boycott Regulations (15 C.F.R. § 760). The parties shall cooperate with each other to facilitate compliance with these laws and regulations.

 

b.            Company understands that sharing controlled technical data with non-U.S. persons is an export to that person’s country of citizenship that is subject to U.S. export laws and regulations, even if the transfer occurs in the United States. Company shall obtain any necessary U.S. government license or other authorization required pursuant to the U.S. export control laws and regulations for the export or re-export of any commodity, service or technical data covered by this Agreement, including technical data acquired from Columbia pursuant to this Agreement and products created as a result of that data.

 

16.                               Breach and Cure.

 

a.            In addition to applicable legal standards, Company shall be deemed to be in material breach of this Agreement for: (i) failure to pay fully and promptly amounts due pursuant to Section 4 and payable pursuant to Section 5; (ii) failure of Company to meet any of its obligations under Section 6 of this Agreement; (iii) failure to comply with governmental requests directed to Columbia or Company pursuant to Section 10(b); (iv) failure to reimburse Columbia for or pay fully and promptly the costs of prosecuting and maintaining Patents pursuant to Section 11; (v) failure to obtain and maintain insurance in the amount and of the type provided for in Section 12; and (vi) failure to comply with the Export Laws under Section 15.

 

b.            Either party shall have the right to cure its material breach. The cure shall be effected within a reasonable period of time but in no event later than thirty (30) days after notice of any

 

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breach given by the non-breaching party; provided, however, if cure cannot be reasonably effected within such thirty (30) day period and the breaching party is diligently pursuing cure, such cure period shall be extended to ninety (90) days following the breaching party’s notice of the breach from the non-breaching party.

 

c.            For any breach that is not cured as set forth in subsection (b) above, the non- breaching party shall have the right to termination this Agreement effective immediately upon written notice to the other party.

 

17.                               Term of Agreement; Effect of Termination.

 

a.            This Agreement shall be effective as of the Effective Date and shall continue in full force and effect until the last to expire Royalty Term (the “Term”).

 

b.            In addition, upon any termination of this Agreement pursuant to Section 16(c), (A)         all know-how, technical information and data [*] during the term of this Agreement, and prior to its termination [*], to the extent such know-how, technical information and data [*], including [*], and (B) at Columbia’s expense and for a reasonable fee to be mutually agreed between the parties, Company will provide Columbia (and/or its future licensees) [*]. Company agrees upon request, to enter into good faith negotiations with Columbia or Columbia’s future licensee(s), for the purpose of [*] in a timely fashion and under commercially reasonable terms to be mutually agreed between the parties.

 

c.            Company may terminate this Agreement for any reason or no reason upon ninety (90)  days prior written notice to Columbia. The licenses granted under this Agreement may be terminated by Columbia or, at Columbia’s option, Columbia has the right to convert any or all of such exclusive licenses granted under this Agreement to nonexclusive licenses, with no right to sublicense, and no right by Company to initiate legal proceedings pursuant to Section 11: (i) upon thirty (30) days written notice to Company if Columbia elects to terminate in accordance with Section 6(b); (ii) upon written notice to Company for Company’s material breach of the Agreement and Company’s failure to cure such material breach in accordance with Section 16(b); (iii) in the event Company becomes judicially declared insolvent or is generally not paying its debts as such debts become due; and (iv) in the event Company ceases to conduct business as a going concern without a successor. Termination under (ii) — (v) shall be effective upon date of notice sent pursuant to Section 18.

 

d.            Upon any termination of this Agreement pursuant to Section 17(c), all sublicenses granted by the Company under it shall be assigned to Columbia, upon request and at Columbia’s discretion, provided that Columbia’s obligations under such sublicense shall be consistent with and not exceed Columbia’s obligations to Company under this Agreement and provided that such sublicense agrees in a writing sent to Columbia to assume all obligations of this Agreement for the benefit of Columbia, including the obligations to make all payments due under this Agreement, including but not limited to those specified in Section 4(b), 4(c), 4(d) and 11(b).

 

e.            Sections 4(i)(ii), 5(c), 5(f), 5(g), 5(h), 7, 8, 9, 10, 12, 15, 17(b), 17(d), 17(e), 17(f), 17(g), 17(h), 18, 20, 22, 23, 24, 25, 26 and 27 will survive any termination or expiration of this Agreement.

 

f.            Any termination of this Agreement shall not adversely affect any rights or obligations that may have accrued to either party prior to the date of termination, including without limitation, Company’s obligation to pay all amounts due and payable under Sections 4, reporting and payment obligations under Section 5 and payment obligations under Section 11 hereof that accrued prior to the effective date of termination.

 

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g.                                         Upon any termination of this Agreement for any reason other than the expiration of this Agreement under Section 17(a) or Company’s failure to cure a material breach of this Agreement under Section 17(c)(ii), the Sellers shall have the right, for [*] or such longer period as the parties may reasonably agree, to dispose of Products or substantially completed Products then on hand, and to complete orders for Products then on hand, and royalties shall be paid to Columbia with respect to such Products as though this Agreement had not terminated. If this Agreement expires under Section 17(a), then (A) the licenses granted by Columbia to Company under Section 2(a) shall be fully paid-up, perpetual and irrevocable and (B) the Company shall thereafter be free to use the Technical Information without any further obligation to Columbia.

 

h.                                        Notwithstanding anything to the contrary in the Agreement, to the extent the manufacture of a Product is Covered By an issued patent within the definition of Patents and occurs prior to the expiration of such issued patent, the sale of that Product after the expiration date of the issued patent shall still constitute a royalty-bearing sale under Section 4.

 

18.                                      Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and shall be considered given (i) when mailed by certified mail (return receipt requested), postage prepaid, or (ii) on the date of actual delivery by hand or overnight delivery, with receipt acknowledged,

 

	
if to Columbia, to:
    	
 
    	
Executive Director
    
	
 
    	
 
    	
Columbia Technology   Ventures 
    
	
 
    	
 
    	
Columbia University
    
	
 
    	
 
    	
80 Claremont Avenue,   #4F, Mail Code 9606 
    
	
 
    	
 
    	
New York, NY 10027-5712
    
	
 
    	
 
    	
 
    
	
copy to:
    	
 
    	
General Counsel
    
	
 
    	
 
    	
Columbia University
    
	
 
    	
 
    	
412 Low Memorial   Library
    
	
 
    	
 
    	
535 West 116th Street,   Mail Code 4308
    
	
 
    	
 
    	
New York, New York   10027
    
	
 
    	
 
    	
 
    
	
if to the Company, to:
    	
 
    	
Applied   Therapeutics, Inc.
    
	
 
    	
 
    	
340 Madison Avenue 
    
	
 
    	
 
    	
19th Floor
    
	
 
    	
 
    	
New York, NY 10173
    
	
 
    	
 
    	
Attn: Shoshana   Shendelman
    
	
 
    	
 
    	
 
    
	
copy to:
    	
 
    	
McDermott   Will & Emery
    
	
 
    	
 
    	
28 State Street
    
	
 
    	
 
    	
Boston, MA 02109
    
	
 
    	
 
    	
Attn: Sarah T. Hogan
    

 

or to such other address as a party may specify by notice hereunder.

 

19.                                       Assignment. This Agreement and all rights and obligations hereunder may not be assigned by either party without the written consent of the other party. Notwithstanding the foregoing, upon written notice to Columbia, Company may assign this Agreement without consent to any successor to all or substantially all of its business to which this Agreement relates, whether by sale of stock or

 

21

 

assets, merger, consolidation or otherwise. Any attempt to assign without compliance with this provision shall be void.

 

20.                                       Waiver and Election of Remedies. The failure of any party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party thereafter of the right to insist upon strict adherence to that term or any other term of this Agreement. All waivers must be in writing and signed by an authorized representative of the party against which such waiver is being sought. The pursuit by either party of any remedy to which it is entitled at any time or continuation of this Agreement despite a breach by the other shall not be deemed an election of remedies or waiver of the right to pursue any other remedies to which it may be entitled.

 

21.                                       Binding on Successors. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns to the extent assignment is permitted under this Agreement.

 

22.                                       Independent Contractors. It is the express intention of the parties that the relationship of Columbia and the Company shall be that of independent contractors and shall not be that of agents, partners or joint venturers. Nothing in this Agreement is intended or shall be construed to permit or authorize either party to incur, or represent that it has the power to incur, any obligation or liability on behalf of the other party.

 

23.                                       Entire Agreement; Amendment. This Agreement, together with the Exhibits, sets forth the entire agreement between the parties concerning the subject matter hereof and supersedes all previous agreements, written or oral, concerning such subject matter. This Agreement may be amended only by written agreement duly executed by the parties.

 

24.                                      Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid, illegal or unenforceable, the validity of the remaining provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if this Agreement did not contain the particular provisions held to be unenforceable, unless such construction would materially alter the meaning of this Agreement.

 

25.                                      No Third-Party Beneficiaries. Except as expressly set forth herein, the parties hereto agree that there are no third-party beneficiaries of any kind to this Agreement.

 

26.                                      Governing Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of New York as applicable to agreements made and wholly performed within the State of New York, and without reference to the conflict or choice of laws principles of any jurisdiction. Unless otherwise separately agreed in writing, the parties agree that any and all claims arising under or related to this Agreement shall be heard and determined only in either the United States District Court for the Southern District of New York or in the courts of the State of New York located in the City and County of New York, and the parties irrevocably agree to submit themselves to the exclusive and personal jurisdiction of those courts and irrevocably waive any and all rights any such party may now or hereafter have to object to such jurisdiction or the convenience of the forum.

 

27.                                      Execution in Counterparts; Facsimile or Electronic Transmission. This Agreement may be executed in counterparts, and by facsimile or electronic transmission. This Agreement is not binding on the parties until it has been signed below on behalf of each party.

 

22

 

IN WITNESS WHEREOF, Columbia and the Company have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written above.

 

	
 
    	
THE TRUSTEES OF COLUMBIA
    
	
 
    	
UNIVERSITY IN THE CITY OF NEW   YORK
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Orin Herskowitz
    
	
 
    	
 
    	
 
    
	
 
    	
Name
    	
Orin Herskowitz
    
	
 
    	
 
    	
Executive Director,
    
	
 
    	
 
    	
Columbia Technology   Ventures
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
TTS#_49512
    
	
 
    	
 
    	
 
    
	
 
    	
APPLIED THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Shoshana Shendelman
    
	
 
    	
 
    	
 
    
	
 
    	
Name
    	
Shoshana Shendelman
    
	
 
    	
 
    	
Chief Executive Officer
    

 

23

 

EXHIBIT A

 

Licensed Patents

 

	
Columbia
   Case
    	
 
    	
Country
    	
 
    	
Serial Number
    	
 
    	
Filing Date
    	
 
    	
Type
    	
 
    	
Filing
   Status
    	
 
    	
Patent
   Number
    	
 
    	
Issue
   Date
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    

 

 

EXHIBIT B

 

Executive Summary/Business Plan/Development Plan

 

[*]  (7 pages omitted)

 

 

EXHIBIT C

 

Provisions of Voting or Other Agreement

 

Note: The provisions set forth below would amend the Voting Agreement. If Columbia, the Company and the other shareholders party to the Voting Agreement enter into another agreement pursuant to Section 4.j.i(b), the provisions would be appropriately revised, without changing the substance thereof, to refer to sections and definitions set forth in such agreement.

 

Section 3 of the Agreement would be amended to add the following at the end thereof:

 

[*]

 

Section 6.8 of the Voting Agreement would be amended to add the following:

 

[*]Exhibit

Exhibit 10.1

_____________

ADOBE INC. 
2019 EQUITY INCENTIVE PLAN

As of April 11, 2019
_____________

TABLE OF CONTENTS

	
			
	1.
	Establishment, Purpose and Term of Plan
	A-1

	1.1
	Establishment
	A-1

	1.2
	Purpose
	A-1

	1.3
	Term of Plan
	A-1

	2.
	Definitions and Construction
	A-1

	2.1
	Definitions
	A-1

	2.2 

	Construction

	A-1

	3. 
	Administration
	A-1

	3.1
	Administration by the Committee
	A-1

	3.2 

	Authority of Officers

	A-1

	3.3 
	Powers of the Committee

	A-2

	3.4 

	Repricing

	A-3

	3.5 

	Indemnification
	A-3

	4.   

	 Shares Subject to Plan

	A-3

	4.1 

	Maximum Number of Shares Issuable

	A-3

	4.2 

	Adjustments for Changes in Capital Structure

	A-4

	5.   

	Eligibility and Award Limitations

	A-4

	5.1 

	Persons Eligible for Awards

	A-4

	5.2 

	Participation

	A-4

	5.3 

	Incentive Stock Option Limitations
	A-4

	5.4 

	Award Limits

	A-5

	6.   

	 Terms and Conditions of Options

	A-6

	6.1 

	Exercise Price

	A-6

	6.2 

	Exercisability and Term of Options

	A-6

	6.3 

	Payment of Exercise Price

	A-6

	6.4 

	Effect of Termination of Service

	A-7

	6.5 

	Transferability of Options

	A-7

	7
	Terms and Conditions of SARs

	A-7

	7.1 

	Types of SARs Authorized

	A-7

	7.2 

	Exercise Price

	A-7

	7.3 

	Exercisability and Term of SARs

	A-7

	7.4

	Exercise of SARs

	A-8

	7.5 

	Effect of Termination of Service

	A-8

	7.6 

	Nontransferability of SARs

	A-8

	8.   

	Terms and Conditions of Stock Awards

	A-8

	8.1 

	Types of Stock Awards Authorized

	A-8

	8.2 

	Purchase Price

	A-9

	8.3 
	Purchase Period

	A-9

	8.4 

	Payment of Purchase Price

	A-9

	8.5 

	Vesting; Restrictions on Transfer; Deferral

	A-9

	8.6 

	Voting Rights; Dividends and Distributions

	A-9

	8.7 

	Effect of Termination of Service

	A-10

	8.8 

	Nontransferability of Stock Award Rights

	A-10

	9.   

	Terms and Conditions of Performance Awards

	A-10

	9.1 

	Types of Performance Awards Authorized

	A-10

	9.2 

	Initial Value of Performance Shares and Performance Units

	A-10

i

	
			
	9.3 

	Establishment of Performance Period, Performance Goals and Performance  Award Formula
	A-10

	9.4 

	Measurement of Performance Goals

	A-11

	9.5 

	Settlement of Performance Awards

	A-11

	9.6 

	Dividend Equivalents

	A-12

	9.7 

	Effect of Termination of Service

	A-12

	9.8 

	Nontransferability of Performance Awards

	A-12

	10.  
	Standard Forms of Award Agreement

	A-12

	10.1 

	Award Agreements

	A-12

	10.2

	Authority to Vary Terms

	A-12

	10.3

	Clawback/Recovery

	A-12

	11.  

	Change of Control

	A-13

	12.  

	Compliance with Securities Law

	A-14

	13.  

	Tax Withholding

	A-14

	13.1 

	Tax Withholding in General

	A-14

	13.2 

	Withholding in Shares

	A-15

	14.  

	Termination or Amendment of Plan

	A-15

	15.  

	Miscellaneous Provisions

	A-15

	15.1
	Repurchase Rights

	A-15

	15.2
	Rights as Employee, Consultant or Director

	A-15

	15.3
	Rights as a Stockholder

	A-15

	15.4
	Fractional Shares

	A-15

	15.5
	Beneficiary Benefits

	A-16

	15.6
	Unfunded Obligation

	A-16

	15.7
	Section 409A

	A-16

	Appendix I
	A-18

ii

ADOBE INC.
2019 EQUITY INCENTIVE PLAN

1.ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1    Establishment.  Adobe Inc., a Delaware corporation, established the Adobe Inc. 2019 Equity Incentive Plan (the “Plan”) effective as of April 11, 2019, the date of its approval by the stockholders of the Company (the “Effective Date”).
1.2    Purpose.  The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group.  The Plan seeks to achieve this purpose by providing for Awards in the form of Options, Stock Appreciation Rights (“SARs”), Stock Purchase Rights, Stock Grants, Restricted Stock Units and Performance Shares, and Performance Share Units. In addition, the Plan provides for certain cash-based amounts for service as Director.
1.3    Term of Plan.  The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed.  However, all Incentive Stock Options shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company. 
2.DEFINITIONS AND CONSTRUCTION.
2.1    Definitions.  Whenever used herein, the terms set forth in Appendix I shall have their respective meanings set forth in Appendix I.
2.2    Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
3.ADMINISTRATION.
3.1    Administration by the Committee.  The Plan shall be administered by the Committee.  All questions of interpretation of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award.
3.2    Authority of Officers.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election.  To the extent consistent with applicable law (including but not limited to Delaware General Corporation Law Section 152 or 157(c)), the Board may, in its discretion, delegate to a committee comprised of one or more Officers (any such committee, an “Officer Committee”) the authority to designate Employees (other than themselves) to receive one or more Stock Awards, Options or rights to acquire shares of Stock and to determine the number of shares of Stock subject 

1

to such Stock Awards, Options and rights, without further approval of the Board or the Committee. Any such grants will be subject to the terms of the Board resolutions providing for such delegation of authority.  

3.3    Powers of the Committee.  In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion:
(a)    to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock or units to be subject to each Award;
(b)    to determine the type of Award granted and to designate Options as Incentive Stock Options or Nonstatutory Stock Options;
(c)    to determine the Fair Market Value of shares of Stock or other property;
(d)    to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the exercise or purchase price of shares purchased pursuant to any Award, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the Performance Award Formula and Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (vi) the time of the expiration of any Award, (vii) the effect of the Participant’s termination of Service on any of the foregoing, and (viii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;
(e)    to determine whether an Award of SARs, Restricted Stock Units or Performance Shares or Performance Share Units will be settled in shares of Stock, cash, or in any combination thereof;
(f)    to approve one or more forms of Award Agreement;
(g)    subject to Section 3.4, to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired pursuant thereto;
(h)    to accelerate, continue, extend or defer the exercisability or vesting of any Award or any shares acquired pursuant thereto, including with respect to the period following a Participant’s termination of Service;
(i)    to prescribe, amend or rescind rules, guidelines and policies relating to the plan, or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws of or to accommodate the laws, regulations, tax or accounting effectiveness, accounting principles or custom of, non-United States jurisdictions whose citizens may be granted Awards; and
(j)    to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.

2

3.4    Repricing.  Without the affirmative vote of holders of a majority of the shares of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding shares of Stock is present or represented by proxy, neither the Board nor the Committee shall approve a program providing for (a) the cancellation of outstanding Options or SARs and the grant in substitution therefor of new Awards having a lower exercise or purchase price, (b) the amendment of outstanding Options or SARs to reduce the exercise price thereof or (c) except in connection with an adjustment pursuant to Section 4.2 or a transaction, the cashout of Options or SARs with an exercise price below Fair Market Value.  This paragraph shall not be construed to apply to “issuing or assuming a stock option in a transaction to which section 424(a) applies,” within the meaning of Section 424 of the Code.
3.5    Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or the Committee or as officers or employees of the Participating Company Group, members of the Board or the Committee and any officers or employees of the Participating Company Group to whom authority to act for the Board, the Committee or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.  
4.SHARES SUBJECT TO PLAN.
4.1    Maximum Number of Shares Issuable.  Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be forty-six million (46,000,000).  The number of shares of stock available for issuance under the Plan shall be reduced (a) by one share for each share issued pursuant to Options or SARs, and (b) by one and seventy seven-hundredths (1.77) shares for each share issued pursuant to Awards other than those set forth in the preceding clause (a).  Such shares shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof.  If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company at the Participant’s purchase price to effect a forfeiture of unvested shares upon termination of Service, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall be added back to the Plan share reserve in an amount corresponding to the reduction in such share reserve previously made in accordance with the rules described above in this Section 4.1 and again be available for issuance under the Plan.  Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award (other than a SAR that may be settled in shares of Stock and/or cash) that is settled in cash. Shares withheld in satisfaction of tax withholding obligations pursuant to Section 13.2 shall not again become available for issuance under the Plan.  Upon exercise of a SAR, whether in cash or shares of Stock, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the SAR is exercised.  If the exercise price of an Option is paid by “net exercise” (as described in Section 6.3(a)(iv)) or tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the Option is exercised.

3

4.2    Adjustments for Changes in Capital Structure.  In the event of any change in the Stock through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate adjustments shall be made in the number and class of shares subject to the Plan, in the ISO Share Limit (as defined in Section 5.3(b)), the Award limits set forth in Section 5.4 and to any outstanding Awards, and in the exercise or purchase price per share under any outstanding Award.  Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and in no event may the exercise or purchase price under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. The adjustments determined by the Committee pursuant to this Section 4.2 shall be final, binding and conclusive.
5.ELIGIBILITY AND AWARD LIMITATIONS.
5.1    Persons Eligible for Awards.  Awards may be granted only to Employees, Directors and Consultants.  No Award shall be granted prior to the date on which such person commences Service.
5.2    Participation.  Except as otherwise provided in Section 3.2, Awards are granted solely at the discretion of the Committee.  Eligible persons may be granted more than one (1) Award.  However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.
5.3    Incentive Stock Option Limitations.
(a)Persons Eligible.  An Incentive Stock Option may be granted only to a person who, on the effective date of grant, is an Employee of the Company, a Parent Corporation or a Subsidiary Corporation (each being an “ISO-Qualifying Corporation”).  Any person who is not an Employee of an ISO-Qualifying Corporation on the effective date of the grant of an Option to such person, but who is otherwise an Employee or a Director of, or Consultant to, the Company or any of its Affiliates, may be granted only a Nonstatutory Stock Option.
(b)ISO Share Limit.  Subject to adjustment as provided in Section 4.2, the maximum number of shares of Stock that may be issued upon the exercise of Incentive Stock Options granted under the Plan will equal the aggregate Share number stated in the first sentence of Section 4.1, plus, to the extent allowable under Code Section 422 and the Treasury Regulations promulgated thereunder, any shares of Stock that become available for issuance under the Plan pursuant to Section 4.1 (the “ISO Share Limit”).
(c)Fair Market Value Limitation.  To the extent that options designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount shall be treated as Nonstatutory Stock Options.  For purposes of this Section, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted.  If the Code is amended to provide for a different limitation from that set forth in this Section, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code.  If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section, the Participant may designate which portion of such Option the 

4

Participant is exercising.  In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first.  Upon exercise, each portion shall be separately identified.
(d)Leaves of Absence.  For purposes of Incentive Stock Options, no leave of absence may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave, any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.
5.4    Award Limits. The following limits shall apply to the grant of any Award:  
(a)    Award Limits. The following limits shall apply to the grant of any Award:
(i)Options and SARs.  Subject to adjustment as provided in Section 4.2, no Employee shall be granted within any fiscal year of the Company one or more Options or Freestanding SARs which in the aggregate are for more than four million (4,000,000) shares of Stock.  An Option which is canceled (or a Freestanding SAR as to which the exercise price is reduced to reflect a reduction in the Fair Market Value of the Stock) in the same fiscal year of the Company in which it was granted shall continue to be counted against such limit for such fiscal year.
(ii)Stock Awards. Subject to adjustment as provided in Section 4.2, no Employee shall be granted within any fiscal year of the Company one or more Stock Awards for more than one million five hundred thousand (1,500,000) shares of Stock in the aggregate.
(iii)Performance Awards.  Subject to adjustment as provided in Section 4.2, no Employee shall be granted (A) an Award of Performance Shares that could result in such Employee receiving from Performance Shares granted during one fiscal year of the Company more than one million five hundred thousand (1,500,000) shares of Stock in the aggregate during any fiscal year of the Company, or (B) an Award of Performance Units that could result in such Employee receiving more than two million five hundred thousand dollars ($2,500,000) during any fiscal year of the Company.
(b)    Clarification of Limits.  For purposes of clarification regarding the foregoing limits, (A) Awards granted in previous fiscal years will not count against the Award limits in subsequent fiscal years even if the Awards from previous fiscal years are earned or otherwise settled in fiscal years following the fiscal year in which they are granted, and (B) more than one Award of the same type can be granted in a fiscal year as long as the aggregate number of shares of Stock granted pursuant to all Awards of that type  do not exceed the fiscal year limit applicable to that Award type.
(c)    Director Award Limits.  Subject to any applicable adjustment as provided in Section 4.2, no non-employee Director shall be granted one or more Awards within any fiscal year of the Company, solely with respect to service as a Director, that in the aggregate exceed one million five hundred thousand dollars ($1,500,000) in aggregate value of cash-based and other Awards, with such value determined by the Committee and as of the date of grant of the Awards. For purposes of clarification regarding the foregoing limit, Awards granted in previous fiscal years will not count against the Award limits in subsequent fiscal years even if the Awards from previous fiscal years are earned or otherwise settled in fiscal years following the fiscal year in which they are granted.  

5

6.TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Award Agreements specifying the number of shares of Stock covered thereby, in such form as the Committee shall from time to time establish.  Award Agreements evidencing Options may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
6.1    Exercise Price.  The exercise price for each Option shall be established in the discretion of the Committee; provided, however, that (a) the exercise price per share shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option and (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option.  Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Sections 409A and 424(a) of the Code.
6.2    Exercisability and Term of Options.  Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of  seven (7) years after the effective date of grant of such Option, and (b) no Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option.  Subject to the foregoing, unless otherwise specified by the Committee in the grant of an Option, any Option granted hereunder to an Employee, Consultant or Director shall terminate seven (7) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions or the Plan.
6.3    Payment of Exercise Price.
(a)Forms of Consideration Authorized.  Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice of exercise together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issued upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company shall accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued; provided further, however, that shares of Stock will no longer be outstanding under an Option and will not be exercisable thereafter to the extent that (A) shares are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or (v) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (v) by any combination thereof.  The Committee may at any time or from time to time grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

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(b)    Limitations on Forms of Consideration.
(i)Tender of Stock.  Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  Unless otherwise provided by the Committee, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either (A) have been owned by the Participant for such period as necessary to avoid a charge to earnings for financial accounting purposes and not used for another Option exercise by attestation during any such period or (B) were not acquired, directly or indirectly, from the Company.
(ii)Cashless Exercise.  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise.
6.4    Effect of Termination of Service.  An Option shall be exercisable after a Participant’s termination of Service to such extent and during such period as determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Option or in another written (including electronic) agreement between the Company and the Participant.
6.5    Transferability of Options.  During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative.  No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution.  Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Option, an Option shall be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S‐8 Registration Statement under the Securities Act or other applicable law.    
7.TERMS AND CONDITIONS OF SARS.
SARs shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in such form as the Committee shall from time to time establish.  Award Agreements evidencing SARs may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
7.1    Types of SARs Authorized.  SARs may be granted in tandem with all or any portion of a related Option (a “Tandem SAR”) or may be granted independently of any Option (a “Freestanding SAR”).  A Tandem SAR may be granted either concurrently with the grant of the related Option or at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such related Option.
7.2    Exercise Price.  The exercise price for each SAR shall be established in the discretion of the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR shall be the exercise price per share under the related Option and (b) the exercise price per share subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR.
7.3    Exercisability and Term of SARs.
(a)Tandem SARs.  Tandem SARs shall be exercisable only at the time and to the extent, and only to the extent, that the related Option is exercisable, subject to such provisions as the Committee may specify where the Tandem SAR is granted with respect to less than the full number of shares of Stock subject to the related Option.  The Committee may, in its discretion, provide in any Award 

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Agreement evidencing a Tandem SAR that such SAR may not be exercised without the advance approval of the Company and, if such approval is not given, then the Option shall nevertheless remain exercisable in accordance with its terms.  A Tandem SAR shall terminate and cease to be exercisable no later than the date on which the related Option expires or is terminated or canceled.  Upon the exercise of a Tandem SAR with respect to some or all of the shares subject to such SAR, the related Option shall be canceled automatically as to the number of shares with respect to which the Tandem SAR was exercised.  Upon the exercise of an Option related to a Tandem SAR as to some or all of the shares subject to such Option, the related Tandem SAR shall be canceled automatically as to the number of shares with respect to which the related Option was exercised.
(b)Freestanding SARs.  Freestanding SARs shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR; provided, however, that no Freestanding SAR shall be exercisable after the expiration of seven (7) years after the effective date of grant of such SAR.
7.4    Exercise of SARs.  Upon the exercise of an SAR, the Participant (or the Participant’s legal representative or other person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price.  Payment of such amount shall be made in cash, shares of Stock, or any combination thereof as determined by the Committee.  Unless otherwise provided in the Award Agreement evidencing such SAR, payment shall be made in a lump sum as soon as practicable following the date of exercise of the SAR.  The Award Agreement evidencing any SAR may provide for deferred payment in a lump sum or in installments.  When payment is to be made in shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair Market Value of a share of Stock on the date of exercise of the SAR.  For purposes of Section 7, an SAR shall be deemed exercised on the date on which the Company receives notice of exercise from the Participant.
7.5    Effect of Termination of Service.  A SAR shall be exercisable after a Participant’s termination of Service to such extent and during such period as determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such SAR or in another written (including electronic) agreement between the Company and the Participant.
7.6    Nontransferability of SARs.  SARs may not be assigned or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant or the Participant’s guardian or legal representative.  
8.TERMS AND CONDITIONS OF STOCK AWARDS.
Stock Awards shall be evidenced by Award Agreements specifying whether the Award is a Stock Grant, a Stock Purchase Right or a Restricted Stock Unit, and the number of shares of Stock subject to the Award, in such form as the Committee shall from time to time establish.  Award Agreements evidencing Stock Awards may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
8.1    Types of Stock Awards Authorized.  Stock Awards may be in the form of a Stock Grant, a Stock Purchase Right or a Restricted Stock Unit.  Stock Awards may be granted or vest upon such conditions as the Committee shall determine, including, without limitation, service to a Participating Company or upon the attainment of one or more Performance Goals.   

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8.2    Purchase Price.  The purchase price for shares of Stock issuable under each Stock Purchase Right shall be established by the Committee in its discretion.  No monetary payment (other than applicable tax withholding) shall be required as a condition of receiving shares of Stock pursuant to a Stock Grant.
8.3    Purchase Period.  A Stock Purchase Right shall be exercisable within a period established by the Committee, which shall in no event exceed thirty (30) days from the effective date of the grant of the Stock Purchase Right; provided, however, that no Stock Purchase Right granted to an Employee, a Consultant or a Director may become exercisable prior to the date on which such person commences Service.
8.4    Payment of Purchase Price.  At the time of grant of Restricted Stock Units, the Committee will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Stock acquired pursuant to Restricted Stock Units.  Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Stock Purchase Right or delivered pursuant to a Restricted Stock Unit shall be made (i) in cash, by check, or cash equivalent, (ii) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (iii) by any combination thereof, in each case consistent with any requirements under applicable law regarding payment in respect of the “par value” of the Stock.  The Committee may at any time or from time to time grant Stock Purchase Rights or Restricted Stock Units which do not permit all of the foregoing forms of consideration to be used in payment of the purchase price or which otherwise restrict one or more forms of consideration.  
8.5    Vesting; Restrictions on Transfer; Deferral.  Shares issued pursuant to any Stock Award (including, without limitation, the percentage of actual achievement relative to pre-established target Performance Goals) may or may not be made subject to vesting conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, a Performance Award Formula and/or Performance Goals (the “Vesting Conditions”), as shall be established by the Committee and set forth in the Award Agreement evidencing such Award.  During any period (the “Restriction Period”) in which shares acquired pursuant to a Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to a Change of Control as provided in Section 11, or as provided in Section 8.8.  Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. Restricted Stock Units may be subject to such conditions that may delay the delivery of the shares of Stock (or their cash equivalent) subject to Restricted Stock Units after the vesting of such Award.
8.6    Voting Rights; Dividends and Distributions.  Except as provided in this Section, Section 8.5 and any Award Agreement, during the Restriction Period applicable to shares subject to a Stock Grant, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares.  With respect to Restricted Stock Units, the Committee may, in its sole discretion, provide that dividend equivalents shall not be paid, provide for the payment of dividend equivalents on Restricted Stock Units that have become nonforfeitable, provide for the accumulation until and payment of dividend equivalents to the extent that the Restricted Stock Units become nonforfeitable or any combination thereof.  In the event of a dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.2, then any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant is entitled by reason of the Participant’s Stock Award shall be immediately subject to the same Vesting Conditions 

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and, if applicable, deferral elections as the shares subject to the Stock Award with respect to which such dividends or distributions were paid or adjustments were made.  Notwithstanding anything herein to the contrary, dividends or dividend equivalents may be accumulated but shall not be paid with respect to shares subject to a Stock Award unless and until the Vesting Conditions are satisfied.
8.7    Effect of Termination of Service.  Unless otherwise provided by the Committee in the grant of a Stock Award and set forth in the Award Agreement or in another written (including electronic) agreement between the Company and the Participant, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then (i) the Company shall have the option to repurchase for the purchase price paid by the Participant any shares acquired by the Participant pursuant to a Stock Purchase Right which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service, (ii) the Participant shall forfeit to the Company any shares acquired by the Participant pursuant to a Stock Grant which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service and (iii) the Participant shall forfeit all rights in any portion of a Restricted Stock Unit award that has not vested as of the date of the Participant’s termination of Service.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.
8.8    Nontransferability of Stock Award Rights.  Rights to acquire shares of Stock pursuant to a Stock Award may not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors of the Participant or the Participant’s beneficiary, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant or the Participant’s guardian or legal representative.
9.TERMS AND CONDITIONS OF PERFORMANCE AWARDS.  Performance Awards shall be evidenced by award agreements in such form as the committee shall from time to time establish.  No performance award or purported performance award shall be a valid and binding obligation of the company unless evidenced by a fully executed award agreement.  Award agreements evidencing performance awards may incorporate all or any of the terms of the plan by reference and shall comply with and be subject to the following terms and conditions:
9.1    Types of Performance Awards Authorized.  Performance Awards may be in the form either of Performance Shares or Performance Share Units.  Each Award Agreement evidencing a Performance Award shall specify the number of Performance Shares or Performance Share Units subject thereto, the Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award. 
9.2    Initial Value of Performance Shares and Performance Units.  Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in Section 4.2, on the effective date of grant of the Performance Share and each Performance Unit shall have an initial value of one hundred dollars ($100). The final value payable to the Participant in settlement of a Performance Award determined on the basis of the applicable Performance Award Formula will depend on the extent to which Performance Goals established by the Committee are attained within the applicable Performance Period established by the Committee.
9.3    Establishment of Performance Period, Performance Goals and Performance Award Formula.  In granting each Performance Award, the Committee shall establish in writing the applicable Performance Period, Performance Award Formula and one or more Performance Goals which, when measured at the end of the Performance Period, shall determine on the basis of the Performance Award Formula the final value of the Performance Award to be paid to the Participant.  The Company shall notify 

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each Participant granted a Performance Award of the terms of such Award, including the Performance Period, Performance Goal(s) and Performance Award Formula.

9.4    Measurement of Performance Goals.  The Performance Goals shall be established by the Committee on the basis of achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Committee in its discretion.  Performance Goals may include a minimum, maximum, target level and intermediate or other levels of performance, with the final value of a Performance Award determined under the applicable Performance Award Formula by the level attained during the applicable Performance Period.  A Performance Goal may be stated as an absolute value or as a value determined relative to a standard selected by the Committee.  Performance Goals may differ from Participant to Participant and from Award to Award.
9.5    Settlement of Performance Awards.
(a)Determination of Final Value.  As soon as practicable following the completion of the Performance Period applicable to a Performance Award, the Committee shall determine the extent to which the applicable Performance Goals have been attained and the resulting final value of the Award earned by the Participant and to be paid upon its settlement in accordance with the applicable Performance Award Formula.
(b)Discretionary Adjustment of Award Formula.  In its discretion, the Committee may, either at the time it grants a Performance Award or at any time thereafter, provide for the positive or negative adjustment of the Performance Award Formula applicable to a Performance Award granted to any Participant to reflect such Participant’s individual performance in his or her position with the Company or such other factors as the Committee may determine.  If permitted under a Participant’s Award Agreement, the Committee shall have the discretion, on the basis of such criteria as may be established by the Committee, to reduce some or all of the value of the Performance Award that would otherwise be paid to the Participant upon its settlement notwithstanding the attainment of any Performance Goal and the resulting value of the Performance Award determined in accordance with the Performance Award Formula.
(c)Effect of Leaves of Absence.  Unless otherwise required by law or determined by the Committee, payment of the final value, if any, of a Performance Award held by a Participant who has taken in excess of thirty (30) days of leaves of absence during a Performance Period shall be prorated on the basis of the number of days of the Participant’s Service during the Performance Period during which the Participant was not on a leave of absence.
(d)Notice to Participants.  As soon as practicable following the Committee’s determination in accordance with Sections 9.5(a) and (b), the Company shall notify each Participant of the determination of the Committee.
(e)Payment in Settlement of Performance Awards.  As soon as practicable following the Committee’s determination in accordance with Sections 9.5(a) and (b), payment shall be made to each eligible Participant (or such Participant’s legal representative or other person who acquired the right to receive such payment by reason of the Participant’s death) of the final value of the Participant’s Performance Award.  Payment of such amount shall be made in cash, shares of Stock, or a combination thereof as determined by the Committee.  Unless otherwise provided in the Award Agreement evidencing a Performance Award, payment shall be made in a lump sum.  An Award Agreement may provide for deferred payment in a lump sum or in installments at the election of the Participant or otherwise.  If any payment is to be made on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment during the deferral period of Dividend Equivalents or interest.

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(f)Provisions Applicable to Payment in Shares.  If payment is to be made in shares of Stock, the number of such shares shall be determined by dividing the final value of the Performance Award by the value of a share of Stock determined by the method specified in the Award Agreement.  Such methods may include, without limitation, the closing market price on a specified date (such as the settlement date) or an average of market prices over a series of trading days.  Shares of Stock issued in payment of any Performance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 8.5.  Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award Agreement and shall be subject to the provisions of Sections 8.5 through 8.8 above.
9.6    Dividend Equivalents.  In its discretion, the Committee may provide in the Award Agreement evidencing any Performance Share Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a record date prior to the date on which the Performance Shares are settled or forfeited.  Dividend Equivalents may be paid on Performance Shares that have become nonforfeitable or may be accumulated until and paid to the extent that Performance Shares become nonforfeitable or a combination thereof, as determined by the Committee.  Settlement of Dividend Equivalents may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on the same basis as settlement of the related Performance Share as provided in Section 9.5.  Dividend Equivalents shall not be paid with respect to Performance Units.  Notwithstanding anything herein to the contrary, Dividend Equivalents may be accumulated but shall not be paid with respect to Performance Share Awards unless and until the Performance Share Awards are earned.
9.7    Effect of Termination of Service.  The effect of a Participant’s termination of Service on the Participant’s Performance Award shall be as determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Performance Award or in another written (including electronic) agreement between the Company and the Participant.
9.8    Nontransferability of Performance Awards.  Prior to settlement in accordance with the provisions of the Plan, no Performance Award may be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except by will or by the laws of descent and distribution.  All rights with respect to a Performance Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.
10.STANDARD FORMS OF AWARD AGREEMENT.
10.1    Award Agreements.  Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Committee and as amended from time to time.  Any Award Agreement may consist of an appropriate form of Notice of Grant and a form of Agreement incorporated therein by reference, or such other form or forms as the Committee may approve from time to time.
10.2    Authority to Vary Terms.  The Committee shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.

10.3    Clawback/Recovery.  All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are 

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listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Committee may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Committee determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of cause as determined by the Committee.  
11.CHANGE OF CONTROL.
11.1        Except as otherwise provided in a Participant’s Award Agreement, “Change of Control” shall mean a change of control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement; provided, however, that anything in this Plan to the contrary notwithstanding, a Change of Control shall be deemed to have occurred if:
(a)    any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity or person, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities entitled to vote in the election of directors of the Company;
(b)    during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least three-fourths (3/4ths) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board) (the “Incumbent Directors”), cease for any reason to constitute a majority thereof;  
(c)    there occurs a reorganization, merger, consolidation or other corporate transaction involving the Company (a “Transaction”), in each case with respect to which the stockholders of the Company immediately prior to such Transaction do not, immediately after the Transaction, own securities representing more than 50% of the combined voting power of the Company, a parent of the Company or other corporation resulting from such Transaction (counting, for this purpose, only those securities held by the Company’s stockholders immediately after the Transaction that were received in exchange for, or represent their continuing ownership of, securities of the Company held by them immediately prior to the Transaction);
(d)    all or substantially all of the assets of the Company are sold, liquidated or distributed; or
(e)    there is a “Change of Control” or a “change in the effective control” of the Company within the meaning of Section 280G of the Code and the regulations promulgated thereunder.  
11.2    The Committee or the Board may, in its discretion, provide in any Award Agreement, severance plan or other individual agreement, that, in the event of a Change of Control of the Company, the Award held by a Participant shall become vested, exercisable and/or payable to such extent as specified in such document.        

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11.3    In the event of a Change of Control, the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of any Participant, either assume the Company’s rights and obligations under outstanding Awards or substitute for outstanding Awards substantially equivalent equity awards for the Acquiror’s stock.  In the event the Acquiror elects not to assume or substitute for outstanding Awards in connection with a Change of Control, any unexercised and/or unvested portions of such outstanding Awards shall become immediately exercisable and vested in full as of immediately prior to the effective date of the Change of Control.  The exercise and/or vesting of any Award that was permissible solely by reason of this paragraph 12 shall be conditioned upon the consummation of the Change in Control.  Any Awards which are not assumed or replaced by the Acquiror in connection with the Change of Control nor exercised as of the time of consummation of the Change of Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change of Control.
12.COMPLIANCE WITH SECURITIES LAW.
12.1    The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of United States federal and state and non-United States law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed.  In addition, no Award may be exercised or shares issued pursuant to an Award unless (i) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award or (ii) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.
12.2    If the exercise of an Award, or the purchase or delivery of shares of Stock subject to an Award, following the termination of the Participant’s Service would be prohibited at any time during the applicable post-termination period solely because the issuance of shares of Stock would violate the registration requirements under the Securities Act, then the Award shall terminate on the earlier of (i) the expiration of a period of three (3) months after the termination of the Participant’s Service during which the exercise of the Award would not be in violation of such registration requirements, or (ii) the expiration of the term of the Award as set forth in the Award Agreement.  
13.TAX WITHHOLDING.
13.1    Tax Withholding in General.  Unless prohibited by applicable law, the Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for, the United States federal, state, local and non-United States taxes, if any, required by law to be withheld by the Participating Company Group with respect to an Award or the shares acquired pursuant thereto.  The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant.

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13.2    Withholding in Shares.  Unless prohibited by applicable law, the Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of the Participating Company Group.  The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount permitted by the Committee or the amount of taxes owed by the Participant up to the maximum statutory tax rate in the Participant’s applicable jurisdiction.  
14.TERMINATION OR AMENDMENT OF PLAN.
The Committee may terminate or amend the Plan at any time.  However, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule.  No termination or amendment of the Plan shall affect any then outstanding Award unless expressly provided by the Committee.  In any event, no termination or amendment of the Plan may adversely affect any then outstanding Award without the consent of the Participant, unless such termination or amendment is necessary to comply with any applicable law, regulation or rule.  
15.MISCELLANEOUS PROVISIONS.
15.1    Repurchase Rights.  Shares issued under the Plan may be subject to one or more repurchase options, or other conditions and restrictions as determined by the Committee in its discretion at the time the Award is granted.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.
15.2    Rights as Employee, Consultant or Director.  No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant.  Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, a Consultant or a Director, or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time.  To the extent that an Employee of a Participating Company other than the Company receives an Award under the Plan, that Award can in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company.
15.3    Rights as a Stockholder.  A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4.2 or another provision of the Plan.
15.4    Fractional Shares.  The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.

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15.5    Beneficiary Benefits.  Subject to local laws and procedures, the Company may request appropriate written documentation from a trustee or other legal representative, court, or similar legal body, regarding any benefit under the Plan to which the Participant is entitled in the event of such Participant’s death before such representative shall be entitled to act on behalf of the Participant and before a beneficiary receives any or all of such benefit.
15.6    Unfunded Obligation.  Participants shall have the status of general unsecured creditors of the Company.  Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended.  No Participating Company shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations.  The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder.  Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Committee, the Officer Committee or any Participating Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of any Participating Company.  The Participants shall have no claim against any Participating Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to the Plan.
15.7    Section 409A. It is intended that all of the benefits and payments provided under this Plan satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A (together, with any state law of similar effect, “Section 409A”) provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5), 1.409A-1(b)(6) and 1.409A-1(b)(9), and this Plan will be construed to the greatest extent possible as consistent with those provisions.  To the extent not so exempt, this Plan and the payments and benefits to be provided hereunder are intended to, and will be construed and implemented so as to, comply in all respects with the applicable provisions of Section 409A.  For purposes of Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), any right to receive any installment payments under this Plan shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment.
To the extent that the Committee determines that any Award granted under the Plan is, or may reasonably be, subject to Section 409A, the Award Agreement evidencing such Award shall incorporate the terms and conditions necessary to avoid the consequences described in Section 409A(a)(1) of the Code (or any similar provision).  Such terms and conditions shall include, without limitation, the following provision (or comparable provision of similar effect):  “To the extent that (i) one or more of the payments or benefits received or to be received by a Participant upon “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h) without regard to alternative definitions thereunder) pursuant to this Plan would constitute deferred compensation subject to the requirements of Section 409A, and (ii) the Participant is a “specified employee” within the meaning of Section 409A at the time of separation from service, then to the extent delayed commencement of any portion of such payments or benefits is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments and benefits shall not be provided to the Participant prior to the earliest of (i) the expiration of the six-month period measured from the date of separation from service, (ii) the date of the Participant’s death or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation on the Participant.  Upon the first business day following the expiration of such applicable Section 409A(a)(2)(B)(i) period, all payments and benefits deferred pursuant to this paragraph shall be paid in a lump sum to the Participant, and any remaining payments and benefits due shall be paid as otherwise provided herein.”  If an Award Agreement is silent 

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as to such provision, the foregoing provision is hereby incorporated by reference directly into such Award Agreement.
In addition, and notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any Award is, or may reasonably be, subject to Section 409A and related Department of Treasury guidance (including such Department of Treasury guidance issued from time to time) or contains any ambiguity as to the application of Section 409A, the Committee may, without the Participant’s consent, adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (A) exempt (or clarify the exemption of) the Award from Section 409A, (B) preserve the intended tax treatment of the benefits provided with respect to the Award, and/or (C) comply with the requirements of Section 409A and related Department of Treasury guidance.
Notwithstanding anything to the contrary contained herein, neither the Company nor any of its Affiliates shall be responsible for, or required to reimburse or otherwise make any Participant whole for, any tax or penalty imposed on, or losses incurred by, any Participant that arises in connection with the potential or actual application of Section 409A to any Award granted hereunder.

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APPENDIX I

(a)    “Affiliate” means (i) an entity, other than a Parent Corporation, that directly, or indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other than a Subsidiary Corporation, that is controlled by the Company directly, or indirectly through one or more intermediary entities.  For this purpose, the term “control” (including the term “controlled by”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the relevant entity, whether through the ownership of voting securities, by contract or otherwise; or shall have such other meaning assigned such term for the purposes of registration on Form S‐8 under the Securities Act.

(b)    “Award” means any Option, SAR, Stock Purchase Right, Stock Grant, Restricted Stock Unit, Performance Share, Performance Unit or for service as a Director, cash-based amounts (including, without limitation, retainers) granted under the Plan.

(c)    “Award Agreement” means a written (including electronic) agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Award granted to the Participant.  An Award Agreement may be an “Option Agreement, an “SAR Agreement,” a “Stock Purchase Agreement,” a “Stock Grant Agreement,” a “Restricted Stock Unit Agreement,” “a “Performance Share Agreement” or a “Performance Unit Agreement.”

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

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

(f)    “Committee” means the Executive Compensation Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board.  If no committee of the Board has been appointed to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers.

(g)    “Company” means Adobe Inc., a Delaware corporation, or any successor corporation thereto.

(h)    “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a member of the Board) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on (i) registration on a Form S‐8 Registration Statement under the Securities Act, or (ii) Rule 701 of the Securities Act, or (iii) other means of compliance with the securities laws of all relevant jurisdictions.

(i)    “Director” means a member of the Board or the board of directors of any other Participating Company.

(j)    “Disability” means the permanent and total disability of the Participant, within the meaning of Section 22(e)(3) and 409A(a)(2)(C)(i) of the Code.   

(k)    “Dividend Equivalent” means a credit, made at the discretion of the Committee or as otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award held by such Participant.  

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(l)    “Employee” means any person treated as an employee (including an Officer or a member of the Board who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a member of the Board nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan.  

(m)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n)    “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:

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

(ii)    If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse.

(o)    “Incentive Stock Option” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option.

(p)    “Nonstatutory Stock Option” means an Option not intended to be (as set forth in the Award Agreement) or not qualifying as an incentive stock option within the meaning of Section 422(b) of the Code.

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

(r)    “Option” means the right to purchase Stock at a stated price for a specified period of time granted to a participant pursuant to Section 6 of the Plan.  An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.

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

(t)    “Participant” means any eligible person who has been granted one or more Awards.

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(u)    “Participating Company” means the Company or any Parent Corporation, Subsidiary Corporation or Affiliate.

(v)    “Participating Company Group” means, at any point in time, all entities collectively which are then Participating Companies.

(w)    “Performance Award” means an Award of Performance Shares or Performance Units.

(x)    “Performance Award Formula” means, for an Award, a formula or table established by the Committee, which provides the basis for computing the value of an Award at one or more threshold levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period.

(y)    “Performance Goal” means a performance goal established by the Committee.

(z)    “Performance Period” means a period established by the Committee at the end of which one or more Performance Goals are to be measured.

(aa)    “Performance Share” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a Performance Share based on performance.

(bb)    “Performance Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 9 of the Plan to receive a payment equal to the value of a Performance Unit based upon performance. 

(cc)    Restricted Stock Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 8 of the Plan to receive one share of Stock, a cash payment equal to the value of one share of Stock, or a combination thereof, as determined in the sole discretion of the Committee.

(dd)    “Restriction Period” means the period established in accordance with Section 8.5 of the Plan during which shares subject to a Stock Award are subject to Vesting Conditions.

(ee)    “SAR” means a bookkeeping entry representing, for each share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 of the Plan to receive payment of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. 

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

(gg)    “Service” means a Participant’s employment or service with the Participating Company Group as an Employee, a Consultant or a Director, whichever such capacity the Participant held on the date of grant of an Award.  Unless otherwise determined by the Committee, a Participant’s Service shall be deemed to have terminated if the Participant ceases to render service to the Participating Company Group in such initial capacity.  However, a Participant’s Service shall not be deemed to have terminated merely because of a change in the Participating Company for which the Participant renders such Service in such initial capacity, provided that there is no interruption or termination of the Participant’s Service.  A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the entity for which the Participant performs Service ceasing 

to be a Participating Company.  Subject to the foregoing and to the extent applicable Section 409A, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of such termination.   

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(hh)    “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2 of the Plan.

(ii)    “Stock Award” means an Award of a Stock Grant, a Stock Purchase Right or a Restricted Stock Unit Award.

(jj)    “Stock Grant” means Stock granted to a Participant pursuant to Section 8 of the Plan. 

(kk)    “Stock Purchase Right” means a right to purchase Stock granted to a Participant pursuant to Section 8 of the Plan.

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

(mm)    “Ten Percent Owner” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the Code.

(nn)    “Vesting Conditions” mean those conditions established in accordance with Section 8.5 of the Plan prior to the satisfaction of which shares subject to a Stock Award remain subject to forfeiture or a repurchase option in favor of the Company.

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