Document:

MODEL, INC

 

Exhibit 10.1

HEATWURX, INC.

AMENDED AND RESTATED

2011 EQUITY INCENTIVE PLAN

ADOPTED BY THE BOARD OF DIRECTORS:  OCTOBER 18, 2012

APPROVED BY THE STOCKHOLDERS:  OCTOBER 18, 2012

TERMINATION DATE:  APRIL 15, 2021

1.

GENERAL.

(a)

Eligible Stock Award Recipients.  The persons eligible to receive Stock Awards are Employees, Directors, Advisors and Consultants.

(b)

Available Stock Awards.  The Plan provides for the grant of the following Stock Awards: (i) Incentive Stock Options and (ii) Nonstatutory Stock Options.

(c)

Purpose.  The Company, by means of the Plan, seeks to secure and retain the services of the group of persons eligible to receive Stock Awards as set forth in Section , to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate, and to provide a means by which such eligible recipients may be given an opportunity to benefit from increases in value of the Common Stock through the granting of Stock Awards.

2.

ADMINISTRATION.

(a)

Administration by Board.  The Board shall administer the Plan unless and until the Board delegates administration of the Plan to a Committee, as provided in Section .

(b)

Powers of Board.  The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(i)

To determine from time to time (A) which of the persons eligible under the Plan shall be granted Stock Awards; (B) when and how each Stock Award shall be granted; (C) what type or combination of types of Stock Award shall be granted; (D) the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive cash or Common Stock pursuant to a Stock Award; (E) the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person; and (F) the Fair Market Value applicable to a Stock Award.

(ii)

To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan or Stock Award fully effective.

(iii)

To settle all controversies regarding the Plan and Stock Awards granted under it.

(iv)

To accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.

(v)

To suspend or terminate the Plan at any time.  Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant.

(vi)

To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to bring the Plan or Stock Awards granted under the Plan into compliance therewith, subject to the limitations, if any, of applicable law. However, except as provided in Section  relating to Capitalization Adjustments, to the extent required by applicable law, stockholder approval shall be required for any amendment of the Plan that either (i) materially increases the number of shares of Common Stock available for issuance under the Plan, (ii) materially expands the class of individuals eligible to receive Stock Awards under the Plan, (iii) materially increases the benefits accruing to Participants under the Plan or materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (iv) materially extends the term of the Plan, or (v) expands the types of Stock Awards available for issuance under the Plan.  Except as provided above, rights under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing.  

(vii)

To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 422 of the Code regarding Incentive Stock Options.

(viii)

To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that, the rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing.  Notwithstanding the foregoing, subject to the limitations of applicable law, if any, and without the affected Participant’s consent, the Board may amend the terms of any one or more Stock Awards if necessary to maintain the qualified status of the Stock Award as an Incentive Stock Option or to bring the Stock Award into compliance with Section 409A of the Code and the related guidance thereunder. 

(ix)

Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Stock Awards.

(x)

To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States.

(xi)

To effect, at any time and from time to time, with the consent of any adversely affected Optionholder, (1) the reduction of the exercise price of any outstanding Option under the Plan, (2) the cancellation of any outstanding Option under the Plan and the grant in substitution therefor of a new Option under the Plan or another equity plan of the Company covering the same or a different number of shares of Common Stock, or (3) any other action that is treated as a repricing under generally accepted accounting principles; provided, however, that no such reduction or cancellation may be effected if it is determined, in the Company’s sole discretion, that such reduction or cancellation would result in any such outstanding Option becoming subject to the requirements of Section 409A of the Code.

(c)

Delegation to Committee.  The Board may delegate some or all of the administration of the Plan to a Committee or Committees.  If administration of the Plan is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.  The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

(d)

Delegation to an Officer.  The Board may delegate to one or more Officers the authority to do one or both of the following: (i) designate Employees who are not Officers to be recipients of Options (and, to the extent permitted by applicable law, other Stock Awards) and the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation shall specify the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not grant a Stock Award to himself or herself.  Notwithstanding the foregoing, the Board may not delegate authority to an Officer to determine the Fair Market Value of the Common Stock pursuant to Section  below. 

(e)

Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

3.

SHARES SUBJECT TO THE PLAN.

(a)

Subject to Section  relating to Capitalization Adjustments, the aggregate number of shares of Common Stock of the Company that may be issued pursuant to Stock Awards after the Effective Date shall not exceed One Million Eight Hundred Thousand (1,800,000) shares.  For clarity, the limitation in this Section  is a limitation in the number of shares of Common Stock that may be issued pursuant to the Plan.  Accordingly, this Section  does not limit the granting of Stock Awards except as provided in Section .  Furthermore, if a Stock Award (i) expires or otherwise terminates without having been exercised in full or (ii) is settled in cash (i.e., the holder of the Stock Award receives cash rather than stock), such expiration, termination or settlement shall not reduce (or otherwise offset) the number of shares of Common Stock that may be issued pursuant to the Plan.

(b)

If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares which are forfeited shall revert to and again become available for issuance under the Plan.  Also, any shares reacquired by the Company pursuant to Section  or as consideration for the exercise of an Option shall again become available for issuance under the Plan.  Notwithstanding the provisions of this Section , any such shares shall not be subsequently issued pursuant to the exercise of Incentive Stock Options.  

(c)

Incentive Stock Option Limit.  Notwithstanding anything to the contrary in this Section , subject to the provisions of Section  relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options shall be One Million Eight Hundred Thousand (1,800,000) shares of Common Stock unless otherwise amended.   

(d)

Source of Shares.  The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock.  The total number of shares available for issuance under the Plan shall be One Million Eight Hundred Thousand (1,800,000) shares of Common Stock unless otherwise amended.   

4.

ELIGIBILITY.

(a)

Eligibility for Specific Stock Awards.  Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code).  Nonstatutory Stock Options may be granted to Employees, Directors and Consultants.

(b)

Ten Percent Stockholders.  A holder of 10% or more of the Company’s stock (a “Ten Percent Stockholder”) shall not be granted an Incentive Stock Option without a vote of a majority of the members of the Board (excluding any member of the Board who is the proposed recipient of the grant), and unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

5.

OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate.  All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased on exercise of each type of Option.  If an Option is not specifically designated as an Incentive Stock Option, then the Option shall be a Nonstatutory Stock Option. The provisions of separate Options need not be identical; provided, however, that each Option Agreement shall include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions:

(a)

Term.  Subject to the provisions of Section  regarding Ten Percent Stockholders, no Option shall be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Option Agreement.

(b)

Exercise Price.  Subject to the provisions of Section  regarding Ten Percent Stockholders, the exercise price of each Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, an Option may be granted with an exercise price lower than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option if such Option is granted pursuant to an assumption or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code (whether or not such options are Incentive Stock Options).

(c)

Consideration.  The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below.  The Board shall have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular method of payment.  The permitted methods of payment are as follows:

(i)

by cash, check, bank draft or money order payable to the Company;

(ii)

pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds; 

(iii)

by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock equal to the Fair Market Value of the aggregate Option exercise price; 

(iv)

by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common 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, that shares of Common 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)

in any other form of legal consideration that may be acceptable to the Board.  

(d)

Transferability of Options.  The Board may, in its sole discretion, impose such limitations on the transferability of Options as the Board shall determine.  In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options shall apply:

(i)

Restrictions on Transfer.  An Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.    

(ii)

Domestic Relations Orders.  Notwithstanding the foregoing, an Option may be transferred pursuant to a domestic relations order, provided, however, that an Incentive Stock Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.  

(iii)

Beneficiary Designation.  Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be the beneficiary of an Option with the right to exercise the Option and receive the Common Stock or other consideration resulting from the Option exercise.

(e)

Vesting of Options Generally.  The total number of shares of Common Stock subject to an Option may vest and therefore become exercisable in periodic installments that may or may not be equal.  The Option may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of performance goals or other criteria) as the Board may deem appropriate.  The vesting provisions of individual Options may vary.  The provisions of this Section  are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.

(f)

Termination of Continuous Service.  Except as otherwise provided in the applicable Option Agreement or other agreement between the Optionholder and the Company, in the event that an Optionholder’s Continuous Service terminates (other than for Cause or upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder’s Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than thirty (30) days unless such termination is for Cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.

(g)

Extension of Termination Date.   Except as otherwise provided in the applicable Option Agreement or other agreement between the Optionholder and the Company, if the exercise of the Option following the termination of the Optionholder’s Continuous Service (other than for Cause or upon the Optionholder’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of a period of three (3) months after the termination of the Optionholder’s Continuous Service during which the exercise of the Option would not be in violation of such registration requirements, or (ii) the expiration of the term of the Option as set forth in the Option Agreement.

(h)

Disability of Optionholder.  Except as otherwise provided in the applicable Option Agreement or other agreement between the Optionholder and the Company, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination of Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months), or (ii) the expiration of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.

(i)

Death of Optionholder.  Except as otherwise provided in the applicable Option Agreement or other agreement between the Optionholder and the Company, in the event that (i) an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated as the beneficiary of the Option upon the Optionholder’s death, but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months), or (ii) the expiration of the term of such Option as set forth in the Option Agreement.  If, after the Optionholder’s death, the Option is not exercised within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate.  If the Optionholder designates a third party beneficiary of the Option in accordance with Section , then upon the death of the Optionholder such designated beneficiary shall have the sole right to exercise the Option and receive the Common Stock or other consideration resulting from the Option exercise.  

(j)

Termination for Cause.  Except as explicitly provided otherwise in an Optionholder’s Option Agreement, in the event that an Optionholder’s Continuous Service is terminated for Cause, the Option shall terminate upon the termination date of such Optionholder’s Continuous Service, and the Optionholder shall be prohibited from exercising his or her Option from and after the time of such termination of Continuous Service.

(k)

Non-Exempt Employees.  No Option granted to an Employee that is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for any shares of Common Stock until at least six months following the date of grant of the Option.  The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option will be exempt from his or her regular rate of pay. 

(l)

Right of Repurchase.  Subject to the “Repurchase Limitation” in Section , the Option may include a provision whereby the Company may elect to repurchase all or any part of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the Option.  Provided that the “Repurchase Limitation” in Section  is not violated, the Company shall not be required to exercise its repurchase option until at least six (6) months (or such longer or shorter period of time necessary to avoid classification of the Option as a liability for financial accounting purposes) have elapsed following exercise of the Option unless otherwise specifically provided in the Option Agreement.

(m)

Right of First Refusal.  The Option may include a provision whereby the Company may elect to exercise a right of first refusal following receipt of notice from the Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option.  Except as expressly provided in this Section 5(m) or in the Stock Award Agreement for the Option, such right of first refusal shall otherwise comply with any applicable provisions of the Bylaws of the Company.  The Company will not exercise its right of first refusal until at least six (6) months (or such longer or shorter period of time necessary to avoid classification of the Option as a liability for financial accounting purposes) have elapsed following exercise of the Option unless otherwise specifically provided in the Option Agreement.

6.

COVENANTS OF THE COMPANY.

(a)

Availability of Shares.  During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of Common Stock reasonably required to satisfy such Stock Awards.

(b)

Securities Law Compliance.  The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.

(c)

No Obligation to Notify.  The Company shall have no duty or obligation to any holder of a Stock Award to advise such holder as to the time or manner of exercising such Stock Award.  Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of a Stock Award or a possible period in which the Stock Award may not be exercised.  The Company has no duty or obligation to minimize the tax consequences of a Stock Award to the holder of such Stock Award.

7.

MISCELLANEOUS.

(a)

Use of Proceeds from Sales of Common Stock.  Proceeds from the sale of shares of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.

(b)

Corporate Action Constituting Grant of Stock Awards.  Corporate action constituting a grant by the Company of a Stock Award to any Participant shall be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant.  

(c)

Stockholder Rights.  No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms and the Participant shall not be deemed to be a stockholder of record until the issuance of the Common Stock pursuant to such exercise has been entered into the books and records of the Company.

(d)

No Employment or Other Service Rights.  Nothing in the Plan, any Stock Award Agreement or any other instrument executed thereunder or in connection with any Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

(e)

Incentive Stock Option $100,000 Limitation.  To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

(f)

Investment Assurances.  The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock.  The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (x) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (y) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock. 

(g)

Withholding Obligations.  To the extent provided by the terms of a Stock Award Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to a Stock Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii)  withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Stock Award; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of the Stock Award as a liability for financial accounting purposes); (iii) withholding payment from any amounts otherwise payable to the Participant; (iv) withholding cash from a Stock Award settled in cash; or (v) by such other method as may be set forth in the Stock Award Agreement.  

(h)

Electronic Delivery.  Any reference herein to a “written” agreement or document shall include any agreement or document delivered electronically or posted on the Company’s intranet.

(i)

Deferrals.  To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Stock Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants.  Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee.  The Board is authorized to make deferrals of Stock Awards and determine when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of employment or retirement, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

(j)

Compliance with Section 409A.  To the extent that the Board determines that any Stock Award granted hereunder is subject to Section 409A of the Code, the Stock Award Agreement evidencing such Stock Award shall incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code.  To the extent applicable, the Plan and Stock Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued or amended after the Effective Date.  Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Board determines that any Stock Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Board may adopt such amendments to the Plan and the applicable Stock Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessary or appropriate to (1) exempt the Stock Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Stock Award, or (2) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance.

(k)

Information Obligation.  To the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall deliver financial statements to Participants at least annually.  This Section  shall not apply to key Employees whose duties in connection with the Company assure them access to equivalent information.

(l)

Repurchase Limitation.  The terms of any repurchase option shall be specified in the Stock Award, and the repurchase price may be either the Fair Market Value of the shares of Common Stock on the date of termination of Continuous Service or the lower of (i) the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their original purchase price.  

8.

ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.

(a)

Capitalization Adjustments.  In the event of a Capitalization Adjustment, the Board shall proportionately and appropriately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section , (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section , (iii) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards, (iv) the class(es) and maximum number of securities that may be issued under the Plan pursuant to Section .  The Board shall make such adjustments, and its determination shall be final, binding and conclusive.  

(b)

Dissolution or Liquidation.  Except as otherwise provided in the Stock Award Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the Company’s right of repurchase) shall terminate immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the Company’s repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the dissolution or liquidation is completed but contingent on its completion. 

(c)

Corporate Transaction.   The following provisions shall apply to Stock Awards in the event of a Corporate Transaction unless otherwise provided in the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the holder of the Stock Award or unless otherwise expressly provided by the Board at the time of grant of a Stock Award.  

(i)

Stock Awards May Be Assumed.  Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor’s parent company, if any), in connection with such Corporate Transaction.  A surviving corporation or acquiring corporation (or its parent) may choose to assume or continue only a portion of a Stock Award or substitute a similar stock award for only a portion of a Stock Award.  The terms of any assumption, continuation or substitution shall be set by the Board in accordance with the provisions of Section .

(ii)

Stock Awards Held by Current Participants.  Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the “Current Participants”), the vesting of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction).  

(iii)

Stock Awards Held by Persons other than Current Participants.  Except as otherwise stated in the Stock Award Agreement, in the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall not be accelerated and such Stock Awards (other than a Stock Award consisting of vested and outstanding shares of Common Stock not subject to the Company’s right of repurchase) shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such Stock Awards shall not terminate and may continue to be exercised notwithstanding the Corporate Transaction.

(iv)

Payment for Stock Awards in Lieu of Exercise.  Notwithstanding the foregoing, in the event a Stock Award will terminate if not exercised prior to the effective time of a Corporate Transaction, the Board may provide, in its sole discretion, that the holder of such Stock Award may not exercise such Stock Award but will receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (A) the value of the property the holder of the Stock Award would have received upon the exercise of the Stock Award, over (B) any exercise price payable by such holder in connection with such exercise.  

(d)

Change in Control.  A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration shall occur. 

9.

TERMINATION OR SUSPENSION OF THE PLAN.

(a)

Plan Term.  The Board may suspend or terminate the Plan at any time.  Unless sooner terminated by the Board pursuant to Section , the Plan shall automatically terminate on the day before the tenth (10th) anniversary of the earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the Plan is approved by the stockholders of the Company.  No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

(b)

No Impairment of Rights.  Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the affected Participant.

10.

EFFECTIVE DATE OF PLAN.

This Plan shall become effective on the Effective Date.  

11.

CHOICE OF LAW.

The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.

12.

DEFINITIONS.   As used in the Plan, the following definitions shall apply to the capitalized terms indicated below:  

(a)

“Affiliate” means, at the time of determination, any “parent” or “majority-owned subsidiary” of the Company, as such terms are defined in Rule 405 of the Securities Act.  The Board shall have the authority to determine the time or times at which “parent” or “majority-owned subsidiary” status is determined within the foregoing definition.  

(b)

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

(c)

“Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company).  Notwithstanding the foregoing, the conversion of any convertible securities of the Company shall not be treated as a transaction “without the receipt of consideration” by the Company.

(d)

“Cause” means with respect to a Participant, the occurrence of any of the following events:  (i) such Participant’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) such Participant’s intentional, material violation of any contract or agreement between the Participant and the Company or of any statutory duty owed to the Company; (iv)  such Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause shall be made by the Company in its sole discretion.  Any determination by the Company that the Continuous Service of a Participant was terminated by reason of dismissal without Cause for the purposes of outstanding Stock Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.  Notwithstanding the foregoing, if a Participant has a written employment agreement with the Company that defines “Cause”, then the definition of Cause in such employment agreement shall be deemed to be controlling for the purposes of this Plan and any Award or Stock Option Agreement issued to such Participant under this Plan.

(e)

“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: 

(i)

any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities or (B) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;

(ii)

there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;

(iii)

there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or

(iv)

individuals who, on the date this Plan is adopted by the Board, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board. 

For the avoidance of doubt, the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.

Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply.

(f)

“Code” means the Internal Revenue Code of 1986, as amended.

(g)

“Committee” means a committee of one (1) or more Directors to whom authority has been delegated by the Board in accordance with Section .

(h)

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

(i)

“Company” means Heatwurx, Inc., a Delaware corporation.

(j)

“Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated for such services.  However, service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a “Consultant” for purposes of the Plan.  

(k)

“Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated.  A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the Entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service; provided, however, if the Entity for which a Participant is rendering service ceases to qualify as an Affiliate, as determined by the Board in its sole discretion, such Participant’s Continuous Service shall be considered to have terminated on the date such Entity ceases to qualify as an Affiliate.  For example, a change in status from an employee of the Company to a consultant of an Affiliate or to a Director shall not constitute an interruption of Continuous Service.  To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave.  Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.

(l)

“Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

(i)

the consummation of a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

(ii)

the consummation of a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the Company;

(iii)

the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

(iv)

the consummation of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

(m)

“Director” means a member of the Board.

(n)

“Disability” means the inability of a Participant to engage in any substantially gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, and shall be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.  

(o)

“Effective Date” means the effective date of this Plan, which is the earlier of (i) the date that this Plan is first approved by the Company’s stockholders, or (ii) the date this Plan is adopted by the Board.

(p)

“Employee” means any person employed by the Company or an Affiliate.  However, service solely as a Director, or payment of a fee for such services, shall not cause a Director to be considered an “Employee” for purposes of the Plan.

(q)

“Entity” means a corporation, partnership, limited liability company or other entity.

(r)

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

(s)

“Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date of the Plan as set forth in Section , is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.

(t)

“Fair Market Value” means, as of any date, the value of the Common Stock determined as follows: 

(i)

if the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of Common Stock will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in such source as the Board deems reliable. Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing sales price (or closing bid if no sales were reported) on the last preceding date for which such quotation exists. 

(ii)

in the absence of such markets, the Fair Market Value will be determined by the Board (a) in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations and (b) in compliance with Section 409A of the Code or, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code.

(u)

“Incentive Stock Option” means an Option that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(v)

“Nonstatutory Stock Option” means an Option that does not qualify as an Incentive Stock Option.

(w)

“Officer” means any person designated by the Company as an officer. 

(x)

“Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

(y)

“Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an Option grant.  Each Option Agreement shall be subject to the terms and conditions of the Plan.

(z)

“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

(aa)

“Own,” “Owned,” “Owner,” “Ownership”  A person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

(bb)

“Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

(cc)

“Plan” means this Amended and Restated Heatwurx, Inc. 2011 Equity Incentive Plan.

(dd)

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

(ee)

“Stock Award” means any right to receive Common Stock granted under the Plan, including an Incentive Stock Option or a Nonstatutory Stock Option.

(ff)

“Stock Award Agreement” means a written agreement between the Company and a Participant evidencing the terms and conditions of a Stock Award grant.  Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(gg)

“Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) .

(hh)

“Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.

APPROVED AND ADOPTED this 18th day of October, 2012

CERTIFICATE OF SECRETARY

 I hereby certify that I am the Secretary of Heatwurx, Inc., and that the foregoing Amended and Restated 2011 Equity Incentive Plan (the “Plan”), consisting of 16 pages, constitute the Plan of the Company, as duly adopted at a regular meeting of the Board of Directors of the Corporation held October 18, 2012.

IN WITNESS WHEREOF, I have hereunto subscribed my name this 18th day of October, 2012.

/s/ Howard J. Kern

Howard J. Kern, Secretary

 

2Exhibit
10.4

 

PROCESSA
PHARMACEUTICALS INC.

EMPLOYMENT
AGREEMENT

SEPTEMBER
1, 2018

 

This
Employment Agreement is entered into as of the date of the last signature affixed hereto, by and between Processa Pharmaceuticals
Inc., a Delaware corporation (“Processa”), and James Stanker, (“Employee”).

 

In
consideration of the mutual promises and covenants set forth herein, and other good and valuable consideration, the sufficiency
of which is hereby acknowledged, Processa and Employee hereby agree as follows:

 

	 	1.	Position
    of Employment. Processa will employ the Employee in the position of Chief Financial Officer (“CFO”) and, as CFO,
    Employee will report to the Chief Executive Officer (“CEO”). Processa retains the right to change Employee’s
    title, duties, and reporting relationships as may be determined to be in the best interests of Processa; provided, however,
    that any such change in Employee’s duties shall be consistent with Employee’s training, experience, and qualifications.
	 	 	 
	 	 	The
    terms and conditions of the Employee’s employment shall, to the extent not addressed or described in this Employment
    Agreement, be governed by Processa’s Policies and Procedures Manual and existing practices. In the event of a conflict
    between this Employment Agreement and the Policies and Procedures Manual or existing practices, the terms of this Agreement
    shall govern.
	 	 	 
	 	2.	Term
    of Employment. Employee’s employment with Processa shall begin on September 1, 2018 and shall continue until December
    31, 2018, after which time continued employment shall be on an “at will” basis, unless:

 

	 	a.	Employee’s
    employment is terminated by either party in accordance with the terms of Section 5 of this Employment Agreement; or
	 	 	 
	 	b.	Such
    term of employment is extended or shortened by a subsequent agreement duly executed by each of the parties to this Employment
    Agreement, in which case such employment shall be subject to the terms and conditions contained in the subsequent written
    agreement.

 

	 	3.	Compensation
    and Benefits.

 

	 	a.	Base
    Salary. Employee shall receive an initial base annual salary of $87,500, subject to review and adjustment from time to time
    by the Company in its sole discretion. The annual salary is based on a 50% level of effort. 
	 	 	 
	 	b.	Stock
    Options. Subject to approval by the Processa’s Board of Directors (the “Board”), and pursuant to the Processa’s
    2017 Stock Plan (the “Plan”), Processa shall grant Employee an option to purchase 316,400 shares of Processa’s
    common stock at the fair market value as determined by the Board as of the date of grant (the “Option”) with a
    10-year term. The option shall be an incentive stock option to the extent permissible
    under Section 422 of the Internal Revenue Code. The Option shall vest over a period of 4 years as follows: 25% of the
    shares vesting on September 1, 2019 and 1/48th of total shares subject to the Option shall vest monthly thereafter
    over the remaining three years of the vesting period, subject to Employee’s continuous service as of each applicable
    date. In the event of the Employee’s termination without cause or termination for Good Reason prior to September 1,
    2019, then 25% of the then-unvested Option shall immediately vest. In addition, in the
    event of a Change of Control, subject to Employee’s continuous service as of the closing of such Sale Event, all of
    Employee’s then-unvested Option shall immediately and automatically vest as of the Closing of such Change of Control
    Event. 
	 	 	 
	 	 	Employee
    shall also receive an option to purchase 18,000 shares of Processa’s common stock at the exercise price as determined
    by the Board. 9,000 of these shares will vest on March 1, 2019 and 9,000 will vest on September 1, 2019. The specifics of
    the stock options will be described in the Stock Option Agreement and Stock Option Award provided to the Employee.
	 	 	 
	 	c.	Incentive
    and Deferred Compensation. Employee shall be eligible to participate in all incentive and deferred compensation programs available
    to other executives or officers of Processa, such participation to be in the same form, under the same terms, and to the same
    extent that such programs are made available to other such executives or officers. Nothing in this Employment Agreement shall
    be deemed to require the payment of bonuses, awards, or incentive compensation to Employee if such payment would not otherwise
    be required under the terms of Processa’s incentive compensation programs.

 

    	 

    	 

    

 

	 	d.	Employee
    Benefits. Employee shall be eligible to participate in all employee benefit plans, policies, programs, or perquisites in which
    other Processa executive or officers participate, including the Processa Stock Option program. The terms and conditions of
    Employee’s participation in Processa’s employee benefit plans, policies, programs, or perquisites shall be governed
    by the terms of each such plan, policy, or program.

 

	 	4.	Duties
    and Performance. The Employee acknowledges and agrees that he is being offered a position of employment by Processa with the
    understanding that the Employee possesses a unique set of skills, abilities, and experiences which will benefit Processa,
    and he agrees that his continued employment with Processa, whether during the term of this Employment Agreement or thereafter,
    is contingent upon his successful performance of his duties in his position as noted above, or in such other position to which
    he may be assigned.

 

	 	a.	General
    Duties.

 

	 	1.	Employee
    shall render to the best of the Employee’s ability, on behalf of the Processa, services to and on behalf of the Processa,
    and shall undertake diligently all duties assigned to him by the Processa.
	 	 	 
	 	2.	Employee shall devote
    his time, energy and skill to the performance of the services in which Processa is engaged, at such time and place as Processa
    may direct. The Employee shall not serve on any board of directors of a company or perform any other activities with a company
    that presents a conflict of interest and/or would interfere with Employee’s responsibilities
    and the performance of Employee’s duties hereunder. Employees will notify the CEO of service
    on boards of directors of companies that are not competitive with the Company, do not otherwise present a conflict of interest
    and would not otherwise interfere with Employee’s responsibilities and the performance of Employee’s duties hereunder.
    The Employee is not prohibited from preforming other activities, for compensation or otherwise, that would not interfere with
    Employee’s responsibilities and the performance of Employee’s duties hereunder or present a conflict of interest.
	 	 	 
	 	3.	Employee shall faithfully
    and industriously assume and perform with skill, care, diligence and attention all responsibilities and duties connected with
    his employment on behalf of Processa.
	 	 	 
	 	4.	Employee shall have
    no authority to enter into any contracts binding upon Processa, or to deliberately create any obligations on the part of Processa,
    except as may be specifically authorized by the Board of Directors of Processa.

 

	 	b.	Specific
    Duties.
	 	 	 
	 	c.	To the best of the
    Employees ability, he will:

 

	 	1.	provide
    leadership in the development for the continuous evaluation of short and long-term strategic financial objectives.
	 	 	 
	 	2.	ensure credibility
    of the Accounting and Finance group by providing timely and accurate analysis of budgets, financial trends and forecasts.
	 	 	 
	 	3.	direct and oversee
    all aspects of the finance & Accounting functions of the organization.
	 	 	 
	 	4.	evaluate and advises
    on the impact of long-range planning, introduction of new programs/strategies and regulatory action.
	 	 	 
	 	5.	manage processes for
    financial forecasting, budgets and consolidation and reporting to the Company.
	 	 	 
	 	6.	provide executive
    management with advice on the financial implications of business activities.
	 	 	 
	 	7.	provide recommendations
    to strategically enhance financial performance and business opportunities.
	 	 	 
	 	8.	develop, design and
    implement effective internal controls over financial reporting to comply with the requirement of the Sarbanes Oxley Act of
    2002.
	 	 	 
	 	9.	understand and mitigate
    key elements of the company’s risk profile.
	 	 	 
	 	10.	report risk issues
    to the CEO and audit committee of the Board of Directors.
	 	 	 
	 	11.	oversee the SEC financial
    reporting process.
	 	 	 
	 	12.	other duties as assigned.

 

    	 

    	 

    

 

	 	5.	Termination
    of Employment. Employee’s employment with Processa may be terminated, prior to the expiration of the term of this Employment
    Agreement, in accordance with any of the following provisions:

 

	 	a.	Termination
    by Employee. The Employee may terminate his employment at any time during the course of this agreement by giving 4 weeks’
    notice in writing to the Board of Directors of Processa. During the notice period, Employee must fulfill all his duties and
    responsibilities set forth above and use his best efforts to train and support his replacement, if any. Failure to comply
    with this requirement may result in Termination for Cause described below, but otherwise Employee’s salary and benefits
    will remain unchanged during the notification period.
	 	 	 
	 	b.	Termination by Employee
    for Good Reason. The Employee may terminate employment with the Company for Good Reason. “Good Reason” shall mean
    the occurrence without Employee’s written consent, of one or more of the following events: (i) the Company reduces Employee’s
    base salary by more than 25%, (ii) the Company materially decreases Employee’s responsibilities, (iii) the Company relocates
    Employee’s principal place of work to a location more than fifty (50) miles from the location of Employee’s principal
    place of work on the date of this Agreement, or (iv) the Company materially breaches the terms of this Agreement; provided
    that no such event shall constitute Good Reason hereunder unless (a) Employee shall have given written notice to the Company
    of Employee’s intent to resign for Good Reason within 30 days after Employee becomes aware of the occurrence of any
    such event (specifying in detail the nature and scope of the event), (b) such event or occurrence shall not have been cured
    within 30 days of the Company’s receipt of such notice, (c) any Termination by Employee for Good Reason following such
    30 day cure period must occur no later than the date that is 30 days following the expiration of such 30 day cure period.
    Employee’s Termination for Good Reason shall be treated as involuntary. 
	 	 	 
	 	c.	Termination by Processa
    without Cause. Processa may terminate Employee’s employment at any time during the course of this agreement by giving
    4 weeks’ notice in writing to the Employee. During the notice period, Employee must fulfill all of Employee’s
    duties and responsibilities set forth above and use Employee’s best efforts to train and support Employee’s replacement,
    if any. Failure of Employee to comply with this requirement may result in Termination for Cause described below, but otherwise
    Employee’s salary and benefits will remain unchanged during the notification period. Processa, in its sole discretion,
    may give Employee severance pay in the amount of the remaining notice period in lieu of actual employment, and nothing herein
    shall require Processa to maintain employee in active employment for the duration of the notice period.
	 	 	 
	 	d.	Termination by Processa
    for Cause. Processa may, at any time and without notice, terminate the Employee for “cause”. Termination by Processa
    of the Employee for “cause” shall include but not be limited to termination based on any of the following grounds:
    (a) conduct by Employee that demonstrates Employee’s gross unfitness to serve
    under circumstances that materially and adversely affect the Company; (b) fraud, misappropriation, embezzlement or
    acts of similar dishonesty; (c) conviction of a felony involving moral turpitude; (d) illegal use of drugs or excessive use
    of alcohol in the workplace; (e) intentional and willful misconduct that may subject Processa to criminal or civil liability;
    (f) breach of the Employee’s duty of loyalty, including the diversion or usurpation of corporate opportunities properly
    belonging to Processa; (g) willful disregard of Processa policies and procedures; and (h) breach of any of the material terms
    of this Agreement. 
	 	 	 
	 	e.	Termination by Death
    or Disability. The Employee’s employment and rights to compensation under this Employment Agreement shall terminate
    if the Employee is unable to perform the duties of his position due to death or disability lasting more than 90 days, and
    the Employee’s heirs, beneficiaries, successors, or assigns shall not be entitled to any of the compensation or benefits
    to which Employee is entitled under this Agreement, except: (a) to the extent specifically provided in this Employment Agreement;
    (b) to the extent required by law; or (c) to the extent that such benefit plans or policies under which Employee is covered
    provide a benefit to the Employee’s heirs, beneficiaries, successors, or assigns.
	 	 	 
	 	f.	Termination of Employment
    without Cause or for Good Reason Involving a Change of Control. Employee’s employment with Processa may be terminated
    in the event that a Change in Control occurs which is also a Cash Severance Change in Control (as defined below), and Employee’s
    employment with the Company is terminated by the Company Without Cause or by Employee for Good Reason at any time within the
    three (3) month period before the date of such Cash Severance Change in Control or during the twelve (12) month period following
    the date of such Cash Severance Change in Control, Employee will receive severance compensation equal to six months’
    of the highest Base Salary in the calendar year in which the Cash Severance Change in Control occurs. 

 

    	 

    	 

    

 

	 	 	For purposes
    of this Section, “Cash Severance Change in Control” shall mean and include:

 

	 	i.	Acquisition
    by any “Person” or “Group” of securities entitled to vote generally in the election of directors (
    “voting securities” ) of the Company that represent 50% or more of the combined voting power of the Company’s
    then outstanding voting securities; 
	 	 	 
	 	ii.	A change in the composition
    of the Board occurring within a twelve (12) month period, as a result of which a majority of the incumbent directors are replaced
    by directors whose appointment or election is not endorsed by a majority of the incumbent directors before the date of the
    appointment or election;
	 	 	 
	 	iii.	Merger or consolidation
    in which the seller’s shareholders no longer control the surviving entity; 
	 	 	 
	 	iv.	Sale of substantially
    all assets to an unrelated entity. 

 

	 	6.	Confidentiality.
    Employee agrees that at all times during Employee’s employment and following the conclusion of Employee’s employment,
    whether voluntary or involuntary, Employee will hold in strictest confidence and not disclose Confidential Information (as
    defined below) to anyone who is not also an employee of Processa or to any employee of Processa.

 

	 	a.	“Confidential
    Information” shall mean any trade secrets or Processa proprietary information, including but not limited to manufacturing
    techniques, processes, formulas, customer lists, inventions, experimental developments, research projects, operating methods,
    cost, pricing, financial data, business plans and proposals, data and information Processa receives in confidence from any
    other party, or any other secret or confidential matters of Processa. Additionally, Employee will not use any Confidential
    Information for Employee’s own benefit or to the detriment of Processa during Employee’s employment or thereafter.
    Employee also certifies that employment with Processa does not and will not breach any agreement or duty that Employee has
    to anyone concerning confidential information belonging to others.
	 	 	 
	 	b.	“Immunity from
    Liability for Confidential Disclosure of a Trade Secret to the Government or in a Court Filing:
	 	 	 
	 	 	(1) Immunity—An
    individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of
    a trade secret that—(A) is made—(i) in confidence to a federal, state or local government official, either directly
    or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law;
    or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
	 	 	 
	 	 	(2) Use of Trade Secret
    Information in Anti-Retaliation Lawsuit—An individual who files a lawsuit for retaliation by an employer for reporting
    a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information
    in the court proceeding, if the individual—(A) files any document containing the trade secret under seal; and (B) does
    not disclose the trade secret, except pursuant to court order.”
	 	 	 

 

	 	7.	Expenses.
    Processa shall pay or reimburse Employee for any expenses reasonably incurred by him in furtherance of his duties hereunder,
    including expenses for entertainment, travel, meals and hotel accommodations, upon submission by him of vouchers or receipts
    maintained and provided to Processa in compliance with such rules and policies relating thereto as Processa may from time
    to time adopt.
	 	 	 
	 	8.	General Provisions.

 

	 	a.	Notices.
    All notices and other communications required or permitted by this Agreement to be delivered by Processa or Employee to the
    other party shall be delivered in writing to the address shown below, either personally, by facsimile transmission or by registered,
    certified or express mail, return receipt requested, postage prepaid, shall be sent to the Company at its primary office location
    and to Employee at Employee’s address as listed on the Company Payroll, or at such other address as the Company or Employee
    may designate by ten days advance written notice to the other, and shall be deemed given and received as of actual personal
    delivery, on the first business day after the date of delivery shown on any such facsimile transmission or upon the date or
    actual receipt shown on any return receipt if registered, certified or express mail is used, as the case may be.
	 	 	 
	 	b.	Amendments and Termination;
    Entire Agreement. This Agreement may not be amended or terminated except by a writing executed by all of the parties hereto.
    This Agreement constitutes the entire agreement of Processa and Employee relating to the subject matter hereof and supersedes
    all prior oral and written understandings and agreements relating to such subject matter.
	 	 	 
	 	c.	Successors and Assigns.
    The rights and obligations of the parties hereunder are not assignable to another person without prior written consent; provided,
    however, that Processa, without obtaining Employee’s consent, may assign its rights and obligations hereunder to a wholly-owned
    subsidiary and provided further that any post-employment restrictions shall be assignable by Processa to any entity which
    purchases all or substantially all of Processa’s assets.

 

    	 

    	 

    

 

	 	d.	Severability; Provisions
    Subject to Applicable Law. All provisions of this Agreement shall be applicable only to the extent that they do not violate
    any applicable law, and are intended to be limited to the extent necessary so that they will not render this Agreement invalid,
    illegal or unenforceable under any applicable law. If any provision of this Agreement or any application thereof shall be
    held to be invalid, illegal or unenforceable, the validity, legality and enforceability of other provisions of this Agreement
    or of any other application of such provision shall in no way be affected thereby.
	 	 	 
	 	e.	Waiver
    of Rights. No waiver by Processa or Employee of a right or remedy hereunder shall be deemed to be a waiver of any other right
    or remedy or of any subsequent right or remedy of the same kind.
	 	 	 
	 	f.	Definitions; Headings;
    and Number. A term defined in any part of this Employment Agreement shall have the defined meaning wherever such term is used
    herein. The headings contained in this Agreement are for reference purposes only and shall not affect in any manner the meaning
    or interpretation of this Employment Agreement. Where appropriate to the context of this Agreement, use of the singular shall
    be deemed also to refer to the plural, and use of the plural to the singular.
	 	 	 
	 	g.	Counterparts. This
    Agreement may be executed in separate counterparts, each of which shall be deemed an original but both of which taken together
    shall constitute but one and the same instrument.
	 	 	 
	 	h.	Governing Laws and
    Forum. This Agreement shall be governed by, construed, and enforced in accordance with the laws of Maryland. The parties hereto
    further agree that any action brought to enforce any right or obligation under this Agreement shall be subject to the exclusive
    jurisdiction of the courts of Maryland.
	 	 	 
	 	i.	Indemnification.
    The Employee shall be entitled to indemnification to the maximum extent permitted by applicable law and the Company’s
    Bylaws with terms no less favorable than provided to any other Company executive officer and subject to the terms of any separate
    written indemnification agreement. At all times during the Employee’s employment, the Company shall maintain in effect
    a directors and officers liability insurance policy with the Employee as a covered officer.

 

All
terms in this offer are dependent on the approval of the Processa Board of Directors. IN WITNESS WHEREOF, Processa Pharmaceuticals,
Inc. and Employee have executed and delivered this Agreement as of the date written below.

 

	 	 	Processa Pharmaceuticals, Inc.
	 	 	 	 
	James Stanker	 	By: 	                       
	 	 	Name:  	 
	 	 	Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00314-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00314-of-00352.parquet"}]]