Document:

f10k2013aex10lxiv_deltainter.htm

EXHIBIT 10.64

 

COOPERATION AGREEMENT

 

This COOPERATION AGREEMENT is made and entered into this 20th day of December 2011, (hereinafter referred to as "Agreement") by and between Delta Mutual lnc of 14362 North Frank Lloyd W right Blvd #2105, Scottsdale AZ 85260 (hereinafter referred to as "Delta"), as one PARTY; and PRINCIPLE  PETROLEUM LIMITED with registered office at Akara Building, 24 De Castro Street Wickhams Cay I, Road Town, Tortola, British Virgin Islands, and contact address in Hipolito Irigoyen 434, 4to. Piso "E", C 1086AAR, Buenos Aires, Argentina (hereinafter referred to as "PPL") as the other PARTY, with both parties jointly hereinafter referred to as the "PARTIES" and individually and independently referred to as the "PARTY".

 

RECITALS:

 

WHEREAS: Delta wholly owns SOUTH AMERICAN HEDGE FUND, LLC., located at 271 1 Centerville Road, Suite 400, Wilmington, New Castle, Delaware, 19808, USA ("SAHF"), which is a limited liability company formed under the laws of the State of Delaware, USA and through its branch in the Republic of Argentina, holds certain rights to explore and exploit solid, liquid and gaseous hydrocarbon deposits i n certain areas in the Republic of Argentina.

 

WHEREAS: PPL is a company formed under the laws of British Virgin Islands.

 

WHEREAS: SAHF holds, and/or is bidding to obtain, the exclusive rights ("Rights") to explore and exploit solid, liquid and gaseous hydrocarbon deposits in certain hydrocarbons areas in the provinces of Salta, Jujuy and Formosa, all of which are in Argentina, as per the technical and legal documents provided by SAHF to PPL.

 

WHEREAS: SAHF and PPL desire to enter into this Agreement to set out the rights and obligations of each PARTY in the ownership, cooperation and development of certain areas ("Designated Areas") in which SAHF has (and/or is bidding to obtain) the Rights (as set out i n Annex I) .

AGREEMENT

NOW, THEREFORE:  i n consideration  of the foregoing recitals, promises, and mutua l covenants hereinafter expressed, the PARTIES do hereby agree as follows:

 

 

	
 

	
1)

	
Cooperation. The PARTIES shall jointly develop the Rights in the Designated Areas through one or more than one cooperation entity ("Cooperation Entity" or UTE (Union Transitoria de Empresas)) jointly owned by the PARTIES in the proportion set out in Annex I.

 

  

  

  

 

	
 

	
2)

	
Transfer and Assignment of Interest.

	
 

	
a)

	
After the signing of this Agreement, SAHF shall assign and transfer all the Rights in the Designated Areas to the Cooperation Entity, the ownership of which is as per instruction and documents provided by PPL.

 

	
 

	
b)

	
After the payment of the Installment 4 as referred to in Paragraph 3(d) below:

 

	
 

	
(i)

	
SAHF shall assign and transfer 9% interest in the Rights in the area of Tartagal ("Tartagal Area ") in the province of Salta to PPL and cause PPL to be registered as the owner of such 9% interest and shall deliver to PPL all document s evidencing the completion of such transfer and registration ; and

	 	 	 
	 	(ii)	SAHF shall assign and transfer 9% interest in the Rights in the area of Mori llo ("Morillo Area ") in the province of Salta to PPL and cause PPL to be registered as the owner of such 9% interest and shall deliver to PPL all documents evidencing the completion of such transfer and registration.

 

	
 

	
3)

	
Specific Terms. According to the installment schedule set out in Paragraphs 3(a) to 3(d) below, PPL shall deliver to SAHF, according to the wiring instruction s as indicated in "ANNEX II," an amount of TEN MILLION UNITED STATES DOLLARS (USD 10,000,000) for entering into the joint ventures as set out in this Agreement.

 

	
a)

	
Installment 1

	
USD 0.5  million to be paid within 10 days after execution of this Agreement

	
b)

	
Installment 2

	
USD 1 million to be paid on or before 31 January 2012

	
c)

	
Installment 3

	
USD 0.5 million to be paid on or before 28 February 2012

	
d)

	
Installment 4

	
USD 8 million to be paid on or before 30 April 2012 after SAHF has provided all evidence showing the completion of the transfer of all the Rights to one or more than one Cooperation

 

Entity jointly  owned by the PARTIES in the proportion set out in Annex I in accordance with Paragraph 1.

 

The PARTIES acknowledge that the estimated fund required for future development of the Designated  Areas  is TEN  MILLION  UNITED  STATES DOLLARS  (USD  10,000,000).

 

The PARTIES agree that such fund will be provided by PPL i n a manner and at such time to be agreed by the PARTIES.

  

2

  

 

 

	
 

	
4)

	
Joint Operations.Operations in all Designated Areas will be governed by an "Operating Agreement" to be executed by the PARTIES when the Rights are transferred to the Cooperation Entity. The "Operating Agreement" will contain provisions establishing an Operating Committee.Both PARTIES will have representatives on the Operating Committee with  SAHF designated as the Operator.

 

SAHF Warranties.

 

	
 

	
a)

	
SAHF hereby warrants and represents that SAHF is the sole owner of, and has good and marketable title, to the Rights in each Designated Area, the Tartagal Area and the Morillo Area and the Rights are free and clear of all liens, claims, liabilities or encumbrances of any type whatsoever.

 

	
 

	
b)

	
SAHF hereby warrants and represents that it will deliver to PPL any and all records, documents, copies of governmental filings and any other items, assets or information relating to the Designated Areas, the Tartagal Area and the Morillo Area after the signing of this Agreement.

 

	
 

	
c)

	
SAHF hereby warrants and represents that as of the date hereof, there are no actions, suits, claims or proceedings pending, or to the knowledge of SAHF, threatened, in any court, administrative agency, arbitrator, or governmental body against SAHF or its empl oyees or, any of the Rights which may have an adverse effect on the Rights mentioned in thi s Agreement.

 

PPL Warranties.

 

	
 

	
d)

	
PPL hereby warrants and represents that as of the date hereof, there are no actions, suits, claims or proceedings pending, or to the knowledge of PPL, threatened, i n any court, administrative agency, arbitrator, or governmental body against PPL or its employees or, any of the Rights which may have an adverse effect on the Rights mentioned in th is Agreement.

 

 

	
 

	
e)

	
PPL hereby warrants and represents that it has sufficient business and financial experience to reasonably protect its own interest under this Agreement.

 

	
 

	
5)

	
No Circumvention  and Confidentiality. A ll the information that one PARTY gives to the other PARTY pursuant to this Agreement shall be considered confidential information ("Confidential Information "), unless there is explicit written authorization to the contrary. For this purpose:

 

	
 

	
a)

	
The PARTY that receives the Confidential Information (herein after referred to as the "RECEIVING PARTY") must maintain the Confidential Information in  strict confidence and shall not disclose, publish, exhibit, transfer or make it known in any other way and for any reason , completely or partially, to persons not  authorized to access such Confidential Information, including  media,  clients,  financers  and  other individuals or entities, without previous written consent from the PARTY that provided the such  Confidential  Information (hereinafter referred to as the "REVEA LING PARTY"), until the PARTIES decide by mutual agreement on when will the public diffusion of such Confidential Information is convenient.

 

	
 

	
b)

	
Each PARTY agrees to exercise in the management and filing of the Confidential Information received by the other PARTY, controls, protects and guards at least as strict as it employs on the management and archiving of its own private data and information.

 

  

3

  

 

	
 

	
8)

	
Survival of Warranties. All representations, warranties, covenants and agreements contained i n this Agreement and i n any document, certificate, or other instrument delivered pursuant hereto or in connection with the transaction contemplated hereby are true now and will survive throughout the term of this Agreement.

 

	
 

	
9)

	
PPL's Indemnification. SAHF hereby covenants and agrees to indemnify and hold PPL harmless from and against and in respect of any and all claim s, losses, expenses, damages, deficiencies, costs, obligations and liabilities including, without limitation, interests, taxes, penalties, assessments, reasonable attorney's fees, together with accountants and other professional fees and other costs and expenses  incident to any suit, action  or proceeding incurred or sustained by PPL, which arise or result from or constitute or related to:

 

	
 

	
a)

	
Any claim or demand for fees, commissions or other compensation or payments by any employee, company or similar person claiming to have been prior to the execution of this Agreement or the transaction contemplated hereby; or

 

	
 

	
b)

	
Any breach by SAHF of any representation , warranty or covenant contained i n this Agreement or document, statement, list of certificate furnished pursuant hereto or delivered herewith; or

 

	
 

	
c)

	
Any claim asserted by a third PARTY arising out  of  or  relating  to  the  acts  or commission of SAHF on or after the Closing related to the Designated Areas, the Tartagal Area and the Morillo Area included in this Agreement.

 

	
 

	
10)

	
SAHF's Indemnification. PPL hereby covenants and agrees to indemnify and hold SAHF harmless from and against and i n respect of any and all claims, losses, expenses, damages, deficiencies, costs, obligations and liabilities including, without limitation, interests, taxes, penalti es, assessments, reasonable attorney's fees, together with accountants and other professional fees and other costs and expenses incident to any suit, action or proceeding incurred or sustained by SAHF, which arise or result from or constitute or related to:

	
 

	
a)

	
Any claim or demand for fees, commissions or other compensation or payments by any employee, company or similar person claiming to have been prior to the execution of this Agreement; or

 

	
 

	
b)

	
Any breach by PPL of any representation, warranty or covenant contained in th is Agreement or document, statement, list of certificate furnished pursuant hereto or delivered herewith.

 

	
 

	
11)

	

 Term. This Agreement is valid for an initial term of four (4) years from the execution of the Agreement by the PARTIES. There will be an automatic renewal of subsequent add itional terms of four (4) years UNLESS the PARTIES agree otherwise.

 

  

4

  

 

	
 

	
12)

	
Nominee of PPL. PPL is entitled to nominate a nominee to take up its rights and obligations under this Agreement.

 

	
 

	
13)

	
Miscellaneous.

 

	  	
a)

	
Binding Agreement. The PARTIES covenant and agree that this Agreement, i ncluding the recitals, when executed and delivered by the PARTIES, will constitute a legal, valid and bind ing agreement between the PARTJ ES and will be enforceable in accordance with the terms set out herein.

 

	  	
b)

	
Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the PARTIES, their legal representatives, successors and assigns.

 

	  	
c)

	
Arbitration. In the  event any controversy or dispute arises out of or relating  to this Agreement  or the breach hereof, each PARTY shall name an arbitrator with in twenty (20) days after either PARTY notifies the other in writing that there is such dispute or controversy existing, and the two (2) arbitrators shall name a third (3rd) arbitrator. If either PARTY fails to select an arbitrator within twenty (20) days as required herein, or if two (2) arbitrators fail to select a third (3rd) arbitrator within fifteen (15) days after both have been appointed, then the Presiding Judge of the Maricopa County Superior Court shall appoint such other arbitrator or arbitrators. In the event that a Spanish language version of this Agreement is created and there is inconsistency between the Spanish language version and the English language version, the English language version will prevail.  The arbitrators shall render a binding decision within sixty (60) days after their appointment and shall conduct all proceedings pursuant to Arizona Revised Statutes, Section 12-1501 through Section 12-1517, or the successor  Statutes and the Rules of the American Arbitration  Association  governing  commercial transaction s then existing, to the extent that such rules are not inconsistent with said statutes and this Agreement. Said decision shall be binding upon the PARTIES without rights of appeal. Judgment upon the award rendered under arbitration may be entered in any court having jurisdiction. The cost of the arbitration procedure shall be borne by the losing PARTY or, if the decision is not clearly in favor of one PARTY or the other, then the costs shall be borne as determined by such arbitration proceeding.

 

	
 

	
d)

	
Integration. This Agreement contains the entire understanding of the PARTIES in respect of the cooperation transaction contemplated under this Agreement. All prior and contemporaneous negotiations, agreements, restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein shall be deemed merged into this Agreement. This Agreement supersedes all prior agreements and understandings between the PARTI ES with respect to the subject matter of this Agreement.

 

	
 

	
e)

	
Modification. This Agreement may be waived, changed, amended, discharged or terminated only by an agreement in writing signed by the PARTIES.

	 	 	 
	 	f) 	Notices. All notices, requests, demand s and other communications shall be deemed to have been duly given if mailed, certified or registered mail, postage prepaid:

 

  

5

  

 

If to SAHF and/or Delta

 

Dr Daniel Peralta SAHF, LLC.

14362 N. Frank Lloyd Wright Blvd. #2 105 Scottsdale, AZ 85260 USA

 

If to PPL

 

Sr. Alberto Mac Mullen

Hipolito Irigoyen 434, 4to. Pisa "E"

C 1086AAR- Ciudad Aut6noma de Buenos Aires Argentina

 

	
 

	
g)

	
Notification of Claims. Each PARTY will promptly notify the other of any third party claims against either PARTY relating to the transaction of which it receives knowledge or notice so as to permit such PARTY an opportunity to prepare a timely defense to such claim or to attempt settlement.

 

	
 

	
h)

	
Attorney's fees. lf any action shall be brought to recover any amount under this Agreement or on account of any breach of or to enforce or interpret any of the terms, covenants or conditions of this Agreement, the prevailing PARTY shall be entitled to recovery from the other PARTY, as part of prevailing PARTY's costs, reasonable attorney's fees, the amount of which shall be fixed by the court and shall be made a part of any judgment rendered.

	 	 	 
	 	i)	Governing Law.  This Agreement shall be governed and construed in accordance with the Laws of the State of Arizona and shall be binding upon and inure to the benefit of the PARTIES and their heirs, legal representatives , successors and assigns.

	
 

	
j)

	
Venue. The proper venue for any proceeding at law or in equity or under the provision s for arbitration shall be Maricopa County, Arizona.

 

  

6

  

 

	
 

	
k)

	
Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

	 	 	 
	 	l) 	Severability. If any portion of this Agreement shall be finally determined by any court of law or government body of competent jurisdiction to violate applicable law or otherwise not to conform to requirements of law and, therefore, to be invalid, the PARTIES will cooperate to remedy or avoid the invalidity, but in any event, will not upset the general balance of relationship created or intended to be created between them as manifested by this Agreement and the instruments referred to herein. Except insofar as it wou ld be an abuse of the foregoing principle, the remaining provisions hereof shall remain in full force and effect.

 

	
 

	
m)

	
Other documents. The PARTIES shall upon reasonable request  of the other, execute such documents as may be necessary or appropriate to carry out the intent of this Agreement.

 

	
 

	
n)

	
Headings. The paragraph headings hereof are intended solely for convenience of reference and shall not be construed to explain any of the provisions of this Agreement.

 

	
 

	
o)

	Time is of the Essence. Time is of the essence of this Agreement.

 

	
 

	
p)

	
No waiver and remedies. No failure or delay on a PARTY's part to exercise any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by a PARTY of a right or remedy hereunder preclude any other or further exercise. No remedy or election hereunder shall be deemed exclusive but it shall , whenever possible, be cumulative with all other remedies in law of equity.

 

  

7

  

 

IN WITNESS WHEREOF, the parties hereto or their duly authorized representatives, having represented that they have the authority to do so, have executed this Agreement on the day, month and year first above written.

 

	
Delta Mutual Inc

	  
	  	  
	
/s/ Dr Daniel Peralta

	  
	
Date: 12/20/2011

	  
	  	  
	
PPL,

	  
	  	  
	
ADAM CARTER-MACKINTOSH, Director

	  
	
Date: 20th  December 2011

	  

  

8

  

Annex I

"List of Interests"

 

	
 

	
1.

	
The PARTIES agree that 51% will be held by SAHF and 49% will be held by PPL, with independence from the participation of third parties, of the interest held by SAHF in the area of Valle de Lerma in the Province of Salta.

 

	
 

	
2.

	
The PARTIES will hold in equal parts, that is to say 50% for each PARTY , with independence from the participation of third parties, of the interest held by SAHF in the area of Selva Maria in the Provi nce of Formosa.

 

	
 

	
3.

	
The PARTIES will hold in equal parts, that is to say 50% for each PARTY, with independence from the participation of third parties, of the interest held by SAHF in the area of San Salvador in the Province of Jujuy.

 

	
 

	
4.

	
The PARTIES will hold i n equal pat1s, that is to say 50% for each PARTY, with independence from the participation of third parties, of the interest held by SAHF in the area of Libertador in the Province of Jujuy.

 

	
 

	
5.

	
The PARTIES will hold in equal parts, that is to say 50% for each PARTY, with independence from the participation of third parties, of the interest which may be acquired by SAHF in the area of La Brea and El Oculto in the Province of Jujuy.

	 	 	 
	
 

	
6.

	
The PARTIES will hold i n equal parts, that is to say 50% for each PARTY, with independence from the participation of third parties, which may be acquired by SAHF in the Area of La Punta in the Province of Formosa.

 

	
 

	
7.

	
The PARTIES agree that 50% will be held by PPL and 50% will  be held by SAHF, with independence from the participation of third parties, which may be acquired by SAHF in the Area of Rivadavia in the Province of Salta.Exhibit 10.1

 

S1 BIOPHARMA, INC.

 

2014 EQUITY INCENTIVE PLAN

 

SECTION 1.  Purpose; Definitions.  The purposes of the Amended and Restated S1 Biopharma, Inc. 2014 Equity Incentive Plan (the “Plan”) of S1 Biopharma, Inc. (the “Company”) are to: (a) enable the Company and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company.

 

For purposes of the Plan, the following terms will have the meanings defined below, unless the context clearly requires a different meaning:

 

(a)                                 “Affiliate” means, with respect to a Person, a Person that directly or indirectly controls, is controlled by, or is under common control with such Person.

 

(b)                                 “Applicable Law” means the legal requirements relating to the administration of and issuance of securities under stock incentive plans, including, without limitation, the requirements of state corporations law, federal, state and foreign securities law, federal, state and foreign tax law, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted.

 

(c)                                  “Award” means an award of Options, Restricted Stock, Restricted Stock Units or Performance Awards made under this Plan.

 

(d)                                 “Award Agreement” means, with respect to any particular Award, the written document that sets forth the terms of that particular Award.

 

(e)                                  “Board” means the Board of Directors of the Company, as constituted from time to time.

 

(f)                                   “Cause” means with respect to any Participant, unless otherwise defined in the Participant’s employment agreement, service agreement or signed offer letter: (i) the Participant’s habitual intoxication or drug addiction; (ii) the Participant’s violation of the Company’s written policies, procedures or codes including, without limitation, those with respect to harassment (sexual or otherwise) and ethics; (iii) the Participant’s refusal or willful failure by the Participant to perform such duties as may reasonably be delegated or assigned to him, consistent with his position; (iv) the Participant’s willful refusal or willful failure to comply with any requirement of the Securities and Exchange Commission or any securities exchange or self-regulatory organization then applicable to the Company; (v) the Participant’s willful or wanton misconduct in connection with the performance of his or her duties including, without limitation, breach of fiduciary duties; (vi) the Participant’s breach (whether due to inattention, neglect, or knowing conduct) of any of the material provisions of his or her employment or service agreement, if any; (vii) the Participant’s conviction of, guilty, no contest or nolo contendere plea to, or admission or confession to any felony (other than driving while intoxicated or driving under the influence of alcohol) or any act of fraud, misappropriation, embezzlement or any misdemeanor involving moral turpitude; (viii) the Participant’s dishonesty detrimental to the best interest of the Company; (ix) the Participant’s involvement in any matter which, in the opinion of the Company’s Chief Executive Officer (or, in the case of the Chief Executive Officer, the Committee), is reasonably likely to cause material prejudice or embarrassment to the Company’s business; or (x) solely in the case of a Non-Employee Director, any other action by the Participant which the Committee determines constitutes “cause.”  Notwithstanding the foregoing, if a Participant and the Company (or any of its Affiliates) have entered into an employment agreement, consulting agreement or other similar agreement that specifically defines “cause,” then with respect to such Participant, “Cause” shall have the meaning defined in such other agreement.

 

(g)                                  “Change in Control” shall mean the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing

 

 

50% or more of the total power to vote for the election of directors of the Company; (ii) during any twelve month period, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 1(g)(i), Section 1(g)(iii), Section 1(g)(iv) or Section 1(g)(v) hereof) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period of whose election or nomination for election was previously approved, cease for any reason to constitute a majority thereof; (iii) the merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to 50% or more of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); (iv) the sale or other disposition of all or substantially all of the assets of the Company; (v) a liquidation or dissolution of the Company or (vi) acceptance by shareholders of the Company of shares in a share exchange if the shareholders of the Company immediately before such share exchange do not or will not own directly or indirectly immediately following such share exchange more than fifty percent (50%) of the combined voting power of the outstanding voting securities of the entity resulting from or surviving such share exchange in substantially the same proportion as their ownership of the voting securities outstanding immediately before such share exchange.

 

Notwithstanding anything in the Plan or an Award Agreement to the contrary, if an Award is subject to Section 409A of the Code, no event that, but for the application of this paragraph, would be a Change in Control as defined in the Plan or the Award Agreement, as applicable, shall be a Change in Control unless such event is also a “change in control event” as defined in Section 409A of the Code.

 

(h)                                 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

 

(i)                                     “Committee” means the committee designated by the Board to administer the Plan under Section 2. To the extent required under Applicable Law, the Committee shall have at least two members and each member of the Committee shall be a Non-Employee Director and an Outside Director.

 

(j)                                    “Director” means a member of the Board.

 

(k)                                 “Disability” means a condition rendering a Participant Disabled.

 

(l)                                     “Disabled” will have the same meaning as set forth in Section 22(e)(3) of the Code.

 

(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 determined as follows: (i) if the Shares are listed on any established stock exchange or a national market system, including, without limitation, the Nasdaq Global Select Market, the Fair Market Value of a Share will be the closing sales price for such stock as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Shares) at the close of regular hours trading on the day of determination; (ii) if the Shares are regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for Shares at the close of regular hours trading on the day of determination; or (iii) if Shares are not traded as set forth above, the Fair Market Value will be determined in good faith by the Committee taking into consideration such factors as the Committee considers appropriate, such determination by the Committee to be final, conclusive and binding.  Notwithstanding the foregoing, in connection with a Change in Control, Fair Market Value shall be determined in good faith by the Committee, such determination by the Committee to be final conclusive and binding.

 

(o)                                 “Incentive Stock Option” means any Option intended to be an “Incentive Stock Option” within the meaning of Section 422 of the Code.

 

2

 

(p)                                 “Non-Employee Director” will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission.

 

(q)                                 “Non-Qualified Stock Option” means any Option that is not an Incentive Stock Option.

 

(r)                                    “Outside Director” means a member of the Board who meets the definition of an “outside director” under Section 162(m) of the Code.

 

(s)                                   “Option” means any option to purchase Shares (including an option to purchase Restricted Stock, if the Committee so determines) granted pursuant to Section 5 hereof.

 

(t)                                    “Parent” means, in respect of the Company, a “parent corporation” as defined in Sections 424(e) of the Code.

 

(u)                                 “Participant” means an employee, consultant, Director, or other service provider of or to the Company or any of its respective Affiliates to whom an Award is granted

 

(v)                                 “Performance Award” means any Award that, pursuant to Section 9, is granted, vested and/or settled upon the achievement of specified performance conditions.

 

(w)                               “Performance Goals”  means a goal that must be met by the end of a period specified by the Committee (but that is substantially uncertain of being met before the grant of the Award) based upon: (i) the attainment of certain target levels of, or a specified increase in, operational cash flow; (ii) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, all or a portion of, the Company’s bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of such cash balances and/or other specified offsets; (iii) appreciation in and/or maintenance of certain target levels in the Fair Market Value; (iv) the attainment of a certain level of, reduction of, or other specified objectives with regard to limiting the level of or rate of increase in all or a portion of specified expenses; and (v) individual objectives; and any combination of the foregoing.  The Committee shall have discretion to determine the specific targets with respect to each of these categories of Performance Goals.

 

(x)                                 “Person” means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or other entity or association.

 

(y)                                 “Plan” means the S1 Biopharma, Inc. 2014 Equity Incentive Plan herein set forth, as amended from time to time.

 

(z)                                  “Restricted Stock” means Shares that are subject to restrictions pursuant to Section 7 hereof.

 

(aa)                          “Restricted Stock Unit” means a right granted under and subject to restrictions pursuant to Section 8 hereof.

 

(bb)                          “Shares” means shares of the Company’s common stock, par value $0.0001, subject to substitution or adjustment as provided in Section 3(c) hereof.

 

(cc)                            “Subsidiary” means, in respect of the Company, a subsidiary company as defined in Sections 424(f) and (g) of the Code.

 

SECTION 2.  Administration.  The Plan shall be administered by the Committee. Any action of the Committee in administering the Plan shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, Affiliates, their respective employees, the Participants, persons claiming rights from or through Participants and stockholders of the Company.

 

3

 

The Committee will have full authority to grant Awards under this Plan and determine the terms of such Awards.  Such authority will include the right to:

 

(a)                                 select the individuals to whom Awards are granted (consistent with the eligibility conditions set forth in Section 4);

 

(b)                                 determine the type of Award to be granted;

 

(c)                                  determine the number of Shares, if any, to be covered by each Award;

 

(d)                                 establish the terms and conditions of each Award;

 

(e)                                  subject to Section 9, establish the performance conditions relevant to any Award and certify whether such performance conditions have been satisfied;

 

(f)                                   approving forms of agreements (including Award Agreements) for use under the Plan;

 

(g)                                  determine whether and under what circumstances an Option may be exercised without a payment of cash under Section 5(d);

 

(h)                                 accelerate the vesting or exercisability of an Award and to modify or amend each Award, subject to Section 10; and

 

(i)                                     extend the period of time for which an Option is to remain exercisable following a Participant’s termination of service to the Company from the limited period otherwise in effect for that Option to such greater period of time as the Committee deems appropriate, but in no event beyond the expiration of the term of the Option.

 

The Committee will have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable; to establish the terms and form of each Award Agreement; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement); and to otherwise supervise the administration of the Plan.  The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent it deems necessary to carry out the intent of the Plan.

 

The Committee may delegate to one or more officers of the Company the authority to grant Awards to Participants who are not subject to the requirements of Section 16 of the Exchange Act or Section 162(m) of the Code and the rules and regulations thereunder, provided that the Committee shall have fixed the total number of Shares subject to such delegation.  Any such delegation shall be subject to the applicable corporate laws of the State of Delaware.  The Committee may revoke any such allocation or delegation at any time for any reason with or without prior notice.

 

No Director will be liable for any good faith determination, act or omission in connection with the Plan or any Award.

 

SECTION 3.  Shares Subject to the Plan.

 

(a)                                 Shares Subject to the Plan.  Subject to adjustment as provided in Section 3(c) of the Plan, the maximum aggregate number of Shares that may be issued in respect of Awards under the Plan is fifteen percent (15%) of the Company’s outstanding equity on a fully diluted basis immediately after the later to occur of the initial closing or the over-allotment option exercise closing of the Company’s initial public offering for which the Company initially filed a registration statement with the Securities and Exchange Commission on July 25, 2014.

 

Any or all of the Awards may be in the form of Incentive Stock Options.  Any shares issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares.  Any shares issued by the Company through the assumption or substitution of outstanding grants in connection with the acquisition of another entity

 

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shall not reduce the maximum number of shares available for delivery under the Plan.  In accordance with the requirements under Section 162(m) of the Code, the maximum number of Shares underlying Awards (including Options, Restricted Stock, Restricted Stock Units and Performance Awards) that may be granted during a calendar year to any individual Participant shall be 10% of the maximum aggregate number of Shares that may be issued in respect of Awards under the Plan.

 

(b)                                 Effect of the Expiration or Termination of Awards.  If and to the extent that an Option expires, terminates or is canceled or forfeited for any reason without having been exercised in full, the Shares associated with that Option will again become available for grant under the Plan.  Similarly, if and to the extent an Award of Restricted Stock or Restricted Stock Units is canceled or forfeited for any reason, the Shares subject to that Award will again become available for grant under the Plan.  Shares withheld in settlement of a tax withholding obligation associated with an Award, or in satisfaction of the exercise price payable upon exercise of an Option, will not become available for grant under the Plan.

 

(c)                                  Other Adjustment.  In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, stock split, reverse stock split, split up, spin-off, split-off, combination of shares, exchange of shares, stock dividend, dividend in kind, or other like change in capital structure (other than ordinary cash dividends) to shareholders of the Company, or other similar corporate event or transaction affecting the Shares, the Committee, to prevent dilution or enlargement of Participants’ rights under the Plan, shall, in such manner as it may deem equitable, substitute or adjust, in its sole discretion, the number and kind of shares that may be issued under the Plan or under any outstanding Awards, the number and kind of shares subject to outstanding Awards, the exercise price, grant price or purchase price applicable to outstanding Awards, and/or any other affected terms and conditions of this Plan or outstanding Awards.  The Committee shall not make any adjustment that would adversely affect the status of any Award that is “performance-based compensation” under Section 162(m) of the Code.

 

(d)                                 Change in Control.  Upon a Change in Control, all outstanding Awards shall become vested and immediately exercisable (as applicable).  Additionally, notwithstanding anything to the contrary set forth in the Plan, upon any Change in Control, the Committee may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following actions contingent upon the occurrence of that Change in Control:

 

(i)                                     cause any outstanding Option to be exercisable for a reasonable period in advance of the Change in Control and, to the extent not exercised prior to that Change in Control, cancel that Option upon closing of the Change in Control;

 

(ii)                                  cancel any Award in exchange for a substitute award;

 

(iii)                               redeem any Restricted Stock or Restricted Stock Unit for cash and/or other substitute consideration with value equal to Fair Market Value of an unrestricted Share on the date of the Change in Control;

 

(iv)                              cancel any Option in exchange for cash and/or other substitute consideration with a value equal to: (A) the number of Shares subject to that Option, multiplied by (B) the difference, if any, between the Fair Market Value per Share on the date of the Change in Control and the exercise price of that Option; provided, that if the Fair Market Value per Share on the date of the Change in Control does not exceed the exercise price of any such Option, the Committee may cancel that Option without any payment of consideration therefor;

 

(v)                                 take such other action as the Committee shall determine to be reasonable under the circumstances; and/or

 

(vi)                              notwithstanding any provision of this Section 3(d), in the case of any Award subject to Section 409A of the Code, such Award shall be distributed only in accordance with the terms of the applicable Award Agreement and the Committee shall only be permitted to use discretion to the extent that such discretion would be permitted under Section 409A of the Code.

 

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In the discretion of the Committee, any cash or substitute consideration payable upon cancellation of an Award may be subjected to earn-out, escrow, holdback or similar arrangements, to the extent such arrangements are applicable to any consideration paid to stockholders in connection with the Change in Control.

 

SECTION 4.  Eligibility.  Employees, Directors, consultants, and other individuals who provide services to the Company or its Affiliates are eligible to be granted Awards under the Plan; provided, however, that only employees of the Company, any Parent or a Subsidiary are eligible to be granted Incentive Stock Options.

 

SECTION 5.  Options.  Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options.  The Award Agreement shall state whether such grant is an Incentive Stock Option or a Non-Qualified Stock Option.  Any Option granted under the Plan will be in such form as the Committee may at the time of such grant approve.

 

The Award Agreement evidencing any Option will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion:

 

(a)                                 Option Price.  The exercise price per Share under an Option will be determined by the Committee and will not be less than 100% of the Fair Market Value of a Share on the date of the grant.  However, any Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, will have an exercise price per Share of not less than 110% of Fair Market Value per Share on the date of the grant.

 

(b)                                 Option Term.  The term of each Option will be fixed by the Committee, but no Option will be exercisable more than 10 years after the date the Option is granted.  However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, may not have a term of more than 5 years.  No Option may be exercised by any Person after expiration of the term of the Option.

 

(c)                                  Exercisability.  Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined by the Committee.

 

(d)                                 Method of Exercise.  Subject to the terms of the applicable Award Agreement, the exercisability provisions of Section 5(c) and the termination provisions of Section 6, Options may be exercised in whole or in part from time to time during their term by the delivery of written notice to the Company specifying the number of Shares to be purchased.  Such notice will be accompanied by payment in full of the purchase price, either by certified or bank check, or such other means as the Committee may accept.  The Committee may, in its sole discretion, permit payment of the exercise price of an Option in the form of previously acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised or through means of a “net settlement,” whereby the Option exercise price will not be due in cash and where the number of Shares issued upon such exercise will be equal to: (A) the product of (i) the number of Shares as to which the Option is then being exercised, and (ii) the excess, if any, of (a) the then current Fair Market Value per Share over (b) the Option exercise price, divided by (B) the then current Fair Market Value per Share.

 

No Shares will be issued upon exercise of an Option until full payment therefor has been made.  A Participant will not have the right to distributions or dividends or any other rights of a stockholder with respect to Shares subject to the Option until the Participant has given written notice of exercise, has paid in full for such Shares, if requested, has given the representation described in Section 15(a) hereof and fulfills such other conditions as may be set forth in the applicable Award Agreement.

 

(e)                                  Incentive Stock Option Limitations.  In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under the Plan and/or any other

 

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plan of the Company, its Parent or any Subsidiary will not exceed $100,000.  For purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted.  To the extent any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.

 

(f)                                   Termination of Service.  Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after the time of grant, Options will be subject to the terms of Section 6 with respect to exercise upon or following termination of employment or other service.

 

SECTION 6.  Termination of Service.  Unless otherwise specified with respect to a particular Option in the applicable Award Agreement or otherwise determined by the Committee, any portion of an Option that is not exercisable upon termination of service will expire immediately and automatically upon such termination and any portion of an Option that is exercisable upon termination of service will expire on the date it ceases to be exercisable in accordance with this Section 6.

 

(a)                                 Termination by Reason of Death.  If a Participant’s service with the Company or any Affiliate terminates by reason of death, any Option held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of his or her death or on such accelerated basis as the Committee may determine at or after grant, by the legal representative of the estate or by the legatee of the Participant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee , then 12 months from the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option.

 

(b)                                 Termination by Reason of Disability.  If a Participant’s service with the Company or any Affiliate terminates by reason of Disability, any Option held by such Participant may thereafter be exercised by the Participant or his personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 12 months from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option.

 

(c)                                  Cause.  If a Participant’s service with the Company or any Affiliate is terminated for Cause: (i) any Option, or portion thereof, not already exercised will be immediately and automatically forfeited as of the date of such termination, and (ii) any Shares for which the Company has not yet delivered share certificates will be immediately and automatically forfeited and the Company will refund to the Participant the Option exercise price paid for such Shares, if any.

 

(d)                                 Other Termination.  If a Participant’s service with the Company or any Affiliate terminates for any reason other than death, Disability or Cause, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Committee may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 90 days from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option.

 

SECTION 7.  Restricted Stock.

 

(a)                                 Issuance.  Restricted Stock may be issued either alone or in conjunction with other Awards.  The Committee will determine the time or times within which Restricted Stock may be subject to forfeiture, and all other conditions of such Awards.  The purchase price for Restricted Stock may, but need not, be zero.  The prospective recipient of an Award of Restricted Stock will not have any rights with respect to such Award, unless and until such recipient has delivered to the Company an executed Award Agreement and has otherwise complied with the applicable terms and conditions of such Award.

 

(b)                                 Certificates.  Upon the Award of Restricted Stock, the Committee may direct that a certificate or certificates representing the number of shares of Common Stock subject to such Award be issued to the Participant or placed in a restricted stock account (including an electronic account) with the transfer agent and in

 

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either case designating the Participant as the registered owner. The certificate(s) representing such shares shall be physically or electronically legended, as applicable, as to sale, transfer, assignment, pledge or other encumbrances during the Restriction Period and if issued to the Participant, returned to the Company, to be held in escrow during the Restriction Period. As a condition to any Award of Restricted Stock, the Participant may be required to deliver to the Company a share power, endorsed in blank, relating to the Shares covered by such Award.

 

(c)                                  Restrictions and Conditions.  The Award Agreement evidencing the grant of any Restricted Stock will incorporate the following terms and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion:

 

(i)                                     During a period commencing with the date of an Award of Restricted Stock and ending at such time or times as specified by the Committee (the “Restriction Period”), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Stock awarded under the Plan.  The Committee may condition the lapse of restrictions on Restricted Stock upon the continued employment or service of the recipient, the attainment of specified individual or corporate performance goals, or such other factors as the Committee may determine, in its sole and absolute discretion.

 

(ii)                                  While any Share of Restricted Stock remain subject to restriction, the Participant will have, with respect to the Restricted Stock, the right to vote the Shares, but will not have the right to receive any cash distributions or dividends prior to the lapse of the Restriction Period underlying such Shares unless otherwise provided under the applicable Award Agreement or as determined by the Committee.  If any cash distributions or dividends are payable with respect to the Restricted Stock, the Committee, in its sole discretion, may require the cash distributions or dividends to be subjected to the same Restriction Period as is applicable to the Restricted Stock with respect to which such amounts are paid, or, if the Committee so determines, reinvested in additional Restricted Stock to the extent Shares are available under Section 3(a) of the Plan.  A Participant shall not be entitled to interest with respect to any dividends or distributions subjected to the Restriction Period.  Any distributions or dividends paid in the form of securities with respect to Restricted Stock will be subject to the same terms and conditions as the Restricted Stock with respect to which they were paid, including, without limitation, the same Restriction Period.

 

(iii)                               Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service with the Company and its Affiliates terminates prior to the expiration of the applicable Restriction Period, the Participant’s Restricted Stock that then remains subject to forfeiture will then be forfeited automatically.

 

SECTION 8.  Restricted Stock Units.  Subject to the other terms of the Plan, the Committee may grant Restricted Stock Units to eligible individuals and may, in its sole and absolute discretion, impose conditions on such units as it may deem appropriate, including, without limitation, continued employment or service of the recipient or the attainment of specified individual or corporate performance goals.  Each Restricted Stock Unit shall be evidenced by an Award Agreement in the form that is approved by the Committee and that is not inconsistent with the terms and conditions of the Plan.  Each Restricted Stock Unit will represent a right to receive from the Company, upon fulfillment of any applicable conditions, an amount equal to the Fair Market Value (at the time of the distribution) of one Share.  Distributions may be made in Shares.  All other terms governing Restricted Stock Units, such as vesting, time and form of payment and termination of units shall be set forth in the applicable Award Agreement.  The Participant shall not have any shareholder rights with respect to the Shares subject to a Restricted Stock Unit Award until that Award vests and the Shares are actually issued thereunder.  Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service with the Company terminates prior to the Restricted Stock Unit Award vesting, the Participant’s Restricted Stock Units that then remain subject to forfeiture will then be forfeited automatically.

 

SECTION 9.  Performance Based Awards.

 

(a)                                 Performance Awards Generally. The Committee may grant Performance Awards in accordance with this Section 9.  Performance Awards may be denominated as a number of Shares or specified number of other Awards, which may be earned upon achievement or satisfaction of such Performance Goals as may

 

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be specified by the Committee.  In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the vesting or settlement of the Award upon the achievement or satisfaction of such Performance Goals as may be specified by the Committee.

 

(b)                                 Adjustments to Performance Goals.  The Committee may provide, at the time Performance Goals are established, that adjustments will be made to those performance goals to take into account, in any objective manner specified by that committee, the impact of one or more of the following: (A) gain or loss from all or certain claims and/or litigation and insurance recoveries, (B) the impairment of tangible or intangible assets, (C) stock-based compensation expense, (D) restructuring activities reported in the Company’s public filings, (E) investments, dispositions or acquisitions, (F) loss from the disposal of certain assets, (G) gain or loss from the early extinguishment, redemption, or repurchase of debt, (H) changes in accounting principles, or (I) any other item, event or circumstance that would not cause an Award to fail to constitute “qualified performance-based compensation” under Section 162(m) of the Code (to the extent such Award is intended to be “qualified performance-based compensation”).  An adjustment described in this Section may relate to the Company or to any subsidiary, division or other operational unit of the Company or its Affiliates, as determined by the committee at the time the performance goals are established.  Any adjustment shall be determined in accordance with generally accepted accounting principles and standards, unless such other objective method of measurement is designated by the committee at the time performance objectives are established.  In addition, adjustments will be made as necessary to any performance criteria related to the Company’s stock to reflect changes in corporate capitalization, including a recapitalization, stock split or combination, stock dividend, spin-off, merger, reorganization or other similar event or transaction affecting the Company’s equity.

 

(c)                                  Other Terms of Performance Awards.  The Committee may specify other terms pertinent to a Performance Award in the applicable Award Agreement, including terms relating to the treatment of that Award in the event of a Change in Control prior to the end of the applicable performance period.  The Participant shall not have any shareholder rights with respect to the Shares subject to a Performance Award until the Shares are actually issued thereunder.  Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service with the Company terminates prior to the Performance Award vesting, the Participant’s Performance Award or portion thereof that then remains subject to forfeiture will then be forfeited automatically.

 

SECTION 10.  Amendments and Termination.  The Board may amend, alter or discontinue the Plan at any time.  However, except as otherwise provided in Section 3, no amendment, alteration or discontinuation will be made which would impair the rights of a Participant with respect to an Award without that Participant’s consent or which, without the approval of such amendment within 365 days of its adoption by the Board by the Company’s stockholders in a manner consistent with Treas. Reg. § 1.422-3 (or any successor provision), would: (i) increase the total number of Shares reserved for issuance hereunder, or (ii) change the persons or class of persons eligible to receive Awards.

 

SECTION 11.  Prohibition on Repricing Programs.  Neither the Committee nor the Board shall (i) implement any cancellation/re-grant program pursuant to which outstanding Options under the Plan are cancelled and new Options are granted in replacement with a lower exercise price per share, (ii) cancel outstanding Options under the Plan with exercise prices per share in excess of the then current Fair Market Value per Share for consideration payable in equity securities of the Company or (iii) otherwise directly reduce the exercise price in effect for outstanding Options under the Plan, without in each such instance obtaining shareholder approval.

 

SECTION 12.  Conditions Upon Grant of Awards and Issuance of Shares.

 

(a)                                 The implementation of the Plan, the grant of any Award and the issuance of Shares in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the Company’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the Shares issuable pursuant to those Awards.

 

(b)                                 No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Applicable Law, including the filing and

 

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effectiveness of the Form S-8 registration statement for the Shares issuable under the Plan, and all applicable listing requirements of any stock exchange on which Shares are then listed for trading.

 

SECTION 13.  Limits on Transferability; Beneficiaries.  No Award or other right or interest of a Participant under the Plan shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any party, other than the Company, any Subsidiary or Affiliate, or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the Participant or his or her guardian or legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, provide that Awards or other rights or interests of a Participant granted pursuant to the Plan (other than an Incentive Stock Option) be transferable, without consideration, to immediate family members (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate family members and to partnerships in which such family members are the only partners. The Committee may attach to such transferability feature such terms and conditions as it deems advisable. In addition, a Participant may, in the manner established by the Committee, designate a beneficiary (which may be a person or a trust) to exercise the rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant. A beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional restrictions deemed necessary or appropriate by the Committee.

 

SECTION 14.  Withholding. No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to such amount.  The minimum required withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement.  The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company will have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

 

SECTION 15.  Liability of Company.

 

(a)                                 Inability to Obtain Authority.  If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory body having jurisdiction for the sale of any Shares under this Plan, and such authority is deemed by the Company’s counsel to be necessary to the lawful issuance of those Shares, the Company will be relieved of any liability for failing to issue or sell those Shares.

 

(b)                                 Grants Exceeding Allotted Shares.  If Shares subject to an Award exceed, as of the date of grant, the number of Shares which may be issued under the Plan without additional shareholder approval, that Award will be contingent with respect to such excess Shares, on the effectiveness under Applicable Law of a sufficient increase in the number of Shares subject to this Plan.

 

(c)                                  Rights of Participants and Beneficiaries.  The Company will pay all amounts payable under this Plan only to the applicable Participant, or beneficiaries entitled thereto pursuant to this Plan.  The Company will not be liable for the debts, contracts, or engagements of any Participant or his or her beneficiaries, and rights to cash payments under this Plan may not be taken in execution by attachment or garnishment, or by any other legal or equitable proceeding while in the hands of the Company.

 

SECTION 16.  General Provisions.

 

(a)                                 The Board may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Board believes are appropriate.

 

(b)                                 All certificates for Shares or other securities delivered under the Plan will be subject to such share-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the Securities Act of 1933, as amended, the Exchange Act, any stock exchange upon which

 

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the Shares are then listed, and any other Applicable Law, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

(c)                                  Nothing contained in the Plan will prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required.

 

(d)                                 Neither the adoption of the Plan nor the execution of any document in connection with the Plan will: (i) confer upon any employee or other service provider of the Company or an Affiliate any right to continued employment or engagement with the Company or such Affiliate, or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment or engagement of any of its employees or other service providers at any time.

 

SECTION 17.  Effective Date of Plan.  The Plan will become effective upon approval of the Board, subject to the approval by the Company’s stockholder within 12 months of such Board approal.

 

SECTION 18.  Term of Plan.  Unless the Plan shall theretofore have been terminated in accordance with Section 10, the Plan shall terminate on the 10-year anniversary of the effective date, and no Awards under the Plan shall thereafter be granted.

 

SECTION 19.  Invalid Provisions.  In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any Applicable Law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.

 

SECTION 20.  Governing Law.  The Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the State of Delaware, without regard to the application of the principles of conflicts of laws.

 

SECTION 21.  Notices.  Any notice to be given to the Company pursuant to the provisions of this Plan must be given in writing and addressed, if to the Company, to its principal executive office to the attention of its Chief Financial Officer (or such other Person as the Company may designate in writing from time to time), and, if to a Participant, to the address contained in the Company’s personnel files, or at such other address as that Participant may hereafter designate in writing to the Company.  Any such notice will be deemed duly given: if delivered personally or via recognized overnight delivery service, on the date and at the time so delivered; if sent via telecopier or email, on the date and at the time telecopied or emailed with confirmation of delivery; or, if mailed, five (5) days after the date of mailing by registered or certified mail.

 

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