Document:

DGAS-2014.6.30-Exhibit10.35

Delta Natural Gas Company, Inc.
Notice of Performance Shares Award

To:          

At its meeting on August XX, XXX1, the Corporate Governance and Compensation Committee (the “Committee”) of Delta Natural Gas Company, Inc. (the “Company”), authorized and directed the Company, on the Date of Award set forth below, to issue and make an award to you of Performance Shares entitling you to receive shares of the Company’s common stock under the terms and conditions of the Incentive Compensation Plan (the “Plan”) of the Company and this Notice of Performance Shares Award.  A copy of the Plan was filed with the Securities and Exchange Commission on March 4, 2010 as an exhibit to Form S-8 and is available on the Company’s website (deltagas.com).  A hard copy is also available upon request.  Contact John B. Brown, Chief Financial Officer, Treasurer and Secretary.  Capitalized terms that are not defined have the meanings given them in the Plan.

Date of Award:     August 31, XXX1
Award:  Subject to the Performance Period, Performance Criteria and other restrictions set forth herein, you may receive between XX,XXX to XX,XXX Performance Shares which will entitle you to receive one share of the Company’s common stock (“Share”) for each Performance Share.
Performance Period:  The period from July 1, XXX1 – June 30, XXX2.
Restriction Period(s):   
     Restriction Period 1 (covers 1/3 of Performance Shares paid):  July 1, XXX2 - August 31, XXX2
     Restriction Period 2 (covers 1/3 of Performance Shares paid):  July 1, XXX2 - August 31, XXX3
     Restriction Period 3 (covers 1/3 of Performance Shares paid):  July 1, XXX2 - August 31, XXX4
Performance Criteria:  The performance objective of this award is based upon on the Company’s XXX2 audited earnings per share as reported in the Company’s Annual Report on Form 10-K, before any cash bonuses or stock awards, for the year ending June 30, XXX2 (“XXX2 Audited EPS”).
Minimum Performance Objective:   $ X.XX per share  
Targeted Performance Objective:    $ X.XX per share
Maximum Performance Objective:  $ X.XX per share

Minimum Performance Objective Not Met.  If the Minimum Performance Objective is not met, i.e., if the Company does not achieve a XXX2 Audited EPS of at least $X.XX, the number of Performance Shares will not be determined and none will vest and you will not be entitled to any Performance Shares hereunder.

Minimum Performance Objective Met or Exceeded.  If the Minimum Performance Objective and all other conditions, including the Conditions to Payment set out below, are met or exceeded, then you shall receive the following number of Performance Shares based upon the actual XXX2 Audited EPS:

	
			
	$X.XX – $X.XX
XXX2 Audited EPS
	$X.XX – $X.XX
XXX2 Audited EPS
	$X.XX and over
XXX2 Audited EPS

	XX,XXX shares
	XX,XXX shares
	XX,XXX shares

Restrictions and Vesting:  Except as provided in Paragraph 2 under Conditions to Payment, all Performance Shares paid hereunder shall be in the form of Restricted Stock, which shall vest in 1/3 increments as described below under Conditions on Restrictions.  

Conditions to Payment:

1.    Payment of Shares.  Except as provided in Paragraph 2, your Performance Shares will be paid in Shares of Restricted Stock, subject to the restrictions and vesting set forth below, as soon as administratively feasible after the end of the Performance Period, but no earlier than the filing date of the Company’s annual report on Form 10-K and no later than September 14 of the same year.  Payment will be made in the form of whole shares of Restricted Stock in a lump sum payment.  You will only receive such number of Shares as are established under the Performance Criteria.

2.    Death, Disability or Retirement before end of Performance Period and Payment.  For purposes of this Paragraph 2 only, the Performance Shares awarded as provided in subsections 2(a), (b), (c) or (d) shall be in the form of shares of the Company’s common stock and will not be subject to the Conditions on Restrictions in this Notice of Performance Shares Award.

(a)     In the event of your Disability or Retirement before the Performance Period has ended, the number of Performance Shares to which you shall be entitled to, if any, shall equal (i) the number of Performance Shares, if any, you would otherwise be entitled to had you been an active Employee at the end of the Performance Period (i.e., as adjusted or forfeited based on the actual Performance Criteria) multiplied by (ii) the portion of the Performance Period during which you were an active Employee multiplied by (iii) one-third, and such Performance Shares shall be distributed as soon as administratively feasible after the end of the Performance Period, but no later than September 13 of the same year; or

(b)     In the event of your death while an Employee before the Performance Period has ended, the Company will be assumed to have achieved a Targeted Performance Objective for the Performance Period in which death occurs, and the number of Shares your beneficiary shall be entitled to, if any, shall equal the number of Shares you would otherwise be entitled to had you been an active Employee at the end of the Performance Period without any further adjustment, and such Performance Shares shall be distributed within a reasonable period following death; or  

(c)     In the event of your Disability or Retirement after the end of the Performance Period, but before the date the Performance Shares are distributed, the number of Performance Shares you shall be entitled to, if any, shall be (i) based on the actual Performance Criteria for the entire Performance Period multiplied by (ii) one-third; or
 
(d)    In the event of your death after the end of the Performance Period, but before the date the Performance Shares are distributed, the number of Performance Shares you shall be entitled to, if any, shall be based on the actual Performance Criteria for the entire Performance Period without any further adjustment.  

3.    Other Termination. 

(a)      You shall have no right to receive payment in respect of Performance Shares if you resign or are otherwise terminated from the Company before the end of the Performance Period for reasons other than your death, Disability, or Retirement or following a Change in Control.

(b)      You shall have no right to receive payment in respect of Performance Shares if you resign or are otherwise terminated from the Company after the end of the Performance Period but before any Performance Shares have vested if you resign or are otherwise terminated from the Company for reasons other than your death, Disability, or Retirement or following a Change in Control.

4.    Short-Term Disability; Other Authorized Leaves of Absence. If you are absent from employment during a Performance Period and you are entitled to (a) reemployment rights following military service under the Uniformed Services Employment and Reemployment Rights Act (USERRA) (or any other similar applicable federal or state law) or (b) sickness allowance and/or short-term disability benefits under the Company’s employee benefit plans, then your absence shall not affect your award of Performance Shares, if any. In the event you are absent from employment during a Performance Period due to an authorized leave of absence not described in the immediately preceding sentence, the amount or number of Performance Shares to which you shall be entitled to, if any, shall equal (i) the amount or number of Performance Shares, if any, to which you would otherwise be entitled had you been an active Employee during the entire Performance Period (i.e., as adjusted or forfeited based on the Performance Criteria) multiplied by (ii) the portion of the Performance Period during which you were an active Employee (i.e., excluding the period of the authorized leave of absence) and such Performance Shares shall be distributed and vest following the end of the Performance Period as set forth in Section 1 above.

5.    Adjustment of Award Due to Demotion or Promotion. The Committee, in its discretion, may reduce the number of Performance Shares (if the Performance Criteria are met) in the event you are demoted during a Performance Period, or grant additional Performance Shares (if the Performance Criteria are met) in the event you are promoted during a Performance Period.

6.    Restriction on Payment of Awards. No distributions in respect of Performance Shares shall be made, and such distribution shall be forfeited, if at the time a distribution would otherwise have been made:

(a)    The regular quarterly dividend on any outstanding common or preferred shares of the Company has been omitted and not subsequently paid prior to or on September 15, XXX2; or

(b)     The consolidated net income of the Company for the fiscal year ending June 30, XXX2 is less than the sum of (i) the aggregate amount to be distributed plus (ii) dividends on all outstanding preferred and common shares of the Company applicable to such twelve-month period (either paid, declared or accrued at the most recently paid rate).

Conditions on Restrictions:

7.    Restricted Stock.  Except as provided in Paragraph 2 under Conditions to Payment, Performance Shares paid hereunder shall be in the form of Restricted Stock which will vest and the restrictions thereon will lapse in 1/3 increments each year beginning on August 31, XXX2, and annually each August 31 thereafter until fully vested as long as the Recipient is an Employee throughout each such Restriction Period.  If the Performance Criteria is not met, you will not receive any Restricted Stock.

8.    Restrictions.  Except as otherwise provided in this Agreement, the Shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the termination of the applicable Restriction Period. Except as otherwise provided herein and subject to the Plan, if you resign, are otherwise terminated from the Company, prior to the end of the Restriction Period, you will forfeit all interests in the applicable Restricted Stock. All rights with respect to the Restricted Stock granted to you shall be exercisable during your lifetime only by you or your guardian or legal representative.

9.    Removal of Restrictions.  Restricted Stock paid hereunder shall become freely transferable by you after the last day of the applicable Restriction Period.

10.    Voting Rights. During the Restriction Period, you may exercise full voting rights with respect to the Restricted Stock subject thereto.

11.    Dividends and Other Distributions. During the Restriction Period, you shall be entitled to receive all dividends and other distributions paid with respect to the applicable Restricted Stock. If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were distributed.

12.    Death, Disability or Retirement after Payment but before end of Restriction Period. Except as otherwise provided in this Notice, in the event of your death, Disability, or Retirement while an Employee, the following shall apply:

(a) Disability and Retirement.  In the event of your Disability or Retirement (except in certain limited situations described in Section 12(c) below) before the Restriction Period has ended, the restrictions on the Shares shall be removed upon expiration of the Restriction Period, and the number of Shares you shall be entitled to, if any, shall equal (i) the number of Shares, if any, you would otherwise be entitled to had you been an active Employee at the end of the Restriction Period multiplied by (ii) the portion of the Restriction Period you were an active Employee; or

(b) Death.  In the event of your death before the Restriction Period has ended, the restrictions on the Shares shall be removed upon your date of death, and the number of Shares you shall be entitled to, if any, shall equal the number of Shares contingently granted to you, without any further adjustment.

(c)  Retirement – Limited Situations.  In the event of your Retirement before the Restriction Period has ended and provided you meet all of the requirements in the next sentence, then the restrictions on the Shares shall be removed upon the date of your Retirement, and the number of Shares you shall be entitled to, if any, shall equal the number of Shares contingently granted to you, without any further adjustment.  In order for you to have the restrictions removed from your Shares as provided in the immediately preceding sentence, you must (i) retire after having met the “normal retirement age” as defined under the defined benefit pension plan sponsored by the Company and (ii) have attained the age of 67 at the time of termination of employment.

Change of Control:

13.    Change in Control.  Upon a Change in Control Performance Shares previously granted shall be immediately vested and not subject to forfeiture due to any subsequent termination from employment.  Upon a change in Control, Restrictions on Restricted Stock shall be eliminated as of such event.  If the Change in Control occurs before the end of the Performance Period, the amount of the Performance Shares shall be determined assuming the Company has achieved the Targeted Performance Objective and, the amount shall then be multiplied by the portion of the Performance Period for which you were an active Employee hereunder. If the Change in Control occurs after the end of the Performance Period but before the Performance Shares are paid, the amount payable shall be determined based on the actual performance objective achieved. In either case payment of the Performance Shares shall be made as soon as practicable following the Change in Control but no later than the close of the seventy five (75) day period following the earlier of the end of the Performance Period or the Change in Control.

Recovery of Stock:

14.    If you are or become subject to the terms of the Company’s Compensation Recovery Policy (the “Policy”), as such Policy may be amended from time to time, including amendments adopted in order to conform to the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any resulting rules issued by the SEC or national securities exchanges thereunder, then the Performance Shares and Restricted Stock granted hereunder shall also be subject to such Policy. Accordingly, if the Committee determines that recovery of compensation under such Policy is due, then the Committee will determine the percentage of your total Performance Shares and Restricted Stock that is recoverable (the “Recoverable Percentage”) and the following shall occur:

		
	•
	the Performance Shares and Restricted Stock equal to the Recoverable Percentage granted hereunder shall automatically terminate and be forfeited effective on the date of such determination; and

		
	•
	all shares of Common Stock equal to the Recoverable Percentage that you acquired pursuant to this Agreement (or other securities into which such shares have been converted or exchanged) shall be returned to the Company or, if no longer held by you, then you shall pay to the Company, without interest, all cash, securities or other assets received by you from the sale or transfer of such stock or securities.  If you received nominal or no consideration on transfer of the Common Stock (e.g. a gift) then in connection with such recovery, you shall pay to the Company the market value of the Common Stock at the time of the transfer.

Definitions:

14.    Definitions.  The following terms used in this Notice of Performance Shares Award will have the meanings indicated:

(a)    “Change in Control” shall have the same meaning as such term or similar term is defined by your individual agreement with the Company which relates to your compensation and benefits upon the occurrence of a change in ownership of the Participating Company or similar event.

In the event there is no such agreement, “Change in Control” shall mean:

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (A) the then outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute an acquisition of control: any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), any acquisition by the Company, any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or any acquisition by any corporation pursuant to a reorganization, merger, share exchange or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (A), (B) and (C) of subsection (iii) of this section are satisfied; or

(ii) Individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) Consummation of a reorganization, merger, share exchange or consolidation, in each case, unless, following such reorganization, merger, share exchange or consolidation, (A) more than fifty percent (50%) of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, share exchange or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger, share exchange or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, share exchange or consolidation, of the Outstanding Company Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Company, any employee benefit plan or related trust of the Company, or such corporation resulting from such reorganization, merger, share exchange or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger, share exchange or consolidation, directly or indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock or Outstanding Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding  shares of common stock of the corporation resulting from such reorganization, merger, share exchange or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger, share exchange or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger, share exchange or consolidation; or

(iv) Approval by the shareholders of the Company and consummation of (A) a complete liquidation or dissolution of the Company or (B) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition (1) more than fifty percent (50%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding the Company and any employee benefit plan or related trust of the Company, or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company; or

(v) The closing, as defined in the documents relating to, or as evidenced by a certificate of any state or federal governmental authority in connection with, a transaction approval of which by the shareholders of the Company would constitute a “Change in Control” under subsection (iii) or (iv) of this Section.

Notwithstanding (a) above, if your employment is terminated before a Change in Control as defined in this Section and you reasonably demonstrate that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a “Change in Control” and who effectuates a “Change in Control” or (ii) otherwise occurred in connection with, or in anticipation of, a “Change in Control” which actually occurs, then for all purposes of this Notice of Performance Shares Award, the date of a “Change in Control” with respect to you shall mean the date immediately prior to the date of such termination of  your employment.

(b)    “Disability” shall mean (a) your  mental or physical disability that is defined as “Disability” under the terms of the long-term disability plan sponsored by the Company and in which you are covered, as amended from time to time in accordance with the provisions of such plan; or (b) a determination by the Committee, in its sole discretion, of total disability (based on medical evidence) that precludes you from engaging in a full-time position at the Company for wage or profit for at least twelve months and appears to be permanent. All decisions by the Committee relating to your Disability (including a decision that you are not disabled), shall be final and binding on all parties.

(c)    “Retirement” shall mean the termination of your employment consistent with the provisions for early or normal retirement under the defined benefit pension plan sponsored by the Company.  Notwithstanding the foregoing, “Retirement” before you are eligible for normal retirement under such plan shall require prior approval by the Committee. 

15.    Conflicts.  If there is a conflict between the terms of this Notice of Performance Shares Award and the Plan, the Plan shall control.

DELTA NATURAL GAS COMPANY, INC.

By:  

Its:  

________________________________________
   [Signature of Participant]

005522.135297/4133863.4

1lbio_ex101.htm

Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) dated effective August 21, 2014 (the “Effective Date”), by and between Lion Biotechnologies, Inc., a Nevada corporation (the “Company”), and  Dr. Elma Hawkins (“Executive”) (either party individually, a “Party”; collectively, the “Parties”).

 

WHEREAS, under that certain Independent Contractor Services Agreement (the “Services Agreement”) entered into by the Parties as of February 21, 2014, the Company engaged Executive as its Head of Clinical Development;

 

WHEREAS, under the Services Agreement, the Company issued to Executive (i) a non-qualified stock option to purchase an aggregate of 200,000 shares of Company’s common stock (the “Outstanding Option”), and (ii) 200,000 shares of restricted common stock (the “Restricted Stock”);

 

WHEREAS, the Company desires to engage Executive as the Company’s new President and Chief Operating Officer;

 

WHEREAS, in connection with Executive’s engagement as the Company’s new President and Chief Operating Officer, the Parties desire to terminate the Services Agreement and desire to enter into this Agreement to set forth the terms and conditions of Executive’s employment by the Company and to address certain matters related to Executive’s employment with the Company;

 

WHEREAS, both the Company and the Executive have read and understood the terms and provisions set forth in this Agreement, and Executive acknowledges that Executive has been afforded a reasonable opportunity to review this Agreement with Executive’s legal counsel to the extent desired;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual provisions contained herein, and for other good and valuable consideration, the Parties hereto agree as follows:

 

1. Employment; Termination of Services Agreement.  Effective as of the Effective Date, the Company hereby employs Executive, and Executive hereby accepts such employment, upon the terms and conditions set forth herein.  The Parties hereby agreed that, immediately following the effectiveness of this Agreement, the Services Agreement is terminated and replaced by this Agreement and, except as set forth herein or in the Services Agreement, all of the rights and obligations of the Parties arising under the Services Agreement after the Effective Date have are terminated.

 

2. Duties.

 

2.1 Position.  Executive shall be employed by the Company in the position of President and Chief Operating Officer.  Executive shall have the duties and responsibilities assigned by the Company’s Chief Executive Officer and the Board of Directors (the “Board”) of the Company.  Executive shall perform faithfully and diligently such duties as are reasonable and customary for Executive’s position, as well as such other duties as the Chief Executive Officer and Board shall reasonably assign from time to time.  The Parties understand that Executive shall provide her duties and services hereunder primarily from her offices in New York.  However, Executive also agrees to perform her duties from time to time at the Company’s corporate headquarters in the Woodland Hills, California, as the Chief Executive Officer or the Board may reasonably request.

 

2.2 Best Efforts/Full-Time.

 

2.2(a) Executive understands and agrees that Executive will faithfully devote Executive’s best efforts and substantially all of her time during normal business hours to advance the interests of the Company.  Executive will abide by all policies and decisions made by the Company, as well as all applicable federal, state and local laws, regulations or ordinances.  Executive will act in the best interest of the Company at all times. Executive further understands and agrees that Executive has a fiduciary duty of loyalty to the Company and that Executive will take no action which in any way harms the business, business interests, or reputation of the Company.

 

2.2(b) Executive agrees that Executive will not directly engage in competition with the Company at any time during the existence of the employment relationship between the Company and Executive.

 

2.2(c) Executive agrees that, during the term of this Agreement, Executive shall work exclusively for the Company.  Consequently, Executive agrees to not accept employment, of any kind, from any person or entity other than the Company, and to not perform duties or render services to any person or entity other than the Company, provided, however, that Executive may, subject to prior approval of the Board of the Company, provide non-executive services, including serving on a board of directors, to any person or entity so long as such person or entity does not compete with the Company or otherwise compete, directly with the Company’s business of developing and marketing therapies based on T-cells (such as CARs, TCRs and TILs) and T-cell engineering based immunotherapy.

 

  

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2.2(d) Executive understands and agrees that any information, funds, or property received or developed by Executive during Executive’s employment with the Company that is related to the Company’s business is or shall become the sole property of the Company. Accordingly, Executive understands and agrees that Executive shall immediately turn over all of the foregoing information, funds, or property that comes into Executive’s possession during Executive’s employment with the Company, upon the Company’s request.

 

3. Term of Employment.  Subject to the termination provision set forth in this Section 3, the term of this Agreement (the “Term”) shall be from the Effective Date through August 21, 2017.  However, either Party may terminate this Agreement at any time with or without cause for convenience, effective upon thirty (30) days notice to the other Party. Executive’s and the Company’s respective rights and obligations at the time of termination are outlined below in Section 6 of this Agreement.

 

4. Compensation.

 

4.1 Base Salary.  As compensation for the proper and satisfactory performance of all duties to be performed by Executive hereunder, the Company shall pay to Executive a base salary of $325,000 per year (the “Base Salary”), less required deductions for state and federal withholding tax, social security and all other employment taxes and authorized payroll deductions, payable on a prorated basis as it is earned, in accordance with the normal payroll practices of the Company.

 

4.2 Outstanding Option/Restricted Stock.  Executive shall retain the Outstanding Option and the Restricted Stock on the same terms and conditions as in effect immediately prior to the Effective Date, which terms and conditions are as follow: The Outstanding Option was granted under Company’s 2011 Equity Incentive Plan (the “Plan”), has a term of five (5) years from February 21, 2014, has an exercise price of $5.60 (which price is equal to the fair market value of the common stock on the effective date of the Services Agreement), and has such other terms and conditions as are included in Company’s standard stock option agreement under the Plan.  Provided that Executive is still providing services to Company under this Agreement on the following dates, the shares under the Outstanding Option will vest in installments as follows: (i) The option to the purchase of 66,666 shares shall vest on February 21, 2015; and (ii) the remaining shares under the Outstanding Option shall vest in eight equal quarterly (three month) installments over the next two years after February 21, 2015.  Provided that Executive is still providing services to Company under this Agreement on the following dates, the 200,000 shares of Restricted Stock will vest in three installments as follows: (i) 40,000 shares shall vest on February 28, 2015; (ii) 60,000 shares shall vest on February 28, 2016, and (iii) 100,000 shares shall vest on February 28, 2017.

 

4.3 Sign-Up Bonus Options.  As of the Effective Date, as a signing bonus, Executive shall receive stock options to purchase an aggregate of 125,000 shares of the Company’s common stock.  The stock options will have an exercise price equal to the fair market value of the common stock on the Effective Date.  Provided that Executive is still employed with the Company on the following dates, the foregoing stock options will vest in three installments as follows: (i) Options for the purchase of 41,667 shares shall vest on the one year anniversary of the Effective Date; and (ii) the remaining options shall vest quarterly over the next two years after the anniversary.

 

4.4 Incentive Compensation. Commencing on February 28, 2015, Executive will be eligible to participate in the Company’s annual incentive compensation program (“Incentive Plan”) applicable to Executive’s position, as approved by the Board (the year in which the program is implemented, the “Plan Year”).  The target potential amount payable to Executive under the Incentive Plan, if earned, shall be 20% of Executive’s Base Salary earned during the applicable calendar year.  Compensation under the Incentive Plan (“Incentive Compensation”) will be conditioned on the satisfaction of individual and Company objectives, as established in writing by the Company, and on the condition that Executive is employed by Company on the Incentive Compensation payment date, which shall be on or before March 15th of the year following the Plan Year.  The payment of any Incentive Compensation pursuant to this Section 4.4 shall be made in accordance with the normal payroll practices of the Company, less required deductions for state and federal withholding tax, social security and all other employment taxes and authorized payroll deductions, and provided Executive satisfies the conditions for earning the Incentive Compensation.

 

4.5 Performance Review.  The Company will periodically review Executive’s performance on no less than an annual basis and will make adjustments to salary or other compensation, as they deem appropriate in their sole and absolute discretion.

 

4.6 Customary Fringe Benefits.  Executive understands and agrees that certain employee benefits may be provided to the Executive by the Company incident to the Executive's employment.  Executive will be eligible for all customary and usual fringe benefits generally available to employees of the Company subject to the terms and conditions of the Company’s benefit plan documents.  Executive understands and agrees that any employee benefits provided to the Executive by the Company incident to the Executive's employment are provided solely at the discretion of the Company and may be modified, suspended or revoked at any time, without notice or the consent of the Executive, unless otherwise provided by law.  Moreover, to the extent that these benefits are provided pursuant to policies or plan documents adopted by the Company, Executive acknowledges and agrees that these benefits shall be governed by the applicable employment policies or plan documents.  The benefits to be provided to Executive shall include group health and dental insurance and participation in a 401-K plan once such plans have been established and implemented.

 

4.7 Personal Time Off (“PTO”).  Executive will be eligible to receive 20 PTO days per year.  PTO is an accrued benefit and will be paid out at termination in accordance with the Company’s standard PTO policies.

 

4.8 Business Expenses; Office Sublease.  Executive will be reimbursed for all reasonable, out-of-pocket business expenses incurred in the performance of Executive’s duties on behalf of the Company, including travel-related expenses.  To obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation in accordance with the Company’s policies.  The Company shall also reimburse Executive for the actual lease payments and other related costs paid by Executive to lease and maintain Executive’s office space in New York.

 

  

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5. Confidentiality and Proprietary Agreement.  Executive agrees to abide by the Company’s Employee Proprietary Information and Inventions Agreement (the “Non-Disclosure Agreement”), which Executive has signed and is incorporated herein by reference.

 

6. Termination of Executive’s Employment.

 

6.1 Termination for Cause by the Company. The Company may terminate Executive’s employment immediately at any time and without notice for “Cause.”  For purposes of this Agreement, “Cause” shall mean (i) a failure by Executive to perform any of her material obligations under this Agreement or to execute and perform in a timely and cooperative manner any directions of the Board; (ii) the death of Executive or her disability resulting in her inability to perform her reasonable duties assigned hereunder for a period of 90 days; (iii) Executive’s theft, dishonesty, or falsification of any Company documents or records; (iv) Executive’s improper use or disclosure of the Company’s confidential or proprietary information; or (v) Executive’s conviction (including any plea of guilty or nolo contendere) of any criminal act which impairs Executive’s ability to perform his or her duties hereunder or which in the Board’s judgment may materially damage the business or reputation of the Company; provided, however, that prior to termination for cause arising under clause (i), Executive shall have a period of ten days after written notice from the Company to cure the event or grounds constituting such cause. Any notice of termination provided by Company to Executive under this Section 6.1 shall identify the events or conduct constituting the grounds for termination with sufficient specificity so as to enable Executive to take steps to cure the same if such default is a failure by Executive to perform any of her material obligations under this Agreement.  In the event Executive’s employment is terminated in accordance with this subsection 6.1, Executive shall be entitled to receive only the Base Salary and any earned Incentive Compensation (as defined in Section 4.4 above) then in effect, prorated to the date of termination. All other obligations of the Company to Executive pursuant to this Agreement will be automatically terminated and completely extinguished.

 

6.2 Termination Without Cause By The Company/Separation Package.  The Company may terminate Executive’s employment under this Agreement without Cause (as defined in Section 6.1 above) at any time on thirty (30) days’ advance written notice to Executive.  In the event of such termination, Executive will receive Executive’s Base Salary through the date of termination and a prorated portion of any Incentive Compensation that was earned under Section 4.4 through the date of termination.  Upon such termination without cause, any then unvested stock options granted to Executive by the Company and any unvested shares of restricted stock that vest with the passage of time will become fully vested and Executive shall have twelve months from the date of termination within which to exercise her vested options.  In addition, Executive will be eligible to receive a “Severance Payment” equivalent to six months of Executive’s then Base Salary, payable in full within thirty (30) days after termination, provided that Executive first satisfies the Severance Conditions.  For purposes of this Agreement, the “Severance Conditions” are defined as (1) Executive’s execution and non-revocation of a full general release, in a form acceptable to the Company, releasing all claims, known or unknown, that Executive may have against the Company arising out of or in any way related to Executive’s employment or termination of employment with the Company, and such release has become effective in accordance with its terms prior to the 30th day following the termination date; and (2) Executive’s reaffirmation of Executive’s commitment to comply, and actual compliance, with all surviving provisions of this Agreement.  Following payment of the Severance Payment, Base Salary and any Incentive Compensation through the date of termination, all other obligations of the Company to Executive pursuant to this Agreement will be automatically terminated and completely extinguished.

 

6.3 Termination Upon a Change of Control.  For purposes of this Agreement, “Change of Control” shall mean: (1) a merger or consolidation or the sale or exchange by the stockholders of the Company of all or substantially all of the capital stock of the Company, where the stockholders of the Company immediately before such transaction do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock or other voting equity of the surviving or acquiring corporation or other surviving or acquiring entity, in substantially the same proportion as before such transaction; (2) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power is transferred; or (3) the sale or exchange of all or substantially all of the Company’s assets (other than a sale or transfer to a subsidiary of the Company as defined in section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”)), where the stockholders of the Company immediately before such sale or exchange do not obtain or retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock or other voting equity of the corporation or other entity acquiring the Company’s assets, in substantially the same proportion as before such transaction; provided, however, that a Change of Control shall not be deemed to have occurred pursuant to any transaction or series of transactions relating to a public or private financing or re-financing, the principal purpose of which is to raise money for the Company’s working capital or capital expenditures and which does not result in a change in a majority of the members of the Board.  If, within six (6) months immediately preceding a Change of Control or within twelve (12) months immediately following a Change of Control, the Executive’s employment is terminated by the Company for any reason other than Cause, then the Executive shall be entitled to receive the Severance Payment and stock option and restricted stock vesting and exercisability set forth in Section 6.2, provided that Executive first satisfies the Severance Conditions.  Following payment of the Severance Payment, Base Salary and any Incentive Compensation through the date of termination, all other obligations of the Company to Executive pursuant to this Agreement will be automatically terminated and completely extinguished.

 

6.4 Resignation.  Executive shall have the right to terminate this Agreement at any time, for any reason, by providing the Company with thirty (30) days written notice, provided, however, that subsequent to Executive’s resignation, Executive shall be required to comply with all surviving provisions of this Agreement.  Executive shall not be entitled to any Severance Pay.  Executive will only be entitled to receive Executive’s Base Salary earned up to the date of termination.  Notwithstanding the foregoing, Executive has the right upon thirty (30) days written notice to the Company to terminate Executive’s employment for “Good Reason” due to occurrence of any of the following:  (i) the Company’s requirement that Executive’s principal place of work relocate more than thirty (30) miles from the location initially designated hereunder by Executive as her New York office without the written consent of Executive, (ii) a material adverse change in Executive’s duties and responsibilities; (iii) any failure by the Company to pay, or any material reduction by Company of, the base salary or any failure by Company to pay any Incentive Compensation to which Executive is entitled pursuant to Section 4; (iv) the Company creates a work environment designed to constructively terminate Executive or to unlawfully harass or retaliate against Executive; or (v) a Change of Control occurs in which the Company is not the surviving entity and the surviving entity fails to offer Executive an executive position at a compensation level at least equal to Executive’s then compensation level under this Agreement.  In the event that Executive terminates her employment for Good Reason, then Executive shall be entitled to receive the Base Salary, any earned Incentive Compensation, Severance Payment and stock option and restricted stock vesting and exercisability as if Executive were terminated by the Company without Cause under Section 6.2, subject to Executive’s compliance with all of the Severance Conditions.

 

  

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6.5 Application of Section 409A.

 

6.5(a)  Notwithstanding anything set forth in this Agreement to the contrary, no amount payable pursuant to this Agreement which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations issued pursuant to Section 409A of the Code (the “Section 409A Regulations”) shall be paid unless and until Executive has incurred a “separation from service” within the meaning of the Section 409A Regulations.

 

6.5(b) Company intends that income provided to Executive pursuant to this Agreement will not be subject to taxation under Section 409A of the Code.  The provisions of this Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the Code.  However, Company does not guarantee any particular tax effect for income provided to Executive pursuant to this Agreement.  In any event, except for Company’s responsibility to withhold applicable income and employment taxes from compensation paid or provided to Executive, Company shall not be responsible for the payment of any applicable taxes on compensation paid or provided to Executive pursuant to this Agreement.

 

6.5(c) Furthermore, to the extent that Executive is a “specified employee” within the meaning of the Section 409A Regulations as of the date of Executive’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Executive’s separation from service shall be paid to Executive before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of Executive’s separation from service or, if earlier, the date of Executive’s death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

 

6.5(d) Notwithstanding anything herein to the contrary, the reimbursement of expenses or in-kind benefits provided pursuant to this Agreement shall be subject to the following conditions: (i) the expenses eligible for reimbursement or in-kind benefits in one taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year; (ii) the reimbursement of eligible expenses or in-kind benefits shall be made promptly, subject to Company’s applicable policies, but in no event later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

6.5(e) For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

7. General Provisions.

 

7.1 Successors and Assigns.  The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company.  Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.

 

7.2 Waiver.  Either party's failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

 

7.3 Attorney’s Fees.  In the event of any dispute or claim relating to or arising out of Executive’s employment relationship with Company, this Agreement, or the termination of Executive’s employment with Company for any reason, the prevailing party in any such dispute or claim shall be entitled to recover its reasonable attorney’s fees and costs.

 

7.4 Severability.  In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law.  If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

 

7.5 Interpretation; Construction.  The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement. Executive has participated in the negotiation of the terms of this Agreement.  Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

7.6 Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the United States and the internal laws of the State of California.

 

7.7 Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated:  (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy, facsimile transmission, or electronic transmission such as e-mail, upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt.  Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

 

7.8 Entire Agreement.  This Agreement constitutes the entire agreement between the Parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral.  This Agreement may be amended or modified only with the written consent of Executive and the Company.  No oral waiver, amendment or modification will be effective under any circumstances whatsoever.

 

  

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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

 

	 	 	 	
EXECUTIVE:

	 	 	 	 
	Dated:	August 21, 2014	 	
Elma Hawkins

	 	 	 	 	 
	 	 	 	/s/ Elma Hawkins	 
	 	 	 	 	 	 
	 	 	 	Address:	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
COMPANY:

	 	 	 	 	 	 
	Dated:	August 21, 2014	 	
Lion Biotechnologies, Inc.

	 	 	 	 	 	 
	 	 	 	By:	/s/ Manish Singh	 
	 	 	 	 	Name: Manish Singh	 
	 	 	 	 	
Title:   Chief Executive Officer

	 

 

 

 

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