Document:

Exhibit 10.1

 

AMENDMENT AGREEMENT

 

THIS AMENDMENT AGREEMENT
(the “Agreement”) is dated as of August 13, 2014, by and between Immune Pharmaceuticals Inc., a Delaware corporation
with offices located at Cambridge Innovation Center, One Broadway, 14th Floor, Cambridge, MA 02142 (the “Company”),
and the investor signatory hereto (the “Investor”).

 

WHEREAS:

 

A.The Company, the Investor and certain
other investors (the “Other Investors” and together with the Investor, the “Investors”) are
parties to that certain Securities Purchase Agreement, dated as of March 10, 2013 (the “Existing Securities Purchase
Agreement”), pursuant to which, among other things, the Investor purchased from the Company (i) certain shares of
the Company’s Series C 8% Convertible Preferred Stock (the “Preferred Stock”), (ii) a five-year warrant
to purchase up to a number of shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”)
set forth next to the Investor’s name on Schedule I attached hereto at an original exercise price of $4.25
(the “$4.25 Warrants”), and (iii) a five-year warrant to purchase up to a number of shares of Common Stock
set forth next to the Investor’s name on Schedule I attached hereto at an original exercise price of $5.10
(the “$5.10 Warrants”). Immediately prior to the execution of this Agreement, the exercise price of the $4.25
Warrants is, as previously adjusted, $3.39 per share of Common Stock and the exercise price of the $5.10 Warrants is, as previously
adjusted, $4.07 per share of Common Stock and the number of shares of Common Stock that remain exercisable pursuant to such Warrants
are set forth next to the Investor’s name on Schedule I attached hereto.

 

B.The Company and the Investor desire
to enter into this Agreement, pursuant to which, among other things, (i) the Company and the Investor shall amend and restate the
$4.25 Warrants and the $5.10 Warrants to reduce the exercise prices thereof, and reflect anti-dilution adjustments that have occurred
and modify certain anti-dilution provisions for subsequent offerings in the $4.25 Warrants and the $5.10 Warrants, and (ii) the
Company shall issue to the Investor shares of the Company’s Common Stock as set forth next to the Investor’s name on
Schedule I attached hereto.

 

C.Each of the Other Investors are executing
agreements identical to this Agreement (other than proportional changes in the numbers reflecting (x) such different number
of Restated Series A Warrants and Restated Series B Warrants exercisable into such different number of shares of Common Stock issuable
to each such Other Investor for the $4.25 Warrant and the $5.10 Warrant, respectively, in each case, pursuant to separate agreements
dated of even date herewith) (the “Other Agreements,” and together with this Agreement, the “Agreements”).

 

D.Capitalized terms used but not otherwise
defined herein shall have the meanings as set forth in the Existing Securities Purchase Agreement as amended hereby.

 

NOW, THEREFORE,
in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

 

1.AMENDMENT AND
RESTATEMENT OF WARRANTS; ISSUANCE OF SHARES.

 

1.1Amendment
and Restatement. Immediately upon the execution of all the Agreements (the “Effective Date”), (A)
the $4.25 Warrants currently held by the Investor shall be amended and restated in the form attached hereto as Exhibit A
(the “Restated Series A Warrants”), which Restated Series A Warrants shall have an initial exercise price of
$3.00 per share and be exercisable for up to a number of shares of Common Stock set forth next to the Investors name on Schedule
I attached hereto and, (B) the $5.10 Warrants currently held by the Investor shall be amended and restated in the form
attached hereto as Exhibit A (the “Restated Series B Warrants”), which Restated Series B Warrants
shall have an initial exercise price of $3.50 per share and be exercisable for up to a number of shares of Common Stock set forth
next to the Investor’s name on Schedule I attached hereto.

 

1.2Delivery
of New Warrant Certificates. Upon the Effective Date, the Investor shall have the right to exercise the Restated Series A Warrant
and Restated B Warrant on the amended and restated terms without having received a new certificate evidencing such warrants. Within
three (3) Trading Days of receipt by the Company of the Investor’s original certificates evidencing the $4.25 Warrant and
the $5.10 Warrant, the Company shall deliver or cause to be delivered to the Investor certificates for the Restated Series A
Warrant and the Restated Series B Warrant.

 

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1.3Issuance
of Shares. Within five (5) Trading Days following the Effective Date, the Company shall deliver or cause to be delivered to
the Investor shares of Common Stock as set forth next to the Investor’s name on Schedule I attached hereto
(the “Shares”).

 

1.4Legends.
The Investor understands that the Shares are not, and will not be, registered under the Securities Act, or the securities laws
of any state and, accordingly, each certificate, if any, representing such Shares shall bear a legend substantially similar to
the following:

 

“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. HOLDERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN THE FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

 

2. TRANSACTION
DOCUMENTS.

 

2.1Transaction
Documents. Except as otherwise expressly provided herein, the Existing Securities Purchase Agreement and each other Transaction
Document, is, and shall continue to be, in full force and effect.

 

3.REPRESENTATIONS
AND WARRANTIES

 

3.1Investor
Representations and Warranties. The Investor hereby represents and warrants to the Company as follows:

 

(a) Organization;
Authority. The Investor is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full capacity, right, corporate, partnership, limited
liability company or similar power and authority, as applicable, to enter into and to consummate the transactions contemplated
by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and performance
by the Investor of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of the Investor. This Agreement has been duly executed
by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid and legally
binding obligation of the Investor, enforceable against it in accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.

 

(b)
Understandings or Arrangements. The Investor is acquiring the Shares hereunder as principal for its own account and has no
direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares
(this representation and warranty not limiting the Investor’s right to sell the Shares in compliance with applicable federal
and state securities laws). The Investor is acquiring the Shares hereunder in the ordinary course of its business.

 

(c) Reliance
on Exemptions. The Investor understands that the Shares are being offered and sold to in reliance upon specific exemptions
from the registration requirements of the Securities Act and state securities laws and that the Company is relying upon the truth
and accuracy of, and the Investor’s compliance with, the representations, warranties, covenants, agreements, acknowledgments
and understandings of the Investor contained in this Agreement in order to determine the availability of such exemptions and the
eligibility of the Investor to acquire the Shares.

 

(d) Risk
of Loss. The Investor understands that its investment in the Shares hereunder involves a significant degree of risk, and the
Investor has full cognizance of and understands all of the risk factors related to its purchase of the Shares, including, but not
limited to, those risk factors including in the SEC Reports. The Investor understands that no representation is being made as to
the future value of the Shares.

 

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(e) Investor
Status. At the time the Investor was offered the Shares hereunder, it was, and as of the date hereof it is, either: (i) an
“accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act. The Investor is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.

 

(f) Experience
of the Investor. The Investor, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares,
and has so evaluated the merits and risks of such investment. The Investor is able to bear the economic risk of an investment in
the Shares and, at the present time, is able to afford a complete loss of such investment.

 

3.2Company
Representations and Warranties. The Company represents and warrants to the Investor as follows:

 

(a) Organization
and Qualification. The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently conducted. The Company is not in violation nor default of any
of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.
The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure
to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse
Effect and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
or curtail such power and authority or qualification.

 

(b) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions contemplated have been duly authorized by all necessary action on
the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith. This Agreement has been (or upon delivery will have been) duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.

 

(c) No
Conflicts. The execution, delivery and performance by the Company of this Agreement, the issuance and sale of the securities
hereunder and the consummation by it of the transactions contemplated hereby do not and will not: (i) conflict with or violate
any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or assets of the Company, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which
any property or asset of the Company is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject,
or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse Effect.

 

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(d)Other
Investors; Registration. Schedule I shall include a complete and final list of all Restated Series A Warrants and Restated
Series B Warrants being issued to Investors and the Company shall have not entered into any agreement or understanding with any
Other Investor that would provide for different (disproportional or otherwise) rights or consideration than what is being offered
to the Investor hereunder nor shall there any be any side or other letters, agreements or understandings with any other Investor
not provided for in this Agreement (adjusted ratably). The registration statement on Form S-1, Commission File No. 333-195251 shall
remain effective and available for the resale of the shares underlying the Restated Series A Warrants and Restated Series B Warrants
immediately following the Effective Date and the Company shall use its reasonable best efforts to cause such registration statement
to remain available to the Investor.

 

(e)Issuance
of the Shares. The Shares to be issued hereunder are duly authorized and, when issued and paid for in accordance with this
Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company.

 

4. TERMINATION.

 

On or before 9:30
a.m., New York time, on the first (1st) Business Day following the Effective Date, the Company shall file a Current Report on Form
8-K describing all the material terms of the transactions contemplated by the Agreement in the form required by the Securities
Exchange Act of 1934, as amended, and attaching this Agreement and the form of the Restated Series A Warrant and Restated
Series B Warrant thereto as exhibits (including all attachments, the “8-K Filing”). From and after the
issuance of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) delivered to any of
the Investors by the Company in connection with the transactions contemplated by this Agreement. On or before 9:30 a.m., New York
time, on the Effective Date, the Company shall file a Current Report on Form 8-K certifying that the Amendment has been consummated.

 

5.TERMINATION.

 

In the event that
the Effective Date does not occur on or before August 13, 2014, the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other
party. Upon such termination, the terms hereof shall be null and void and the parties shall continue to comply with all terms and
conditions of the Transaction Documents, as in effect prior to the execution of this Agreement.

 

6.MISCELLANEOUS.

 

6.1No
Commissions. Neither the Company nor the Investor has paid or given, or will pay or give, to any person, any commission or
other remuneration, directly or indirectly, in connection with the transactions contemplated by this Agreement.

 

6.2Headings.
The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.

 

6.3Amendment.
This Agreement may only be amended by a written instrument executed by each of the parties hereto.

 

6.4Execution
in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of a signed counterpart
of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.

 

[The remainder of the page is intentionally
left blank]

 

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IN WITNESS WHEREOF,
the Investor and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date
first written above.

	 	 	 	 	 
	 	
        COMPANY:

        

        

         

        IMMUNE PHARMACEUTICALS INC. 

         
	 
	 	
         

         

        By:  

        
	 	 
	 	 	Name:  	Dr. Daniel G. Teper	 
	 	 	Title:  	Chief Executive Officer 	 

 

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IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature pages to this Agreement to be duly
executed as of the date first written above.

 

 

Name of Investor: ________________________________________________________

 

Signature of Authorized Signatory of
Investor: __________________________________

 

Name of Authorized Signatory: ____________________________________________________

 

Title of Authorized Signatory: _____________________________________________________

 

Email Address of Authorized Signatory:
_____________________________________________

 

Facsimile Number of Authorized Signatory: __________________________________________

 

Address for Notice to Investor:

 

 

Address for Delivery of Certificates to Investor (if not same
as address for notice):

 

 

$4.25 Warrants:

 

$5.10 Warrants:

 

Restated Series A Warrants:

 

Restated Series B Warrants:

 

Shares of Common Stock:

 

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Schedule I

 

	 	 	Original
    March Warrants	 	 	After
    Registration Explosion	 	 	New
    Warrant (reflect amount and price adj.)	 	 	Aug
    - New Registered Shares	 
	March
    2014 Pipe Warrants	 	$	4.25	 	 	$	5.10	 	 	 	 Total
                                         	 	 	$	3.39	 	 	$	4.07	 	 	 	 Total
                                         	 	 	$	3.00	 	 	$	3.50	 	 	 	 Total
                                         	 	 	 	 Total
                                         	 
	MMCAP
    International Inc. SPC	 	 	367,647	 	 	 	367,647	 	 	 	735,294	 	 	 	461,255	 	 	 	461,255	 	 	 	922,509	 	 	 	520,833	 	 	 	535,714	 	 	 	1,056,548	 	 	 	49,020	 
	Sabby
    Healthcare	 	 	161,765	 	 	 	161,765	 	 	 	323,529	 	 	 	202,952	 	 	 	202,952	 	 	 	405,904	 	 	 	229,167	 	 	 	235,714	 	 	 	464,881	 	 	 	21,569	 
	Sabby
    Volatility Warrant	 	 	73,529	 	 	 	73,529	 	 	 	147,059	 	 	 	92,251	 	 	 	92,251	 	 	 	184,502	 	 	 	104,167	 	 	 	107,143	 	 	 	211,310	 	 	 	9,804	 
	Capital
    Ventures International	 	 	150,000	 	 	 	150,000	 	 	 	300,000	 	 	 	188,192	 	 	 	188,192	 	 	 	376,384	 	 	 	212,500	 	 	 	218,571	 	 	 	431,071	 	 	 	20,000	 
	Sio
    Partners, LP	 	 	82,205	 	 	 	82,205	 	 	 	164,410	 	 	 	103,136	 	 	 	103,136	 	 	 	206,271	 	 	 	116,457	 	 	 	119,785	 	 	 	236,242	 	 	 	10,961	 
	Sio
    Partners QP, LP	 	 	14,168	 	 	 	14,168	 	 	 	28,336	 	 	 	17,775	 	 	 	17,775	 	 	 	35,551	 	 	 	20,071	 	 	 	20,645	 	 	 	40,716	 	 	 	1,889	 
	Sio
    Partners Offshore, Ltd.	 	 	50,686	 	 	 	50,686	 	 	 	101,371	 	 	 	63,591	 	 	 	63,591	 	 	 	127,182	 	 	 	71,805	 	 	 	73,856	 	 	 	145,661	 	 	 	6,758	 
	Nyenburgh
    Holding B.V.	 	 	58,824	 	 	 	58,824	 	 	 	117,647	 	 	 	73,801	 	 	 	73,801	 	 	 	147,601	 	 	 	83,333	 	 	 	85,714	 	 	 	169,048	 	 	 	7,843	 
	Stourbridge
    Investments LLC	 	 	14,706	 	 	 	14,706	 	 	 	29,412	 	 	 	18,450	 	 	 	18,450	 	 	 	36,900	 	 	 	20,833	 	 	 	21,429	 	 	 	42,262	 	 	 	1,961	 
	Cranshire
    Capital Master Fund, Ltd.	 	 	44,118	 	 	 	44,118	 	 	 	88,235	 	 	 	55,351	 	 	 	55,351	 	 	 	110,701	 	 	 	62,500	 	 	 	64,286	 	 	 	126,786	 	 	 	5,882	 
	Equitec
    Specialists, LLC	 	 	14,706	 	 	 	14,706	 	 	 	29,412	 	 	 	18,450	 	 	 	18,450	 	 	 	36,900	 	 	 	20,833	 	 	 	21,429	 	 	 	42,262	 	 	 	1,961	 
	Chardan
    Capital Markets LLC	 	 	23,442	 	 	 	23,442	 	 	 	46,884	 	 	 	29,411	 	 	 	29,411	 	 	 	58,821	 	 	 	33,209	 	 	 	34,158	 	 	 	67,368	 	 	 	3,126	 
	JMM
    Foundation, Inc.	 	 	14,706	 	 	 	14,706	 	 	 	29,412	 	 	 	18,450	 	 	 	18,450	 	 	 	36,900	 	 	 	20,833	 	 	 	21,429	 	 	 	42,262	 	 	 	1,961	 
	DAFNA
    Lifescience L.P.	 	 	38,235	 	 	 	38,235	 	 	 	76,471	 	 	 	47,970	 	 	 	47,970	 	 	 	95,941	 	 	 	54,167	 	 	 	55,714	 	 	 	109,881	 	 	 	5,098	 
	DAFNA
    Lifescience Select L.P.	 	 	28,676	 	 	 	28,676	 	 	 	57,353	 	 	 	35,978	 	 	 	35,978	 	 	 	71,956	 	 	 	40,625	 	 	 	41,786	 	 	 	82,411	 	 	 	3,824	 
	DAFNA
    Lifescience Market Neutral L.P.	 	 	6,618	 	 	 	6,618	 	 	 	13,235	 	 	 	8,303	 	 	 	8,303	 	 	 	16,605	 	 	 	9,375	 	 	 	9,643	 	 	 	19,018	 	 	 	882	 
	Framboise
    Trading Limited	 	 	147,059	 	 	 	147,059	 	 	 	294,118	 	 	 	184,502	 	 	 	184,502	 	 	 	369,004	 	 	 	208,333	 	 	 	214,286	 	 	 	422,619	 	 	 	19,608	 

 

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	Melini
    Capital	 	 	73,529	 	 	 	73,529	 	 	 	147,059	 	 	 	92,251	 	 	 	92,251	 	 	 	184,502	 	 	 	104,167	 	 	 	107,143	 	 	 	211,310	 	 	 	9,804	 
	Business
    Assets Corp.	 	 	73,529	 	 	 	73,529	 	 	 	147,059	 	 	 	92,251	 	 	 	92,251	 	 	 	184,502	 	 	 	104,167	 	 	 	107,143	 	 	 	211,310	 	 	 	9,804	 
	Paul
    Benichou	 	 	73,529	 	 	 	73,529	 	 	 	147,059	 	 	 	92,251	 	 	 	92,251	 	 	 	184,502	 	 	 	104,167	 	 	 	107,143	 	 	 	211,310	 	 	 	9,804	 
	Giliana
    Niffeler	 	 	22,059	 	 	 	22,059	 	 	 	44,118	 	 	 	27,675	 	 	 	27,675	 	 	 	55,351	 	 	 	31,250	 	 	 	32,143	 	 	 	63,393	 	 	 	2,941	 
	Michael
    Tordjman	 	 	15,074	 	 	 	15,074	 	 	 	30,147	 	 	 	18,911	 	 	 	18,911	 	 	 	37,823	 	 	 	21,354	 	 	 	21,964	 	 	 	43,318	 	 	 	2,010	 
	Frank
    Allouch	 	 	14,706	 	 	 	14,706	 	 	 	29,412	 	 	 	18,450	 	 	 	18,450	 	 	 	36,900	 	 	 	20,833	 	 	 	21,429	 	 	 	42,262	 	 	 	1,961	 
	Rahul
    Singhvi	 	 	7,353	 	 	 	7,353	 	 	 	14,706	 	 	 	9,225	 	 	 	9,225	 	 	 	18,450	 	 	 	10,417	 	 	 	10,714	 	 	 	21,131	 	 	 	980	 
	Daniel
    Teper	 	 	8,824	 	 	 	8,824	 	 	 	17,647	 	 	 	11,070	 	 	 	11,070	 	 	 	22,140	 	 	 	12,500	 	 	 	12,857	 	 	 	25,357	 	 	 	1,176	 
	Isaac
    Kobrin	 	 	8,824	 	 	 	8,824	 	 	 	17,647	 	 	 	11,070	 	 	 	11,070	 	 	 	22,140	 	 	 	12,500	 	 	 	12,857	 	 	 	25,357	 	 	 	1,176	 
	David
    Sidransky	 	 	5,882	 	 	 	5,882	 	 	 	11,765	 	 	 	7,380	 	 	 	7,380	 	 	 	14,760	 	 	 	8,333	 	 	 	8,571	 	 	 	16,905	 	 	 	784	 
	René
    Lerer	 	 	2,938	 	 	 	2,938	 	 	 	5,875	 	 	 	3,685	 	 	 	3,685	 	 	 	7,371	 	 	 	4,161	 	 	 	4,280	 	 	 	8,442	 	 	 	392	 
	Daniel
    Kazado	 	 	2,938	 	 	 	2,938	 	 	 	5,875	 	 	 	3,685	 	 	 	3,685	 	 	 	7,371	 	 	 	4,161	 	 	 	4,280	 	 	 	8,442	 	 	 	392	 
	Marc
    Rothenberg	 	 	5,735	 	 	 	5,735	 	 	 	11,471	 	 	 	7,196	 	 	 	7,196	 	 	 	14,391	 	 	 	8,125	 	 	 	8,357	 	 	 	16,482	 	 	 	765	 
	Jean
    Kadouche	 	 	2,941	 	 	 	2,941	 	 	 	5,882	 	 	 	3,690	 	 	 	3,690	 	 	 	7,380	 	 	 	4,167	 	 	 	4,286	 	 	 	8,452	 	 	 	392	 
	Oppenheim
    Asset Management	 	 	36,765	 	 	 	36,765	 	 	 	73,529	 	 	 	46,125	 	 	 	46,125	 	 	 	92,251	 	 	 	52,083	 	 	 	53,571	 	 	 	105,655	 	 	 	4,902	 
	IPConcept	 	 	14,706	 	 	 	14,706	 	 	 	29,412	 	 	 	18,450	 	 	 	18,450	 	 	 	36,900	 	 	 	20,833	 	 	 	21,429	 	 	 	42,262	 	 	 	1,961	 
	Medical
    Strategy GmbH	 	 	7,353	 	 	 	7,353	 	 	 	14,706	 	 	 	9,225	 	 	 	9,225	 	 	 	18,450	 	 	 	10,417	 	 	 	10,714	 	 	 	21,131	 	 	 	980	 
	Hauck
    & Aufhäuser Banquiers	 	 	2,938	 	 	 	2,938	 	 	 	5,875	 	 	 	3,685	 	 	 	3,685	 	 	 	7,371	 	 	 	4,161	 	 	 	4,280	 	 	 	8,442	 	 	 	392	 
	Michal
    Ayalon Soffer	 	 	2,941	 	 	 	2,941	 	 	 	5,882	 	 	 	3,690	 	 	 	3,690	 	 	 	7,380	 	 	 	4,167	 	 	 	4,286	 	 	 	8,452	 	 	 	392	 
	Adam
    Foley-Comer	 	 	2,941	 	 	 	2,941	 	 	 	5,882	 	 	 	3,690	 	 	 	3,690	 	 	 	7,380	 	 	 	4,167	 	 	 	4,286	 	 	 	8,452	 	 	 	392	 
	Sarit
    Steinberg	 	 	2,941	 	 	 	2,941	 	 	 	5,882	 	 	 	3,690	 	 	 	3,690	 	 	 	7,380	 	 	 	4,167	 	 	 	4,286	 	 	 	8,452	 	 	 	392	 
	Danit
    Shema	 	 	843	 	 	 	843	 	 	 	1,685	 	 	 	1,057	 	 	 	1,057	 	 	 	2,114	 	 	 	1,194	 	 	 	1,228	 	 	 	2,422	 	 	 	112	 
	Oshrat
    Harush Frenkel	 	 	421	 	 	 	421	 	 	 	843	 	 	 	529	 	 	 	529	 	 	 	1,057	 	 	 	597	 	 	 	614	 	 	 	1,211	 	 	 	56	 
	Ze'ev
    Hamber	 	 	147	 	 	 	147	 	 	 	294	 	 	 	185	 	 	 	185	 	 	 	369	 	 	 	208	 	 	 	214	 	 	 	423	 	 	 	20	 
	Sub
    Total	 	 	1,680,945	 	 	 	1,680,945	 	 	 	3,361,890	 	 	 	2,108,938	 	 	 	2,108,939	 	 	 	4,217,876	 	 	 	2,381,342	 	 	 	2,449,380	 	 	 	4,830,715	 	 	 	224,126	 

 

    	8exh_101.htm

Exhibit 10.1

 

SIGNAL GENETICS, INC.

 

2014 STOCK INCENTIVE PLAN

 

	
1.

	
Establishment, Purpose and Types of Awards

 

Signal Genetics, Inc., a Delaware corporation (the “Company”), hereby establishes the Signal Genetics, Inc. 2014 Stock Incentive Plan (the “Plan”).  The purpose of the Plan is to promote the long-term growth and profitability of the Company by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Company through their future services, and (ii) enabling the Company to attract, retain and reward the best-available personnel.

 

The Plan permits the granting of stock options (including incentive stock options qualifying under Code section 422 and nonstatutory stock options), stock appreciation rights, restricted or unrestricted stock awards, restricted stock units, performance awards, other stock-based awards, or any combination of the foregoing.

 

	
2.

	
Definitions

 

Under this Plan, except where the context otherwise indicates, the following definitions apply:

 

(a) “Administrator” means the Board or the committee(s) or officer(s) appointed by the Board that have authority to administer the Plan as provided in Section 3 hereof.

 

(b) “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, the Company (including, but not limited to, joint ventures, limited liability companies, and partnerships). For this purpose, “control” shall mean ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity, or the power to direct the management and policies of the entity, by contract or otherwise.

 

(c) “Award” means any stock option, stock appreciation right, stock award, restricted stock unit award, performance award, or other stock-based award.

 

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

 

(e) “Change in Control” means: a (i) Change in Ownership of the Company, (ii) Change in Effective Control of the Company, or (iii) Change in the Ownership of Assets of the Company, as described herein and construed in accordance with Code section 409A.

 

(i) A Change in Ownership of the Company shall occur on the date that any one Person acquires, or Persons Acting as a Group acquire, ownership of the capital stock of the Company that, together with the stock held by such Person or Group, constitutes more than 50% of the total fair market value or total voting power of the capital stock of the Company. However, if any one Person is, or Persons Acting as a Group are, considered to own more than 50% of the total fair market value or total voting power of the capital stock of the Company, the acquisition of additional stock by the same Person or Persons Acting as a Group is not considered to cause a Change in Ownership of the Company or to cause a Change in Effective Control of the Company (as described below). An increase in the percentage of capital stock owned by any one Person, or Persons Acting as a Group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock.

 

  

 

  

(ii) A Change in Effective Control of the Company shall occur on the date a majority of members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election.

 

(iii) A Change in the Ownership of Assets of the Company shall occur on the date that any one Person acquires, or Persons Acting as a Group acquire (or has or have acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons), assets from the Company that have a total gross fair market value of more than 50% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

The following rules of construction apply in interpreting the definition of Change in Control:

 

(A) A Person means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than employee benefit plans sponsored or maintained by the Company and by entities controlled by the Company or an underwriter of the capital stock of the Company in a registered public offering.

 

(B) Persons will be considered to be Persons Acting as a Group (or Group) if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation.  If a Person owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a Group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation. Persons will not be considered to be acting as a Group solely because they purchase assets of the same corporation at the same time or purchase or own stock of the same corporation at the same time, or as a result of the same public offering.

 

(C) For purposes of this Section 2(e), fair market value shall be determined by the Administrator.

 

(D) A Change in Control shall not include a transfer to a related person as described in Code section 409A or a public offering of capital stock of the Company.

 

(E) For purposes of this Section 2(e), Code section 318(a) applies to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation §1.83­3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option.

 

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

 

  

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(g) “Common Stock” means shares of common stock of the Company, par value of $0.01 per share.

 

(h) “Fair Market Value” means, with respect to the Common Stock, as of any date:

 

(i) if the principal market for the Common Stock (as determined by the Administrator if the Common Stock is listed or admitted to trading on more than one exchange or market) is a national securities exchange or an established securities market, the official closing price per share of Common Stock for the regular market session on that date on the principal exchange or market on which the Common Stock is then listed or admitted to trading or, if no sale is reported for that date, on the last preceding day on which a sale was reported;

 

(ii) if the principal market for the Common Stock is not a national securities exchange or an established securities market, the average of the highest bid and lowest asked prices for the Common Stock on that date as reported on a national quotation system or, if no prices are reported for that date, on the last preceding day on which prices were reported; or

 

(iii) if the Common Stock is neither listed nor admitted to trading on a national securities exchange or an established securities market, nor quoted by a national quotation system, the value determined by the Administrator in good faith.

 

With respect to property other than Common Stock, Fair Market Value means the value of the property determined by such methods or procedures to be established from time to time by the Board in accordance with Code section 409A.

 

(i) “Full-Value Award” means any Award other than (i) a stock option, (ii) a stock appreciation right or (iii) any other Award for which the Holder pays the intrinsic value existing as of the date of grant (whether directly or by forgoing a right to receive a payment from the Company or any subsidiary).

 

(j) “Grant Agreement” means a written document, including an electronic writing acceptable to the Administrator, memorializing the terms and conditions of an Award granted pursuant to the Plan and which shall incorporate the terms of the Plan.

 

(k) “Performance Measures” mean criteria established by the Administrator relating to any of the following, as it may apply to an individual, one or more business units, divisions or subsidiaries, or on a Company-wide basis, and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies:

 

(i) Earnings or Profitability Metrics: including, but not limited to, earnings/loss (gross, operating, net, or adjusted); earnings/loss before interest and taxes (“EBIT”);  earnings/loss before interest, taxes, depreciation and amortization (“EBITDA”);  profit margins; expense levels or ratios; in each case adjusted to eliminate the effect of any one or more of the following: interest expense, asset impairments, early extinguishment of debt, stock-based compensation expense, changes in generally accepted accounting principles or critical accounting policies, or other extraordinary or non-recurring items, as specified by the plan administrator when establishing the performance goals;

 

(ii) Return Metrics: including, but not limited to, return on investment, assets, equity or capital (total or invested);

 

  

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(iii) Cash Flow Metrics: including, but not limited to, operating cash flow; cash flow sufficient to achieve financial ratios or a specified cash balance; free cash flow; cash flow return on capital; net cash provided by operating activities; cash flow per share; working capital;

 

(iv) Liquidity Metrics: including, but not limited to, capital raising; debt reduction; extension of maturity dates of outstanding debt; debt leverage (debt to capital, net debt-to-capital, debt-to-EBITDA or other liquidity ratios) or access to capital; debt ratings; total or net debt; other similar measures approved by the plan administrator;

 

(v) Stock Price and Equity Metrics: including, but not limited to, return on stockholders’ equity; total stockholder return; revenue (gross, operating or net); revenues from sales; revenues from search model; revenue growth; stock price; stock price appreciation; market capitalization; earnings/loss per share (basic or diluted) (before or after taxes); price-to-earnings ratio;

 

(vi) Strategic Metrics: including, but not limited to, number of users, site traffic, conversion ratios, product research and development; regulatory filings or approvals; patent application or issuance; manufacturing or process development; sales or net sales; geographic coverage; market share; market penetration; inventory control; growth in assets; key hires; business expansion; acquisitions, divestitures, affiliate agreements, collaborations, licensing or joint ventures; financing; resolution of significant litigation; legal compliance or risk reduction.

 

	
3.

	
Administration

 

(a) Administration of the Plan.  The Plan shall be administered by the Board or by such committee or committees as may be appointed by the Board from time to time. To the extent allowed by applicable state law, the Board by resolution may authorize an officer or officers to grant Awards (other than Stock Awards) to other officers and employees of the Company and its Affiliates, and, to the extent of such authorization, such officer or officers shall be the Administrator.

 

(b) Powers of the Administrator.  The Administrator shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards.

 

The Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be granted; (ii) determine the types of Awards to be granted; (iii) determine the number of shares to be covered by or used for reference purposes for each Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided, however, that, except as provided in Section 6 or 7(e) of the Plan, any modification that would materially adversely affect any outstanding Award shall not be made without the consent of the holder and no such modification, amendment or substitution that results in repricing the Award, within the meaning of the Nasdaq Marketplace Rule 5635(c) and IM-5635-1, or any successor provision, shall be made without prior stockholder approval); (vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any grantee’s employment or other relationship with the Company;  provided, however, that no such waiver or acceleration of lapse restrictions shall be made with respect to a performance-based stock award granted to an executive officer of the Company if such waiver or acceleration is inconsistent with Code section 162(m); (vii) establish objectives and conditions, if any, for earning Awards and determining whether Awards will be paid with respect to a performance period; (viii) for any purpose, including but not limited to, qualifying for preferred tax treatment under foreign tax laws or otherwise complying with the regulatory requirements of local or foreign jurisdictions, to establish, amend, modify, administer or terminate sub-plans, and prescribe, amend and rescind rules and regulations relating to such sub-plans; (ix) interpret and administer the Plan and any instrument or agreement relating to, or Award made under the Plan; (x) correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect; and (xi) make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.  All decisions and determinations of the Administrator shall be final, conclusive and binding on the Company, the participants in the Plan and any and all interested parties.

 

  

- 4 -

  

The Administrator shall have full power and authority, in its sole and absolute discretion, to administer, construe and interpret the Plan, Grant Agreements and all other documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind and interpret such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Administrator deems necessary or advisable, and to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Administrator shall deem it desirable to carry it into effect.

 

(c) Non-Uniform Determinations.  The Administrator’s determinations under the Plan (including without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Grant Agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.

 

(d) Limited Liability.  To the maximum extent permitted by law, no member of the Administrator shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder.

 

(e) Indemnification.  To the maximum extent permitted by law and by the Company’s charter and by­laws, the members of the Administrator shall be indemnified by the Company in respect of all their activities under the Plan.

 

(f) Effect of Administrator’s Decision.  All actions taken and decisions and determinations made by the Administrator on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Company, its stockholders, any participants in the Plan and any other employee, consultant, or director of the Company, and their respective successors in interest.

 

	
4.

	
Shares Available for the Plan; Maximum Awards

 

(a) Subject to adjustments as provided in Section 7(e) of the Plan, the aggregate number of shares of Common Stock that may be issued with respect to Awards granted under the Plan is 1,245,399; provided, however, that no more than 1,000,000 shares of Common Stock may be issued in the form of Full-Value Awards, and no more than 600,000 shares of Common Stock may be issued pursuant to incentive stock options intended to qualify under Code section 422. If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable, is settled in cash without delivery of shares of Common Stock, or is forfeited or otherwise terminated, surrendered or canceled as to any shares, or if any shares of Common Stock are repurchased by or surrendered to the Company in connection with any Award (whether or not such surrendered shares were acquired pursuant to any Award), or if any shares are withheld by the Company, the shares subject to such Award and the repurchased, surrendered and withheld shares shall thereafter be available for further Awards under the Plan; provided, however, that any such shares that are surrendered to or repurchased or withheld by the Company in connection with any Award or that are otherwise forfeited after issuance shall not be available for purchase pursuant to incentive stock options intended to qualify under Code section 422.

 

  

- 5 -

  

(b) Subject to adjustments as provided in Section 7(e) of the Plan, the maximum number of shares of Common Stock subject to Awards of any combination that may be granted during any one fiscal year of the Company to any one individual under this Plan shall be limited to 750,000 shares. Such per-individual limit shall not be adjusted to effect a restoration of shares of Common Stock with respect to which the related Award is terminated, surrendered or canceled.

 

	
5.

	
Participation

 

Participation in the Plan shall be open to all employees, officers, and directors of, and other individuals providing bona fide services to or for, the Company, or of any Affiliate of the Company, as may be selected by the Administrator from time to time. The Administrator may also grant Awards to individuals in connection with hiring, retention or otherwise, prior to the date the individual first performs services for the Company or an Affiliate, provided that such Awards shall not become vested or exercisable, and no shares shall be issued to such individual, prior to the date the individual first commences performance of such services.

 

	
6.

	
Awards

 

The Administrator, in its sole discretion, establishes the terms of all Awards granted under the Plan.  Awards may be granted individually or in tandem with other types of Awards, concurrently with or with respect to outstanding Awards.  All Awards are subject to the terms and conditions provided in the Grant Agreement.

 

(a) Stock Options.  The Administrator may from time to time grant to eligible participants Awards of incentive stock options as that term is defined in Code section 422 or nonstatutory stock options; provided, however, that Awards of incentive stock options shall be limited to employees of the Company or of any current or hereafter existing “parent corporation” or “subsidiary corporation,” as defined in Code sections 424(e) and (f), respectively, of the Company and any other individuals who are eligible to receive incentive stock options under the provisions of Code section 422. Options must have an exercise price at least equal to Fair Market Value (110% of Fair Market Value for incentive stock options if the grantee is a 10% stockholder within the meaning of Code section 422) as of the date of grant and may not have a term in excess of ten years’ duration (five years’ duration for incentive stock options if the grantee is a 10% stockholder within the meaning of Code section 422). The Administrator shall not reduce the exercise price of an outstanding stock option, whether through amendment, cancellation or replacement of such stock option, unless such reduction is consistent with Code section 409A and other applicable law and is approved by the stockholders of the Company.  No stock option shall be an incentive stock option unless so designated by the Administrator at the time of grant or in the Grant Agreement evidencing such stock option.

 

  

- 6 -

  

(b) Stock Appreciation Rights.  The Administrator may from time to time grant to eligible participants Awards of Stock Appreciation Rights (“SAR”). An SAR entitles the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or portion thereof, which is exercised. The base price per share specified in the Grant Agreement shall not be less than the lower of the Fair Market Value on the grant date or the exercise price of any tandem stock option Award to which the SAR is related.  The Administrator shall not reduce the exercise price of an outstanding SAR, whether through amendment, cancellation or replacement of such SAR, unless such reduction consistent with Code section 409A and other applicable law and is approved by the stockholders of the Company.  No SAR shall have a term longer than ten years’ duration. Payment by the Company of the amount receivable upon any exercise of an SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Administrator. If upon settlement of the exercise of an SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Administrator shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated.

 

(c) Stock Awards.

 

(i) The Administrator may from time to time grant stock awards to eligible participants in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as it shall determine. A stock award may be denominated in Common Stock or other securities, stock-equivalent units or restricted stock units, securities or debentures convertible into Common Stock, or any combination of the foregoing and may be paid in Common Stock or other securities, in cash, or in a combination of Common Stock or other securities and cash, all as determined in the sole discretion of the Administrator.

 

(ii) The Administrator may grant stock awards in a manner constituting “qualified performance­-based compensation” within the meaning of Code section 162(m). The grant of, or lapse of restrictions with respect to, such performance-based stock awards shall be based upon one or more Performance Measures and objective performance targets to be attained relative to those Performance Measures, all as determined by the Administrator.  Performance targets may include minimum, maximum, intermediate and target levels of performance, with the size of the performance-based stock award or the lapse of restrictions with respect thereto based on the level attained. A performance target may be stated as an absolute value or as a value determined relative to prior performance, one or more indices, budget, one or more peer group companies, any other standard selected by the Administrator, or any combination thereof.  The Administrator shall be authorized to make adjustments in the method of calculating attainment of Performance Measures and performance targets in recognition of: (A) extraordinary or non-recurring items; (B) changes in tax laws; (C) changes in generally accepted accounting principles or changes in accounting policies; (D) charges related to restructured or discontinued operations; (E) restatement of prior period financial results; and (F) any other unusual, non­recurring gain or loss that is separately identified and quantified in the Company’s financial statements; provided that the Administrator’s decision as to whether such adjustments will be made with respect to any  “covered employee”, within the meaning of Code section 162(m), is determined when the performance targets are established for the applicable performance period. Notwithstanding the foregoing, the Administrator may, at its sole discretion, modify the performance results upon which Awards are based under the Plan to offset any unintended results arising from events not anticipated when the Performance Measures and performance targets were established; provided, that such modifications may be made with respect to an Award granted to any covered employee, within the meaning of Code section 162(m), only to the extent permitted by Code section 162(m) if the Award was intended to constitute “qualified performance­based compensation” within the meaning of Code section 162(m). Notwithstanding anything in the Plan to the contrary, the Administrator is not authorized to waive or accelerate the lapse of restrictions on a performance-based stock award granted to any covered employee, within the meaning of Code section 162(m), except upon death, disability or a change of ownership or control of the Company. In the event that a Change in Control occurs after a performance-based stock award has been granted but before completion of the applicable performance period, a pro rata portion of such Award shall become payable (or a pro rata portion of the lapse restrictions shall lapse, as applicable) as of the date of the Change in Control to the extent otherwise earned on the basis of achievement of the pro rata portion of the Performance Measures and performance targets relating to the portion of the performance period completed as of the date of the Change in Control.

 

  

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7.

	
Miscellaneous

 

(a) Payment.  The Administrator shall determine the methods by which payments by any participant with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b)  shares of Common Stock (including, in the case of payment of the exercise price of an Award,  shares issuable pursuant to the exercise of the Award) or shares of Common Stock held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the participant has placed a market sell order with a broker with respect to shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided, that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other form of legal consideration acceptable to the Administrator.  The Administrator shall also determine the methods by which shares shall be delivered or deemed to be delivered to participants.  Notwithstanding any other provision of the Plan to the contrary, no participant who is a director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

 

(b) Withholding of Taxes.  Grantees and holders of Awards shall pay to the Company or its Affiliate, or make provision satisfactory to the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax liability. The Company or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the grantee or holder of an Award. In the event that payment to the Company or its Affiliate of such tax obligations is made in shares of Common Stock, such shares shall be valued at Fair Market Value on the applicable date for such purposes and shall not exceed in amount the minimum statutory tax withholding obligation.

 

(c) Loans.  To the extent otherwise permitted by law, the Company or its Affiliate may make or guarantee loans to grantees to assist grantees in exercising Awards and satisfying any withholding tax obligations.

 

(d) Transferability.  Except as otherwise determined by the Administrator, no Award granted under the Plan may be assigned or transferred, hypothecated or encumbered, in whole or in part, either directly or by operation of law or otherwise, including, but not limited to, by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, except transfer by will or by the laws of descent and distribution.  All rights with respect to Awards granted under the Plan shall be exercisable during the participant’s lifetime only by the participant or the participant’s guardian or legal representative.

 

  

- 8 -

  

(e) Adjustments for Corporate Transactions and Other Events.

 

(i) Stock Dividend, Stock Split and Reverse Stock Split. In the event of a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, (A) the maximum number of shares of such Common Stock as to which Awards may be granted under this Plan and the maximum number of shares with respect to which Awards may be granted during any one fiscal year of the Company to any individual, as provided in Section 4 of the Plan, and (B) the number of shares covered by and the exercise price and other terms of outstanding Awards, shall, without further action of the Board, be adjusted to reflect such event. The Administrator may make adjustments, in its discretion, to address the treatment of fractional shares and fractional cents that arise with respect to outstanding Awards as a result of the stock dividend, stock split or reverse stock split.

 

(ii) Non-Change in Control Transactions.  Except with respect to the transactions set forth in Section 7(e)(i), in the event of any change affecting the Common Stock, the Company or its capitalization, by reason of a spin-off, split-up, dividend, recapitalization, merger, consolidation or share exchange, other than any such change that is part of a transaction resulting in a Change in Control of the Company, the Administrator, in its discretion and without the consent of the holders of the Awards, shall make (A) appropriate adjustments to the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the Plan, in the aggregate and with respect to any individual during any one fiscal year of the Company, as provided in Section 4 of the Plan; and (B) any adjustments in outstanding Awards, including but not limited to modifying the number, kind and price of securities subject to Awards.

 

(iii) Change in Control Transactions. In the event of any transaction resulting in a Change in Control of the Company, outstanding stock options and other Awards that are payable in or convertible into Common Stock under this Plan will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Awards by, or for the substitution of the equivalent awards, as determined in the sole discretion of the Administrator, of, the surviving or successor entity or a parent thereof. In the event of such termination, the holders of stock options and other Awards under the Plan will be permitted, immediately before the Change in Control, to exercise or convert all portions of such stock options or other Awards under the Plan that are then exercisable or convertible or which become exercisable or convertible upon or prior to the effective time of the Change in Control.

 

(iv) Unusual or Non-recurring Events.  The Administrator is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or non-recurring events affecting the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 

(f) Substitution of Awards in Mergers and Acquisitions.  Awards may be granted under the Plan from time to time in substitution for awards held by employees, officers, consultants or directors of entities who become or are about to become employees, officers, consultants or directors of the Company or an Affiliate as the result of a merger or consolidation of the employing entity with the Company or an Affiliate, or the acquisition by the Company or an Affiliate of the assets or stock of the employing entity.  The terms and conditions of any substitute Awards so granted may vary from the terms and conditions set forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the substitute Awards to the provisions of the awards for which they are substituted.

 

  

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(g) Termination, Amendment and Modification of the Plan.  The Board may terminate, amend or modify the Plan or any portion thereof at any time. Except as otherwise determined by the Board, termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

(h) No Stockholders Rights.  Except as otherwise provided herein, a participant shall have none of the rights of a stockholder with respect to shares of Common Stock covered by any Award until the participant becomes the record owner of such shares of Common Stock.

 

(i) Issuance of Shares; Paperless Administration.  Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule or regulation, the Company may choose to not deliver to any participant certificates evidencing shares issued in connection with any Award and instead record such shares in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).  In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a participant may be permitted through the use of such an automated system.

 

(j) Effect of Plan upon Other Compensation Plans.  The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any subsidiary.  Nothing in the Plan shall be construed to limit the right of the Company or any subsidiary:  (a) to establish any other forms of incentives or compensation for employees, directors or other service providers of the Company or any subsidiary, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.  No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

(k) Non-Guarantee of Employment or Service.  Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an individual to continue in the service of the Company or shall interfere in any way with the right of the Company to terminate such service at any time with or without cause or notice and whether or not such termination results in (i) the failure of any Award to vest; (ii) the forfeiture of any unvested or vested portion of any Award; and/or (iii) any other adverse effect on the individual’s interests under the Plan.

 

(l) Compliance with Securities Laws; Listing and Registration.  If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign securities laws, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery is lawful. If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may violate the rules of the national exchange on which the shares are then listed for trade, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery would not violate such rules. The Company shall have no obligation to effect any registration or qualification of the Common Stock under Federal, state or foreign laws.

 

  

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The Company may require that a grantee, as a condition to exercise of an Award, and as a condition to the delivery of any share certificate, make such written representations (including representations to the effect that such person will not dispose of the Common Stock so acquired in violation of Federal, state or foreign securities laws) and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Common Stock in compliance with applicable Federal, state or foreign securities laws. The stock certificates for any shares of Common Stock issued pursuant to this Plan may bear a legend restricting transferability of the shares of Common Stock unless such shares are registered or an exemption from registration is available under the Securities Act of 1933, as amended, and applicable state or foreign securities laws.

 

(m) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

 

(n) Governing Law.  The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Delaware, without regard to its conflict of laws principles.

 

(o) 409A Savings Clause.  The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from, Code section 409A. The Plan and all Awards granted under the Plan shall be administered, interpreted, and construed in a manner consistent with Code section 409A to the extent necessary to avoid the imposition of additional taxes under Code section 409A(a)(1)(B). Should any provision of the Plan, any Award Agreement, or any other agreement or arrangement contemplated by the Plan be found not to comply with, or otherwise be exempt from, the provisions of Code section 409A, such provision shall be modified and given effect (retroactively if necessary), in the sole discretion of the Administrator, and without the consent of the holder of the Award, in such manner as the Administrator determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Code section 409A. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the participant’s separation from service shall instead be paid on the first payroll date after the six-month anniversary of the participant’s separation from service (or the participant’s death, if earlier).  Notwithstanding anything in the Plan to the contrary, in no event shall the Administrator exercise its discretion to accelerate the payment or settlement of an Award where such payment or settlement constitutes deferred compensation within the meaning of Code section 409A unless, and solely to the extent that, such accelerated payment or settlement is permissible under Treasury Regulation section 1.409A-3(j)(4) or any successor provision.

 

  

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(p) Participants Subject to Taxation Outside the United States.  With respect to participants who are believed by the Administrator to be subject to taxation in countries other than the United States, the Administrator may make grants on such terms and conditions, consistent with the Plan, as the Administrator deems appropriate to comply with the laws of the applicable countries, and the Administrator may create such procedures, addenda and subplans and make such modifications as may be necessary or advisable to comply with such laws. The Board may amend the Plan in such manner as may be necessary to enable the Plan to achieve its stated purposes in any jurisdiction outside the United States in a tax-efficient manner and in compliance with local rules and regulations. Furthermore, if any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

 

(q) Effective Date; Termination Date.  The Plan is effective as of the date on which the Plan is adopted by the Board, subject to approval of the stockholders within twelve months before or after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan, or if earlier, the tenth anniversary of the date this Plan is approved by the stockholders. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards.

 

PLAN APPROVAL

 

 

	Date Approved by the Board:	 	June 17, 2014	 
	 	 	 	 
	Date Approved by the Stockholders:	 	June 17, 2014	 

                                                                                                                                                                                 

 

 

 

 

 

 

 

 

 

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