Document:

EXHIBIT
4.1

COMMON
STOCK PURCHASE WARRANT

IBIO, INC.

	
  

 	
  

 
	
 Warrant Shares: [●]

 	
 Issue Date: April 26, 2013

 

                    THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, [●] (the
“Holder”) is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the
date hereof (the “Exercisability Date”) and on or prior to the close of
business on the third anniversary of the Exercisability Date (the “Termination
Date”) but not thereafter, to subscribe for and purchase from iBio, Inc., a
Delaware corporation (the “Company”), up to [●] shares (the “Warrant Shares”) of common stock
of the Company (“Common Stock”). 

          Section
1. Definitions. Capitalized
terms used herein shall have the meanings given to them herein. As used herein,
“Original Issue Date” means the Issue Date referenced above and “business day” means any day on which the New York Stock Exchange,
Inc. is open for trading. 

          Section
2. Exercise.

	
  

 	
  

 
	
  

 	
           a)
 Exercise of Warrant. Exercise of the purchase rights represented by
 this Warrant may be made, in whole or in part, at any time or times on or
 after the Exercisability Date and on or before the Termination Date by
 delivery to the Company (or such other office or agency of the Company as it
 may designate by notice in writing to the registered Holder at the address of
 the Holder appearing on the books of the Company) of a duly executed
 facsimile copy of the Notice of Exercise Form annexed hereto; and, within
 three (3) business days of the date said Notice of Exercise is delivered to
 the Company, the Company shall have received payment of the aggregate
 Exercise Price of the shares thereby purchased by wire transfer or cashier’s
 check drawn on a United States bank or, if available, pursuant to the
 cashless exercise procedure specified in Section 2(c) below. Notwithstanding
 anything herein to the contrary, the Holder shall not be required to
 physically surrender this Warrant to the Company until the Holder has
 purchased all of the Warrant Shares available hereunder and the Warrant has
 been exercised in full, in which case, the Holder shall surrender this
 Warrant to the Company for cancellation within three (3) business days of the
 date the final Notice of Exercise is delivered to the Company. Partial
 exercises of this Warrant resulting in purchases of a portion of the total
 number of Warrant Shares available hereunder shall have the effect of
 lowering the outstanding number of Warrant Shares purchasable hereunder in an
 amount equal to the applicable number of Warrant Shares purchased. The Holder
 and the Company shall maintain records showing the number of Warrant Shares
 purchased and the date of such purchases. The Company shall deliver any
 objection to any Notice of Exercise Form within one (1) business day of
 receipt of such notice. The Holder and any
 assignee, by acceptance of this Warrant, acknowledge and agree that, by
 reason of the provisions of this paragraph, following the purchase of a
 portion of the

 

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 Warrant
 Shares hereunder, the number of Warrant Shares available for purchase
 hereunder at any given time may be less than the amount stated on the face
 hereof.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           b)
 Exercise Price. The
 exercise price per share of the Common Stock under this Warrant shall be $0.53, subject to adjustment
 hereunder (the “Exercise Price”).

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           c)
 Cashless Exercise. If at the time of exercise hereof there is no
 effective registration statement registering, or the prospectus contained
 therein is not available for the issuance of the Warrant Shares to the
 Holder, then this Warrant may also be exercised, in whole or in part, at such
 time by means of a “cashless exercise” in which the Holder shall be entitled
 to receive a certificate for the number of Warrant Shares equal to the
 quotient obtained by dividing [(A-B) (X)] by (A), where:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A) = 

 	
 the VWAP on the business
 day immediately preceding the date on which Holder elects to exercise this
 Warrant by means of a “cashless exercise,” as set forth in the applicable
 Notice of Exercise;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B) = 

 	
 the Exercise Price of this
 Warrant, as adjusted hereunder; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (X) = 

 	
 the number of Warrant
 Shares that would be issuable upon exercise of this Warrant in accordance
 with the terms of this Warrant if such exercise were by means of a cash
 exercise rather than a cashless exercise.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           “VWAP”
 means, for any date, the price determined by the first of the following
 clauses that applies: (a) if the Common Stock is then listed or quoted on a
 market or exchange, the daily volume weighted average price of the Common
 Stock for such date (or the nearest preceding date) on such market or
 exchange on which the Common Stock is then listed or quoted as reported by
 Bloomberg L.P. (based on a business day from 9:30 a.m. (New York City time)
 to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a
 market or exchange, the volume weighted average price of the Common Stock for
 such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if
 the Common Stock is not then listed or quoted for trading on the OTC Bulletin
 Board and if prices for the Common Stock are then reported in the “Pink
 Sheets” published by OTC Markets, Inc. (or a similar organization or agency
 succeeding to its functions of reporting prices), the most recent bid price
 per share of the Common Stock so reported, or (d) in all other cases,
 the fair market value of a share of Common Stock as determined by an
 independent appraiser selected in good faith by the Company and reasonably
 acceptable to the Required Holders (as defined herein), the fees and expenses
 of which shall be paid by the Company. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           d)
 Mechanics of Exercise. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           i.
 Delivery of Certificates Upon Exercise. Certificates for shares
 purchased hereunder shall be transmitted by the transfer agent to the Holder
 by crediting the account of the Holder’s prime broker with the depository
 trust company through its Deposit Withdrawal Agent Commission (“DWAC”)
 system if the Company is then a participant in such system and either (A)
 there is an effective Registration Statement

 

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 covering the issuance
 of the Warrant Shares to the Holder or (B) this Warrant is being exercised
 via cashless exercise, and otherwise by physical delivery to the address
 specified by the Holder in the Notice of Exercise by the date that is three
 (3) business days after the latest of (A) the delivery to the Company of the
 Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C)
 payment of the aggregate Exercise Price as set forth above (including by
 cashless exercise, if permitted) (such date, the “Warrant Share Delivery
 Date”). This Warrant shall be deemed to have been exercised on the first
 date on which all of the foregoing have been delivered to the Company. The
 Warrant Shares shall be deemed to have been issued, and Holder or any other
 person so designated to be named therein shall be deemed to have become a
 holder of record of such shares for all purposes, as of the date the Warrant
 has been properly exercised, with payment to the Company of the Exercise
 Price (or by cashless exercise, if permitted) and all taxes required to be
 paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the
 issuance of such shares, having been paid. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           ii.
 Delivery of New Warrants Upon Exercise. If this Warrant shall have
 been exercised in part, the Company shall, at the request of the Holder and
 upon surrender of this Warrant certificate, at the time of delivery of the
 certificate or certificates representing Warrant Shares, deliver to the
 Holder a new Warrant evidencing the rights of the Holder to purchase the
 unpurchased Warrant Shares called for by this Warrant, which new Warrant
 shall in all other respects be identical with this Warrant.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           iii.
 Rescission Rights. If the Company fails to cause the transfer agent to
 transmit to the Holder a certificate or the certificates representing the
 Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery
 Date, then, the Holder will have the right to rescind such exercise.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           iv.
 Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
 Exercise. In addition to any other rights available to the Holder, if the
 Company fails to cause the transfer agent to transmit to the Holder a
 certificate or the certificates representing the Warrant Shares pursuant to
 an exercise on or before the Warrant Share Delivery Date, and if after such
 Warrant Share Delivery Date, the Holder purchases (in an open market
 transaction or otherwise) shares of Common Stock to deliver in satisfaction
 of a sale by the Holder of the Warrant Shares that the Holder anticipated
 receiving from the Company (a “Buy-In”), then the Company shall,
 within five (5) business days after the Holder’s request and in the Holder’s
 discretion, either (i) pay cash to the Holder in an amount, equal to the
 Holder’s total purchase price (including reasonable brokerage commissions, if
 any) for the shares of Common Stock so purchased (the “Buy-In Price”),
 at which point the Company’s obligation

 

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 to deliver such certificate
 (and to issue such Common Stock) shall terminate and this Warrant shall be
 restored to its pre-exercise numbers of shares, or (ii) promptly honor its
 obligation to deliver to the Holder a certificate or certificates
 representing such Common Stock and pay cash to the Holder in an amount equal
 to the excess (if any) of the Buy-In Price over the product of (A) such
 number of shares of Common Stock, times (B) the VWAP (as reported by
 Bloomberg) on the date of the event giving rise to the Company’s obligation
 to deliver such certificate. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Notwithstanding the
 foregoing, the Company shall not be required to make the payments set forth
 herein in the case of uncertificated Warrant Shares if the Holder fails to
 timely file a request with the depository trust company to receive such
 uncertificated Warrant Shares.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Notwithstanding the
 foregoing, if the Company fails to cause the transfer agent to transmit to
 the Holder a certificate or the certificates representing the Warrant Shares
 pursuant to an exercise on or before the Warrant Share Delivery Date, then
 the Holder will have the right to rescind such Notice of Exercise. Nothing
 herein shall limit a Holder’s right to pursue any other remedies available to
 it hereunder, at law or in equity including, without limitation, a decree of
 specific performance and/or injunctive relief with respect to the Company’s
 failure to timely deliver a Certificate pursuant to the terms hereof.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           v.
 No Fractional Shares or Scrip. No fractional shares or scrip
 representing fractional shares shall be issued upon the exercise of this
 Warrant. As to any fraction of a share which the Holder would otherwise be
 entitled to purchase upon such exercise, the Company shall, at its election,
 either pay a cash adjustment in respect of such final fraction in an amount
 equal to such fraction multiplied by the Exercise Price or round up to the
 next whole share.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           vi.
 Charges, Taxes and Expenses. Issuance of certificates for Warrant
 Shares shall be made without charge to the Holder for any issue or transfer
 tax or other incidental expense in respect of the issuance of such
 certificate, all of which taxes and expenses shall be paid by the Company,
 and such certificates shall be issued in the name of the Holder or in such
 name or names as may be directed by the Holder; provided, however,
 that in the event certificates for Warrant Shares are to be issued in a name
 other than the name of the Holder, this Warrant when surrendered for exercise
 shall be accompanied by the Assignment Form attached hereto duly executed by
 the Holder and the Company may require, as a condition thereto, the payment
 of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

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           vii.
 Closing of Books. The Company will not close its stockholder books or
 records in any manner which prevents the timely exercise of this Warrant,
 pursuant to the terms hereof.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Section 3. Certain
 Adjustments.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           a)
 Stock Dividends and Splits. If the Company, at any time while this
 Warrant is outstanding: (i) pays a stock dividend or otherwise makes a
 distribution or distributions on shares of its Common Stock or any other
 equity or equity equivalent securities payable in shares of Common Stock
 (which, for avoidance of doubt, shall not include any shares of Common Stock
 issued by the Company upon exercise of this Warrant), (ii) subdivides
 outstanding shares of Common Stock into a larger number of shares, (iii)
 combines (including by way of reverse stock split) outstanding shares of
 Common Stock into a smaller number of shares, or (iv) issues by
 reclassification of shares of the Common Stock any shares of capital stock of
 the Company, then in each case the Exercise Price shall be multiplied by a
 fraction of which the numerator shall be the number of shares of Common Stock
 (excluding treasury shares, if any) outstanding immediately before such event
 and of which the denominator shall be the number of shares of Common Stock
 outstanding immediately after such event, and the number of shares issuable
 upon exercise of this Warrant shall be proportionately adjusted such that the
 aggregate Exercise Price of this Warrant shall remain unchanged. Any
 adjustment made pursuant to this Section 3(a) shall become effective immediately
 after the record date for the determination of stockholders entitled to
 receive such dividend or distribution and shall become effective immediately
 after the effective date in the case of a subdivision, combination or
 re-classification.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           b)
 [Intentionally Omitted]

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           c)
 Subsequent Rights
 Offerings. If the Company,
 at any time while the Warrant is outstanding, shall issue rights, options or
 warrants to all holders of Common Stock (and not to the Holders) entitling them
 to subscribe for or purchase shares of Common Stock at a price per share less
 than the VWAP on the record date mentioned below, then, the Exercise Price
 shall be multiplied by a fraction, of which the denominator shall be the
 number of shares of the Common Stock outstanding on the date of issuance of
 such rights, options or warrants plus the number of additional shares of
 Common Stock offered for subscription or purchase, and of which the numerator
 shall be the number of shares of the Common Stock outstanding on the date of
 issuance of such rights, options or warrants plus the number of shares which
 the aggregate offering price of the total number of shares so offered
 (assuming receipt by the Company in full of all consideration payable upon
 exercise of such rights, options or warrants) would purchase at such VWAP.
 Such adjustment shall be made whenever such rights, options or warrants are
 issued, and shall become effective immediately after the record date for the
 determination of stockholders entitled to receive such rights, options or
 warrants. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           d)
 Pro Rata Distributions. If the Company, at any time while this Warrant
 is outstanding, shall distribute to all holders of Common Stock (and not to
 the Holders) evidences of its indebtedness or assets (including cash and cash
 dividends) or rights or 

 

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 warrants to subscribe
 for or purchase any security other than the Common Stock, then in each such
 case the Exercise Price shall be adjusted by multiplying the Exercise Price
 in effect immediately prior to the record date fixed for determination of
 stockholders entitled to receive such distribution by a fraction of which the
 denominator shall be the VWAP determined as of the record date mentioned
 above, and of which the numerator shall be such VWAP on such record date less
 the then per share fair market value at such record date of the portion of
 such assets or evidence of indebtedness so distributed applicable to one
 outstanding share of the Common Stock as determined by the Board of Directors
 in good faith. In either case the adjustments shall be described in a
 statement provided to the Holder of the portion of assets or evidences of
 indebtedness so distributed or such subscription rights applicable to one
 share of Common Stock. Such adjustment shall be made whenever any such
 distribution is made and shall become effective immediately after the record
 date mentioned above.

 
	
  

 	
  

 
	
  

 	
           e)
 Fundamental Transaction. If, at any time while this Warrant is
 outstanding, (i) the Company, directly or indirectly, in one
 or more related transactions effects any merger or consolidation of
 the Company with or into another Person, (ii) the Company,
 directly or indirectly, effects any sale, lease, license, assignment,
 transfer, conveyance or other disposition of all or substantially all
 of its assets in one or a series of related transactions, (iii) any, direct
 or indirect, purchase offer, tender offer or exchange offer (whether by the
 Company or another Person) is completed pursuant to which holders of Common
 Stock are permitted to sell, tender or exchange their shares for other
 securities, cash or property and has been accepted by the holders of 50% or
 more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one
 or more related transactions effects any reclassification,
 reorganization or recapitalization of the Common Stock or any compulsory
 share exchange pursuant to which the Common Stock is effectively converted
 into or exchanged for other securities, cash or property, or (v) the Company,
 directly or indirectly, in one or more related transactions consummates
 a stock or share purchase agreement or other business combination (including, without limitation, a
 reorganization, recapitalization, spin-off or scheme of arrangement) with another
 Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not
 including any shares of Common Stock held by the other Person or other
 Persons making or party to, or associated or affiliated with the other Persons
 making or party to, such stock or share purchase agreement or other business combination)
 (each a “Fundamental Transaction”), then, upon any subsequent exercise
 of this Warrant, the Holder shall have the right to receive, for each Warrant
 Share that would have been issuable upon such exercise immediately prior to
 the occurrence of such Fundamental Transaction, at the option of the Holder
 (without regard to any limitation in Section 2(e) on the exercise of this
 Warrant), the number of shares of Common Stock of the successor or acquiring
 corporation or of the Company, if it is the surviving corporation, and any
 additional consideration (the “Alternate Consideration”) receivable as
 a result of such Fundamental Transaction by a holder of the number of shares
 of Common Stock for which this Warrant is exercisable immediately prior to
 such Fundamental Transaction (without regard to any limitation in Section
 2(e) on the exercise of this Warrant). For purposes of any such exercise, the
 determination of the Exercise Price shall be appropriately adjusted to apply
 to such Alternate Consideration based on the amount of Alternate
 Consideration issuable in respect of one share of Common Stock

 

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 in such Fundamental
 Transaction, and the Company shall apportion the Exercise Price among the
 Alternate Consideration in a reasonable manner reflecting the relative value
 of any different components of the Alternate Consideration. If holders of
 Common Stock are given any choice as to the securities, cash or property to be
 received in a Fundamental Transaction, then the Holder shall be given the
 same choice as to the Alternate Consideration it receives upon any exercise
 of this Warrant following such Fundamental Transaction. 

 
	
  

 	
  

 
	
  

 	
           Notwithstanding
 the foregoing, in the event of a Fundamental Transaction that is (1) an all
 cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3
 under the Exchange Act or (3) a Fundamental Transaction involving a person or
 entity not traded on either The New York Stock Exchange, Inc., The NYSE MKT,
 The NASDAQ Global Select Market, The NASDAQ Global Market or The NASDAQ
 Capital Market, other than a merger in connection with a bona fide
 acquisition by the Company of any Person in which (x) the gross consideration
 paid, directly or indirectly, by the Company in such acquisition is not
 greater than 45% of the Company’s market capitalization as calculated on each
 of (1) the date of the public announcement of such merger and (2) the date of
 the consummation of such merger and (y) such merger does not contemplate any
 change to the identity of the board of directors of the Company or any of the
 members of the senior management of the Company, including, without
 limitation, the chief executive officer and the chief financial officer of
 the Company, at the request of the Holder delivered before the 45th day after
 such Fundamental Transaction, the Company (or the Successor Entity, as
 defined below) shall purchase this Warrant from the Holder by paying to the
 Holder, within five business days after such request (or, if later, on the
 effective date of the Fundamental Transaction), cash in an amount equal to
 the Black Scholes Value of the remaining unexercised portion of this Warrant
 on the date of such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based
 on the Black Scholes Option Pricing Model obtained from the “OV” function on
 Bloomberg using (i) a price per share of Common Stock equal to the Weighted
 Average Price of the Common Stock for the business day immediately preceding
 the date of consummation of the applicable Fundamental Transaction, (ii) a
 risk-free interest rate corresponding to the U.S. Treasury rate for a period
 equal to the remaining term of this Warrant as of the date of the Holder’s request
 under this Section 3(e) and (iii) an expected volatility equal to the lesser
 of 80% and the 60-day volatility obtained from the HVT function on Bloomberg
 determined as of the business day next following the public announcement of
 the applicable Fundamental Transaction.

 
	
  

 	
  

 
	
  

 	
           The
 Company shall cause any successor entity in a Fundamental Transaction in
 which the Company is not the survivor (the “Successor Entity”) to
 assume in writing all of the obligations of the Company under this Warrant in
 accordance with the provisions of this Section 3(e) pursuant to written
 agreements in form and substance reasonably satisfactory to the Holder and
 approved by the Holder (without unreasonable delay) prior to such Fundamental
 Transaction and shall, at the option of the Holder, deliver to the Holder in
 exchange for this Warrant a security of the Successor Entity evidenced by a
 written instrument substantially similar in form and substance to this
 Warrant which is exercisable for a corresponding number of shares of capital
 stock of such Successor Entity (or its parent entity) equivalent to the
 shares of Common Stock acquirable and

 

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 receivable
 upon exercise of this Warrant (without regard to any limitations on the
 exercise of this Warrant) prior to such Fundamental Transaction, and with an
 exercise price which applies the exercise price hereunder to such shares of
 capital stock (but taking into account the relative value of the shares of
 Common Stock pursuant to such Fundamental Transaction and the value of such
 shares of capital stock, such number of shares of capital stock and such
 exercise price being for the purpose of protecting the economic value of this
 Warrant immediately prior to the consummation of such Fundamental
 Transaction), and which is reasonably satisfactory in form and substance to
 the Holder. Upon the occurrence of any such Fundamental Transaction, the
 Successor Entity shall succeed to, and be substituted for (so that from and
 after the date of such Fundamental Transaction, the provisions of this
 Warrant referring to the “Company” shall refer instead to the Successor
 Entity), and may exercise every right and power of the Company and shall
 assume all of the obligations of the Company under this Warrant with the same
 effect as if such Successor Entity had been named as the Company herein.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           f)
 Calculations. All calculations under this Section 3 shall be made to
 the nearest cent or the nearest 1/100th of a share, as the case may be. For
 purposes of this Section 3, the number of shares of Common Stock deemed to be
 issued and outstanding as of a given date shall be the sum of the number of
 shares of Common Stock (excluding treasury shares, if any) issued and
 outstanding.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           g)
 Notice to Holder. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           i.
 Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
 pursuant to any provision of this Section 3, the Company shall promptly mail
 to the Holder a notice setting forth the Exercise Price after such adjustment
 and setting forth a brief statement of the facts requiring such adjustment. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           ii.
 Notice to Allow Exercise by Holder. If during the term in which this
 Warrant may be exercised by the Holder (A) the Company shall declare a
 dividend (or any other distribution in whatever form) on the Common Stock,
 (B) the Company shall declare a special nonrecurring cash dividend on or a
 redemption of the Common Stock, (C) the Company shall authorize the granting
 to all holders of the Common Stock rights or warrants to subscribe for or
 purchase any shares of capital stock of any class or of any rights, (D) the
 approval of any stockholders of the Company shall be required in connection
 with any reclassification of the Common Stock, any consolidation or merger to
 which the Company is a party, any sale or transfer of all or substantially
 all of the assets of the Company, or any compulsory share exchange whereby
 the Common Stock is converted into other securities, cash or property, or (E)
 the Company shall authorize the voluntary or involuntary dissolution,
 liquidation or winding up of the affairs of the Company, then, in each case,
 the Company shall cause to be mailed to the Holder at its last address as it
 shall appear upon the Warrant Register of the Company, at least 10 calendar
 days prior to the applicable record or effective date hereinafter specified,
 a notice

 

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 stating (x) the date on
 which a record is to be taken for the purpose of such dividend, distribution,
 redemption, rights or warrants, or if a record is not to be taken, the date
 as of which the holders of the Common Stock of record to be entitled to such
 dividend, distributions, redemption, rights or warrants are to be determined
 or (y) the date on which such reclassification, consolidation, merger, sale,
 transfer or share exchange is expected to become effective or close, and the
 date as of which it is expected that holders of the Common Stock of record
 shall be entitled to exchange their shares of the Common Stock for
 securities, cash or other property deliverable upon such reclassification,
 consolidation, merger, sale, transfer or share exchange; provided that the
 failure to mail such notice or any defect therein or in the mailing thereof
 shall not affect the validity of the corporate action required to be specified
 in such notice. To the extent that any notice provided hereunder constitutes,
 or contains, material, non-public information regarding the Company or any of
 the Subsidiaries, the Company shall simultaneously file such notice with the
 Securities and Exchange Commission pursuant to a Current Report on Form 8-K.
 The Holder shall remain entitled to exercise this Warrant during the period
 commencing on the date of such notice to the effective date of the event
 triggering such notice except as may otherwise be expressly set forth herein.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Section 4. Transfer
 of Warrant.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           a)
 Transferability. Subject to compliance with applicable securities
 laws, this Warrant and all rights hereunder are transferable, in whole or in
 part, upon surrender of this Warrant at the principal office of the Company
 or its designated agent, together with a written assignment of this Warrant
 substantially in the form attached hereto duly executed by the Holder or its
 agent or attorney and funds sufficient to pay any transfer taxes payable upon
 the making of such transfer. Upon such surrender and, if required, such
 payment, the Company shall execute and deliver a new Warrant or Warrants in
 the name of the assignee or assignees, as applicable, and in the denomination
 or denominations specified in such instrument of assignment, and shall issue
 to the assignor a new Warrant evidencing the portion of this Warrant not so
 assigned, and this Warrant shall promptly be cancelled. The Warrant, if
 properly assigned in accordance herewith, may be exercised by a new holder
 for the purchase of Warrant Shares without having a new Warrant issued. 

 
	
  

 	
  

 
	
  

 	
           b)
 New Warrants. This Warrant may be divided or combined with other
 Warrants upon presentation hereof at the aforesaid office of the Company,
 together with a written notice specifying the names and denominations in
 which new Warrants are to be issued, signed by the Holder or its agent or
 attorney. Subject to compliance with Section 4(a), as to any transfer which
 may be involved in such division or combination, the Company shall execute
 and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
 to be divided or combined in accordance with such notice. All Warrants issued
 on transfers or exchanges shall include reference to the initial issuance
 date set forth on the first page of this Warrant and shall be identical with
 this Warrant

 

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 except as to the number
 of Warrant Shares issuable pursuant thereto and the Warrant number. 

 
	
  

 	
  

 
	
  

 	
           c)
 Warrant Register. The Company shall register this Warrant, upon
 records to be maintained by the Company for that purpose (the “Warrant
 Register”), in the name of the record Holder hereof from time to time.
 The Company may deem and treat the registered Holder of this Warrant as the
 absolute owner hereof for the purpose of any exercise hereof or any
 distribution to the Holder, and for all other purposes, absent actual written
 notice to the contrary.

 
	
  

 	
  

 
	
  

 	
 Section 5. Miscellaneous.

 
	
  

 	
  

 
	
  

 	
           a)
 No Rights as Stockholder Until Exercise. This Warrant does not
 entitle the Holder to any voting rights, dividends or other rights as a
 stockholder of the Company prior to the exercise hereof as set forth in
 Section 2(d)(i). 

 
	
  

 	
  

 
	
  

 	
           b)
 Loss, Theft, Destruction or Mutilation of Warrant. The Company
 covenants that upon receipt by the Company of evidence reasonably
 satisfactory to it of the loss, theft, destruction or mutilation of this
 Warrant or any stock certificate relating to the Warrant Shares, and in case
 of loss, theft or destruction, of indemnity or security reasonably
 satisfactory to it, and upon surrender and cancellation of such Warrant or
 stock certificate, if mutilated, the Company will make and deliver a new
 Warrant or stock certificate of like tenor and dated as of such cancellation,
 in lieu of such Warrant or stock certificate.

 
	
  

 	
  

 
	
  

 	
           c)
 Saturdays, Sundays, Holidays, etc. If the last or appointed day
 for the taking of any action or the expiration of any right required or
 granted herein shall not be a business day, then, such action may be taken or
 such right may be exercised on the next succeeding business day.

 
	
  

 	
  

 
	
  

 	
           d)
 Authorized Shares. The Company covenants that during the period
 the Warrant is outstanding, it will reserve from its authorized and unissued
 Common Stock a sufficient number of shares to provide for the issuance of the
 Warrant Shares upon the exercise of any purchase rights under this Warrant.
 The Company further covenants that its issuance of this Warrant shall
 constitute full authority to its officers who are charged with the duty of
 executing stock certificates to execute and issue the necessary certificates
 for the Warrant Shares upon the exercise of the purchase rights under this
 Warrant. The Company will take all such reasonable action as may be necessary
 to assure that such Warrant Shares may be issued as provided herein without
 violation of any applicable law or regulation, or of any requirements of the
 Trading Market upon which the Common Stock may be listed. “Trading Market”
 means any of the following markets or exchanges on which the Common Stock is
 listed or quoted for trading on the date in question: the NYSE MKT, the
 Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
 Market, the New York Stock Exchange or the OTC Bulletin Board (or any
 successors to any of the foregoing). The Company covenants that all Warrant
 Shares which may be issued upon the exercise of the purchase rights
 represented by this Warrant will, upon exercise of the purchase rights represented
 by this Warrant and

 

A-10

	
  

 	
  

 
	
  

 	
 payment for such
 Warrant Shares in accordance herewith, be duly authorized, validly issued,
 fully paid and nonassessable and free from all taxes, liens and charges
 created by the Company in respect of the issue thereof (other than taxes in
 respect of any transfer occurring contemporaneously with such issue). 

 
	
  

 	
  

 
	
  

 	
           Except
 and to the extent as waived or consented to by the Holder, the Company shall
 not by any action, including, without limitation, amending its certificate of
 incorporation or through any reorganization, transfer of assets,
 consolidation, merger, dissolution, issue or sale of securities or any other
 voluntary action, avoid or seek to avoid the observance or performance of any
 of the terms of this Warrant, but will at all times in good faith assist in
 the carrying out of all such terms and in the taking of all such actions as
 may be necessary or appropriate to protect the rights of Holder as set forth
 in this Warrant against impairment. Without limiting the generality of the
 foregoing, the Company will (i) not increase the par value of any Warrant
 Shares above the amount payable therefor upon such exercise immediately prior
 to such increase in par value, (ii) take all such action as may be necessary
 or appropriate in order that the Company may validly and legally issue fully
 paid and nonassessable Warrant Shares upon the exercise of this Warrant and
 (iii) use commercially reasonable efforts to obtain all such authorizations,
 exemptions or consents from any public regulatory body having jurisdiction
 thereof, as may be necessary to enable the Company to perform its obligations
 under this Warrant.

 
	
  

 	
  

 
	
  

 	
           Before
 taking any action which would result in an adjustment in the number of
 Warrant Shares for which this Warrant is exercisable or in the Exercise
 Price, the Company shall obtain all such authorizations or exemptions
 thereof, or consents thereto, as may be necessary from any public regulatory
 body or bodies having jurisdiction thereof.

 
	
  

 	
  

 
	
  

 	
           e)
 Jurisdiction. All questions concerning the construction,
 validity, enforcement and interpretation of this Warrant shall be determined
 in accordance with the laws of the State of New York.

 
	
  

 	
  

 
	
  

 	
           f)
 Restrictions. The Holder acknowledges that the Warrant Shares
 acquired upon the exercise of this Warrant, if not registered, and the Holder
 does not utilize cashless exercise, will have restrictions upon resale
 imposed by state and federal securities laws.

 
	
  

 	
  

 
	
  

 	
           g)
 Nonwaiver and Expenses. No course of dealing or any delay or
 failure to exercise any right hereunder on the part of Holder shall operate
 as a waiver of such right or otherwise prejudice Holder’s rights, powers or
 remedies. Without limiting any other provision of this Warrant, if the
 Company willfully and knowingly fails to comply with any provision of this
 Warrant, which results in any material damages to the Holder, the Company
 shall pay to Holder such amounts as shall be sufficient to cover any costs
 and expenses including, but not limited to, reasonable attorneys’ fees,
 including those of appellate proceedings, incurred by Holder in collecting
 any amounts due pursuant hereto or in otherwise enforcing any of its rights,
 powers or remedies hereunder.

 

A-11

	
  

 	
  

 	
  

 
	
  

 	
           h)
 Notices. The Company shall provide Holder with prompt written
 notice of all actions taken pursuant to this Warrant. Whenever notice is
 required to be given under this Warrant, unless otherwise provided herein,
 such notice shall be given in writing, will be mailed (a) if within the
 domestic United States by first-class registered or certified airmail, or
 nationally recognized overnight express courier, postage prepaid, or by
 facsimile or (b) if delivered from outside the United States, by
 International Federal Express or facsimile, and (c) will be deemed given (i)
 if delivered by first-class registered or certified mail domestic, three
 business days after so mailed, (ii) if delivered by nationally recognized
 overnight carrier, one business day after so mailed, (iii) if delivered by
 International Federal Express, two business days after so mailed and (iv) if
 delivered by facsimile, upon electronic confirmation of receipt, and will be
 delivered and addressed as follows: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i) if to the Company,
 to: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 iBio, Inc.

 
	
  

 	
  

 	
 9 Innovation Way, Suite
 100

 
	
  

 	
  

 	
 Newark DE 19711

 
	
  

 	
  

 	
 Attn: Robert B. Kay,
 Chief Executive Officer

 
	
  

 	
  

 	
 Facsimile: (302)
 356-1173

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 with a copy to: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Andrew Abramowitz, PLLC

 
	
  

 	
  

 	
 565 Fifth Avenue, Ninth
 Floor

 
	
  

 	
  

 	
 New York, NY 10017

 
	
  

 	
  

 	
 Attn: Andrew Abramowitz

 
	
  

 	
  

 	
 Facsimile: (212)
 972-8883

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii) if to the Holder,
 at the address of the Holder appearing on the books of the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
           i)
 Limitation of Liability. No provision hereof, in the absence of
 any affirmative action by Holder to exercise this Warrant to purchase Warrant
 Shares, and no enumeration herein of the rights or privileges of Holder,
 shall give rise to any liability of Holder for the purchase price of any
 Common Stock or as a stockholder of the Company, whether such liability is
 asserted by the Company or by creditors of the Company.

 
	
  

 	
  

 
	
  

 	
           j)
 Remedies. The Holder, in addition to being entitled to exercise
 all rights granted by law, including recovery of damages, will be entitled to
 specific performance of its rights under this Warrant. The Company agrees
 that monetary damages would not be adequate compensation for any loss
 incurred by reason of a breach by it of the provisions of this Warrant and
 hereby agrees to waive and not to assert the defense in any action for
 specific performance that a remedy at law would be adequate.

 
	
  

 	
  

 
	
  

 	
           k)
 Successors and Assigns. Subject to applicable securities laws,
 this Warrant and the rights and obligations evidenced hereby shall inure to
 the benefit of and

 

A-12

	
  

 	
  

 
	
  

 	
 be binding upon the
 successors and permitted assigns of the Company and the successors and
 permitted assigns of Holder. The provisions of this Warrant are intended to
 be for the benefit of any Holder from time to time of this Warrant and shall
 be enforceable by the Holder or holder of Warrant Shares.

 
	
  

 	
  

 
	
  

 	
           l)
 Amendment. This Warrant is one of a series of Warrants of like
 tenor issued by the Company pursuant to the Underwriting Agreement, dated as
 of April 23, 2013, by and between the Company and Roth Capital Partners, LLC
 (collectively, the “Warrants”). Any term of this Warrant may be
 amended or waived (including the adjustment provisions included in Section 3
 of this Warrant) upon the written consent of the Company and the holders of
 Warrants representing at least 66 2/3% of the number of shares of Common
 Stock then subject to all outstanding Series A Warrants (the “Required
 Holders”); provided, that (x) any such amendment or waiver must apply to
 all Warrants; and (y) the number of Warrant Shares subject to this Warrant
 may not be reduced, the Exercise Price may not be increased and the
 Termination Date may not be accelerated, and the right to exercise this
 Warrant may not be terminated or waived, without the written consent of the
 Holder.

 
	
  

 	
  

 
	
  

 	
           m)
 Severability. Wherever possible, each provision of this Warrant
 shall be interpreted in such manner as to be effective and valid under
 applicable law, but if any provision of this Warrant shall be prohibited by
 or invalid under applicable law, such provision shall be ineffective to the
 extent of such prohibition or invalidity, without invalidating the remainder
 of such provisions or the remaining provisions of this Warrant.

 
	
  

 	
  

 
	
  

 	
           n)
 Headings. The headings used in this Warrant are for the
 convenience of reference only and shall not, for any purpose, be deemed a
 part of this Warrant.

 

********************

 (Signature Page Follows)

A-13

          IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.

	
  

 	
  

 	
  

 
	
  

 	
 IBIO, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
 Name:

 
	
  

 	
  

 	
 Title:

 

NOTICE
OF EXERCISE

TO: IBIO, INC.

                    (1)
The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.

                    (2)
Payment shall take the form of (check applicable box):

	
  

 	
  

 	
  

 
	
  

 	
 [   ] in lawful money of the United
 States; or

 	 
	
  

 	
  

 	 
	
  

 	
 [   ] if
 permitted the cancellation of such number of Warrant Shares as is necessary,
 in accordance with the formula set forth in subsection 2(c), to exercise this
 Warrant with respect to the maximum number of Warrant Shares purchasable
 pursuant to the cashless exercise procedure set forth in subsection 2(c).

 	 

                    (3)
Please issue a certificate or certificates representing said Warrant Shares in
the name of the undersigned or in such other name as is specified below:

	
  

 	
  

 	
  

 

The Warrant Shares shall be delivered to the following
DWAC Account Number or by physical delivery of a certificate to:

	
  

 	
  

 	
  

 
	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	 

 	
  

 

[SIGNATURE OF HOLDER]

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name of Investing Entity: 

 	
  

 
	
  

 	 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Signature
 of Authorized Signatory of Investing Entity:

 	
  

 
	
  

 	 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name of Authorized Signatory:

 	
  

 
	
  

 	 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Title of Authorized Signatory: 

 	
  

 
	
  

 	 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Date:

 	
  

 
	
  

 	 

 

ASSIGNMENT
FORM

(To assign the
foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

                    FOR
VALUE RECEIVED, [____] all of or [__________] shares of the foregoing Warrant
and all rights evidenced thereby are hereby assigned to

	
  

 	
  

 
	
  

 	
  whose address is

 
	 

 	
  

 

	
  

 	
  

 
	
  

 	
 .

 
	 

 	
  

 

	
  

 	
  

 
	 

 	
  

 

	
  

 	
  

 
	
  

 	
 Dated: ______________, _______

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Holder’s Signature:

 	
  

 	
  

 
	
  

 	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Holder’s Address:

 	
  

 	
  

 
	
  

 	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	 

 	
  

 

	
  

 	
  

 	
  

 
	
 Signature Guaranteed:

 	
  

 	
  

 
	
  

 	 

 	
  

 

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign the
foregoing Warrant.

-3-exh10_1.htm

Exhibit 10.1

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of  January 1, 2013,  between GSE Systems, Inc. a Delaware corporation with principal executive offices at 1332 Londontown Blvd., Sykesville, MD  21784 (the "Company"), and James Eberle, residing at 645 Quarry Road, Lititz, PA  17543 ("Employee").

 

WITNESSETH

WHEREAS, Employee is currently employed by the Company and the Company desires to enter into an employment agreement (the “Agreement”) with the Employee in order to continue and secure the employment of Employee with the Company, on the terms and conditions contained in this Agreement with the understanding the Employee is being offered secure terms of employment in this Agreement in exchange for Employee’s agreement to the restrictive covenants contained in this Agreement, including a non-compete and non-solicit, among other things.

NOW, THEREFORE, in consideration of the premises, the mutual promises, covenants, and conditions herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:

Section 1.                                Employment.

The Company hereby agrees to continue to employ Employee, and Employee hereby agrees to continue to serve the Company, all upon the terms and subject to the conditions set forth in this Agreement.

Section 2.                                Capacity and Duties.

 

Employee shall be employed in the capacity of Chief Executive Officer of the Company and shall have the duties, responsibilities, and authorities normally performed by the Chief Executive Officer of a company and such other duties, responsibilities, and authorities as are assigned to him by the Board of Directors of the Company (the "Board") so long as such additional duties, responsibilities, and authorities are consistent with Employee's position and level of authority as Chief Executive Officer of the Company. The Employee shall devote substantially all of his business time and attention to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would materially conflict or interfere with the performance of such duties either directly or indirectly. The Employee will be permitted to act or serve as a director, trustee, or committee member of any type of civic or charitable organization as long as such activities do not materially interfere with the performance of the Employee's duties and responsibilities to the Company as provided hereunder.

 

  

1

  

Section 3.                                Term of Employment.

The term of employment of Employee by the Company pursuant to this Agreement shall be for the two-year period (the “Employment Period”) commencing on the date hereof and ending on December 31, 2014 (the “Scheduled Termination Date”), unless sooner terminated in accordance with the provisions of this Agreement.

Section 4.                                Compensation.

During the Employment Period, subject to all the terms and conditions of this Agreement and as compensation for all services to be rendered by Employee under this Agreement, the Company shall pay to or provide Employee with the following:

(a) Base Salary.  The Company shall pay to Employee a base annual salary (the “Base Salary”) at the rate of Three Hundred Twenty Two Thousand Nine Hundred Dollars ($322,900).  The Employee’s Base Salary shall be reviewed at least annually by the  Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) and the Compensation Committee may, but shall not be required to, increase (but not decrease) the Base Salary during the Employment Period.  The Base Salary will be payable at such intervals as salaries are paid generally to other executive officers of the Company.

(b) Bonus.  For each calendar year of the Employment Period, the Employee shall be eligible to earn an annual bonus award (the “Bonus”) of up to 50% of Base Salary, based upon the achievement of annual performance goals established by the Compensation Committee.  The amount of Bonus to be paid to Employee for any year of this Agreement shall be (i) prorated for the number of months which Employee was employed by the Company during such year and (ii) paid on or prior to March 15 of the following year.

(c) Vacation.  Employee shall be entitled to vacation in accordance with the Company's policy for its senior executives.

(d) Automobile.  The Company shall pay the maintenance, gas, and insurance expenses in connection with Employee’s automobile.

(e) Medical and Dental Insurance.  The Company shall pay Employee’s monthly Medical and Dental Insurance premiums in association with Company provided health insurance plans.

(f) Benefit Plans.  Employee shall be entitled to participate in all employee benefit plans maintained by the Company for its senior executives or employees, including without limitation the Company's medical and 401(k) plans.

  

2

  

Section 5.                                Expenses.

The Company shall reimburse Employee for all reasonable expenses (including, but not limited to, continuing education, business travel, and customer entertainment expenses) incurred by him in connection with his employment hereunder in accordance with the written policy and guidelines established by the Company for executive officers.

Section 6.                      Non-Competition, Non-Solicitation, Non-Disparagement.

 

(a) Non-Competition.  Because of the Company’s legitimate business interest as described herein and the good and valuable consideration offered to the Employee, during the Employment Period and for the 12-month period beginning on the last day of the Employee's employment with the Company, the Employee agrees and covenants not to engage in Prohibited Activity within the United States.

 

For purposes of this Section 6, "Prohibited Activity" is activity in which the Employee contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern or any other similar capacity to an entity engaged in the same or similar business as the Company.

 

Nothing herein shall prohibit the Employee from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Employee is not a controlling person of, or a member of a group that controls, such corporation.

 

 

(b) Non-solicitation of Employees. The Employee agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company during the term of this Agreement and the 12-month period beginning on the last day of the Employee's employment with the Company.

 

(c) Non-solicitation of Customers. The Employee understands and acknowledges that because of the Employee's experience with and relationship to the Company, he will have access to and learn about much or all of the Company's customer information. "Customer Information" includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information and other information identifying facts and circumstances specific to the customer.

 

The Employee understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm to the Company.

 

 

The Employee agrees and covenants, during the term of this Agreement and the 12-month period beginning on the last day of the Employee's employment with the Company, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with the Company's current customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company or for purposes of inducing any such customer to terminate its relationship with the Company.

 

 

(d) Non-disparagement. The Employee agrees and covenants that he will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company or its businesses, or any of its employees, officers and directors.

 

  

3

  

Section 7.                                Patents.

Any interest in patents, patent applications, inventions, copyrights, developments, and processes ("Such Inventions") which Employee now or hereafter during the period he is employed by the Company under this Agreement  may own or develop relating to the fields in which the Company or any of its subsidiaries may then be engaged shall belong to the Company; and forthwith upon request of the Company, Employee shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company all his right, title, and interest in and to Such Inventions free and clear of all liens, charges, and encumbrances.

Section 8.                                Confidential Information.

All Confidential Information which Employee may now possess, may obtain during the Employment Period, or may create prior to the end of the period he is employed by the Company under this Agreement  relating to the business of the Company or of any of its customers or suppliers shall not be published, disclosed, or made accessible by him to any other person, firm, or corporation either during or after the termination of his employment or used by him except during the Employment Period in the business and for the benefit of the Company, in each case without prior written permission of the Company. Employee shall return all tangible evidence of  any Confidential Information to the Company prior to or at the termination of his employment. For purposes of this Agreement, “Confidential Information” means any and all information related to the Company or any of its subsidiaries that is not generally known by others with whom they compete or do business.

Section 9.                                Termination.

Except as provided in Section 13, Employee's employment hereunder may be terminated under the following circumstances:

 Death. Employee's employment hereunder shall terminate upon his death.

(b)  Disability. If, as a result of Employee's incapacity due to physical or mental illness, Employee shall have been absent from his duties hereunder on a full-time basis for the entire period of three (3) consecutive months, and within 30 days after a Notice of Termination (as defined in Section 9(e)) is given shall not have returned to the performance of his duties hereunder on a full-time basis, the Company may terminate Employee's employment hereunder.

  

4

  

(c)  Cause. The Company may terminate Employee's employment hereunder for Cause. For purposes of this Agreement, the Company shall have "Cause" to terminate  Employee's employment hereunder upon the occurrence of any of the following (i) the willful and continued failure by Employee to substantially perform his duties or obligations hereunder (other than any such failure resulting from Employee's incapacity due to physical or mental illness), after written demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes Employee has not substantially performed his duties or obligations, (ii) the willful engaging by Employee in misconduct which, in the reasonable opinion of the Board of the Company, will have a material adverse effect on the reputation, operations, prospects or business relations of the Company, (iii) the conviction of Employee of any felony or the entry by Employee of any plea of nolo contendere in response to an indictment for a crime involving moral turpitude, (iv) Employee abuses alcohol, illegal drugs or other controlled substances which impact Employee’s performance of his duties or (v) the material breach by Employee of a material term or condition of this Agreement.  For purposes of this paragraph, no act, or failure to act, on Employee's part shall be considered "willful" unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Cause without the following: (i) reasonable notice to Employee setting forth the reasons for the Company's intention to terminate for Cause, (ii) an opportunity for Employee, together with his counsel, to be heard before the Board, and (iii) delivery to Employee of a Notice of Termination in accordance with Section 9(e).

(d)  Termination Without Cause.   The Employment Period and the Employee’s employment hereunder may be terminated by either the Company or the Employee at any time and for any reason; provided that, unless otherwise provided herein, either party shall be required to give the other party at least 30 days advance written notice of any termination of the Employee’s employment.

(e)  Notice of Termination. Any termination of Employee's employment (other than termination pursuant to Section 9(a)) shall be communicated by a Notice of Termination given by the terminating party to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated.

(f)  Date of Termination.  "Date of Termination" shall mean (i) if Employee's employment is terminated by his death, the date of his death, (ii) if Employee's employment is terminated pursuant to Section 9(b), 30 days after Notice of Termination is given (provided that Employee shall not have returned to the performance of his duties on a full-time basis during such 30-day period), and (iii) if Employee's employment is terminated for any other reason, the date specified in the Notice of Termination, which shall not be earlier than the date on which the Notice of Termination is given.

  

5

  

Section 10.                                       Compensation upon Termination or During Disability.

(a)  During any period that Employee fails to perform his duties hereunder as a result of incapacity due to physical or mental illness ("disability period"), Employee shall continue to receive his full salary at the rate then in effect for such period until his employment is terminated pursuant to Section 9(b), provided that payments so made to Employee during the disability period shall be reduced by the sum of the amounts, if any, payable to Employee at or prior to the time of any such payment under disability benefit plans of the Company and which were not previously applied to reduce any such payment.

(b)  If Employee's employment shall be terminated for Cause, the Company shall pay Employee his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given.

(c)  If Employee’s employment shall be terminated by the Company for a reason other than (i) Death, (ii) Disability or (iii) Cause, upon Employee’s execution of a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the Company (the “Release”) and such Release becoming effective within 21 days following the Termination Date,  the Employee shall be entitled to receive his full salary and  benefits for a period equal to the greater of (1) the number of months then remaining on the term of this Agreement and (2) 12 months. Such salary and benefits shall be paid at such intervals as salaries are paid generally to other executive officers of the Company.  In addition, Employee shall also be entitled to receive a payment equal to the product of (I) the Bonus, if any, that the Employee would have earned for the calendar year in which the Date of Termination occurs had he been employed as of the last day of such year, based on the Company’s actual results of operations for such year and (II) a fraction, the numerator of which is the number of days the Employee was employed by the Company during the year of termination and the denominator of which is the number of days in such year. This amount shall be paid on the date that annual bonuses are paid to similarly situated employees, but in no event later than two-and-a-half (2 1/2) months following the end of the calendar year in which the Date of Termination occurs.  Finally, all options to purchase the Company's common stock granted to Employee under the Company's option plan or otherwise shall immediately become fully vested and shall terminate on such date as they would have terminated if Employee's employment by the Company had not terminated.

(d)  If Employee’s employment is terminated at the Scheduled Termination Date of this Agreement or if Employee continues as an employee after the Scheduled Termination Date and Employee’s employment is terminated by the Company for a reason other than (i) the Death or Disability of the Employee or (ii) Cause, Employee shall be entitled to receive his full salary and benefits for a period of 12 months from the date of termination.

  

6

  

Section 11.                                       Accelerated Vesting of Options Upon Change of Control.

After the date of this Agreement, in the event of a Change of Control (as defined below) of the Company, the options granted to Employee under the Company's option plan or otherwise shall become fully vested on the day immediately prior to the date such Change of Control shall be deemed to have occurred, and any conditions to the Employee’s entitlement to such options under the Company’s option plan or otherwise shall be deemed to have been satisfied.

For purposes of this Agreement, a “Change in Control” of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:

(a)  Any person (other than a person in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a company owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of voting securities of the Company) becomes the beneficial owner, directly or indirectly, of securities of the Company representing a majority of the combined voting power of the Company’s then outstanding securities; or

(b)  The stockholders of the Company approve: (x) a plan of complete liquidation of the Company (which includes a termination and liquidation of all Employee’s rights under any arrangement governed by Section 409A of the Internal Revenue Code of 1986, as amended (“Code”); or (y) an agreement for the sale or disposition of all or substantially all the Company’s assets; or (z) a merger, consolidation, or reorganization of the Company with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a majority of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.

For purposes of this definition of Change in Control, “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Act of 1934, as amended (the “1934 Act”), and used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof, and “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and regulations under the 1934 Act.

Section 12.                                       Successors; Binding Agreement.

This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of the Company and permitted successors and assigns.

  

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Section 13.                                       Severance upon Change of Control.

In the event of a Change of Control, Employee may terminate this Agreement within one year of such Change in Control for Good Reason (as defined herein).  Upon termination for Good Reason, Employee shall, for a period of 18 months from the date of his termination, continue to receive salary and all benefits (including medical, dental and life insurance coverage and any other Company-provided benefits) that Employee is receiving as of the date (the “Effective Date”) the Change of Control occurs.    Such salary and benefits shall be paid at such intervals as salaries are paid generally to other executive officers of the Company. In addition, the Employee shall also be entitled to receive on the Date of Termination an amount, payable in one lump sum,  equal to the average of the Bonus amounts paid to Employee for the two years prior to the year in which the Change of Control takes place.

“Good Reason” shall mean that any of the following has occurred: (a) without Employee’s prior written consent, Employee’s duties, responsibilities or authority become  materially reduced as compared to those of Employee’s current position; (b) Employee’s annual base salary (as the same may be increased at any time hereafter) and bonus programs are reduced; (c) Employee’s benefits (including medical, dental and life insurance coverage and any other Company-provided benefits to which Employee is entitled as of the Effective Date) are either discontinued or materially reduced; (d) Employee’s primary office or location is moved more than fifty (50) miles from Employee’s current office or location; or (e) either the Company or any successor company materially breaches this Agreement.  In the event of Employee’s decision to terminate employment for Good Reason, Employee must give notice to Company of the existence of the conditions giving rising to the termination for Good Reason within ninety (90) days of the initial existence of the conditions.  Upon such notice, Company shall have a period of thirty (30) days during which it may remedy the conditions (“Cure Period”).  If the Company fails to cure the conditions constituting the Good Reason during the Cure Period to Employee’s reasonable satisfaction, Employee’s termination of employment must occur within a period of ninety (90) days following the expiration of the Cure Period in order for the termination to constitute a termination pursuant to Good Reason for purposes of this Agreement.

Section 14.                                       No Third Party Beneficiaries.

This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement (except as provided in Section 12).

Section 15.                                       Fees and Expenses.

The Company shall pay all reasonable legal fees and related expenses (including the costs of experts, evidence, and reasonable attorney’s fees) incurred by Employee as a result of a contest or dispute relating to this Agreement if such contest or dispute is settled or adjudicated on terms that are substantially in favor of Employee. In addition, the Company shall pay Employee interest, at the prevailing prime rate, on any amounts that are determined to be payable to Employee hereunder that are not paid when due.

  

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Section 16.                                       Representations and Warranties of Employee.

Employee represents and warrants to the Company that (a) Employee is under no contractual or other restriction or obligation which is inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the other rights of the Company hereunder and (b) Employee is under no physical or mental disability that would hinder his performance of duties under this Agreement.

Section 17.                                       Life Insurance.

If requested by the Company, Employee shall submit to such physical examinations and otherwise take such actions and execute and deliver such documents as may be reasonably necessary to enable the Company, at its expense and for its own benefit, to obtain life insurance on the life of Employee. Employee has no reason to believe that his life is not insurable with a reputable insurance company at rates now prevailing in the City of Baltimore for healthy men of his age.

Section 18.                                       Modification.

This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.

Section 19.                                       Notices.

Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt to the party to whom it is to be given at the address of such party set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 19).

Section 20.                                       Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without giving effect to conflict of laws.  Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Maryland.  The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

  

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Section 21.                                        409A of the Code.

This Agreement is intended to comply with the requirements of Section 409A of the Code or any exemption from Section 409A of the Code, and shall in all respects be administered in accordance with and interpreted to ensure compliance with Section 409A of the Code.  Employee’s termination of employment under this Agreement shall be interpreted in a manner consistent with the separation from service rules under Section 409A of the Code.  For purposes of Section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment and the right to a series of payments under this Agreement shall be treat as a right to a series of separate payments.  In no event shall Employee, directly or indirectly, designate the calendar year of the payment.  Furthermore, if, at the time of termination of employment with the Company, Company has stock which is publicly traded on an established securities market and Employee is a “specified employee” (as defined in Section 409A of the Code) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under Section 409A of the Code, then Company shall postpone the commencement of the payment of such payment or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise paid within the short-deferral exception under Section 409A of the Code and are in excess of the lessor of two (2) times (i) Employee’s then annual compensation or (ii) the limit on compensation then set forth in Section 401(a)(17) of the Code, until the first payroll date that occurs after the date that is six months following Employee’s separation from service with the Company (within the meaning of Section 409A of the Code).  The accumulated postponed amount shall be paid in a lump sum payment within ten days after the end of the six month period.

Section 22.                                           Survival

 

Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.

 

Section 23.                                           Acknowledgment of Full Understanding.

 

THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS AGREEMENT.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

GSE SYSTEMS, INC.

	
By:

	
/s/ Lawrence M. Gordon

	  	
April 22, 2013

	  	
Lawrence M. Gordon

	  	
Date

	  	
Senior Vice President and General Counsel

	  	  
	  	  	  	  
	  	
/s/ James Eberle

	  	
April 22, 2013

	  	
James Eberle

	  	
Date

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