Document:

EX-10.3

 Exhibit 10.3 
  

	**	Indicates that certain information contained herein has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  

	****	Indicates that the amount of information omitted was a page or more in length, and such information has been filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with
respect to the omitted portions. 

  

			
	Private & Confidential	  	EXECUTION VERSION

 DATED _24_October 2014 

VERNALIS (R&D) LTD (1) 

and 
 CTI BIOPHARMA
CORP. (2) 
  
  

Amended and restated exclusive licence agreement covering 

BB-76163 and certain Other Compounds for use in Human Diseases 
  

 

  
 Confidential Treatment
Requested 

 CONTENTS 
  

					
	Clause	  	Page
		  		  	
	1	  	Definitions	  	2
	2	  	Licence agreement and transfer of the Materials	  	5
	3	  	Duration	  	6
	4	  	Vernalis’ Obligations	  	6
	5	  	Royalties	  	6
	6	  	Accounting, records and payment	  	7
	7	  	Confidentiality	  	8
	8	  	Representations, Warranties and Covenants	  	9
	9	  	Withholding Tax	  	11
	10	  	Termination	  	11
	11	  	General	  	12
	12	  	Notices	  	13
	13	  	Publicity	  	13
	14	  	Law	  	14
	15	  	Jurisdiction	  	14

 Schedules 
  

					
	 Schedule 1 The Patent Rights
	  	 	2	  
	 Schedule 2 The Materials
	  	 	3	  
	 Schedule 3 The Documentation
	  	 	4	  
	 Schedule 4 Other Compounds
	  	 	5	  

  
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 THIS AGREEMENT is amended and restated with effect from 24 October 2014 and is made 

BETWEEN 
  

	(1)	VERNALIS (R&D) LTD. (Registered in England No. 1985479) whose registered office is at 100 Berkshire Place, Wharfedale Road, Winnersh, Berkshire, RG41 5RD, England (“Vernalis”); and

  

	(2)	CTI BIOPHARMA CORP. (formerly known as Cell Therapeutics, Inc.) (incorporated in the State of Washington) whose principal place of business is at 3101 Western Avenue, Suite 600, Seattle, WA 98121 USA
(“CTI”). 

 BACKGROUND: 
  

	(A)	Vernalis (Oxford) Ltd and Chroma Therapeutics Ltd (“Chroma”) entered into an exclusive licence agreement dated 24 November 2003 (the “Original Exclusive Licence”)
under which Chroma acquired certain rights under the Patent Rights, the Documentation and the Materials. 

  

	(B)	On 18 December 2003 Vernalis (Oxford) Ltd changed its name to Vernalis (R&D) Ltd. 

  

	(C)	The Original Exclusive Licence was amended by an Amendment No. 1 dated 30 March 2007 (the “First Amendment”), pursuant to which the licence granted under the Original Exclusive Licence was
extended to include certain further compounds (“Other Compounds”, as further defined below). 

  

	(D)	On or about 14 March 2011, Chroma granted to CTI a sublicence under its rights in the Patent Rights and Documentation. 

  

	(E)	The Original Exclusive Licence was further amended by an Amendment No. 2 dated 11 March 2011(the “Second Amendment”), pursuant to which the licence granted under the Original Exclusive
Licence was extended to include a non-exclusive licence to manufacture under a certain additional US Patent Right and to extend certain rights of Chroma under the Original Licence Agreement to Chroma’s licensee, CTI. 

 

	(F)	On the date hereof, Chroma, Vernalis and CTI entered into a novation agreement pursuant to which Chroma novated its rights and obligations under the Original Licence Agreement to CTI. 

 

	(G)	Vernalis and CTI wish to amend and restate the Original Licence Agreement to reflect the change in identity of the parties thereto and the change in the status of their relationship (with CTI no longer being a
sublicensee of Vernalis), to account for the passage of time, to reflect the terms of the First Amendment and the Second Amendment and to account for certain other changes set forth herein. 

  
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 In consideration of the mutual covenants and undertakings set out below THE PARTIES AGREE as
follows: 
  

	1	Definitions 

  

	1.1	In this Agreement unless the context otherwise requires: 

 “Accounting Dates”
means 1 January, 31 March, 30 June and 30 September in each Year during the term of this Agreement; 

“Affiliate” means any entity which (directly or indirectly) owns, is owned by or is under common ownership with
a party to this Agreement or any entity actually controlled by, controlling or under common control with a party to this Agreement. For the purposes of this definition “Ownership” or “Control” shall mean where such entity owns or
controls 50% (fifty per cent) or more of the equity-conferring voting rights and/or otherwise has the ability to direct the business affairs of another entity, 

“BB-76163” means the compound 2S-2R-(S-Hydroxy-hydroxycarbamoyl-methyl)-4-methylpentanoylamino-2-phenylethanoic acid
cyclopentyl ester ; 
 ** 
 **

 “Business Day” means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the
City of London; 
 “Claim” has the meaning set out in Clause 8.4; 

“Commencement Date” means the date of this Agreement; 

“Competent Authority” means any national or local agency, authority, department, inspectorate, minister, ministry official,
parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of
First Instance and the European Court of Justice, including any exchange on which the securities of a Party are listed and, in the case of Vernalis, UK Listing Authority; 

“Compounds” means BB-76163 **; 

“Confidential Information” means secret or confidential commercial, financial, marketing, technical or other information
(including without limitation, information in or relating to unpatented inventions or computer programs), know-how, trade secrets and other confidential information whatsoever in any form or medium whether disclosed orally or in writing before or
after the date of this Agreement, together with any reproductions of such information in any form or medium or any part(s) of this information (and “confidential” means that the information, either in its entirety or in the precise
configuration or assembly of its components, is not publicly available); 

  
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 “CTI Parties” means CTI, its Affiliates, sub-licensees, agents and distributors
(and “CTI Party” shall have a corresponding meaning); 
 “Documentation” means all documentation described
in Schedule 3; 
 “Exploit” means to develop, make, have made, use, have used, import, have imported, market,
advertise, distribute, offer for sale and sell or have marketed, advertised, distributed and sold; 
 “Field” means the
diagnosis, prevention and treatment of any disease or condition in humans or animals; 
 “First Commercial Sale” means the
first commercial sale by any of the CTI Parties in any country of a Product after grant of a Marketing Authorisation in that country for such Product; 

“Further Royalties” has the meaning set out in Clause 5.1; 

“Group” means in relation to any company that company and every other company which is for the time being a subsidiary
undertaking or parent undertaking of that company or a subsidiary undertaking of any such parent undertaking (and the terms “subsidiary undertaking” and “parent undertaking” shall have the meanings given to them by
Section 1162 of, and Schedule 7 to, the Companies Act 2006); 
 “Indemnified Party” has the meaning set out in
Clause 8.4; 
 “Indemnifying Party” has the meaning set out in Clause 8.4; 

“Independent Third Party” means any independent third party (other than the CTI Parties or Vernalis); 

“Marketing Authorisation” means any approval (including all applicable pricing and governmental reimbursement approvals)
required from the relevant Regulatory Authority or Competent Authority to market and sell a Product in a particular country; 

“Materials” means the stocks outlined in Schedule 2; 

“Net Sales” means **. 

Should the Product be sold in a form containing in addition to simple Product at least one other ingredient, product, device, equipment or
component (any such Product being a “Combination Product”), Net Sales for such Combination Product will be calculated by **. 

“Other Compounds” has the meaning set out in Clause 2.1A; 

  
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 “Party” means each of the parties to this Agreement, CTI and Vernalis, and
“Parties” means both CTI and Vernalis; 
 “Patent Costs” means renewal fees and the usual costs normally
associated with administering and maintaining the Patent Rights by Vernalis; 
 “Patent Rights” means the patents and patent
applications listed in Schedule 1, all priority applications for them and all further applications derived from them or their priority applications throughout the world, together with patents issuing from any such applications and any future
divisional applications and patents, refilings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any
supplementary protection certificates and equivalent protection rights in respect of any of them; 
 “Products” means all
products containing BB-76163 or any of the Other Compounds; 
 “Regulatory Authority” means any national, supranational
(e.g., FDA or the European Commission, the Council of the European Union, the European Agency for the Evaluation of Medicinal Products), regional, state or local regulatory agency, department, bureau, commission, council or other governmental body
in each country of the world involved in the granting of a Marketing Authorisation for a Product; 
 ** 

“Territory” means the world; 

“Third Party” or “Third Parties” means any entity or person other than Vernalis or the CTI Parties; 

“Valid Claim” means a claim of a patent application or an issued and unexpired patent included within Patent Rights, which has
not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or un-appealed within the time allowed for appeal, and which has not been admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise; 
 “Withholding Tax” has the meaning set out in
Clause 9.1; and 
 “Year” means a period commencing on the Commencement Date and on each successive anniversary of the
Commencement Date and ending on the day before each successive anniversary of the Commencement Date. 
  

	1.2	The headings to Clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement. 

  
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	1.3	Words imparting the singular shall include the plural and vice versa. Words imparting a gender include every gender and references to persons include an individual, company, corporation, firm or partnership.

  

	1.4	All sums payable hereunder are exclusive of VAT or any other applicable tax or duty payable upon such sums which shall be added if appropriate at the rate prevailing at the relevant tax point. 

 

	1.5	The words and phrases “other”, “including” and “in particular” shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding word
where a wider construction is possible. 

  

	1.6	References to any statute or statutory provision shall include (i) any subordinate legislation made under it, (ii) any provision which it has modified or re-enacted (whether with or without modification), and
(iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification). 

  

	2	Licence agreement and transfer of the Materials 

  

	2.1	Effective as of the Commencement Date and in consideration of the royalties described in Clause 5, Vernalis hereby grants CTI, with the right to grant sub-licences through multiple tiers: 

 

	2.1.1	an exclusive licence under the Patent Rights to Exploit BB-76163 in the Field; 

  

	2.1.2	an exclusive licence under the copyright in the Documentation to Exploit BB-76163 in the Field; 

  

	2.1.3	a non-exclusive licence under the copyright in ** to manufacture BB-76163 in accordance with the route described in that study report; and 

 

	2.1.4	a non-exclusive licence under US Patent 5912360 to manufacture BB-76163 (for so long as such patent is maintained by Vernalis). 

The licences in Clauses 2.1.3 and 2.1.4 shall be ancillary (only) to the main licences under Clauses 2.1.1 and 2.1.2 and in particular shall
not extend CTI’s rights beyond BB-76163 (and Other Compounds) or the Field. 
 CTI will be
responsible for the performance of its sub-licensees and ensure that such sub-licenses contain covenants by the sub-licensees to observe and perform conditions equivalent to those contained in this Agreement
insofar as the same are applicable. 
  

	2.1	A In consideration of the royalties described in Clause 5, Vernalis hereby grants to CTI, with a right to grant sub-licences through multiple tiers, an exclusive licence under the Patent Rights to Exploit those
compounds listed in Schedule 4 (the “Other Compounds”) in the Field. CTI further agrees that the provisions of final paragraph of Clause 2.1.4 in relation to performance of sub-licences shall apply to this licence
of Other Compounds. 

  
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	2.2	Following notification by Vernalis to CTI that Vernalis is able without causing a default or requiring consent under any other existing contractual obligation to an Independent Third Party or any obligation under any
new agreement with **, to assign the Patent Rights the Parties shall discuss whether to effect such assignment. Such assignment would involve **. Such assignment would generally have similar provisions to this agreement (including the royalty
provisions) but would also, inter alia, have provisions to protect Vernalis’ right to a royalty which would include **. 

  

	2.3	Vernalis warrants that it has delivered to Chroma, under the Original Licence Agreement, the Documentation and the Materials. 

  

	3	Duration 

 This Agreement shall come into force on the Commencement Date and shall continue in
force, unless terminated in accordance with Clause 10, until the expiry of the royalty obligations hereunder. 
  

	4	Vernalis’ Obligations 

  

	4.1	Vernalis will maintain the Patent Rights until such time that it is able to assign them to CTI. CTI will reimburse Vernalis for ** of the Patent Costs incurred by Vernalis whilst one other party apart from Vernalis and
CTI has an interest in the patents or ** of the Patent Costs incurred by Vernalis whilst two other parties apart from Vernalis and CTI have such an interest. 

  

	4.2	Vernalis will not and shall procure that its Affiliates will not Exploit BB-76163. 

  

	4.3	Vernalis will not grant a licence to Exploit BB-76163 outside the Field. 

  

	5	Royalties 

  

	5.1	CTI shall pay Vernalis royalties in an amount equal to the following percentages of annual Net Sales of Products: 

** 
 ** 

** 
 CTI shall also pay Vernalis
further royalties (“Further Royalties”) that are equivalent sums to **. 
  

	5.2	All royalties other than Further Royalties due to Vernalis pursuant to this Agreement shall be payable on a country-by-country basis commencing with the First Commercial Sale in that country and continuing until 10
years from launch date in each country or until the expiry of the last Valid Claim to expire in that country, whichever is the longer. Further Royalties shall be payable for so long as **. 

  
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	6	Accounting, records and payment 

  

	6.1	The royalties and Further Royalties payable under Clause 5 shall be calculated by CTI ** and CTI shall pay the amount of any royalties and Further Royalties owing within **. 

 

	6.2	With each payment of royalties CTI shall deliver to Vernalis a statement in writing showing the amount of such royalties and giving all reasonable particulars of how such royalties have been calculated.

  

	6.3	All sums to be paid by CTI under this Agreement shall be in Pounds Sterling or Euros should Euros ever replace Pounds Sterling and payment shall be in Pounds Sterling or Euros should Euros ever replace Pounds Sterling
by electronic transfer with any applicable charges on such payments being at CTI’s expense. Where it is necessary to calculate the exchange rate for the purposes of payment of any sums due under this Agreement, the exchange rate used shall be
the spot rate quoted by Barclays Bank plc at close of business on the Business Day preceding the due date for payment of each such sum. 

  

	6.4	Vernalis may ** by notice in writing require that CTI provide a certificate from an independent auditor appointed by Vernalis and agreed by CTI (such agreement not to be unreasonably withheld) verifying the statements
delivered by CTI under Clause 6.2 hereof, (such certificates to be provided at ** expense save in the case where an under-payment of royalties of ** or more is shown in which event such certificate shall be provided at the expense of **).

  

	6.5	In the event that either Party discovers that an under- or over -payment of the royalty has occurred they will promptly notify the other and the amount of any under payment will be paid with, or the amount of any over
payment will be deducted from, the next payment of royalty due under this Agreement. 

  

	6.6	CTI shall at all times keep or cause or procure to be kept and for at least ** retain or cause or procure to be retained accurate accounts and full supporting documentation of all Products sold by CTI Parties and the
Net Sales price thereof containing all data reasonably required for the computation and verification of royalties payable under this Agreement. CTI shall give to or procure for Vernalis or its nominated representative or an Independent Third Party
reasonably acceptable to CTI every reasonable facility at any time and from time to time during normal business hours to inspect all accounts, records and supporting documentation kept in accordance with this Clause 6.6 and to make copies or to
take extracts from these accounts, records and supporting documentation. Such inspection shall not take place more than **. Any Independent Third Party used by Vernalis pursuant to this Clause 6.6 shall not disclose to Vernalis any Confidential
Information belonging to CTI but shall restrict his or her report to details of any under or over payment discovered as a result of his inspection and shall be obliged by Vernalis to enter a confidentiality agreement providing that such Independent
Third Party shall not, except to the extent expressly envisaged in this Clause 6.6, use or disclose any Confidential Information belonging to CTI. 

  
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	6.7	If CTI defaults in payment of any sum due to Vernalis hereunder CTI shall pay interest to Vernalis for the period of arrears on the amount due with interest accruing at the rate of **, at the time of such default in
payment, by Barclays Bank plc. Vernalis acknowledges that prior to the Commencement Date it has received from Chroma, under the Original Licence Agreement, (i) the payment of ** due it under Clause 2.1 of the Original Licence Agreement,
and (ii) the payment of ** due it under Clause 2.1A of the original Licence Agreement (as amended by the First Amendment). 

  

	7	Confidentiality 

  

	7.1	CTI shall keep and procure to be kept secret and confidential any Confidential Information comprised in the Documentation, and shall not use nor disclose the same save for the purposes of the proper performance of this
Agreement or to potential investors or their consultants under confidentiality provisions no less stringent than those currently in place between the two Parties. Vernalis shall from the Commencement Date of this agreement keep and procure to be
kept secret and confidential any Confidential Information of CTI and the Confidential Information comprised in the Documentation related to BB-76163, and shall not use nor disclose the same save for the purposes of the proper performance of this
Agreement. Notwithstanding the foregoing, each Party may disclose Confidential Information of the other Party in connection with a due diligence process associated with any future financing by such Party or the negotiation or exploration of a
possible strategic transaction involving such Party; provided that such disclosure is made in the course of such diligence, negotiation or exploration pursuant to confidentiality obligations consistent with those set forth in this Agreement.

  

	7.2	The obligations of confidentiality in this Clause 7 shall not extend to any matter which the Party wishing to be relieved of the obligation, or, in the case of Clause 7.2(b), CTI, can show: 

 

	 	(a)	is in, or has become part of, the public domain other than as a result of its breach of the obligations of confidentiality under this Agreement; 

 

	 	(b)	was in its written records prior to the signing of the Confidentiality Agreement between Vernalis (Oxford) Ltd and Chroma dated 16th May 2003; 

 

	 	(c)	was independently disclosed to it other than under a duty of confidentiality; or 

  

	 	(d)	is required under any applicable law, or by order or the rules and regulations of a court, governmental body or Competent Authority of competent jurisdiction. 

 

	 	(e)	     

  

  
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	8	Representations, Warranties and Covenants 

  

	8.1	Each Party hereby represents and warrants to the other Party as of the Commencement Date that: 

  

	 	(a)	it is a corporation duly organised, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated; 

 

	 	(b)	it has the corporate power and authority and the legal right to enter into this Agreement free from any conflicting right owed to a Third Party and to perform its obligations hereunder; 

 

	 	(c)	it has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder and that this Agreement has been duly executed and
delivered on behalf of each Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms; 

  

	 	(d)	the execution and delivery of this Agreement and the performance of such Party’s obligations do not constitute a default or require any consent under any other contractual obligation of such Party.

  

	8.2	Vernalis represents and warrants that: 

  

	 	(a)	as at **, and with respect to the following matters as such matters relate to **: 

  

	 	(i)	Vernalis is the registered proprietor/beneficial owner of the Patent Rights, , and owner of the Documentation and the Materials in each case free from encumbrances or other Third Party rights, except for the obligation
to pay the Further Royalties **; and its records state that Vernalis has paid all fees relating to the Patent Rights on or before their due date for payment; 

  

	 	(ii)	The Patent Rights are subsisting and after a review by Vernalis of its records (only) Vernalis does not know of, or of any basis for, any claim for revocation, amendment, opposition or rectification or any challenge to
ownership or entitlement in respect of any of the Patent Rights (due to non-payment of renewal or other fees or for any other reason); 

  

	 	(iii)	No Third Party has alleged that the use by Vernalis of the Documentation and Materials infringes, either directly or through any other person, its intellectual property rights. To the best of Vernalis’ knowledge
and belief, the use by Vernalis of the Documentation and Materials is not infringing and nor has it ever infringed, either directly or through any other person, the intellectual property rights of any Third Party; 

 

	 	(iv)	No claim under sections 39 to 43 Patents Act 1977 or their equivalents in any territory has been made in respect of any of the Patent Rights. 

 

	 	(b)	as at **: 

  

	 	(i)	Vernalis is the registered proprietor/beneficial owner of the Patent Rights, and its records state that Vernalis has paid all fees relating to the Patent Rights on or before their due date for payment; and

  
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	 	(ii)	No Third Party has alleged that the use by Vernalis of the Documentation and Materials infringes, either directly or through any other person, its intellectual property rights. 

 

	8.3	Nothing in this Agreement or any licence granted hereunder is to be construed as a representation or warranty that BB-76163 or any Product shall be or is capable of being successfully developed or granted regulatory
approval by a Regulatory Authority anywhere in the world for the treatment of any indication within the Field; any of the Materials are fit for CTI’s intended use; or that any patent applications included in Patent Rights will proceed to grant.

  

	8.4	Each Party (the “Indemnifying Party”) shall defend, indemnify and hold harmless the other Party, its directors, officers, employees, successors and assigns (the “Indemnified
Party”), from any loss, damage or liability, including reasonable attorney’s fees, relating to any claim, lawsuit or other action by a Third Party that arises out of, relates to or results from the breach by the Indemnifying
Party of any of its representations, warranties or covenants contained within this Agreement (hereinafter a “Claim”). 

  

	8.5	If as regards any Claim it is shown by evidence acceptable in a court of law having jurisdiction over the subject matter and meeting the appropriate degree of proof for such action, that the Claim was in whole or in
part the result of the negligence, failure to reasonably act or wilful misconduct of any employee or agent of the Indemnified Party or the conduct of any activity to be performed by the Indemnified Party pursuant to this Agreement, then the
Indemnifying Party shall not be obligated under Clause 8.4, for that Claim. 

  

	8.6	The Indemnifying Party shall have no obligation under Clause 8.4 unless the Indemnified Party: 

  

	 	(a)	gives the Indemnifying Party prompt written notice of any Claim for which it seeks to be indemnified under this Agreement; provided, however, that the failure to timely give notice of a Claim shall not relieve the
Indemnifying Party of any liability that it may have to any Indemnified Party, except to the extent that the Indemnifying Party demonstrates that such failure has a material prejudicial effect on the defenses or other rights available thereto with
respect to such Claim; 

  

	 	(b)	the Indemnifying Party is granted full authority and control over the defence including settlement, against such Claim; and 

  

	 	(c)	the Indemnified Party co-operates fully with the Indemnifying Party and its agents in defence of such Claim at the sole cost and expense of the Indemnifying Party. 

 

	8.7	The Indemnified Party shall have the right to participate in the defence of any such Claim referred to in this Clause 8 utilising attorneys of its choice at its own cost and expense, provided, however, that the
Indemnifying Party shall have full authority and control to handle any such Claim, including any settlement or other disposition thereof, for which the Indemnified Party seeks indemnification under Clause 8.4. 

  
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	9	Withholding Tax 

  

	9.1	CTI shall be entitled to deduct tax from the royalty payable to Vernalis under Clause 5 (“Withholding Tax”) above provided that: 

 

	 	(a)	CTI shall pay over such Withholding Tax to the relevant revenue authority and shall provide to Vernalis such documentary evidence as Vernalis may reasonably require regarding (i) the amount so deducted and
(ii) evidence of payment to such authority; and 

  

	 	(b)	CTI shall provide to Vernalis, such assistance as Vernalis may reasonably require (including submission of documents to relevant revenue authorities) to obtain a repayment of the Withholding Tax or (as the case may be)
to obtain the benefit of such Withholding Tax whether by credit against taxes or otherwise. 

  

	10	Termination 

  

	10.1	CTI may terminate this Agreement upon 3 months’ notice if it believes that the continued development of BB-76163 or any of the Other Compounds is not commercially viable. Upon termination, all Documentation and
unused Materials will be returned to Vernalis. 

  

	10.2	If at any time either Party shall become insolvent and shall cease to carry on its business or shall go into liquidation, whether compulsory or voluntary (other than a voluntary liquidation for the purpose of
reconstruction or amalgamation), or shall have a receiver appointed over the whole or any part of its assets or shall enter into any arrangement or composition with its creditors or become bankrupt or enter into a non-voluntary corporate
rehabilitation or corporate reorganisation then, and in any of the foregoing events, the other Party shall be entitled to terminate this Agreement forthwith by notice in writing. 

 

	10.3	If CTI has not paid Vernalis any sum due hereunder and Vernalis has given CTI written notice of CTI’s default then Vernalis shall be entitled to terminate this Agreement forthwith by notice in writing at any time
when the sum due is still unpaid and ** have elapsed since the notice of default and ** have elapsed since the due date for payment. 

  

	10.4	This Agreement may be terminated by either Party if the other Party is in material breach of its obligations hereunder and (i) has not cured such breach within ** after written notice requesting cure of the breach
with reasonable detail of the particulars of the alleged breach, or (ii) within ** of receiving notice has not initiated actions reasonably expected to cure the cited failure and thereafter diligently pursued such actions to cure the failure
(even if requiring longer than the ** set forth in this subsection). 

  

	10.5	Upon termination of this Agreement for whatsoever reason under this Clause 10 the licences granted to CTI under this Agreement shall terminate with the effect that all
sub-licences granted by CTI or any of its Affiliates shall also terminate. 

  
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	11	General 

  

	11.1	Nothing in this Agreement shall create, or be deemed to create, a partnership or joint venture or relationship of employer and employee or principal and agent between the Parties and no employee of either Party shall be
deemed to be or have become an employee of the other Party. 

  

	11.2	This Agreement may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed; provided,
however, that either Party may, without such consent, assign this Agreement together with all of its rights and obligations hereunder to a successor in interest in connection with the transfer or sale of all or substantially all of its business to
which this Agreement relates, or in the event of its merger or consolidation or similar transaction, subject to the assignee or successor undertaking in writing to the non-assigning Party to be bound by the terms of this Agreement. Notwithstanding
the foregoing, each Party may assign its rights and obligations under this Agreement within its Group, provided that CTI may only do so after providing a guarantee in any reasonable form requested by Vernalis in respect of CTI’s Group assignee.
Any purported assignment in violation of the preceding sentences shall be void. Any permitted successor or permitted assignee shall assume and be bound by all obligations of its assignor or predecessor under this Agreement. 

 

	11.3	This Agreement, together with the Confidentiality Agreement between CTI, Vernalis and Chroma of February 19, 2014, contains the entire agreement between the Parties in relation to its subject matter. The Parties
irrevocably and unconditionally waive any right they may have to claim damages for, and/or to rescind this Agreement because of breach of any warranty not contained in this Agreement, or any misrepresentation whether or not contained in this
Agreement, unless such misrepresentation was made fraudulently. 

  

	11.4	No purported alteration or variation of this Agreement shall be effective unless it is in writing, refers specifically to this Agreement and is signed by a director of each of the Parties to this Agreement.

  

	11.5	The rights and remedies of either Party in respect of this Agreement shall not be diminished, waived or extinguished by the granting of any indulgence, forbearance or extension of time granted by such Party to the other
nor by any failure of, or delay by the said Party in ascertaining or exercising any such rights or remedies. Any waiver of any breach of this Agreement shall be in writing. The waiver by either Party of any breach of this Agreement shall not prevent
the subsequent enforcement of that provision and shall not be deemed to be a waiver of any subsequent breach of that or any other provision. 

  

	11.6	If at any time any part of this Agreement (including any one or more of the Clauses of this Agreement or any sub-Clause or paragraph or any part of one or more of these Clauses) is held to be or becomes void or
otherwise unenforceable for any reason under any applicable law, the same shall be deemed omitted from this Agreement and the validity and/or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired
as a result of that omission. 

  
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	11.7	This Agreement may be entered into in the form of two counterparts, each executed by one of the Parties but, taken together, executed by all, and, provided that both the Parties shall so enter into the Agreement, each
of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. 

  

	11.8	Each of the Parties shall, and shall use their reasonable endeavours to procure that any necessary Third Parties shall, execute and deliver to the other Party such other instruments and documents and take such other
action as is necessary to fulfil the provisions of this Agreement in accordance with its terms. 

  

	11.9	The Contracts (Rights of Third Parties) Act 1999 shall not apply to this Agreement. No person who is not a Party to this Agreement (including any employee, officer, agent, representative or subcontractor of either
Party) shall have the right (whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise) to enforce any term of this Agreement which expressly or by implication confers a benefit on that person without the express prior agreement in
writing of the Parties which agreement must refer to this Clause. 

  

	12	Notices 

  

	12.1	Any notices sent under this Agreement must be in writing and may be served by personal delivery or by sending the notice by registered post or facsimile transmission at the address given above or at such other address
as the relevant Party may give for the purpose of service of notices under this Agreement and every such notice shall be deemed to have been served upon delivery if served by hand or at the expiration of 3 Business Days after despatch of the
same if delivered by registered post or at ten hours am local time of the recipient on the next Business Day following despatch if sent by facsimile transmission. 

 

	12.2	To prove service of any notice it shall be sufficient to show in the case of a notice delivered by hand that the same was duly addressed and delivered by hand and in the case of a notice served by post that the same was
duly addressed prepaid and posted in the manner set out above. In the case of a notice given by facsimile transmission, it shall be sufficient to show that it was despatched in a legible and complete form to the correct telephone number without any
error message provided that a confirmation copy of the transmission is sent to the recipient by registered post in the manner set out above. Failure to send a confirmation copy will invalidate the service of any facsimile transmission.

  

	13	Publicity 

 Except as required by applicable law or the rules and regulations of
any Competent Authority of competent jurisdiction, neither Party shall issue any press release or other publicity material which is dominated by the subject matter of this Agreement without the prior written consent of the other Party, such consent
not to be unreasonably withheld, delayed or conditioned. Consent is not required where applicable text has previously been approved. 

  
 Confidential Treatment
Requested 

  
 13 

	14	Law 

 This Agreement and any dispute or claim arising out of or in connection with
it shall be governed by, and construed in accordance with, the laws of England. 
  

	15	Jurisdiction 

 All disputes or claims arising out of or relating to this Agreement
shall be subject to the exclusive jurisdiction of the English Courts to which the Parties irrevocably submit. 

  
 Confidential Treatment
Requested 

  
 14 

 IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

  

					
	SIGNED by Ian Garland	  	)	  	
		  	)	  	
			
	for and on behalf of	  	)	  	 /s/ Ian Garland

			
	VERNALIS (R&D) LTD.	  	)	  	Director & Authorised Signatory
			
	SIGNED by	  	)	  	
			
		  	)	  	
			
	for and on behalf of	  	)	  	 /s/ James Bianco

			
	CTI BIOPHARMA CORP.	  	)	  	 James Bianco, MD
 Director & Authorised
Signatory

 [Signature Page to CTI Vernalis Licence Agreement] 

  
 Confidential Treatment
Requested 

 Schedule 1 

The Patent Rights 
 Patents and Patent
Applications Derived from International Patent Application WO 98/11063 
  

							
	 Country
	  	 Status
	  	 Application No
	  	 Patent No

	 Australia
	  	Granted	  		  	718890
	 Belgium
	  	Granted	  		  	EP 0925278
	 Canada
	  	Granted	  		  	2265666
	 Switzerland
	  	Granted	  		  	EP 0925278
	 Czech Republic
	  	Granted	  		  	298048
	 Germany
	  	Granted	  		  	EP 0925278
	 Spain
	  	Granted	  		  	EP 0925278
	 France
	  	Granted	  		  	EP 0925278
	 UK
	  	Granted	  		  	EP 0925278
	 Italy
	  	Granted	  		  	EP 0925278
	 Japan
	  	Granted	  		  	4238334
	 Norway
	  	Granted	  		  	314227
	 New Zealand
	  	Granted	  		  	333923
	 Poland
	  	Granted	  		  	191366
	 USA
	  	Granted	  		  	6169075
	 USA (divisional)
	  	Granted	  		  	6790834

 Patents and Patent Applications Derived from International Patent Application WO 99/46241 

 

							
	 Country
	  	 Status
	  	 Application No
	  	 Patent No

	 Australia
	  	Granted	  		  	747977
	 Canada
	  	Granted	  		  	2323414
	 China
	  	Granted	  		  	ZL 98813847.6
	 Czech Republic
	  	Granted	  		  	299610
	 Germany
	  	Granted	  		  	EP 1062202
	 France
	  	Granted	  		  	EP 1062202
	 UK
	  	Granted	  		  	EP 1062202
	 Ireland
	  	Granted	  		  	EP 1062202
	 Israel
	  	Granted	  		  	137774
	 Japan
	  	Granted	  		  	4324324
	 Mexico
	  	Granted	  		  	224080
	 New Zealand
	  	Granted	  		  	506293
	 Poland
	  	Granted	  		  	190637
	 USA
	  	Granted	  		  	6462023

  
 Confidential Treatment
Requested 

  
 2 

 Schedule 2 

The Materials 
 **** 

  
 Confidential Treatment
Requested 

  
 3 

 Schedule 3 

The Documentation 
 **** 

  
 Confidential Treatment
Requested 

  
 4 

 Schedule 4 

Other Compounds 
 **** 

  
 Confidential Treatment
Requested 

  
 5abs8ex4_3.htm

  

 

 

 

Exhibit 4.3

SMART BALANCE, INC.

2012 INDUCEMENT AWARD PLAN

 

Section 1. Purpose and Construction.

 

(a) Purpose. Smart Balance, Inc. has implemented the Smart Balance, Inc. 2012 Inducement Award Plan (the “Plan”) in order to promote the long-term growth and financial success of Smart Balance, Inc. and increase shareholder value by attracting outstanding officers and other employees. The Plan is designed to accomplish these goals by providing stock option incentives for Participants to commence employment relationships with Smart Balance, Inc.

 

(b) Construction. Capitalized terms used in this Plan shall have the meanings set forth in Section 11, unless the context clearly requires otherwise. Awards made under this Plan and the accompanying Award Agreements are intended to not constitute non-qualified deferred compensation for purposes of Code Section 409A. The Committee shall have the authority to interpret and apply the terms of the Plan or any Award Agreement consistent with such intention.

 

(c) Deemed Amendment. Any non-complying provision of the Plan and any Award Agreement issued under the Plan shall be deemed amended to the extent necessary to preserve the intended tax consequence set forth in paragraph (b) above. Nothing in this Plan shall be construed, interpreted or applied in any way that would conflict with any provision of the Company’s Restated Certificate of Incorporation.

 

(d) Effective Date. This Plan is effective as of July 2, 2012.

 

Section 2. Shares Reserved Under this Plan.

 

(a) Plan Reserve. An aggregate of 1,300,000 Shares are reserved for issuance under this Plan. The maximum number of Shares that may be the subject of Awards (Options) granted to a Participant in any calendar year may not exceed 1,300,000 Shares. The number of Shares covered by an Award under the Plan shall be counted on the date of grant of such Award against the number of Shares available for granting Awards under the Plan. Any Shares delivered pursuant to the exercise of an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury shares. Under no circumstances may any Award be made effective prior to the date such Award is approved by the Committee.

 

(b) Share Adjustment. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event (collectively referred to as “Events”) affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee may, in such manner as it may deem equitable, adjust any or all of: (i) the number and type of Shares subject to the Plan and which thereafter may be made the subject of Awards under the Plan; (ii) the number and type of Shares subject to outstanding Awards; and (iii) the exercise price with respect to any Award (collectively referred to as “Adjustments”); provided, however, that Awards subject to grant or previously granted to Participants under the Plan at the time of any such Event shall be subject only to such Adjustments as shall be necessary to maintain the proportionate interest of the Participants and preserve, without exceeding, the value of such Awards; and provided further that the number of Shares subject to any Award shall always be a whole number. All such adjustments shall be made so that the adjustments do not result in the grant of a new Award for purposes of Section 409A of the Code or cause the Company to record a new compensation charge for financial reporting purposes.

 

(c) Replenishment of Shares Under this Plan. The number of Shares reserved for issuance under this Plan shall be reduced only by the number of Shares actually delivered in payment or settlement of Awards. If an Award lapses, expires, terminates or is cancelled without the issuance of Shares under the Award, then the Shares subject to, reserved for or delivered in payment in respect of such Award may again be used for new Awards under this Plan. If Shares are issued under any Award and the Company subsequently reacquires them pursuant to rights reserved upon the issuance of the Shares or if Shares, including previously owned Shares or newly issued Shares, are delivered by a Participant to the Company in satisfaction of any employment or income tax withholding obligation or in payment of the exercise price of an Award, then the Shares subject to, reserved for or delivered in payment in respect of such Award may again be used for new Awards under this Plan.

 

Section 3. Plan Administration and Operation.

 

(a) Administrative Authority. Subject to any limitations or restrictions under the Company’s Restated Certificate of Incorporation, the Plan shall be administered by, and the Committee has full authority to administer this Plan, including the authority to (i) interpret the provisions of this Plan, (ii) prescribe, amend and rescind rules and regulations relating to this Plan, (iii) correct any defect, supply any omission, or reconcile any inconsistency in any Award or agreement covering an Award in the manner and to the extent it deems desirable to carry this Plan into effect, and (iv) make all other determinations necessary or advisable for the administration of this Plan.

 

(b) Awards. The Committee has full authority to designate from time to time which new employees shall be eligible to be Participants under this Plan and the nature and scope of Awards offered to new employees. All awards under the Plan shall be in the form of Options. The Committee may consider such factors as it deems pertinent in determining the number of Shares subject to an Award under this Plan and in determining any Performance Goals, vesting periods, or other conditions or limitations of the Award. Awards under this Plan must be approved by the Committee prior to the date the Participant commences employment with the Company.

 

(c) Committee Action and Delegation. A majority of the members of the Committee will constitute a quorum, and a majority of the Committee’s members present at a meeting at which a quorum is present must make all determinations of the Committee. The Committee may make any determination under this Plan without notice or meeting of the Committee by a writing that a majority of the Committee members have signed. To the extent applicable law permits, the Board may delegate to another committee of the Board or the Committee may delegate to specified officers of the Company any or all of the authority and responsibility of the Committee. In the event of any such delegation, then all references to the Committee in this Plan include such other committee or one or more officers to the extent of such delegation. Except to the extent prohibited by applicable law, the Committee may also authorize any one or more of their number or the Secretary or any other officer of the Company to execute and deliver documents previously approved by the Committee.

 

(d) Review of Committee Decisions. All Committee determinations are final and binding upon all interested parties and no reviewing court, agency or other tribunal shall overturn a decision of the Committee unless it first determines that the Committee acted in an arbitrary and capricious manner with respect to such decision.

 

(e) Committee Indemnification. No member of the Committee will be liable for any act done, or determination made, by the individual in good faith with respect to the Plan or any Award. The Company will indemnify and hold harmless all Committee members to the maximum extent that the law and the Company’s bylaws and Restated Certificate of Incorporation permit.

 

Section 4. Discretionary Awards.

 

Subject to the terms of this Plan, including Section 3(b) and 3(c) above and Section 6 below, the Committee has full power and authority to determine: (a) the number of Shares with respect to which an Award is granted to a Participant; and (b) any other terms and conditions of any Award granted to a Participant. Awards under this Plan may be granted either alone or in addition to, in tandem with, or in substitution for any other award granted under another plan of the Company or any Company Entity). All Awards shall be evidenced by written Award Agreements.

 

Section 5. Options.

 

(a) Exercise Price of Options. For each Award, the Committee will establish (i) the exercise price, which may not be less than the Fair Market Value of the Shares subject to the Award on the Grant Date and (ii) the method or methods by which a Participant may pay the exercise price or satisfy his or her Tax Obligation with respect to the Award, including net or cashless exercise procedures.

 

(b) Terms and Conditions of Options. The Award Agreement shall also set forth all other terms and conditions of the Award, including the term of the Award and any vesting schedule or Performance Goals. Subject to the terms of the Plan, an Award will be exercisable at such times and subject to such conditions as the Committee specifies. Notwithstanding the preceding, each Award must terminate no later than ten (10) years after the date of grant.

 

Section 6. Effect of Termination of Employment.

 

(a) Award Limitations. Subject to the limitations set forth in Section 6(b) below, the Committee shall, in its discretion, determine the consequences under any Award of the Participant’s Separation from Service for any reason. The restrictions under Section 6(b) and any other limitations imposed by the Committee under this Section 6(a) shall be included in the Award Agreement. Unless otherwise stated under the Award Agreement, if a Participant has a Separation from Service, all non-vested Options shall immediately terminate and be forfeited and all vested Options shall terminate and be forfeited if not exercised within ninety (90) days of such Separation from Service. The foregoing notwithstanding, in the event the Separation From Service is due to the Participant’s death or Disability, all non-vested Options shall vest upon such death or Disability termination and all Options shall thereafter terminate and be forfeited if not exercised within one (1) year of the Separation from Service or prior to the expiration of the term of the Option, if sooner. When a Participant has a Separation from Service, the Committee in its sole discretion, is authorized to (i) accelerate vesting of non-vested Options, (ii) grant the Participant a longer period post-separation to exercise the Options following a Separation from Service consistent with the requirements of Treas. Reg. § 1.409A-1(b)(5)(v)(C), or (iii) allow continued vesting of the Options on such terms and conditions as the Committee may deem reasonable and appropriate.

 

(b) For Cause Termination. Notwithstanding any provision in this Plan or in any Award Agreement, if a Participant’s employment is terminated by the Company for Cause, then all Awards previously granted to such Participant shall immediately terminate and be forfeited retroactively to the date the Participant first engaged in the conduct which was the basis for such termination.

 

Section 7. Non-Transferability.

 

(a) Awards. Except as otherwise provided in this Section or as the Committee otherwise provides in the Award Agreement, Awards granted under this Plan are not transferable by a Participant other than by will or the applicable laws of descent or distribution. During the lifetime of the Participant such Awards may be exercised only by the Participant. Following the death of a Participant, Awards may be exercised, consistent with the terms of the Award, by the Participant’s legal representative or transferee of such Participant by will or applicable law of descent or distribution.

 

(b) Shares. Shares received in connection with the exercise of an Award shall be transferable, subject to any restrictions on transfer imposed by applicable securities laws.

 

Section 8. Amendment and Termination of the Plan and Awards.

 

(a) Term of Plan. This Plan will terminate on, and no Award may be granted after, the ten (10) year anniversary of the Effective Date, unless the Company earlier terminates this Plan pursuant to Section 8(b).

 

(b) Termination and Amendment. The Company may amend, alter, suspend, discontinue or terminate this Plan at any time, subject to shareholder approval if: (i) shareholder approval of such amendment(s) is required under the Exchange Act; or (ii) shareholder approval of such amendment(s) is required under the listing requirements of principal securities exchange or market on which the Shares are then traded (to maintain the listing or quotation of the Shares on that exchange).

 

 (c) Amendment, Modification or Cancellation of Awards. Except as provided in Section 8(e) and subject to the requirements of this Plan, the Committee may waive any restrictions or conditions applicable to any Award or the exercise of the Award, and the Committee may modify, amend, or cancel any of the other terms and conditions applicable to any Awards by mutual agreement between the Committee and the Participant or any other persons as may then have an interest in the Award, but the Committee need not obtain the Participant’s (or other interested party’s) consent for the cancellation of an Award pursuant to the provisions of Section 2(b). The foregoing notwithstanding, no modification, extension, amendment or cancellation of any terms or conditions of any Award shall be made to the extent such action would violate the requirements of Section 409A of the Code or would result in such action being treated as a new Option grant pursuant to Treas. Reg. §1.409A-1(b)(5)(v).

 

(d) Survival of Committee Authority and Awards. Notwithstanding the foregoing, the authority of the Committee to administer this Plan and modify or amend an Award shall extend beyond the date this Plan is terminated. In addition, termination of this Plan will not affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards will continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.

 

(e) Repricing Prohibited. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Section 2(b), neither the Committee nor any other person may decrease the exercise price for any outstanding Option granted under this Plan after the date of grant nor allow a Participant to surrender an outstanding Option granted under this Plan to the Company as consideration for the grant of a new Option with a lower exercise price.

 

Section 9. Change of Control.

 

To the extent not prohibited under the Restated Certificate of Incorporation and except to the extent otherwise set forth in an Award Agreement covering an Award, in the event of a Change of Control, all non-vested Options shall vest and become fully exercisable upon the occurrence of such Change of Control without regard to any Performance Goal or vesting schedule set forth in the applicable Award Agreement.

 

Section 10. General Provisions.

 

(a) Other Terms and Conditions. The grant of any Award under this Plan may also be subject to such other provisions or include other tandem rights or features (whether or not applicable to the Award awarded to any other Participant) as the Committee determines appropriate. The foregoing notwithstanding, no Award shall include any additional deferral feature or other provision that would cause the Award to be subject to Section 409A of the Code.

 

(b) No Fractional Shares. No fractional Shares or other securities may be issued or delivered pursuant to this Plan, and the Committee may determine whether cash, other securities or other property will be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights to fractional Shares or other securities will be canceled, terminated or otherwise eliminated.

 

(c) Requirements of Law. The granting of Awards under this Plan and the issuance of Shares in connection with an Award are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision of this Plan or any Award Agreement, the Company has no liability to deliver any Shares under this Plan or make any payment unless such delivery or payment would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity.

 

(d) Governing Law. This Plan, and all agreements under this Plan, should be construed in accordance with and governed by the laws of the State of Delaware, without reference to any conflict of law principles. Any legal action or proceeding with respect to this Plan, any Award or any Award Agreement, or for recognition and enforcement of any judgment in respect of this Plan, any Award or any Award Agreement, may only be brought and determined in a court sitting in the County of Bergen, or the Federal District Court for the Third District of New Jersey sitting in Third District, in the State of New Jersey.

 

(e) Severability. If any provision of this Plan or any Award Agreement or any Award (i) is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or (ii) would disqualify this Plan, any Award Agreement or any Award under any law the Committee deems applicable, then such provision should 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 Committee, materially altering the intent of this Plan, Award Agreement or Award, then such provision should be stricken as to such jurisdiction, person or Award, and the remainder of this Plan, such Award Agreement and such Award will remain in full force and effect.

 

(f) Other Arrangements. Nothing contained in the Plan shall prevent the Company or any Company Entity from adopting or continuing in effect other or additional compensation arrangements for Participants, and such arrangements may be either generally applicable or applicable only in specific cases.

 

(g) No Right to Remain Employed. The grant of an Award to a Participant pursuant to the Plan shall confer no right on such Participant to continue as an officer, employee, consultant, advisor or other similar position relative to the Company or any Company Entity. Except for rights accorded under the Plan, Participants shall have no rights as holders of Shares as a result of the granting of Awards hereunder.

  

Section 11. Definitions.

 

(a) “Award” means any grant of Options under this Plan.

 

(b) “Award Agreement” means a written agreement, in such form (consistent with the terms of this Plan) as approved by the Committee.

 

(c) “Board” shall mean the Board of Directors of the Company.

 

(d) “Cause” means with respect to a Participant any of the following as determined by the Board, in its sole discretion, (a) fraud or intentional misrepresentation, (b) embezzlement, misappropriation or conversion of assets or opportunities of the Company or any Company Entity, (c) acts or omissions that are in bad faith or constitute gross negligence, or willful or reckless misconduct, or (d) conviction, plea of guilty or nolo contendere, or judicial determination of civil liability, based on a federal or state felony or serious criminal or civil offense.

 

(e) “Change of Control” means the occurrence of any of the following: events with respect to the Company:

 

a.           any Person (other than an Exempt Person) acquires securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities;

 

b.           any Person acquires, during the twelve (12) month period ending on the date of the most recent acquisition, securities of Company representing thirty percent (30%) of Company’s then outstanding voting securities;

 

c.           a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board serving immediately prior to such appointment or election; or

 

d.           any Person, during the twelve (12) month period ending on the date of the most recent acquisition, acquires assets of Company having a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of Company’s assets immediately before such acquisition or acquisitions;

 

but only if the applicable transaction otherwise constitutes a “change in control event” for purposes of Section 409A of the Code and Treas. Reg. §1.409A-3(i)(5).

 

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and as interpreted by applicable regulations, rulings, notices and other similar guidance. Any reference to a specific provision of the Code includes any successor provision and any guidance issued under such provision.

 

 (g) “Committee” means the Compensation Committee of the Board or any subcommittee thereof.

 

(h) “Common Stock” means the $.0001 par value common stock of the Company.

 

(i) “Company” shall mean Smart Balance, Inc., a Delaware corporation, together with any successor thereto.

 

(j) “Company Entity” means a corporation or other entity in which the Company holds a controlling interest under Treas. Reg. § 1.414(c)-2(b)(2)(i), but determined by applying the phrase “at least 50 percent” in the place of the phrase “at least 80 percent” each place that it appears in such Treasury Regulation or Section 1563(a) of the Code and each other entity so designated by the Committee as an Affiliate for “legitimate business reasons” (within the meaning of Treas. Reg. § 1.409A-1(b)(5)(iii)(E)) in which the Company holds a controlling interest under Treasury Regulation §1.414(c)-2(b)(2)(i), but determined by applying the phrase “at least 20 percent” in the place of the phrase “at least 80 percent” in each place it appears in such Treasury Regulation or Section 1563(a) of the Code.

 

(k) “Disability” means a determination by the Company to terminate the service relationship between the Company and all Company Entities and a Participant based on the inability of a Participant to perform a material portion of his or her duties and responsibilities on behalf of the Company or a Company Entity due to a physical or mental condition that is expected to last indefinitely.

 

(l) “Effective Date” means July 2, 2012.

 

(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and as interpreted by applicable regulations, rulings, notices and other similar guidance. Any reference to a specific provision of the Exchange Act includes any successor provision and any guidance issued under such provision.

 

(n) “Fair Market Value” shall mean with respect to a Share, for purposes of determining the minimum exercise price of an Option on the Grant Date or otherwise (i) if the Shares are readily tradable on an established securities market, the closing price of a Share on such market on the Grant Date or (ii) if the Shares are not readily tradable on an established securities market, the value determined by the Committee as of the Grant Date through the reasonable application of a reasonable valuation method and otherwise in accordance with Treas. Reg. § 1.409A-1(b)(5)(iv)(B).

 

(o) “Grant Date” means the date on which all corporate action required to duly authorize and effect the grant of the Award is first completed or the first date on which all conditions precedent to the effectiveness of the Award are fully satisfied, if later.

  

(p) “Option” shall mean the right to purchase Shares at a stated price in accordance with the terms of this Plan and the underlying Award Agreement.

 

(q) “Participant” shall mean an individual who: (i) was not previously an employee or director of the Company or any Company Entity or who has incurred a bona fide period of non-employment with the Company and all Company Entities; (ii) is offered an Award under this Plan as an inducement to become an officer or employee of the Company or any Company Entity; and (iii) becomes an officer or employee of the Company or any Company Entity and enters into an Award Agreement. Only Participants shall be entitled to receive Awards under this Plan.

 

(r) “Performance Goals” means any goals the Committee establishes that relate to one or more of the following with respect to the Company or any one or more Company Entities or other business units: revenue; cash flow; net cash provided by operating activities; net cash provided by operating activities less net cash used in investing activities; cost of goods sold; ratio of debt to debt plus equity; profit before tax; gross profit; net profit; gross sales; net sales; product units sold; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; Fair Market Value of Shares; basic earnings per share; diluted earnings per share; return on shareholder equity; average accounts receivable (calculated by taking the average of accounts receivable at the end of each month); average inventories (calculated by taking the average of inventories at the end of each month); return on average total capital employed; return on net assets employed before interest and taxes; economic value added; and/or return on year-end equity.

 

(s) “Plan” shall mean the Smart Balance, Inc. 2012 Inducement Award Plan, as set forth herein and as amended from time to time.

 

(t) “Separation From Service” shall mean with respect to an employee the termination of the employee’s employment with the Company and all Company Entities, provided that, notwithstanding such termination of the employment relationship between the employee and the Company and all Company Entities, the employee shall not be deemed to have had a Separation from Service where it is reasonably anticipated that the level of bona fide services that the employee will perform (whether as an employee or independent contractor) following such termination for the Company and all Company Entities would be twenty percent (20%) or more of the average level of bona fide services performed by the employee (whether as an employee or independent contractor) for the Company and all Company Entities over the immediately preceding thirty-six (36) month period (or such lesser period of actual service). In such event, Separation from Service shall mean the permanent reduction of the level of bona fide services to be performed by the employee (whether as an employee or independent contractor) to a level that is less than twenty percent (20%) of the average level of bona fide services performed by the employee (whether as an employee or independent contractor) during the thirty-six (36) month period (or such lesser period of actual service) immediately prior to the termination of the employee’s employment relationship. A Separation from Service shall not be deemed to have occurred if the employee is absent from active employment due to military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed the greater of (i) six months or (ii) the period during which the Employee’s right to reemployment by the Company or any Company Entity is provided either by statute or contract.

 

(u) “Share” means a share of Common Stock.

 

(v) “Tax Obligation” means with respect to any period an amount equal to the total obligation of the Company to withhold and deposit federal, state or local employment and income taxes with respect to an Award.

 

  

  

  

 

AMENDMENT 1

 

TO THE

 

BOULDER BRANDS, INC. 2012 INDUCEMENT AWARD PLAN

 

 

WHEREAS, Boulder Brands, Inc. (the “Company”), established the Company 2012 Inducement Award Plan (the “Plan”) effective as of July 2, 2012; and

 

WHEREAS, pursuant to Sections 8(b) of the Inducement Plan, the board of directors of the Company (the “Board”) may amend the Plan at any time; and

 

WHEREAS, the Board desires to amend the Plan to increase the aggregate number of shares that are reserved for issuance under the Plan; and

 

WHEREAS, the Board has determined this amendment to be in the best interests of the Company and its stockholders; and

 

NOW, THEREFORE, in consideration of the premises, the Plan is hereby amended as follows:

 

1. The first sentence of Section 2(a) shall be amended and restated in its entirety to read as follows:

 

An aggregate of 3,300,000 Shares are reserved for issuance under this Plan.

 

2. This amendment shall be effective as of December 23, 2013.

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