Organize assays and follow progress
Initial evaluation of TCAP pharmacokinetics
Complete pharmacokinetic analysis for IV and SC K37 TCAP and TCAP
Generate a report on pharmacokinetic parameters
Initial evaluation of TCAP exposure biomarker assay through CRO
identification and evaluation of suitable timepoints for biomarker assessment
provide samples and follow progress
Oversee monoclonal antibody production through CRO
testing of the antibody clones
evaluation for sandwich ELISA
Peptide synthesis and formulation development
organize synthesis and follow progress
schedule initial in vitro screening experiments
coordinate assay schedule with Behavioral Studies Consultant and CSO
oversee formulation development
Ensure that all new formulations comply with clinical guidelines
Consult with CSO regarding coordination of manufacture of peptides with formulation of peptides
Coordinate development of receptor assays with CSO
Evaluate data from the biological assays
Consult with the CSO regarding results and their significance
Consult with the CSO and advisory board regarding clinical assays and future development
Direct activities of one technician involved in carrying out assays
Prepare summaries, presentations and study reports for the in house studies.
Prepare budgets associated with supervised activities.
Liase with CSO regarding coordination of CROs associated with ADME and PK analyses.
2. Accountability and Reporting
The Consultant will be accountable to the PTI Chief Scientific Officer.
3. Compensation
As full compensation for the Consulting Services PTCI will pay the Consultant monthly, as per following schedule and amount of worked agreed:
| 1. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Jan 2009; |
Protagenic Therapeutics Inc., 2 Carlton Street, Suite 1307, Toronto, Ontario, M5B1J3, Canada;
e<EMAIL_ADDRESS>www.protagenic.com
6
| 2. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Feb 2009; |
| 3. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Mar 2009; |
| 4. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Apr 2009; |
| 5. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of May 2009; |
| 6. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Jun 2009; |
| 7. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Jul 2009; |
| 8. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Aug 2009; |
| 9. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Sep 2009; |
| 10. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Oct 2009; |
| 11. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Nov 2009; |
| 12. | $ 4,000 (four thousand dollars) per 128 hours of work for the month of Dec 2009; |
| | Amounts due under the Agreement will be payable no later than thirty (30) days from PTCIs receipt and acceptance by President and/or Operations Manager of a written invoice with an expense report and accompanying supporting documentation (if necessary). Total payment to be made under this contract should not exceed CA$ 48,000 (forty eight thousand dollars). |
4. Term
This Agreement will be for a term of one year (12 months), ending December 31, 2009, beginning on the Effective Date (the Term), and may be extended for additional periods, at PTCIs option and with Consultants consent.
Protagenic Therapeutics Inc., 2 Carlton Street, Suite 1307, Toronto, Ontario, M5B1J3, Canada;
e<EMAIL_ADDRESS>www.protagenic.com
7
Exhibit 10.14
AGREEMENT BETWEEN BRANDT J. MANDIA AND
PROTAGENIC THERAPEUTICS, INC.
THIS AGREEMENT is made as of this 4th day of November, 2015, by and between Brandt J. Mandia, an individual (Consultant), and Protagenic Therapeutics, Inc., a Delaware corporation (Protagenic).
WHEREAS, Consultant has significant expertise in providing financial and business advisory services.
WHEREAS, Consultant has been providing Protagenic with financial and business advisory services since January 2015.
WHEREAS, Protagenic desires to retain Consultant to continue to provide it with these services, and to compensate Consultant for services previously rendered, and Consultant is willing to be so retained, all on the terms set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants of the parties set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Term & Obligations The term of this Agreement shall extend until December 31, 2015. This Agreement may be extended by mutual agreement of the parties. During the term of this Agreement, Consultant shall provide a variety of consulting and advisory services to Protagenic relating principally to identifying and evaluating strategic business relationships and strategies and potential licensing opportunities.
3. Consideration to Consultant As full consideration for the services previously rendered and to be rendered by Consultant hereunder, Protagenic hereby issues to Consultant a warrant (the Warrant) to purchase 200,000 shares of Protagenic common stock, par value $0.001 per share. The Warrant shall be exercisable for a period of five years from the date of this agreement, at an exercise price of $1.25 per share. The Warrant shall be immediately vested as to 150,000 shares, and shall vest as to the remaining 50,000 shares on December 31, 2015. A form of the Warrant is annexed hereto as Exhibit A.
4. Independent Contractor Status The parties intend for the relationship between Protagenic and Consultant to be that of an independent contractor. Consultant shall be responsible for all income and other taxes imposed on Consultant under applicable law by reason of any consideration paid to consultant by Protagenic or any of its affiliates pursuant to this Agreement.
1
5. Confidential Information
| i) | Company Information. At all times during the term of this Agreement and thereafter, Consultant shall hold in strictest confidence, and not use, except for the benefit of Protagenic and its affiliates, or disclose to any person, firm or corporation without written authorization of the Board of Directors of the Protagenic, any Confidential Information of Protagenic or its affiliates. Confidential Information means any proprietary information, technical data, trade secrets or know-how of Protagenic and its affiliates, including, but not limited to, research, product plans, products, services, customer lists and customers, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information disclosed to Consultant by Protagenic or its affiliates either directly or indirectly, in writing, orally, by drawings, or by observation of parts or equipment. Confidential Information does not include any of the foregoing items that have become publicly known and made generally available through no wrongful act of Consultant or of others who were under confidentiality obligations as to the item or items involved. |
| ii) | Consultants Information. At all times during the term of this Agreement and thereafter, Protagenic and its other consultants, directors, investors, shall hold in strictest confidence, and not use, or disclose to any person, firm or corporation without written authorization of Consultant any Confidential Information of Consultant. Thus, Confidential Information also means any proprietary information, technical data, trade secrets or know-how of Consultant, including, but not limited to, research, product plans, products, services, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, disclosed to Protagenic and its other consultants, directors, investors, by Consultant either directly or indirectly, in writing, orally, by drawings, or by observation of parts or equipment. Confidential Information does not include any of the foregoing items which has become publicly known and made generally available through no wrongful act of the Company or of others who were under confidentiality obligations as to the item or items involved. |
6. Separability of Terms Each obligation and consideration in this Agreement is separately enforceable and the parties requirements to perform these obligations are separate and independent. In the event any provision, paragraph or clause either lapses in accordance with its terms or becomes unenforceable for any reason, all remaining provisions, paragraphs or clauses shall remain in full force and effect.
7. Notices All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or sent by telefax or email, by recognized overnight courier marked for overnight delivery, or by registered or certified mail, postage prepaid, address as follows:
2
If to Consultant, to:
Brandt J. Mandia
46 Lortel Avenue
Staten Island, NY 10314
Tel:<PHONE_NUMBER>
Email<EMAIL_ADDRESS>If to Protagenic, at:
Protagenic Therapeutics, Inc.
149 Fifth Avenue, Suite 500
New York, NY 10010
Attn: Garo H. Armen, PhD, Chairman
Telefax:<PHONE_NUMBER>
Telephone:<PHONE_NUMBER>
Email<EMAIL_ADDRESS>All such notices and communications shall be effective, if by telefax, when receipt is confirmed by telephone, or if sent by nationally recognized overnight courier service, one business day after delivery to such courier service marked for overnight delivery, or, if mailed, when received, or if e-mailed, upon confirmation of receipt.
9. Applicable Law This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to or application of any conflicts of laws principles.
10. Accredited Investor Status. Consultant represents and warrants that Consultant is an accredited investor, as such term is defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended.
11. Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[signature page follows]
3
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
| CONSULTANT | ||
| /s/ Brandt J. Mandia | ||
| Brandt J. Mandia | ||
| PROTAGENIC THERAPEUTICS, INC. | ||
| By: | /s/ Garo H. Armen | |
| Garo H. Armen, PhD, Chairman |
4
EXHIBIT A
Form of Warrant
5
Exhibit 10.15
| CONSULTANT: EFFECTIVE DATE: TERMINATION DATE:
|
Robert B. Stein January 23, 2015 January 23, 2020
|
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (together with the Business Terms Exhibit, the Agreement) made as of January 23, 2015 (the Effective Date) is between Protagenic Therapeutics, Inc., a Delaware corporation with a office address at 149 5th Avenue, Suite 500, New York, NY 10010, Tel:<PHONE_NUMBER>, F:<PHONE_NUMBER> (Protagenic) and Dr. Robert B. Stein having a home address at 155 Ocena Drive East, Suite 4i, Brooklyn, NY 11235 (Tel:<PHONE_NUMBER>) (Consultant). Protagenic desires to have the benefit of Consultants knowledge and experience, and Consultant desires to provide consulting services to Protagenic, all as provided in this Agreement.
| 1. | Definitions. The following terms have the meanings set forth below: |
| 1.1 | Business Terms Exhibit means the business and financial terms applicable to the Consulting Services (as defined below) set forth in the attached exhibit, as may be amended from time to time by written agreement of the parties. |
| 1.2 | Confidential Information means any non-public scientific, technical, financial or business information possessed or obtained by, developed for or given to Protagenic which is treated by Protagenic as confidential or proprietary, whether or not labeled or identified as Confidential. Confidential Information will include, without limitation, information prepared in full or in part for Protagenic by Consultant, Materials and Developments (defined below), the terms of this Agreement and information about or belonging to Protagenics suppliers, licensors, licensees, partners, affiliates, customers, potential customers or others. |
| 1.3 | Developments means concepts, inventions, know-how, techniques, improvements, writings, data, computer software, and Materials (whether or not patentable or subject to copyright or trade secret protection) that Consultant makes, conceives or reduces to practice, either alone or jointly with others, and that result from the performance of the Consulting Services, and/or result from use of Protagenics Confidential Information. |
| 1.4 | Materials means all materials furnished by Protagenic, all materials developed by Consultant in connection with the Consulting Services, and any materials, the cost of which are reimbursed to Consultant by Protagenic hereunder. Materials include, in the case of biological materials, all progeny and unmodified derivatives of those materials, and in the case of chemical materials, all analogs, formulations, mixtures and compositions of those materials. |
| 1.5 | Term means the term of this Agreement as set forth in the Business Terms Exhibit. |
| 2. | Consulting Services. Protagenic retains Consultant and Consultant agrees to provide consulting services to Protagenic as it may from time to time reasonably request and as specified in the Business Terms Exhibit (the Consulting Services). Any changes to the Consulting Services (and any related compensation adjustments) must be agreed to in writing between Consultant and Protagenic prior to commencement of the changes. |
| 3. | Consulting Relationship. Consultant agrees, as a condition of this Agreement, to the following terms: |
Protagenic Therapeutics Inc., 149 5th Avenue, Suite 500, New York, NY 10010,
Tel:<PHONE_NUMBER>, F:<PHONE_NUMBER>, www.protagenic.com
1
| 3.1 | Compliance. |
| a. | With Institution Policies. Protagenic recognizes that if the Consultant becomes a faculty member at or employee of a university or hospital (Institution), then the Consultant is responsible for ensuring that any consulting agreement Consultant enters into with industry is not in conflict with the patent, consulting or other policies of Institution. If Consultant is required by Consultants Institution to disclose to it any proposed agreements with industry, Consultant has made that disclosure. If Institutions prior approval of this Agreement is required by Institution policies, Consultant has obtained that approval. |
| b. | With Policies and Regulations. In performing the Consulting Services, Consultant will comply with all business conduct, regulatory, and health and safety guidelines or regulations established by Protagenic or any governmental authority with respect to State of Delawares business. |
| c. | Absence of Debarment. Consultant represents that Consultant has not been debarred, and to the best of Consultants knowledge, is not under consideration to be debarred, either by the Health Canada or by the U.S. Food and Drug Administration from working in or providing services to any pharmaceutical or biotechnology company under the Generic Drug Enforcement Act of 1992. |
| 3.2 | Absence of Restrictions. Consultant is under no contractual or other obligation or restriction which is inconsistent with Consultants execution of this Agreement or the performance of the Consulting Services. During the Term, Consultant will not enter into any agreement, either written or oral, in conflict with Consultants obligations under this Agreement. Consultant will arrange to provide the Consulting Services in such manner and at such times so that they will not conflict with Consultants responsibilities under any other agreement, arrangement or understanding or pursuant to any employment relationship Consultant has at any time with any third party (including, without limitation, Institution). |
| 3.3 | Confidential Information of Third Parties. The performance of the Consulting Services does not and will not breach any agreement which obligates Consultant to keep in confidence any confidential or proprietary information of any third party or to refrain from competing, directly or indirectly, with the business of any third party. Consultant will not disclose to State of Delaware any confidential or proprietary information of any third parties. |
| 3.4 | Competitive Activities. During the Term and for a period of twelve (12) months thereafter, Consultant will not provide consulting services to any business or entity developing a product or sponsoring a project which competes with a product being developed or project being sponsored by Protagenic for which Consultant is providing Consulting Services. It will not be considered a competitive activity for Consultant to be a member of the faculty or staff of a university, college or other educational or non-profit research institution. |
| 4. | Compensation. As full consideration for the Consulting Services rendered under this Agreement, Protagenic agrees to pay Consultant and reimburse expenses as set forth in the Business Terms Exhibit. |
| 5. | Developments. |
| 5.1 | Ownership. All Developments will be the exclusive property of Protagenic. All Developments that are Works Made for Hire as defined both by the Canadian and the U.S. Copyright Act and other copyrightable works will be deemed, upon creation, to be assigned to Protagenic. Consultant will promptly and fully disclose to Protagenic all Developments. Consultant will keep and maintain |
Protagenic Therapeutics Inc., 149 5th Avenue, Suite 500, New York, NY 10010,
Tel:<PHONE_NUMBER>, F:<PHONE_NUMBER>, www.protagenic.com
2
| complete written records of all Developments and of all work or investigations done or carried out by Consultant. Consultant may keep one (1) copy of these records in Consultants files solely for reference purposes. Consultant assigns and agrees to assign to Protagenic all of Consultants right, title and interest in and to any Developments. During and after the Term, Consultant will cooperate fully in obtaining patent and other proprietary protection for the Developments, all in the name of Protagenic and at Protagenics cost and expense, and, without limitation, will execute and deliver all requested applications, assignments and other documents, and take such other measures as Protagenic will reasonably request, in order to perfect and enforce Protagenics rights in the Developments. Consultant appoints Protagenic its attorney to execute and deliver any such documents on Consultants behalf in the event Consultant fails to do so. |
| 5.2 | Agreement with Institution. This Agreement is made subject to the understanding that Consultant, if becoming an affiliated with an Institution, may be required to fulfill certain obligations, including teaching, directing laboratory operations, conducting research, and publishing work. It is further understood that Consultant may have signed an agreement concerning inventions with Institution, under which Consultant may be obligated to assign to Institution certain inventions which arise out of or otherwise relate to Consultants work at or for Institution or from Consultants use of certain of its facilities or intellectual property. In performing the Consulting Services, Consultant agrees not to utilize Institution facilities or intellectual property if the result of that use is that any Development will not be assignable solely to Protagenic. |
| 5.3 | Work at Third Party Facilities. Unless covered by an appropriate agreement between any third party and Protagenic, Consultant will not engage in any activities or use any third party facilities or intellectual property in performing the Consulting Services which could result in claims of ownership to any Developments being made by a third party. |
| 6. | Confidentiality; Publication. |
| 6.1 | Confidentiality. During the Term and for a period of five (5) years thereafter, Consultant will not publish, disseminate or otherwise disclose, use for Consultants own benefit or for the benefit of a third party, any Confidential Information. Consultant will exercise all reasonable precautions to physically protect the confidentiality of the Confidential Information. Consultant may disclose the Confidential Information to a governmental authority or by order of a court of competent jurisdiction, provided that the disclosure is subject to all applicable governmental or judicial protection available for like material and reasonable advance notice is given to Protagenic. The obligations of non-disclosure will not apply to information which (a) was known to Consultant at the time it was disclosed, other than by previous disclosure by Protagenic, as evidenced by Consultants written records at the time of disclosure; (b) is at the time of disclosure or later becomes publicly known under circumstances involving no breach of this Agreement; or (c) is lawfully and in good faith made available to Consultant by a third party who did not derive it, directly or indirectly, from Protagenic. |
| 6.2 | Publication. Consultant agrees to submit to Protagenic a copy of any proposed manuscript or other materials to be published or otherwise publicly disclosed which contain information or any discussion relating to Protagenic or the Consulting Services, at least thirty (30) days prior to submission for publication or disclosure, to enable Protagenic to determine if patentable Developments or any Confidential Information of Protagenic would be disclosed. Consultant will cooperate with Protagenic in this respect and will delete from the manuscript or other disclosure any Confidential Information if requested by Protagenic, and will assist Protagenic in filing for patent protection for any patentable Developments described in those documents, prior to publication or other disclosure. |
Protagenic Therapeutics Inc., 149 5th Avenue, Suite 500, New York, NY 10010,
Tel:<PHONE_NUMBER>, F:<PHONE_NUMBER>, www.protagenic.com
3
| 7. | Expiration/Termination. |
| 7.1 | Term. This Agreement will commence on the Effective Date and continue for the Term, unless sooner terminated pursuant to the express terms of this Section 7 or extended by mutual written agreement of the parties. |
| 7.2 | Termination for Breach. If either party breaches in any material respect any of its material obligations under this Agreement, in addition to any other right or remedy, the non-breaching party may terminate this Agreement in the event that the breach is not cured within thirty (30) days after receipt by that party of written notice of the breach. |
| 7.3 | Termination by Protagenic. Either party may terminate this Agreement (a) immediately at any time upon written notice to the other party in the event of a breach of this Agreement by the other party which cannot be cured (i.e. breach of the confidentiality obligations) and/or (b) at any time without cause upon not less than fifteen (15) days prior written notice to the other party. |
| 7.4 | Effect of Expiration/Termination. Upon expiration or termination, neither Protagenic nor Consultant will have any further obligations under this Agreement, except (a) the liabilities accrued through the date of expiration or termination, and (b) the terms and obligations under sections 1, 3.4, 5, 6, 7.4 and 8, will survive. Upon expiration or termination, and in any case upon Protagenics request, Consultant will promptly return to Protagenic all Confidential Information and copies thereof, except for one (1) copy which Consultant may retain solely for archival purposes. |
| 8. | Miscellaneous. |
| 8.1 | Independent Consultant; Taxes. |
| a. | Independent Consultant. All Consulting Services will be rendered by Consultant as an independent Consultant and this Agreement does not create an employer-employee relationship between Protagenic and Consultant. Consultant will have no rights to receive any employee benefits, such as health and accident insurance, sick leave or vacation which are accorded to regular Protagenic employees. Consultant will not in any way represent himself to be an employee, partner, joint venture, agent or officer with or of Protagenic. |
| b. | Taxes. Consultant will pay all required taxes on Consultants income from Protagenic under this Agreement. Consultant will provide Protagenic with Consultants taxpayer Identification Number or Social Insurance number, as applicable. |
| 8.2 | Use of Name. Consultant consents to the use by Protagenic of Consultants name and likeness in written materials and oral presentations to current or prospective customers, partners, investors or others, provided that the materials or presentations accurately describe the nature of Consultants relationship with or contribution to Protagenic. |
| 8.3 | Notices. All notices must be written and sent to the address or facsimile number identified in this Agreement or a subsequent notice. All notices must be given (a) by personal delivery, with receipt acknowledged; (b) by facsimile followed by hard copy delivered by the methods under (c) or (d); (c) by prepaid certified or registered mail, return receipt requested; or (d) by prepaid recognized next business day delivery service. Notices will be effective upon receipt or as stated in the notice. Notices to Protagenic must be marked Attention: Chairman / CEO. |
Protagenic Therapeutics Inc., 149 5th Avenue, Suite 500, New York, NY 10010,
Tel:<PHONE_NUMBER>, F:<PHONE_NUMBER>, www.protagenic.com
4
| 8.4 | Assignment. This Agreement is a personal services agreement, and the rights and obligations hereunder, may not be assigned or transferred by either party without the prior written consent of the other party, except that Protagenic may assign this Agreement, in whole or in part, to an affiliated company or in connection with the merger, consolidation, sale or transfer of all or substantially all of its business to which this Agreement relates. |
| 8.5 | Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to its subject matter, and supersedes all previous written or oral representations, agreements and understandings between Protagenic and Consultant. |
| 8.6 | No Modification. This Agreement may be changed only by a writing signed by both parties. |
| 8.7 | Severability. Each provision in this Agreement is independent and severable from the others, and no provision will be rendered unenforceable as a result of any other provision(s) being held to be invalid or unenforceable in whole or in part. If any provision of this Agreement is invalid, unenforceable or too broad, that provision will be appropriately limited and reformed to the maximum extent permitted by applicable law. |
| 8.8 | Applicable Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to any choice of law principle that would dictate the application of the law of another jurisdiction. Any action, suit, or other legal proceeding which is commenced to resolve any matter arising under or relating to any provision of this Agreement will be commenced only in a court of the State of Delaware (or, if appropriate, a provincial court located within the State of Delaware), and Protagenic and Consultant each consents to the jurisdiction of such a court. |
| 8.9 | Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which shall constitute one and the same agreement. |
IN WITNESS WHEREOF, duly authorized representatives of the parties have executed this Agreement as of the Effective Date.
| PROTAGENIC THERAPEUTICS, INC. | ROBERT B. STEIN | |||||
| By: | ||||||
| Signature: | /s/ Robert Ziroyan |
Signature: | /s/ Robert B. Stein | |||
| Print Name: | Robert Ziroyan | SS or Tax ID No: | [redacted] | |||
| Title: | Interim President & Chief Operating Officer |
Protagenic Therapeutics Inc., 149 5th Avenue, Suite 500, New York, NY 10010,
Tel:<PHONE_NUMBER>, F:<PHONE_NUMBER>, www.protagenic.com
5
BUSINESS TERMS EXHIBIT
Consulting Agreement with Dr. Robert B. Stein
1. Scope of Work/Duties and Responsibilities
Consultant will provide advisory and technical services to Research and Development.
2. Compensation
As full compensation for the Consulting Services, Protagenic will grant a nonqualified stock option to the Consultant under the terms and conditions specified in the Nonqualified Stock Option Agreement.
3. Term:
This agreement will be for a term of five years beginning of the Effective Date (the Term).
4. Reporting:
The Consultant will be accountable to the Chairman of Protagenic Therapeutics Inc.
Protagenic Therapeutics Inc., 149 5th Avenue, Suite 500, New York, NY 10010,
Tel:<PHONE_NUMBER>, F:<PHONE_NUMBER>, www.protagenic.com
6
Exhibit 10.16
PROTAGENIC THERAPEUTICS, INC.
FORM OF 2006 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
| 1. | DEFINITIONS. |
Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Protagenic Therapeutic, Inc. 2006 Employee, Director and Consultant Stock Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.
Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.
Board of Directors means the Board of Directors of the Company.
Change of Control means a merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which 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 or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation outstanding immediately after such merger or consolidation, or the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of the Companys assets.
Code means the United States Internal Revenue Code of 1986, as amended.
Committee means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.
Common Stock means shares of the Companys common stock, $0.001 par value per share.
Company means Protagenic Therapeutics, Inc., a Delaware corporation.
Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.
Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.
Fair Market Value of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common Stock, the closing or last price of the Common Stock on the composite tape or other comparable reporting system for the trading day immediately preceding the applicable date;
(2) If the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the trading day on which Common Stock was traded immediately preceding the applicable date; and
(3) If the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock option under Section 422 of the Code.
Non-Qualified Option means an option which is not intended to qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
Option Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.
Participant means an Employee, director or consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As used herein, Participant shall include Participants Survivors where the context requires.
Plan means this Protagenic Therapeutics, Inc. 2006 Employee, Director and Consultant Stock Plan.
Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.
2
Stock Grant means a grant by the Company of Shares under the Plan.
Stock Grant Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.
Stock Right means a right to Shares of the Company granted pursuant to the Plan, an ISO, a Non-Qualified Option or a Stock Grant.
Survivor means a deceased Participants legal representatives and/or any person or persons who acquired the Participants rights to a Stock Right by will or by the laws of descent and distribution.
| 2. | PURPOSES OF THE PLAN. |
The Plan is intended to encourage ownership of Shares by Employees and directors of and certain consultants to the Company in order to attract such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options and Stock Grants.
| 3. | SHARES SUBJECT TO THE PLAN. |
(a) The number of Shares which may be issued from time to time pursuant to this Plan shall be 140,000 or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 23 of the Plan.
If an Option ceases to be outstanding, in whole or in part, or if the Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares which were subject to such Option and any Shares so reacquired by the Company shall be available for the granting of other Stock Rights under the Plan. Any Option shall be treated as outstanding until such Option is exercised in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties to the pertinent Option Agreement.
| 4. | ADMINISTRATION OF THE PLAN. |
The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:
3
| a. | Interpret the provisions of the Plan or of any Option or Stock Grant and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan; |
| b. | Determine which Employees, directors and consultants shall be granted Stock Rights; |
| c. | Determine the number of Shares for which a Stock Right or Stock Rights shall be granted; |
| d. | Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted; and |
| e. | Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax laws applicable to the Company or to Plan Participants or to otherwise facilitate the administration of the Plan, which sub-plans may include additional restrictions or conditions applicable to Options or Shares acquired upon exercise of Options. |
provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee.
If permissible under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it. Any such allocation or delegation may be revoked by the Board of Directors or the Committee at any time.
| 5. | ELIGIBILITY FOR PARTICIPATION. |
The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be an Employee, director or consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to Employees. Non-Qualified Options and Stock Grants may be granted to any Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights.
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| 6. | TERMS AND CONDITIONS OF OPTIONS. |
Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions:
| A. | Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option: |
| a. | Option Price: Each Option Agreement shall state the option price (per share) of the Shares covered by each Option, which option price shall be determined by the Administrator but shall not be less than the par value per share of Common Stock. |
| b. | Each Option Agreement shall state the number of Shares to which it pertains; |
| c. | Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the attainment of stated goals or events; and |
| d. | Exercise of any Option may be conditioned upon the Participants execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that: |
| i. | The Participants or the Participants Survivors right to sell or transfer the Shares may be restricted; and |
| ii. | The Participant or the Participants Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions. |
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| B. | ISOs: Each Option intended to be an ISO shall be issued only to an Employee and be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service: |
| a. | Minimum standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(A) above, except clause (a) thereunder. |
| b. | Option Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code: |
| i. | 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Shares on the date of the grant of the Option; or |
| ii. | More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less than 110% of the said Fair Market Value on the date of grant. |
| c. | Term of Option: For Participants who own: |
| i. | 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or |
| ii. | More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide. |
| d. | Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at the time each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000. |
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| 7. | TERMS AND CONDITIONS OF STOCK GRANTS. |
Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Stock Grant Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:
| (a) | Each Stock Grant Agreement shall state the purchase price (per share), if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law on the date of the grant of the Stock Grant; |
| (b) | Each Stock Grant Agreement shall state the number of Shares to which the Stock Grant pertains; and |
| (c) | Each Stock Grant Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant, including the time and events upon which such reacquisition rights shall accrue and the purchase price therefor, if any. |
| 8. | EXERCISE OF OPTIONS AND ISSUE OF SHARES. |
An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee, together with provision for payment of the full purchase price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement. Payment of the purchase price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option and held for at least six months, or (c) at the discretion of the Administrator, by delivery of the grantees personal note, for full, partial or no recourse, bearing interest payable not less than annually at market rate on the date of exercise and at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, with or without the pledge of such Shares as collateral, or (d) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.
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The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participants Survivors, as the case may be). In determining what constitutes reasonably promptly, it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or blue sky laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any installment of any Option granted to an Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Paragraph 26) if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6.B.d.
The Administrator may, in its discretion, amend any term or condition of an outstanding Option provided (i) such term or condition as amended is permitted by the Plan, (ii) any such amendment shall be made only with the consent of the Participant to whom the Option was granted, or in the event of the death of the Participant, the Participants Survivors, if the amendment is adverse to the Participant, and (iii) any such amendment of any ISO shall be made only after the Administrator determines whether such amendment would constitute a modification of any Option which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder of such ISO.
| 9. | ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES. |
A Stock Grant (or any part or installment thereof) shall be accepted by executing the Stock Grant Agreement and delivering it to the Company or its designee, together with provision for payment of the full purchase price, if any, in accordance with this Paragraph for the Shares as to which such Stock Grant is being accepted, and upon compliance with any other conditions set forth in the Stock Grant Agreement. Payment of the purchase price for the Shares as to which such Stock Grant is being accepted shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months and having a Fair Market Value equal as of the date of acceptance of the Stock Grant to the purchase price of the Stock Grant, or (c) at the discretion of the Administrator, by delivery of the grantees personal note, for full or partial recourse as determined by the Administrator, bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by any combination of (a), (b) and (c) above.
The Company shall then reasonably promptly deliver the Shares as to which such Stock Grant was accepted to the Participant (or to the Participants Survivors, as the case may be), subject to any escrow provision set forth in the Stock Grant Agreement. In determining what constitutes reasonably promptly, it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or blue sky laws) which requires the Company to take any action with respect to the Shares prior to their issuance.
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The Administrator may, in its discretion, amend any term or condition of an outstanding Stock Grant or Stock Grant Agreement provided (i) such term or condition as amended is permitted by the Plan, and (ii) any such amendment shall be made only with the consent of the Participant to whom the Stock Grant was made, if the amendment is adverse to the Participant.
| 10. | RIGHTS AS A SHAREHOLDER. |
No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right, except after due exercise of the Option or acceptance of the Stock Grant and tender of the full purchase price, if any, for the Shares being purchased pursuant to such exercise or acceptance and registration of the Shares in the Companys share register in the name of the Participant.
| 11. | ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS. |
By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Option Agreement or Stock Grant Agreement. Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock Right shall only be exercisable or may only be accepted, during the Participants lifetime, only by such Participant (or by his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.
| 12. | EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY. |
Except as otherwise provided in a Participants Option Agreement, in the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:
| a. | A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than termination for cause, Disability, or death for which events there are special rules in Paragraphs 13, 14, and 15, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in a Participants Option Agreement. |
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| b. | Except as provided in Subparagraph (c) below, or Paragraph 14 or 15, in no event may an Option intended to be an ISO, be exercised later than three months after the Participants termination of employment. |
| c. | The provisions of this Paragraph, and not the provisions of Paragraph 14 or 15, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy, provided, however, in the case of a Participants Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participants Survivors may exercise the Option within one year after the date of the Participants termination of service, but in no event after the date of expiration of the term of the Option. |
| d. | Notwithstanding anything herein to the contrary, if subsequent to a Participants termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Board of Directors determines that, either prior or subsequent to the Participants termination, the Participant engaged in conduct which would constitute cause, then such Participant shall forthwith cease to have any right to exercise any Option. |
| e. | A Participant to whom an Option has been granted under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a permanent and total Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participants employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide. |
| f. | Except as required by law or as set forth in a Participants Option Agreement, Options granted under the Plan shall not be affected by any change of a Participants status within or among the Company and any Affiliates, so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate. |
| 13. | EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE. |
Except as otherwise provided in a Participants Option Agreement, the following rules apply if the Participants service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated for cause prior to the time that all his or her outstanding Options have been exercised:
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| a. | All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated for cause will immediately be forfeited. |
| b. | For purposes of this Plan, cause shall include (and is not limited to) dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination of the Administrator as to the existence of cause will be conclusive on the Participant and the Company. |
| c. | Cause is not limited to events which have occurred prior to a Participants termination of service, nor is it necessary that the Administrators finding of cause occur prior to termination. If the Administrator determines, subsequent to a Participants termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participants termination the Participant engaged in conduct which would constitute cause, then the right to exercise any Option is forfeited. |
| d. | Any definition in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of cause for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant. |
| 14. | EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY. |
Except as otherwise provided in a Participants Option Agreement, a Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:
| a. | To the extent that the Option has become exercisable but has not been exercised on the date of Disability; and |
| b. | In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability. |
A Disabled Participant may exercise such rights only within the period ending one year after the date of the Participants termination of employment, directorship or consultancy, as the case may be, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not become Disabled and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.
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The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.
| 15. | EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. |
Except as otherwise provided in a Participants Option Agreement, in the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate, such Option may be exercised by the Participants Survivors:
| a. | To the extent that the Option has become exercisable but has not been exercised on the date of death; and |
| b. | In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participants date of death. |
If the Participants Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.
| 16. | EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS. |
In the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant, such offer shall terminate.
For purposes of this Paragraph 16 and Paragraph 17 below, a Participant to whom a Stock Grant has been offered and accepted under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a permanent and total Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participants employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.
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In addition, for purposes of this Paragraph 16 and Paragraph 17 below, any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment, director status or consultancy so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.
| 17. | EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY. |
Except as otherwise provided in a Participants Stock Grant Agreement, in the event of a termination of service (whether as an employee, director or consultant), other than termination for cause, Disability, or death for which events there are special rules in Paragraphs 18, 19, and 20, respectively, before all Company rights of repurchase shall have lapsed, then the Company shall have the right to repurchase that number of Shares subject to a Stock Grant as to which the Companys repurchase rights have not lapsed.
| 18. | EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE. |
Except as otherwise provided in a Participants Stock Grant Agreement, the following rules apply if the Participants service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated for cause:
| a. | All Shares subject to any Stock Grant shall be immediately subject to repurchase by the Company at the purchase price, if any, thereof. |
| b. | For purposes of this Plan, cause shall include (and is not limited to) dishonesty with respect to the employer, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination of the Administrator as to the existence of cause will be conclusive on the Participant and the Company. |
| c. | Cause is not limited to events which have occurred prior to a Participants termination of service, nor is it necessary that the Administrators finding of cause occur prior to termination. If the Administrator determines, subsequent to a Participants termination of service, that either prior or subsequent to the Participants termination the Participant engaged in conduct which would constitute cause, then the Companys right to repurchase all of such Participants Shares shall apply. |
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| d. | Any definition in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of cause for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant. |
| 19. | EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY. |
Except as otherwise provided in a Participants Stock Grant Agreement, the following rules apply if a Participant ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability: to the extent the Companys rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such rights of repurchase lapse periodically, such rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of Disability as would have lapsed had the Participant not become Disabled. The proration shall be based upon the number of days accrued prior to the date of Disability.
The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.
| 20. | EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. |
Except as otherwise provided in a Participants Stock Grant Agreement, the following rules apply in the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate: to the extent the Companys rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such rights of repurchase lapse periodically, such rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of death as would have lapsed had the Participant not died. The proration shall be based upon the number of days accrued prior to the Participants death.
| 21. | PURCHASE FOR INVESTMENT. |
Unless the offering and sale of the Shares to be issued upon the particular exercise or acceptance of a Stock Right shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the 1933 Act), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:
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| a. | The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to the Company, prior to the receipt of such Shares, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their Shares issued pursuant to such exercise or such grant: |
The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.
| b. | At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise or acceptance in compliance with the 1933 Act without registration thereunder. |
| 22. | DISSOLUTION OR LIQUIDATION OF THE COMPANY. |
Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants which have not been accepted will terminate and become null and void; provided, however, that if the rights of a Participant or a Participants Survivors have not otherwise terminated and expired, the Participant or the Participants Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation.
| 23. | ADJUSTMENTS. |
Upon the occurrence of any of the following events, a Participants rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participants Option Agreement or Stock Grant Agreement:
A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, the number of shares of Common Stock deliverable upon the exercise or acceptance of such Stock Right may be appropriately increased or decreased proportionately, and appropriate adjustments may be made including, in the purchase price per share, to reflect such events.
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B. Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in a merger, sale of all or substantially all of the Companys assets other than a transaction to merely change the state of incorporation (a Corporate Transaction), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the Successor Board), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity (provided, that, at the discretion of the Administrator, all unvested Options shall be made fully or partially exercisable for purposes of this Subparagraph upon the closing of the Corporate Transaction); or (ii) upon written notice to the Participants, provide that all Options must be exercised (either to the extent then exercisable or, at the discretion of the Administrator, all Options being made fully or partially exercisable for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Options (either to the extent then exercisable or, at the discretion of the Administrator, all Options being made fully or partially exercisable for purposes of this Subparagraph) over the exercise price thereof.
With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall either (i) make appropriate provisions for the continuation of such Stock Grants by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that all Stock Grants must be accepted (to the extent then subject to acceptance) within a specified number of days of the date of such notice, at the end of which period the offer of the Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Stock Grants over the purchase price thereof, if any. In addition, in the event of a Corporate Transaction, the Administrator may waive any or all Company repurchase rights with respect to outstanding Stock Grants.
Notwithstanding the foregoing, individual Option Agreements and Stock Grant Agreements may provide for different adjustments than those set forth herein.
C. Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company other than a Corporate Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising or accepting a Stock Right after the recapitalization or reorganization shall be entitled to receive for the purchase price paid upon such exercise or acceptance the number of replacement securities which would have been received if such Stock Right had been exercised or accepted prior to such recapitalization or reorganization.
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D. Modification of ISOs. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph A, B or C above with respect to ISOs shall be made only after the Administrator determines whether such adjustments would constitute a modification of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Administrator determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments, unless the holder of an ISO specifically requests in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such modification on his or her income tax treatment with respect to the ISO.
| 24. | ISSUANCES OF SECURITIES. |
Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right.
| 25. | FRACTIONAL SHARES. |
No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.
| 26. | CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs. |
The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participants ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participants ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion.
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| 27. | WITHHOLDING. |
In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act (F.I.C.A.) withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participants salary, wages or other remuneration in connection with the exercise or acceptance of a Stock Right or in connection with a Disqualifying Disposition (as defined in Paragraph 28) or upon the lapsing of any right of repurchase, the Company may withhold from the Participants compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Companys Common Stock or a promissory note, is authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the fair market value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer. The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participants payment of such additional withholding.
| 28. | NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. |
Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
| 29. | TERMINATION OF THE PLAN. |
The Plan will terminate on 10 years after adoption, the date which is ten years from the earlier of the date of its adoption by the Board of Directors and the date of its approval by the shareholders. The Plan may be terminated at an earlier date by vote of the shareholders or the Board of Directors of the Company; provided, however, that any such earlier termination shall not affect any Option Agreements or Stock Grant Agreements executed prior to the effective date of such termination.
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| 30. | AMENDMENT OF THE PLAN AND AGREEMENTS. |
The Plan may be amended by the shareholders of the Company. The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code, and to the extent necessary to qualify the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or Stock Rights to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers. Any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or her. With the consent of the Participant affected, the Administrator may amend outstanding Option Agreements and Stock Grant Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding Option Agreements and Stock Grant Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.
| 31. | EMPLOYMENT OR OTHER RELATIONSHIP. |
Nothing in this Plan or any Option Agreement or Stock Grant Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.
| 32. | GOVERNING LAW. |
This Plan shall be construed and enforced in accordance with the law of the State of Delaware.
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Exhibit 10.17
Participant: [Name]
PROTAGENIC THERAPEUTICS, INC.
FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
(2006 Stock Plan)
THIS AGREEMENT is entered into by and between Protagenic Therapeutics, Inc., a Delaware corporation (hereinafter the Company), and the undersigned employee, consultant of or other provider of services to the Company (hereinafter the Participant).
WHEREAS, the Participant renders important services to the Company of the type specified on the signature page below (such services to be collectively herein referred to as Service), and the Company desires to grant a nonqualified stock option to the Participant;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained, the parties hereto hereby agree as follows:
1. Grant, Exercisability and Term of Option.
(a) The Company hereby grants to the Participant pursuant to the 2006 Employee, Director and Consultant Stock Plan (the Plan), a copy of which is attached as Exhibit 1, the option (the Option) to purchase from the Company upon the terms and conditions hereinafter set forth the number of shares (Shares) of the common stock, $0.001 par value, (Common Stock) of the Company set forth on the signature page below at the purchase price per Share so set forth (the Option Price). The date of grant of this Option is the date set forth on the signature page of this Agreement as the Option Date.
(b) This Option may be exercised only as to Shares which are Vested Shares, as defined in Section 5, at the time of exercise, and such exercise is subject to any other restrictions provided in Section 5. This option shall expire on the tenth anniversary of the Option Date, unless the Option is sooner terminated as hereinafter specified. Only whole Shares may be purchased pursuant to this Option.
2. Conditions and Limitations.
(a) The Option is granted on the condition that the purchase of shares hereunder shall be for investment purposes and not with a view to resale or distribution, except that such condition shall be inoperative if the offering of Shares subject to the Option is registered under the Securities Act of 1933, as amended, or if in the opinion of counsel for the Company such Shares may be resold without registration. At the time of the exercise of the Option or any installment thereof, the Participant will execute a Nonqualified Stock Option Exercise Form in the form attached as Exhibit 2 and such further agreements as the Company may require to implement the foregoing condition and to acknowledge the Participants familiarity with restrictions on the resale of the Shares under applicable securities laws, and the Company may stamp such legend on the certificate representing the Shares as may be necessary or appropriate in light of the foregoing condition.
(b) The Company will furnish upon request of the Participant copies of the certificate of incorporation of the Company, as amended (the Certificate of Incorporation), and bylaws of the Company, as amended (the Bylaws), such publicly available financial and other information concerning the Company and its business and prospects as may be reasonably requested by the Participant in connection with exercise of this Option (and such other financial and other information concerning the Company as may be required to be delivered to Optionees from time to time pursuant to applicable laws).
(c) The Option shall not be transferable otherwise than by will or by the laws of descent and distribution, and except as provided in Section 4 the Option shall be exercisable during the lifetime of the Participant by the Participant only. Notwithstanding the foregoing, however, if the Participant is determined to be mentally incompetent and a guardian or conservator (or other similar person) is appointed by a court of competent jurisdiction to manage the Participants affairs, the guardian or conservator (or other similar person) may exercise the Option on behalf of the Participant, provided that such exercise is made within the time limits prescribed herein.
(d) The Option granted in this Agreement is subject to the terms, conditions and definitions of the Plan. To the extent that the terms, conditions and definitions of this Agreement are inconsistent with those of the Plan, those of this Agreement shall govern. Capitalized terms not otherwise defined herein shall have the meanings defined in the Plan. The Participant hereby accepts this Option subject to all such provisions of the Plan and agrees that all decisions under, and interpretations of, such provisions of the Plan by the Board, as defined in the Plan, shall be final, binding and conclusive upon the Participant and the Participants heirs.
(e) In the event that the Company, upon the advice of counsel, deems it necessary to list upon official notice of issuance any shares to be issued pursuant to the Plan on a national securities exchange or market system or to register under the Securities Act of 1933 or other applicable federal or state statute any shares to be issued pursuant to the Plan, or to qualify any such shares for exemption from the registration requirements of the Securities Act of 1933 under the rules and regulations of the Securities and Exchange Commission or for similar exemption under state law, then the Company shall notify the Participant to that effect and no Shares shall be issued until such registration, listing or exemption has been obtained. The Company shall make prompt application for any such registration, listing or exemption pursuant to federal or state law or rules of such securities exchange which it deems necessary and shall make reasonable efforts to cause such registration, listing, or exemption to become and remain effective.
3. Exercise of Option; Withholding Taxes.
(a) Written notice of the exercise of the Option or any installment thereof shall be given to the Company in the form attached as Exhibit 2, specifying the number of shares for which the Option is exercised and accompanied by (i) payment in full of the Option Price or (ii) if the Common Stock is registered under the Exchange Act, irrevocable instructions to a broker to promptly deliver to the Company full payment in accordance with this Section of the amount necessary to pay the aggregate exercise price. Payment shall be made (a) in cash, (b) by check, (c) at such time as the Common Stock is registered under the Exchange Act, by actual delivery or deemed delivery and assignment to the Company of shares of Common Stock owned by the Participant which (i) have a Fair Market Value not less than the Option Price (as specified on the signature page below), and (ii) have been owned by the Participant for at least six months prior to the date of delivery or deemed delivery of such shares (or such other period as may be required to avoid a charge to the Companys earnings) or were not acquired, directly or indirectly, from the Company, (d) by such other consideration and method of payment approved by the Board or (e) by any combination of the foregoing. Notwithstanding the foregoing, this Option may not be exercised by delivery and assignment to the Company of shares of Common Stock to the extent that such delivery and assignment would constitute a violation of the provisions of any law, or related regulation or rule, or any agreement or Company policy, restricting the transfer or redemption of the Common Stock. For purposes of this Section, a deemed delivery of shares shall mean the offset by the Company of a number of shares subject to the Option against an equal number of shares of the Common Stock owned by the Participant, which may be accomplished by attestation by the Participant as to such shares owned. The Company reserves the right to decline to approve any such procedure in the Companys sole and absolute discretion.
(b) The Companys obligation to deliver Shares upon exercise of an Option shall be subject to the Participants satisfaction of all applicable income and employment tax withholding obligations. Without limiting the generality of the foregoing, the Company shall have the right to deduct from payments of any kind otherwise due to the Participant any taxes of any kind required by law to be withheld with respect to any Shares issued upon exercise of the Option. Payment of withholding taxes may be made (i) by cash, (ii) when the Common Stock is registered under the Exchange Act, through the surrender (by actual or deemed delivery) of shares of Common Stock which the Participant already owns and which, except to the extent otherwise permitted by the Board in any instance, have been owned by the Participant for at least six months prior to the date of delivery or deemed delivery of such Shares (or such other period as may be required to avoid a charge to the Companys earnings) or were not acquired, directly or indirectly, from the Company, or (iii) to the extent of the minimum applicable federal, state and local withholding rate only, through the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Plan, subject to the discretion of the Board to require payment in cash if it determines that payment by other methods is not in the best interests of the Company.
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4. Termination of Option. In the event that the Participant ceases to perform Service for the Company or any parent or subsidiary of the Company (collectively, the Company Group) at any time prior to the exercise of this Option in full, this Option shall terminate according to the following provisions:
(a) If the Participant ceases to perform Service for any reason other than death or disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the Code)), the Participant may at any time within a period of 30 days after the date of such cessation of Service exercise the Option to the extent that the Option was exercisable on the date of such cessation;
(b) If the Participant ceases to perform Service because of disability (as defined in Section 22(e)(3) of the Code), the Participant may at any time within a period of 180 days after the date of such cessation of Service exercise the Option to the extent that the Option was exercisable on the date of such cessation; and
(c) If the Participant ceases to perform Service because of death, the Option, to the extent that the Participant was entitled to exercise it on the date of death, may be exercised within a period of 180 days after the Participants death by the person or persons to whom the Participants rights under the Option shall pass by will or by the laws of descent and distribution; provided, however, that this Option may not be exercised to any extent by anyone after the date of its expiration.
5. Exercisability of Option. The Participants ownership of the Shares shall vest over [ ] year[s] period commencing on the Grant Date Vesting Commencement Date in increments of [ ]% per month on the first day of each calendar month following the Vesting Commencement Date, such that the Shares shall be fully vested on [ ], for so long as the Participant remains as a Consultant to the Company. The Vesting Commencement Date is specified on the signature page below. Shares as to which this Option may be exercised at any time are herein referred to as Vested Shares.
The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all unpurchased Vested Shares until the earlier of the tenth anniversary of the Option Date or the termination of this option under Section 4 hereof or the Plan.
6. Market Stand Off Agreement.
(a) The Participant, if requested by the Company or any managing underwriter of the Companys securities, shall agree not to sell or otherwise transfer or dispose of any shares of the Company held by the Participant during the period up to 180 days, as requested by the Company or such underwriter, following the effective date of a registration statement of the Company filed under the Securities Act of 1933 (except for any Company securities held by the Participant sold pursuant to such registration statement). Such agreement shall be in writing in form satisfactory to the Company or such underwriter. The Company may impose stop-transfer instructions with respect to the Shares subject to the foregoing restriction until the end of such period.
(b) The provisions contained in this Section 6 shall not apply to any transfer of Shares to or in trust for the sole benefit of the Participant, or any member of the immediate family of the Participant, including for this purpose the undersigneds spouse, domestic partner, parents, parents-in-law, issue, nephews, nieces, god-children, brothers, brothers-in-law, sisters, sisters-in-law, children-in-law and grandchildren-in-law, provided that such transferee agrees in writing to be subject to the terms of this Agreement.
7. Notices. All notices or demands given pursuant to this Agreement shall be in writing and shall be deemed to have been sufficiently given if delivered by hand or sent by certified or registered mail, postage prepaid, addressed to the Company at its principal office or to the Participant (or the Participants legal representatives) at the address stated in the Participants (or their) notice or at the Participants address appearing on the books of the Company.
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8. No Service Commitment; Tax Treatment. Nothing herein contained shall be deemed to be or constitute an agreement or commitment by the Company or any other member of the Company Group to continue the Participant in Service. The Option granted hereunder is not intended to qualify as an incentive stock option under Section 422 of the Code, and the Company makes no representation about the tax treatment to the Participant with respect to receipt or exercise of the Option or acquiring, holding or disposing of the Shares. The Participant represents that the Participant has had the opportunity to discuss such treatment with the Participants tax adviser. The Participant shall have no rights as a stockholder with respect to the Shares subject to the Option until the exercise of the Option and the issuance of a stock certificate for the Shares with respect to which the Option shall have been exercised.
9. Adjustment in Shares. In the event of any stock dividends, stock splits, stock combinations, recapitalizations and other similar changes in the capital structure of the Company after the Option Date, the number of shares of Common Stock deliverable upon the exercise of this Option shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the Option Price to reflect such subdivision, combination or stock dividend. In the event of a change of the Common Stock resulting from a merger or similar reorganization as to which the Company is the surviving corporation after the Option Date the number and kind of Shares subject to this Option and the Option Price thereof shall be appropriately adjusted in such manner as the Board may deem equitable to prevent dilution or enlargement of the rights available or granted hereunder. The Boards determination in any specific situation shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to this Option.
10. Acquisition Events.
(a) An Acquisition Event shall mean: (x) any merger or consolidation after which the voting securities of the Company outstanding immediately prior thereto represent (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the voting securities of the Company or such surviving or acquiring entity outstanding immediately after such event; or (y) any sale of all or substantially all of the assets or capital stock of the Company (other than in a spin-off or similar transaction); or (z) any other acquisition of the business of the Company, as determined by the Board.
(b) Upon the occurrence of an Acquisition Event, the Board or the board of directors of any entity assuming the obligations of the Company hereunder (as used in this Section 10(b), also the Board) shall, as to this Option, either (i) make appropriate provision for the continuation of this Option by substituting on an equitable basis for the Shares then subject to this Option either (1) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition Event, (2) shares of stock of the surviving or successor corporation or (3) such other securities as the Board deems appropriate, the Fair Market Value of which shall not materially differ from the Fair Market Value of the shares of Common Stock subject to this Option immediately preceding the Acquisition Event; or (ii) upon written notice to the Participant, provide that this Option must be exercised, to the extent then exercisable or to be exercisable as a result of the Acquisition Event, within a specified number of days of the date of such notice, at the end of which period this Option shall terminate; or (iii) terminate this Option in exchange for a cash payment equal to the excess of the fair market value of the Shares subject to this Option (to the extent then exercisable or to be exercisable as a result of the Acquisition) over the Option Price.
(c) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, this Option will terminate immediately prior to the consummation of such proposed action or at such other time and subject to such other conditions as shall be determined by the Board.
11. Miscellaneous. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware applicable to contracts made in and to be wholly performed within such. This Agreement shall be binding upon and inure to the benefit of the heirs and legal representatives of the Participant and the successors and assigns of the Company, but shall not be assigned by the Participant at any time without the prior written permission of the Company, and any such attempted assignment shall be void.
{Remainder of page intentionally left blank.}
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IN WITNESS WHEREOF the parties have executed this Nonqualified Stock Option Agreement as of the Option Date set forth below.
| Name of Participant: [__________] |
| Signature of Participant: |
|
|
| Address: [_________________________ |
| _________________________________] |
| Type of Service: Consultant |
| Option Date: [______________] |
| No. of Shares: [______________] |
| Option Price: $[_____] |
| Vesting Commencement Date: |
| [______________] |
Accepted, as the issuer of the Shares, in accordance with the terms of the foregoing Nonqualified Stock Option Agreement as of the foregoing Option Date.
| Protagenic Therapeutics, Inc. | ||
| By: | ||
| Its: |
| |
5
Exhibit 1
Protagenic Therapeutics, Inc.
2006 Employee, Director and Consultant Stock Plan
| Exhibit 2 |
| Name of Participant: |
| Date of Exercise: |
NONQUALIFIED STOCK OPTION EXERCISE FORM
Protagenic Therapeutics, Inc.
Dear Sir/Madam:
The undersigned optionee (the Participant), presently or formerly an employee, officer, director, agent or consultant of Protagenic Therapeutics, Inc. (the Company) was granted a nonqualified stock option (the Option) to purchase shares of common stock of the Company at an exercise price of $ per share on , pursuant to the Companys 2006 Employee, Director and Consultant Stock Plan (the Plan) and an Nonqualified Stock Option Agreement dated , 200 (the Option Agreement).
The Participant hereby elects to exercise the Option as to shares of common stock of the Company (the Shares).
Enclosed herewith is full payment in the amount of $ for the Shares in the manner set forth in the Option Agreement. The Participant will make adequate provision for any federal and state income tax withholding obligations of the Company, if any, as more fully set forth in the Option Agreement.
The Participant represents and warrants that the Participant is acquiring the Shares for the Participants own account for investment and not with a view to, or for sale in connection with, any distribution of the Shares. The Participant also represents that the Participant does not have any present intention of selling, offering to sell or otherwise disposing of or distributing the Shares or any portion thereof; and that, subject to the right of the Participant to register the Shares in the joint names of the Participant and the Participants spouse, the entire legal and beneficial interest of the Shares is being purchased for, and will be held for the account of, the Participant only and not for any other person.
The Participant further represents and warrants that at no time was the Participant presented with or solicited by any form of general solicitation or any general advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio or presented at any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
The Participant acknowledges and understands that the purchase of the Shares is a highly speculative investment, and the Participant represents and warrants that the Participant is able, without impairing the Participants financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of the investment.
The Participant further acknowledges and understands that the Shares have not been registered under the Securities Act of 1933, as amended (the Securities Act), and that consequently the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Participant further acknowledges and understands that the Company is under no obligation to register the Shares, that, in the absence of registration, the Shares may be transferred only under limited circumstances, and that transfer of the Shares is subject to restrictions contained in the Certificate of Incorporation and Bylaws of the Company, as amended from time to time, and restrictions contained in the Option Agreement. The Participant understands that the instrument evidencing the Shares will be imprinted with legends which prohibit the transfer of the Shares unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company. The Participant does not have any contract, agreement or arrangement with any person to sell, transfer or grant participations, to such person or to any third person with respect to any of the Shares.
The Participant is aware of the adoption of Rule 144 by the Securities and Exchange Commission, promulgated under the Securities Act, which permits limited public resale of securities acquired in a non-public offering subject to the satisfaction of certain conditions, including, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the securities to be sold, the sale being through a broker in an unsolicited brokers transaction, and the amount of securities being sold during any three-month period not exceeding specified limitations (generally, 1% of the total amount outstanding).
The Participant agrees further that said Shares are being acquired by the Participant in accordance with and subject to the terms, provisions and conditions of the Plan and the Option Agreement, to each of which the Participant hereby expressly assents. Such terms, provisions and conditions shall bind and inure to the benefit of the Participants heirs, legal representatives, successors and assigns.
The Participant agrees to obtain the consent of the Participants spouse to any such agreement which may be required by the Company.
| The Participants address of record is: | ||||||
|
|
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|
and the Participants Social Security Number is: |
| Very truly yours, | ||
|
| ||
| Signature of Participant |
{Spouse of the Participant to sign below if the Shares are to be registered in joint names or if the Participant resides in a community property state:}
The undersigned, being the spouse of the Participant exercising the option as set forth above, does hereby acknowledge that the undersigned has read and is familiar with the provisions of the above Nonqualified Stock Option Exercise Form, the Plan, and the Option Agreement, and the undersigned hereby agrees thereto and joins therein to the extent, if any, that the agreement and joinder of the undersigned may be necessary.
| Signature of Spouse of Participant | ||
| Dated: |
| Receipt of the above is hereby acknowledged. |
| Protagenic Therapeutics, Inc. |
| By: |
| Its: |
| Dated: |
2
Exhibit 10.19(i)
TECHNOLOGY LICENSE AGREEMENT
THIS AGREEMENT is made and effective as of the 21st day of July, 2005
BETWEEN:
THE UNIVERSITY OF TORONTO INNOVATIONS FOUNDATION, a corporation without share capital incorporated under the laws of the Province of Ontario whose full post office address is Suite 200, 243 College Street, Toronto, Ontario M5T 1 R5, Canada
(hereinafter UTIF)
- and-
PROTAGENIC THERAPEUTICS, INC., a corporation incorporated under the laws of Delaware and having a principal place of business at 4264 Corte Favor, San Diego, California 92130 U.S.A.
(hereinafter Licensee)
WHEREAS David Lovejoy, Dalia Barsyte, Susan Rotzinger and Bradley Chewpoy (hereinafter Owners), while employed by the University (as hereinafter defined), made an invention titled Teneurin C-Terminal Associated Peptides (TCAP) and Methods and Uses Thereof and certain improvements thereto (hereinafter Invention);
WHEREAS David Lovejoy, while employed by the University, also made an invention titled Selected Targeting of Residue Motifs (STORM): A Novel Algorithmic Method to Predict Bioactive Peptides in Genome Databases, (hereinafter STORM);
WHEREAS by an Assignment of Rights from the University dated December 12, 2001 and an Assignment of Rights from the University dated July 4, 2003, the University assigned its entire right, title and interest in the Invention to Owners on terms and conditions set out therein;
WHEREAS by an Assignment of Rights from the University dated December 15, 2004, the University assigned its entire right, title and interest in STORM to David Lovejoy on terms and conditions set out therein;
WHEREAS by a Technology Owners Agreement dated March 8, 2002 as amended January 30, 2004, April 28, 2005 and July 20, 2005, the Owners retained UTIF as their agent for the exploitation of the Invention, including the patenting and licensing thereof;
Page 1 of 24
WHEREAS by an Technology Owners Agreement dated July 20, 2005, David Lovejoy retained UTIF as his agent for the exploitation of STORM, including the patenting and licensing thereof;
WHEREAS UTIF, on behalf of the Owners, has filed patent applications in relation to the Invention as listed in Schedule A;
WHEREAS Licensee is a company whose purpose is to develop and commercialize novel drugs;
WHEREAS Licensee wishes to commercialize, develop, manufacture, market, distribute and sell products which may be developed through the use of a part or the whole of the Technology, as hereinafter defined, and therefore desires to obtain a license for the Technology; and
WHEREAS UTIF is willing to grant a license under the terms and conditions set forth hereinafter.
NOW THEREFORE in consideration of the premises and the mutual covenants, terms, conditions and agreements contained herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
| 1.1 | Definitions |
In this Agreement, the following terms have the meanings set forth below unless there is something in the subject matter or context inconsistent therewith:
Affiliate shall mean any company or other legal entity controlling, controlled by or under common control with Licensee. The term control means the ability to direct the management and policies of said entity, whether through ownership of equity, by contract or otherwise;
Agreement means this Technology License Agreement including all attached schedules, as the same may be supplemented, amended, restated or replaced in writing from time to time;
Calendar Quarter shall mean the period of time ending on March 31, June 30, September 30 and December 31 of each year;
Confidential Information means this Agreement and its terms and conditions, the Knowhow, and any information, which is non-public, confidential or proprietary in nature, including, without limitation, business information, trade secrets, and any information related to the Technology, whether written, oral or in electronic form, provided that tangible materials are marked as confidential, and provided that information given orally is identified as confidential at the time of disclosure, and confirmed as confidential in writing within fifteen (15) days, but shall not include information that:
Page 2 of 24
| (a) | is or becomes generally available to the public other than as a result of any act by a Party to this Agreement; |
| (b) | is rightfully received from a Third Party without similar restriction or without breach of this Agreement; |
| (c) | a Party is able to demonstrate, in writing, was known to it on a non-confidential basis; or |
| (d) | was independently developed by a Party without the use of any of the Confidential Information. |
Effective Date shall mean the date first shown in this Agreement;
Field of Use shall mean all human therapeutic applications;
First Commercial Sale means the first sale of a Licensed Product in the Territory after Regulatory Approval (as hereinafter defined), by Licensee or its Affiliates (or their sub-licensee(s)) to any Third Party as evidenced by an invoice or other relevant document to such Third Party. A sale shall not include Licensed Products delivered solely for research purposes or for clinical trials or Licensed Products distributed as samples or promotions;
Improvements means any and all improvements, variations, updates, modifications or enhancements to the Technology which are developed under the terms of a research agreement dated December 14, 2004, as amended May 31, 2005, between Licensee and the Governing Council of the University of Toronto attached hereto as Schedule B;
Intellectual Property Rights means any and all proprietary rights provided under, (i) patent law, (ii) copyright law, (iii) trade-mark law, (iv) design patent or industrial design law, (v) integrated circuit topography or mask work law, or (vi) any other statutory provision or common law principle applicable to this Agreement, including trade secret law, which may provide a right in either ideas, formulae, algorithms, concepts, inventions or know-how generally, or the expression or use of such ideas, formulae, algorithms, concepts, inventions or know-how;
Know-how means any and all trade secrets, technical expertise, knowledge, confidential information and know-how, whether patentable or unpatentable relating to the Patents and/or STORM, whether in written, machine readable, drawing or oral form, including, without limiting the generality of the foregoing, all technical information, raw material, data, product specifications, processes and designs, operating and production data, calculations, computer programs, instructions and techniques, quality control and other standards, and drawings relating thereto whether developed by UTIF, an Owner or the Licensee that exists as of the date of this Agreement;
Page 3 of 24
Licensed Product means (i) any product derived from STORM; (ii) any product derived from an Improvement; and/or (iii) any product derived from, or partially from, at least one claim of the Patents;
Milestones refers to the events which the Licensee has agreed to accomplish within defined periods of time. The Milestones are described in Schedule C of this Agreement;
Net Sales means the gross amount received by Licensee, its Affiliates or sub-licensees (including, without limitation, the fair market value of any non-cash consideration received in connection therewith) net of any of the following charges or expenses that are incurred in connection with the sales, leases or other transfers of Licensed Products: (i) discounts (including cash discounts and quantity discounts), chargeback payments and rebates granted to healthcare organizations or to federal, state or local government (or their respective agencies, purchasers and reimbursers) or to trade customers; (ii) credits, rebates or allowances because of damaged goods or returns with respect to Licensed Products; (iii) freight, postage, shipping and insurance charges incurred in transporting the Licensed Product(s) to the end customer; and (iv) taxes, duties or other governmental charges (other than income taxes) levied on, absorbed or otherwise imposed on sales of Licensed Products;
Parties means UTIF and the Licensee collectively, and Party means one of them;
Patents means the patent application listed in Schedule A appended hereto and any patents and patent applications from which such patent application claims priority, and shall include any divisional, re-examination, renewal, or continuation applications based on any of the foregoing patents and patent applications, any patents which may issue on, from or as a result of any of the foregoing, and any reissue of said patents;
Phase I End means approval by the FDA or other applicable regulatory authority to commence Phase II Clinical Trials of a Licensed Product as such trials are described in 21 C.F.R. 312.21(b);
Phase II End means approval by the FDA or other applicable regulatory authority to commence Phase III Clinical Trials of a Licensed Product as such trials are described in 21 C.F.R. 312.21(c);
Phase III End means Regulatory Approval of a Licensed Product;
Prime Rate for any day means the rate of interest expressed as a rate per annum that The Royal Bank of Canada establishes at its head office in Toronto as the reference rate of interest that it will charge on that day for Canadian dollar demand loans to its customers in Canada and which it at present refers to as its prime rate;
Regulatory Approval means all governmental approvals and authorizations necessary for the manufacture and commercial sale of the Licensed Product in a country of the Territory;
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Secure means the terms of financing agreed to as witnessed by a signed private placement memorandum (PPM) or term sheet and funds in escrow and accessible by Licensee within thirty (30) days following the execution of the PPM or term sheet;
STORM means the invention titled Selected Targeting of Residue Motifs: A Novel Algorithmic Method to Predict Bioactive Peptides in Genome Databases as described in the University of Toronto Confidential Invention Disclosure appended hereto as Schedule D;
Technology means the Patents, STORM, Know-how and, subject to Section 4.4 herein, Improvements;
Territory means each and every country of the world;
Third Party means, in respect of a Party, a person who deals with such Party at arms length, as that term is defined in the Income Tax Act (Canada) on the date hereof; and
University means the University of Toronto.
| 1.2 | Captions |
Captions or descriptive words at the commencement of the various sections are inserted for convenience only, and are in no way to be construed as part of this Agreement or as a limitation upon the scope of the particular section to which they refer.
| 1.3 | Currency |
Unless specified otherwise, all statements of or references to dollar amounts in this Agreement are to lawful money of Canada.
| 1.4 | Schedules |
The following schedules form part of this Agreement:
| Schedule A | Patent Applications | |
| Schedule B | Research Agreement | |
| Schedule C | Milestones | |
| Schedule D | University of Toronto Confidential Invention Disclosure |
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ARTICLE 2
TECHNOLOGY LICENSE
| 2.1 | Grant of License for Technology |
Subject to the terms and conditions hereinafter set forth, UTIF hereby grants to Licensee:
| (a) | an exclusive license, within the Territory and within the Field of Use to develop, make, have made, use, sell, offer for sale and import Licensed Products under all Owners right, title and interest in the Technology; and |
| (b) | an exclusive right to grant sub-licenses of all rights set out in Article 2.1(a) above provided that Licensee shall have the right to audit the books and records of each such sub-licensee in the same manner as UTIF as per Section 3.3(f) hereof. Any such sub-licenses shall be subject to Section 7.2 (b) herein, and Licensee shall notify UTIF of any such sub-license at least thirty (30) days prior to its execution. Further, Licensee shall promptly provide UTIF with a copy of each sub-license agreement entered into hereunder. |
| 2.2 | Reserved Rights |
Licensee acknowledges that UTIF, on behalf of the Owners and the University, has reserved a royalty-free, perpetual irrevocable license to use the Technology and Improvements for the purpose of research, education and administrative purposes.
| 2.3 | Conversion to Non-Exclusive License |
In the event that UTIF elects to convert the rights granted under Section 2.1 herein to non-exclusive rights pursuant to Section 3.2(d) herein:
| (a) | Licensee shall continue to pay all Third Party charges for the filing, prosecution and maintenance of the Patents pursuant to section 4.3 herein. |
| (b) | The right of Licensee to grant sub-licenses to a Third Party under subsection 2.1(b) herein shall be subject to the following conditions: |
| (i) | UTIF has not granted such Third Party with a non-exclusive license in relation to the Technology; |
| (ii) | UTIF is not in discussions/negotiations with such Third Party for a nonexclusive license in relation to the Technology; |
| (iii) | The prior written approval of UTIF, which approval shall not be unreasonably withheld; and |
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| (iv) | Licensee agrees to pay and shall pay to UTIF a non-refundable fee of five thousand dollars ($5,000) within ninety (90) days following the effective date of each sub-license. |
| (c) | Royalties and fees payable to UTIF pursuant to sections 2.3(b)(iv) and 3.l(a) herein shall be first applied to offset all reasonable expenses incurred by Licensee for filing, prosecuting, securing, and maintaining the Patents subsequent to the date upon which the exclusive rights under section 2.1 herein are converted to non-exclusive rights (the Conversion Date). For further clarity, Licensee shall not be entitled to recover such expenses incurred by Licensee prior to the Conversion Date. After Licensee recovers such expenses, any remaining royalties and fees shall be remitted to UTIF according to sections 2.3(b)(iv) and 3.1(a) herein. |
| (d) | All of the remaining terms and conditions of this Agreement shall continue to apply to Licensee. |
ARTICLE 3
CONSIDERATION
| 3.1 | Royalty |
| (a) | In consideration of the entering into of this Agreement, Licensee, together with all Affiliates, shall pay a royalty (the Royalty Payment) to UTIF of two and one-half percent (2.5%) of the Net Sales made during the term of this Agreement. |
| (b) | If Licensee sub-licenses any rights under this Agreement to a Third Party, the Licensee shall pay UTIF a percentage of the upfront sub-license fees and any periodic milestone payments, sub-license maintenance fees, sub-license milestone payments and similar non-royalty payments made by sub-licensees to Licensee on account of sub-licenses pursuant to this Agreement (the Upfront Sub-License Fees), if any such Upfront Sub-License Fees are paid to Licensee, equal to: |
| (i) | fifty percent (50%) of the Upfront Sub-License Fees, if the sub-license occurs on or before September 9, 2005; |
| (ii) | twenty-five percent (25%) of the Upfront Sub-License Fees, if the sub-license occurs after September 9, 2005 but before September 9, 2006; or |
| (iii) | ten percent (10%) of the Upfront Sub-License Fees, if the sub-license occurs on or after September 9, 2006. |
| (c) | If Licensee sub-licenses any rights under this Agreement to a Third Party, the Licensee, on behalf of such sub-licensee, shall pay UTIF a royalty equal to two and one-half percent (2.5%) of the Net Sales in respect of all sales of Licensed Products made during the term of this Agreement by the sub-licensee (the Sub-License Royalty Payment). |
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| (d) | The Upfront Sub-License Fees may include both cash and non-cash consideration as may be agreed upon between UTIF and Licensee. |
| (e) | If Licensee obtains rights to another royalty bearing technology which is included in the Licensed Products and the aggregate royalty payable on the Licensed Products by the Licensee to all parties is greater than five percent (5%) of Net Sales, then Licensee may reduce the royalty payable to UTIF from two and one-half percent (2.5%) to one and one-half percent (1.5%) of Net Sales. In no case will the royalty payable to UTIF be less than one and one-half percent (1.5%) of Net Sales. |
| 3.2 | Milestones |
| (a) | In relation to each Licensed Product, Licensee shall use reasonable commercial efforts to carry out those activities set out in Schedule C: Milestones hereto. |
| (b) | Upon First Commercial Sale of a Licensed Product, Licensee shall be deemed to have met all Milestones for that particular Licensed Product. |
| (c) | Subject to any applicable federal or provincial or state privacy laws or regulations, Licensee shall provide UTIF with the following reports within thirty (30) days following June 30th and December 31st of each year during the term of this Agreement: |
| (i) | a semi-annual development update disclosing a summary of research results (containing sufficient detail acceptable to UTIF, acting reasonably) obtained from the pre-clinical and clinical development of the Licensed Product during the preceding six (6) month period; and |
| (ii) | a semi-annual updated business plan. |
Said reports are expected to demonstrate continued progress toward the Milestones and to ensure that Licensed Product opportunities and revenue potential is maximized.
| (d) | If Licensee fails to either: |
| (i) | provide reports to UTIF pursuant to Section 3.2 (c) herein; or |
| (ii) | continue to make reasonable commercial efforts towards obtaining Regulatory Approval for a Licensed Product |
then Licensee shall cure such breach within six (6) months after written notice of such breach is given to Licensee by UTIF. In the event that Licensee is unable to cure such breach within the said six (6) months, UTIF shall have the option to convert the rights granted pursuant to Section 2.1 herein to non-exclusive rights effective immediately. Upon First Commercial Sale of a Licensed Product, this Subsection 3.2 (d) shall no longer apply for that particular Licensed Product.
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| 3.3 | Accounting and Records |
| (a) | The Royalty Payments, the Upfront Sub-License Fees and the Sub-License Royalty Payments (collectively the Fees) under Section 3.1 herein are to be paid by Licensee to UTIF on a quarterly calendar basis and shall be made within thirty (30) days after the end of each Calendar Quarter in which such Fees are received by Licensee. |
| (b) | The Parties acknowledge that the royalties and fees payable hereunder for all sales of Licensed Products within Canada are subject to the Canadian Goods and Services Tax (GST). Licensee hereby agrees to provide UTIF a statement as to the Licensees GST status and to remit such amounts to UTIF as required under Canadian GST legislation. UTIF is registered to collect GST under registration number 10525 7117 RT000l. |
| (c) | Fees shall be paid to UTIF free and clear of all taxes including income taxes, except such taxes as the Licensee shall be required by law to withhold. |
| (d) | Licensed Products sold under the license granted herein, or under any sub-license, shall be deemed to have been sold when a Licensed Product is delivered and payment is received. |
| (e) | Licensee agrees to keep complete and accurate books of account in which the particulars of all sales of the Licensed Product are recorded in sufficient detail to enable Fees payable hereunder to be determined. |
| (f) | UTIF, or their authorized representatives, shall have the right from time to time, upon ten (10) days prior written notice to Licensee, to audit Licensees said books and records of accounts and all of the documents and other materials in the possession or under the control of Licensee with respect to the subject matter of this Agreement. UTIF reserves the right to confirm any information learned in the course of such audit with individuals or corporations that have purchased a Licensed Product from Licensee to verify the accuracy of Licensees payments of Fees and compliance with the terms hereunder. Licensee shall preserve and keep available to UTIF all such books and records, documents, contracts, and other data (including reports of audits undertaken by Licensee of the books and records of its own sub-licensees) with respect thereto for a period of six (6) years after the date of each such record. |
| (g) | In the event that any audit of the books and records of Licensee reveals an error in excess of five percent (5%) to the detriment of UTIF, then Licensee shall bear all the costs of said examination and pay forthwith all outstanding amounts together with interest thereon as set out under Subsection (i) hereof. |
| (h) | Each payment of the Fees hereunder shall be accompanied by a statement of the Net Sales certified correct by the chief financial officer of Licensee. |
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