PROPOSAL
2
APPROVAL
OF AN AMENDMENT AND RESTATEMENT OF THE ONCOSEC MEDICAL INCORPORATED 2011 STOCK INCENTIVE PLAN
,
FOR THE PURPOSE OF INCREASING THE NUMBER OF SHARES OF
our
COMMON STOCK RESERVED
FOR ISSUANCE THEREUNDER
On
September 18, 2017, the Board approved, subject to and contingent on stockholder approval, an amendment and restatement of the
2011 Plan. We refer to this plan as it is proposed to be amended and restated pursuant to this Proposal 2 as the “Amended
Plan,” and we refer to this plan as it is currently in effect as the “Existing Plan” or the “2011 Plan.”
A purpose of the amendment and restatement is to increase the number of shares of our common stock authorized for issuance thereunder
by 2,500,000 shares, to 7,500,000 shares. Other than this change, which is described in more detail below under “Key Features
of the Proposed Amendment to the Existing Plan,” and the amendment of our provision that provides for certain annual
automatic increases, described in Proposal 3, the terms of the Amended Plan are identical to the terms of the Existing Plan.
A copy of the proposed Amended Plan is included in this Proxy Statement as Annex A.
The
Existing Plan was originally approved by the Board on August 5, 2011 and by our stockholders on March 2, 2012, and originally
authorized the Board to issue up to 260,000 shares of common stock to employees, directors and consultants. Both the Existing
Plan and the proposed Amended Plan provide for an automatic annual increase in the number of shares authorized for issuance, effective
on the first business day of each calendar year. Since the adoption of the Existing Plan, the number of shares of common stock
authorized for issuance has been increased by: (i) 3,369,722 shares of common stock pursuant to three amendments approved by our
stockholders, and (ii) 1,370,278 shares of common stock pursuant to the automatic increase provisions set forth in the
Existing Plan, bringing the total number of shares of common stock authorized for issuance under the Existing Plan to 5,000,000
shares as of the date of this Proxy Statement.
Key
Features of the Proposed Amendment to the Existing Plan
The
Amended Plan will only become effective if approved by our stockholders. If this Proposal 2 is approved, the following amendment
will be made, which is designed to ensure the continued viability of the Amended Plan and which the Board believes is aligned
with the best interests of our stockholders:
Increase
in Number of Shares Authorized for Issuance
Of
the total number of shares of our common stock authorized for issuance under the Existing Plan, 222,291 shares remain available
for grant. The Amended Plan provides for an increase in the number of shares of common stock authorized for issuance thereunder
by 2,500,000 shares, following which, if this Proposal 2 is approved, and taking into account the grant of certain Contingent
Options as described below, 1,727,291 shares of common stock will be available for future grants under the Amended Plan. If the
Amended Plan is approved, we expect to use the additional authorized shares to attract, motivate, and retain high-performing employees,
executive officers, directors and consultants. Based on our prior grant practices, and assuming future grant practices are consistent
with past practices, we expect the addition of 2,500,000 shares will be sufficient to provide a competitive equity incentive program
for approximately two years. Because we have exhausted the current share reserve under the Existing Plan, if the Amended Plan
is not approved by our stockholders, we would not be able to provide future equity incentives.
In
addition, on November 7, 2017, the Board approved (i) the appointment of Mr. Daniel J. O’Connor as our new Chief Executive
Officer, upon Mr. Punit Dhillon’s voluntary resignation from such position, (ii) the confirmation of Mr. Dhillon to continue
to serve in his current position as our President, and (iii) entry into an executive employment agreement with each of Mr. O’Connor
and Mr. Dhillon in connection with such appointments and confirmations. Under these employment agreements, both Mr. O’Connor
and Mr. Dhillon may, subject to certain conditions as described in the agreements (including the availability of a sufficient
share reserve under the Amended Plan), elect on an annual basis to receive all or a portion of their $400,000 base salary in the
form of shares of our common stock, which would be issued under the Amended Plan (the “Salary Election”). If this
Proposal 2 is not approved, then shares of our common stock would not be available for the Salary Elections and all base salary
under Mr. O’Connor’s and Mr. Dhillon’s employment agreements with the Company would be required to be paid in
cash. The terms of Mr. O’Connor’s and Mr. Dhillon’s employment agreements with the Company are described in
more detail under “Executive Compensation—Employment Agreements” below.
Other
than these Salary Election and the Contingent Options, described below, we currently have no plans, proposals or arrangements,
written or otherwise, to issue any of the additional shares of common stock to be authorized for issuance under the Amended Plan
is this Proposal 2 is approved.
As
of November 15, 2017:
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●
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There
were 5,000,000 shares of common stock subject to outstanding stock options granted under the Existing Plan, and of
these, (i) approximately 51% of outstanding stock options were exercisable on that date, (ii) approximately 6% of exercisable
stock options had exercise prices above the $2.22 closing price of our common stock on the NASDAQ Capital Market on that date,
and (iii) 995,000 of the shares subject to the outstanding stock options related to the Contingent Options, described below;
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●
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There
were 1,100,000 shares of common stock subject to outstanding restricted stock units granted to employees, directors and consultants,
and of these, (i) 575,000 restricted stock units were granted on March 4, 2016 and vest on March 4, 2019 and 525,000 restricted
stock units were granted on March 29, 2017 and vest on March 29, 2020;
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●
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There
have been no grants of stock appreciation rights or any other type of award under the Existing Plan.
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Contingent
Options
On
November 4, 2017, the Compensation Committee of the Board approved the grant of stock option awards under the Existing Plan to
purchase up to 995,000 shares of our common stock, which are described in more detail below under “New Plan Benefits”
below (such stock option awards, the “Contingent Options”). At the time the Contingent Option were granted, 222,291
shares of common stock were available for grant under the Existing Plan, and thus 772,709 of the Contingent Options exceeded this
limitation. As a result, 772,709 of the Contingent Options are subject to stockholder approval of this Proposal 2. If this Proposal
2 is not approved by our stockholders, the Contingent Options will be forfeited.
Awards
Outstanding Under the Existing Plan
The
following table provides information about outstanding awards and shares available for future awards under the Existing Plan as
of November 15, 2017 (without giving effect to approval of the Amended Plan under this Proposal 2, but giving effect to and taking
into account the grant of the Contingent Options):
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Awards
Outstanding under the Existing Plan
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As
of
November 15, 2017
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Total
outstanding stock options (1)(2)
|
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5,000,000
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Weighted-average
exercise price of outstanding stock options
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$
|
1.73
|
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Weighted-average
remaining life of outstanding stock options (in years)
|
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8.24
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Total
shares subject to outstanding unvested full-value awards (2)
|
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1,100,000
|
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Total
shares available for future grant
|
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0
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(1)
|
In
addition, as of November 15, 2017, there were (i) 2,500,000 shares subject to stock option awards granted to Daniel J. O’Connor
upon his appointment as our Chief Executive Officer, which we refer to as the “O’Connor Options” and which
were not granted under the Existing Plan and are contingent upon obtaining the approval of our stockholders at the Annual
Meeting (see Proposal 4 for a description of these awards), and (ii) 270,000 shares subject to an outstanding stock option
award that was not granted under the Existing Plan. The out-of-plan stock option award with respect to 270,000 shares was
granted on September 1, 2016 to a new employee as an inducement material to entering into employment with the Company, has
an exercise price of $1.71 per share, has a term of 10 years from the date of grant, and becomes fully vested within three
years of the date of grant. As of November 15, 2017, 146,250 of the shares subject to this out-of-plan stock option award
were fully vested.
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(2)
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Includes
all shares subject to the Contingent Options.
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(3)
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Includes
all outstanding and unvested restricted stock unit awards, of which there were 1,100,000 as of November 15, 2017, and restricted
stock bonus awards, of which there were none as of November 15, 2017.
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Summary
of the Amended Plan
The
following is a summary of the material features of the Amended Plan. This summary does not purport to be a complete description
of all of the provisions of the Amended Plan. It is qualified in its entirety by reference to the full text of the Amended Plan,
which is set forth on Annex A of this Proxy Statement. In the event of any inconsistency between the Amended Plan and this summary,
the Amended Plan will control. Any stockholder who desires to obtain a copy of either the Existing Plan or the Amended Plan may
do so by written request to the Company at 5820 Nancy Ridge Drive, San Diego, California 92121, Attn: Secretary.
Eligibility
Awards
other than incentive stock options may be granted to employees, directors and consultants. Incentive stock options may be granted
only to employees of the Company or a parent or a subsidiary of the Company. An employee, director or consultant who has been
granted an award may, if otherwise eligible, be granted additional awards. Awards may be granted to such employees, directors
or consultants who are residing in non-U.S. jurisdictions as the Plan Administrator may determine from time to time. As a result
of their eligibility to participate in the Amended Plan, our directors and executive officers may have a substantial interest
in this Proposal 2; however, because the Amended Plan provides for broad discretion in selecting which eligible persons will participate
and in granting awards, the total number of persons who will actually participate in the Amended Plan and the benefits that will
be provided to the participants cannot be determined at this time. As of November 15, 2017, approximately 34 employees (three
of whom are current executive officers of the Company), six directors, and 12 consultants were eligible to participate in
the Amended Plan.
Administration
The
Amended Plan is administered, at the Company’s expense, by the Board or a committee designated by the Board, and is currently
being administered by the Compensation Committee of the Board (each such entity, the “Plan Administrator”). All questions
of interpretation or application of the Amended Plan are determined in the sole discretion of the Plan Administrator, and its
decisions are final, conclusive, and binding upon all persons. With respect to grants to officers and directors, the Compensation
Committee shall be constituted in such a manner as to satisfy applicable laws, including Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and Section 162(m) of the Internal Revenue Code (the “Code”).
Share
Reserve
Currently,
5,000,000 shares of the Company’s common stock are authorized for issuance under the Existing Plan. The Amended Plan provides
for an automatic increase in the reserve of shares available for grant under the Amended Plan on the first business day of each
calendar year beginning with 2018, by the lesser of (i) 3% of the shares of common stock outstanding as of the last day of the
immediately preceding calendar year, (ii) 500,000 shares and (iii) such lesser number of shares as may be determined by the Board
(see Proposal 3).
Of
the 5,000,000 shares currently authorized for issuance under the Existing Plan, as of November 15, 2017, (i) 7,500 shares have
been issued pursuant to restricted stock bonus awards, (ii) stock options to purchase 186,133 shares have been exercised,
(iii) stock options for 3,706,367 shares, including the Contingent Options, are outstanding and available for exercise,
subject to vesting and other conditions, (iv) awards for 1,100,000 restricted stock units remain outstanding, and (v) zero shares
remain available for grant pursuant to future awards. If stockholders approve the Amended Plan, the maximum aggregate number of
shares that may be issued under the Amended Plan will increase to 7,500,000 shares of common stock.
The
number of shares available under the Amended Plan is subject to adjustment in the event of a stock split, reverse stock split,
stock dividend, recapitalization, combination or reclassification of shares or other similar transaction affecting the shares,
or any other transaction affecting the shares, including a corporate merger, consolidation, acquisition of property or stock,
separation (including a spin-off or other distribution of stock or property), reorganization or a liquidation (whether partial
or complete).
Any
shares covered by an award that is forfeited, canceled or expires (whether voluntary or involuntary) shall be deemed not to have
been issued for purposes of determining the maximum number of shares that may be issued under the Amended Plan. Shares that have
been issued under the Amended Plan pursuant to an award shall not be returned to the Amended Plan and shall not become available
for future grant under the Amended Plan, except where unvested shares are forfeited or repurchased by the Company at the lower
of their original purchase price or their fair market value. To the extent not prohibited by the listing requirements of The NASDAQ
Stock Market LLC (“NASDAQ”)(or other established stock exchange or national market system on which the shares are
traded) or applicable law, shares tendered or withheld in payment of an award exercise or purchase price and shares withheld by
the Company to pay any tax withholding obligation shall be returned to the Amended Plan and shall become available for future
issuance under the Amended Plan, unless otherwise determined by the Plan Administrator.
Types
of Awards
The
Plan Administrator is authorized under the Amended Plan to award any type of arrangement to an employee, director or consultant
that is not inconsistent with the provisions of the Amended Plan and that by its terms involves or might involve the issuance
of (i) shares of common stock, (ii) cash, or (iii) an option, a stock appreciation right (a “SAR”), or a similar right
with a fixed or variable price related to the fair market value of the shares and with an exercise or conversion privilege related
to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions.
Such awards include, without limitation, options, SARs, sales or bonuses of restricted stock, restricted stock units or dividend
equivalent rights (collectively, “awards”), and an award may consist of one such security or benefit, or two or more
of them in any combination or alternative.
Terms
and Conditions of Awards
Incentive
stock options may be granted only to employees. Awards other than incentive stock options may be granted to our employees, consultants
and directors and those of the Company’s related entities, including such employees, consultants or directors who are residing
in non-U.S. jurisdictions as the Plan Administrator may determine from time to time. Each award granted under the Amended Plan
shall be designated in an award agreement. To the extent the aggregate fair market value of the shares subject to stock options
designated as incentive stock options that become exercisable for the first time by a participant during any calendar year exceeds
$100,000, such excess stock options shall be treated as non-qualified stock options.
Awards
may be granted subject to vesting schedules and restrictions on transfer and repurchase or forfeiture rights in favor of the Company
as specified in the award agreements to be issued under the Amended Plan. Incentive stock options may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be
exercised during the lifetime of the participant only by the participant. However, the Amended Plan permits the designation of
beneficiaries by holders of awards, including incentive stock options. Other awards shall be transferable by will and by the laws
of descent and distribution and during the lifetime of the participant, to the extent and in the manner authorized by the Plan
Administrator.
The
Plan Administrator has the authority, in its discretion, to select employees, consultants and directors to whom awards may be
granted from time to time; to determine whether and to what extent awards are granted; to determine the number of shares or the
amount of other consideration to be covered by each award (subject to the limitations set forth below); to approve award agreements
for use under the Amended Plan; to determine the terms and conditions of any award (including, without limitation, vesting schedules,
repurchase provisions, rights of first refusal, forfeiture provisions, form of payment, payment contingencies and satisfaction
of any performance criteria), to amend the terms of any outstanding award granted under the Amended Plan; to construe and interpret
the terms of the Amended Plan and awards granted under the Amended Plan; to establish additional terms, conditions, rules or procedures
to accommodate the rules or laws of applicable non-U.S. jurisdictions; and to take such other action not inconsistent with the
terms of the Amended Plan, in each case, as the Plan Administrator deems appropriate.
The
term of any award granted under the Amended Plan will be stated in the applicable award agreement, provided that the term of an
incentive stock option may not exceed 10 years (or five years in the case of an incentive stock option granted to any employee
who owns stock representing more than 10% of the combined voting power of the Company or its parent or subsidiary). Notwithstanding
the foregoing, the term of an award shall not include any period for which the participant has elected to defer the receipt of
the shares or cash issuable pursuant to the award under any deferral program the Plan Administrator may establish in its discretion.
The
Amended Plan authorizes the Plan Administrator to grant incentive stock options at an exercise price not less than 100% of the
fair market value of our common stock on the date the stock option is granted (or 110%, in the case of an incentive stock option
granted to any employee who owns stock representing more than 10% of the combined voting power of the Company or a parent or subsidiary).
In the case of non-qualified stock options, SARs, and awards intended to qualify as performance-based compensation, the exercise
price, base appreciation amount or purchase price (as applicable) shall be not less than 100% of the fair market value per share
on the date of grant. In the case of all other awards granted under the Amended Plan, the exercise or purchase price shall be
determined by the Plan Administrator. The method of payment of the exercise or purchase price shall be determined by the Plan
Administrator. The Plan Administrator, in its discretion, may accept the following, individually or in combination, and in addition
to any other types of consideration: cash; check; shares; or with respect to stock options, payment through a broker-dealer sale
and remittance procedure or a “net exercise.”
Under
the Amended Plan, the Plan Administrator may establish one or more programs to permit selected participants the opportunity to
elect to defer receipt of consideration payable under an award. The Administrator also may establish separate programs for the
grant of particular forms of awards to one or more classes of participants.
Section
162(m) of the Code.
For
awards of stock options and SARs that are intended to be performance-based compensation under Section 162(m) of the Code, the
maximum number of shares subject to such awards that may be granted to a participant during a fiscal year is 500,000 shares. For
awards of restricted stock and restricted stock units that are intended to be performance-based compensation under Section 162(m)
of the Code, the maximum number of shares subject to such awards that may be granted to a participant during a fiscal year is
500,000 shares. The foregoing limitations shall be adjusted proportionately by the Plan Administrator in the event of any change
in the Company’s capitalization, and its determination shall be final, binding and conclusive.
In
order for an award of restricted stock and restricted stock units to qualify as performance-based compensation, the Administrator
must establish a performance goal with respect to such award in writing not later than 90 days after the commencement of the services
to which it relates (or, if earlier, the date after which 25% of the period of service to which the performance goal relates has
elapsed) and while the outcome is substantially uncertain. In addition, the performance goal must be stated in terms of an objective
formula or standard.
Under
Code Section 162(m), a “covered employee” is the Company’s chief executive officer (or individual serving in
such capacity) and the three other most highly compensated officers of the Company other than the chief financial officer.
The
Amended Plan includes the following performance criteria that may be considered by the Plan Administrator when granting awards
intended to qualify as performance-based compensation under Section 162(m) of the Code: (i) net earnings or net income (before
or after taxes); (ii) earnings per share or earnings per share growth, total units or unit growth; (iii) net sales, sales growth,
total revenue or revenue growth; (iv) operating income, net operating profit or pre-tax profit; (v) return measures (including,
but not limited to, return on assets, capital, invested capital, equity, sales or revenue); (vi) cash flow (including, but not
limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment); (vii) earnings
before or after taxes, interest, depreciation, and/or amortization; (viii) gross or operating margins; (ix) productivity ratios;
(x) share price or relative share price (including, but not limited to, growth measures and total stockholder return); (xi) expense
targets; (xii) margins; (xiii) operating efficiency; (xiv) market share or change in market share; (xv) customer retention or
satisfaction; (xvi) working capital targets; (xvii) completion of strategic financing goals, acquisitions or alliances and clinical
progress; (xviii) company project milestones; and (xix) economic value added (net operating profit after tax minus the sum of
capital multiplied by the cost of capital). The performance criteria may be applicable to the Company, related entities and/or
any individual business units of the Company or any related entity. Partial achievement of the specified criteria may result in
a payment or vesting corresponding to the degree of achievement as specified in the award agreement. In addition, the performance
criteria shall be calculated in accordance with generally accepted accounting principles, but excluding the effect (whether positive
or negative) of any change in accounting standards and any other item that is either unusual or infrequent in nature, as determined
by the Plan Administrator in accordance with Accounting Standards Codification Topic 225-20 “Extraordinary and Unusual Item.”
Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis from period to period for the
calculation of performance criteria in order to prevent the dilution or enlargement of the grantee’s rights with respect
to an award intended to be performance-based compensation.
Amendment,
Suspension and Termination
The
Board may at any time amend, suspend, or terminate the Amended Plan; provided, however, that no such amendment shall be made without
the approval of the Company’s stockholders if such amendment would require stockholder approval under Section 422 of the
Code or any other applicable law or regulation. Any amendment, suspension or termination of the Amended Plan may not adversely
affect the rights of any participant under an outstanding award (unless such participant’s written consent is obtained).
Notwithstanding the foregoing, the reduction or increase of the exercise price of any stock option or the base appreciation amount
of a SAR and the canceling of any stock option or SAR at a time when its exercise price or base appreciation amount exceeds the
fair market value of the underlying shares in exchange for another award shall not be subject to stockholder approval.
Certain
Adjustments
Subject
to any required action by the stockholders of the Company, the number of shares covered by outstanding awards, the number of shares
that have been authorized for issuance under the Amended Plan but as to which no awards have been granted or which have been returned
to the Amended Plan, the exercise or purchase price of each outstanding award, the maximum number of shares with respect to which
awards may be granted to any participant in any calendar year, and the like, shall be proportionally adjusted by the Plan Administrator
in the event of (i) any increase or decrease in the number of issued shares resulting from a stock split, reverse stock split,
stock dividend, recapitalization, combination or reclassification or similar transaction affecting the shares; (ii) any other
increase or decrease in the number of issued shares effected without receipt of consideration by the Company; or (iii) any other
transaction with respect to the Company’s common stock including a corporate merger, consolidation, acquisition of property
or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial
or complete), distribution of cash or other assets to stockholders other than a normal cash dividend, or any similar transaction;
provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” In the event of any distribution of cash or other assets to stockholders other than a
normal cash dividend, the Plan Administrator may also substitute, exchange or grant awards to effect such adjustment. Any such
adjustments shall be made by the Plan Administrator and its determination shall be final, binding and conclusive.
Change
in Control
Except
as otherwise stipulated in an award agreement and irrespective of whether an award is assumed or replaced, in the event of a change
in control of the Company, the Amended Plan provides for the automatic vesting and exercisability, and the lapsing of all other
restrictions, including vesting restrictions, of all unvested awards. Any performance criteria relevant to such awards shall be
deemed to have been achieved at the target performance level. The Plan Administrator may provide that awards that remain outstanding
after vesting will be assumed or replaced in connection with the change in control. The Plan Administrator may also provide for
the cashing out of outstanding and vested options and SARs based upon the per-share consideration being paid in connection with
the change in control, less the applicable exercise price or base amount.
Under
the Amended Plan, “
change in control
” refers to a change in ownership or control of the Company effected through
any of the following transactions: (i) a person or group’s direct or indirect acquisition of shares representing more than
50% of the total combined voting power of the Company’s outstanding securities; (ii) a change in the majority of the Company’s
board members within 12 months by reason of one or more contested elections; (iii) the consummation of a corporate transaction
such as a merger, reorganization, share exchange or consolidation, or asset sale; or (iv) a complete liquidation or dissolution
of the Company.
Transferability
Awards
generally will be non-transferable except upon the death of a participant, although the Plan Administrator may permit a participant
to transfer awards other than incentive stock options (for example, to family members or trusts for family members) subject to
such conditions as the Plan Administrator may establish.
Plan
Benefits
The
proposed amendment and restatement of the Existing Plan would increase the number of shares authorized for issuance from 5,000,000
shares to 7,500,000 shares. Awards granted under the Amended Plan are at the discretion of the Plan Administrator. With the exception
of grants that have already been made, it is not possible to determine the benefits or the amounts to be received under the Amended
Plan by the Company’s officers, employees, consultants or non-employee directors as a result of such an increase in the
number of shares authorized for issuance under the Amended Plan, or as a result of an increase to the provision that provides
for certain annual automatic increases under the Amended Plan as described in Proposal 3.
New
Plan Benefits
The
following table sets forth all stock options that have been granted to our named executive officers, our current executive officers,
our non-executive officer employees and our non-employee directors that are subject to stockholder approval of this Proposal 2
and Proposal 4:
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Name
of Individual or Identity of Group and Position
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Number
of Shares
Underlying
Contingent Options
(Granted under the
Existing Plan) (1)
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Number
of Shares
Underlying O’Connor
Options (Granted
Outside the Existing
Plan) (2)
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Named
Executive Officers and Current Executive Officers:
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Daniel
J. O’Connor, Chief Executive Officer, Current Director and Director Nominee
|
|
|
—
|
|
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2,500,000
|
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Punit
S. Dhillon, President, Current Director and Director Nominee
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250,000
|
|
|
|
—
|
|
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Richard
B. Slansky, Chief Financial Officer
|
|
|
100,000
|
|
|
|
—
|
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Dr.
Sharron Gargosky, Chief Clinical and Regulatory Officer
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100,000
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|
|
|
—
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All
current executive officers, as a group (3 persons)
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350,000
|
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|
|
—
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Non-Employee
Directors and Non-Executive Officer Employees:
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All
current non-employee directors and director nominees, as a group (4 persons)
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—
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—
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All
non-executive officer employees (including all current officers who are not executive officers) as a group
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645,000
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—
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(1)
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Each
Contingent Option was granted under the Existing Plan on November 4, 2017, has an exercise price of $1.32 per share, will
expire on November 4, 2027, and vests as follows: 25% of the shares subject to the award vested on the November 4,
2017 grant date and 1/36
th
of the remaining 75% of the shares subject to the award will vest on each of the 36
monthly anniversaries of the grant date, subject to continuing service by the named executive officer on each vesting date.
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(2)
|
The
O’Connor Options consist of two stock option awards granted outside of the Existing Plan upon Mr. O’Connor’s
appointment as our Chief Executive Officer and are described in detail in Proposal 4.
|
The
following table sets forth the number of outstanding awards held by our executive officers, directors and employees under the
Existing Plan as of November 15, 2017:
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Name
of Individual or Identity of Group and Position
|
|
Number
of Shares
Underlying
Outstanding Stock
Options Under the
Existing Plan
|
|
|
Number
of Shares
Underlying
Outstanding
Restricted Stock
Units Under the
Existing Plan
|
|
|
Named
Executive Officers and Current Executive Officers:
|
|
|
|
|
|
|
|
|
|
Daniel
J. O’Connor, Chief Executive Officer, Current Director and Director Nominee
|
|
|
100,000
|
|
|
|
—
|
|
|
Punit
S. Dhillon, President, Current Director and Director Nominee
|
|
|
564,583
|
|
|
|
275,000
|
|
|
Richard
B. Slansky, Chief Financial Officer
|
|
|
247,500
|
|
|
|
200,000
|
|
|
Dr.
Sharron Gargosky, Chief Clinical and Regulatory Officer
|
|
|
75,000
|
|
|
|
100,000
|
|
|
All
current executive officers, as a group (3 persons)
|
|
|
987,083
|
|
|
|
575,000
|
|
|
Current
Non-Employee Directors and Director Nominees:
|
|
|
|
|
|
|
|
|
|
Dr.
Avtar Dhillon, Chairman of the Board and Director Nominee
|
|
|
297,916
|
|
|
|
100,000
|
|
|
Dr.
James DeMesa, Current Director and Director Nominee
|
|
|
126,500
|
|
|
|
—
|
|
|
Dr.
Annalisa M. Jenkins, Current Director and Director Nominee
|
|
|
100,000
|
|
|
|
—
|
|
|
Dr.
Anthony Maida, Current Director
|
|
|
131,500
|
|
|
|
—
|
|
|
All
current non-employee directors and director nominees, as a group (5 persons)
|
|
|
655,916
|
|
|
|
100,000
|
|
|
Others:
|
|
|
|
|
|
|
|
|
|
Associates
of current executive officers, directors or director nominees who have received awards under the Existing Plan
|
|
|
—
|
|
|
|
—
|
|
|
All
non-executive officer employees (including all current officers who are not executive officers) as a group
|
|
|
1,984,710
|
|
|
|
425,000
|
|
No
person not listed in the table above has received or is expected to receive 5% or more of the awards under the Existing Plan.
As of November 27, 2017, the closing price of our common stock on the NASDAQ Capital Market was $1.99 per share.
Certain
U.S. Federal Income Tax Consequences
The
following is general summary as of this date of the federal income tax consequences to us and to U.S. participants for awards
granted under the Amended Plan. The federal tax laws may change and the federal, state and local tax consequences for any participant
will depend upon his or her individual circumstances. Tax consequences for any particular individual may be different. This summary
does not purport to be complete, and does not discuss state, local or non-U.S. tax consequences.
Non-Qualified
Stock Options
The
grant of a non-qualified stock option under the Amended Plan will not result in any federal income tax consequences to the participant
or to the Company. Upon exercise of a non-qualified stock option, the participant is subject to income taxes at the rate applicable
to ordinary compensation income on the difference between the option exercise price and the fair market value of the shares at
the time of exercise. This income is subject to withholding for federal income and employment tax purposes. The Company is entitled
to an income tax deduction in the amount of the income recognized by the participant, subject to possible limitations imposed
by Section 162(m) of the Code and so long as the Company withholds the appropriate taxes with respect to such income (if required)
and the participant’s total compensation is deemed reasonable in amount. Any gain or loss on the participant’s subsequent
disposition of the shares of common stock will receive long or short-term capital gain or loss treatment, depending on whether
the shares are held for more than one year following exercise. The Company does not receive a tax deduction for any such gain.
A
non-qualified stock option can be considered non-qualified deferred compensation and subject to Section 409A of the Code. A non-qualified
stock option that does not meet the requirements of Code Section 409A can result in the acceleration of income recognition, an
additional 20% tax obligation, plus penalties and interest.
Incentive
Stock Options.
The grant of an incentive stock option under the Amended Plan will not result in any federal income tax consequences
to the participant or to the Company. A participant recognizes no federal taxable income upon exercising an incentive stock option
(subject to the alternative minimum tax rules discussed below), and the Company receives no deduction at the time of exercise.
In the event of a disposition of stock acquired upon exercise of an incentive stock option, the tax consequences depend upon how
long the participant has held the shares of common stock. If the participant does not dispose of the shares within two years after
the incentive stock option was granted, nor within one year after the incentive stock option was exercised, the participant will
recognize a long-term capital gain (or loss) equal to the difference between the sale price of the shares and the exercise price.
The Company is not entitled to any deduction under these circumstances.
If
the participant fails to satisfy either of the foregoing holding periods (referred to as a “disqualifying disposition”),
he or she must recognize ordinary income in the year of the disposition. The amount of ordinary income generally is the lesser
of (i) the difference between the amount realized on the disposition and the exercise price, or (ii) the difference between the
fair market value of the stock at the time of exercise and the exercise price. Any gain in excess of the amount taxed as ordinary
income will be treated as a long or short-term capital gain, depending on whether the stock was held for more than one year. The
Company, in the year of the disqualifying disposition, is entitled to a deduction equal to the amount of ordinary income recognized
by the participant, subject to possible limitations imposed by Section 162(m) of the Code and so long as the participant’s
total compensation is deemed reasonable in amount.
The
“spread” under an incentive stock option—i.e., the difference between the fair market value of the shares at
exercise and the exercise price—is classified as an item of adjustment in the year of exercise for purposes of the alternative
minimum tax. If a participant’s alternative minimum tax liability exceeds such participant’s regular income tax liability,
the participant will owe the larger amount of taxes. In order to avoid the application of alternative minimum tax with respect
to incentive stock options, the participant must sell the shares within the calendar year in which the incentive stock options
are exercised. However, such a sale of shares within the year of exercise will constitute a disqualifying disposition, as described
above.
Stock
Appreciation Rights
Recipients
of SARs generally should not recognize income until the SAR is exercised (assuming there is no ceiling on the value of the right).
Upon exercise, the recipient will normally recognize taxable ordinary income for federal income tax purposes equal to the amount
of cash and fair market value of the shares, if any, received upon such exercise. Recipients who are employees will be subject
to withholding for federal income and employment tax purposes with respect to income recognized upon exercise of a SAR. Recipients
will recognize gain upon the disposition of any shares received on exercise of a SAR equal to the excess of (i) the amount realized
on such disposition, over (ii) the ordinary income recognized with respect to such shares under the principles set forth above.
That gain will be taxable as long or short-term capital gain depending on whether the shares were held for more than one year.
The Company will be entitled to a tax deduction to the extent and in the year that ordinary income is recognized by the recipient,
subject to possible limitations imposed by Section 162(m) of the Code and so long as the appropriate taxes are withheld with respect
to such income (if required) and the recipient’s total compensation is deemed reasonable in amount.
A
SAR also can be considered non-qualified deferred compensation and subject to Section 409A of the Code. A SAR that does not meet
the requirements of Code Section 409A can result in the acceleration of income recognition, an additional 20% tax obligation,
plus penalties and interest.
Restricted
Stock
A
restricted stock award is subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code
to the extent the award will be forfeited in the event that the participant ceases to provide services to the Company. As a result
of this substantial risk of forfeiture, the recipient will not recognize ordinary income at the time of the award (absent certain
vesting acceleration provisions). Instead, the recipient will recognize ordinary income on the date when the stock is no longer
subject to a substantial risk of forfeiture, or when the stock becomes transferable, if earlier. The recipient’s ordinary
income is measured as the difference between the amount paid for the stock, if any, and the fair market value of the stock on
the earlier of those two dates.
The
recipient may accelerate his or her recognition of ordinary income, if any, and begin his or her capital gains holding period
by timely filing (
i.e.
, within 30 days of the award) an election pursuant to Section 83(b) of the Code. In such event,
the ordinary income recognized, if any, is measured as the difference between the amount paid for the stock, if any, and the fair
market value of the stock on the date of award, and the capital gain holding period commences on such date. The ordinary income
recognized by a recipient that is an employee or former employee will be subject to tax withholding by the Company.
Restricted
Stock Units
With
respect to awards of restricted stock units, no taxable income is reportable when the restricted stock units are granted to a
participant or upon vesting of the restricted stock units. Upon settlement, the recipient will recognize ordinary income in an
amount equal to the value of the payment received pursuant to the restricted stock units. The ordinary income recognized by a
recipient that is an employee or former employee will be subject to tax withholding by the Company.
Restricted
stock units also can be considered non-qualified deferred compensation and subject to Section 409A of the Code. A grant of restricted
stock units that does not meet the requirements of Code Section 409A will result in an additional 20% tax obligation, plus penalties
and interest to such recipient.
Dividends
and Dividend Equivalents
Recipients
of stock-based awards that earn dividends or dividend equivalents will recognize taxable ordinary income on any dividend payments
received with respect to unvested and/or unexercised shares subject to such awards, which income is subject to withholding for
federal income and employment tax purposes. We are entitled to an income tax deduction in the amount of the income recognized
by a participant, subject to possible limitations imposed by Section 162(m) of the Code and so long as we withhold the appropriate
taxes with respect to such income (if required) and the individual’s total compensation is deemed reasonable in amount.
Tax
Effect for the Company
Unless
limited by Section 162(m) of the Code, the Company generally will be entitled to a tax deduction in connection with an award under
the Amended Plan in an amount equal to the ordinary income realized by a recipient at the time the recipient recognizes such income
(for example, when restricted stock is no longer subject to the risk of forfeiture).
The
Amended Plan is not subject to any of the requirements of the Employee Retirement Income Security Act of 1974, as amended. The
Amended Plan is not, nor is it intended to be, qualified under Section 401(a) of the Code.
The
Board of Directors recommends that you vote “FOR” the approval of the Amended Plan, for the purpose of increasing
the number of shares of our common stock reserved for issuance thereunder.
Annual
Report
Our
Annual Report accompanies this Proxy Statement. Additional copies of the Annual Report, without exhibits, can be obtained without
charge by contacting us at 5820 Nancy Ridge Drive, San Diego, California 92121, or (855) 662-6732, or can be accessed on our website,
located at
www.oncosec.com
.
Stockholder
Director Nominations and Other Proposals for Our Next Annual Meeting of Stockholders
The
submission deadline for stockholder proposals to be included in our proxy materials for our next annual meeting of stockholders
after the Annual Meeting pursuant to Rule 14a-8 under the Exchange Act is July 31, 2018 if the meeting is held between
December 13, 2018 and February 11, 2019 or, if the meeting is not held within these dates, a reasonable time before we begin to
print and send our proxy materials for the meeting. All such proposals must be in writing and sent to our Secretary at the address
of our principal executive offices, and must otherwise comply with Rule 14a-8 in all respects.
In
addition, under our bylaws, director nominees and other proposals may be presented at an annual meeting of stockholders only by
or at the direction of the Board or by a stockholder who has given us timely written notice of the nomination or proposal. To
be timely for our 2018 annual meeting of stockholders, (i) in the case of a stockholder seeking inclusion of a proposal (but not
a director nominee) in our proxy materials, the stockholder’s notice must be delivered to or mailed and received by our
Secretary at the address of our principal executive offices between June 1, 2018 and July 31, 2018 if the meeting
is held between December 13, 2018 and February 11, 2019, or if the meeting is not held within these dates, no later than the 90
th
day before the date of the meeting or the 15
th
day after our first public announcement of the date of the meeting,
whichever is later, and (ii) in the case of a stockholder not seeking inclusion of a director nominee or other proposal in our
proxy materials, a stockholder’s notice must be delivered to or mailed and received by our Secretary at the address of our
principal executive offices not less than 90 days before the date of the meeting. A stockholder’s notice must set forth,
as to each director nominee or other proposal the stockholder proposes to bring before the meeting, all of the information required
by our bylaws. Stockholders may obtain more information about these notice requirements by referencing a copy of our bylaws contained
in the filings we make with the SEC, which are available through our website at
www.oncosec.com
or through the SEC’s
website at
www.sec.gov
.
We
will not entertain any director nominations or other proposal at the Annual Meeting or at our 2018 annual meeting of stockholders
that do not meet the requirements set forth in our Bylaws. Further, if we comply and the stockholder does not comply with the
requirements of Rule 14a-4(c)(2) under the Exchange Act, we may exercise discretionary voting authority under proxies that we
solicit to vote in accordance with our best judgment on any such stockholder proposal or director nominee.
Other
Business at the Annual Meeting
The
Board of Directors is not aware of any matter to be presented at the Annual Meeting that is not listed on the Notice of Annual
Meeting of Stockholders and discussed in this Proxy Statement. If other matters should properly come before the Annual Meeting,
the persons named in the accompanying proxy intend to vote all proxies in accordance with the recommendation of the Board or,
if no such recommendation is given, in their own discretion.
|
|
By
order of the Board of Directors,
|
|
|
|
|
|
/s/
Richard B. Slansky
|
|
|
Richard
B. Slansky
|
|
|
Chief
Financial Officer and Secretary
|
San
Diego, California
November
28, 2017
ANNEX
A
ONCOSEC
MEDICAL INCORPORATED 2011 STOCK INCENTIVE PLAN
(as
proposed to be amended and restated)
1.
Purposes of the Plan.
The purposes of this Plan are to attract and retain the best available personnel, to provide additional
incentives to Employees, Directors and Consultants and to promote the success of the Company’s business.
2.
Definitions.
The following definitions shall apply as used herein and in the individual Award Agreements except as defined
otherwise in an individual Award Agreement. In the event a term is separately defined in an individual Award Agreement, such definition
shall supersede the definition contained in this Section 2.
(a)
“
Administrator
” means the Board or any of the Committees appointed to administer the Plan.
(b)
“
Affiliate
” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2
promulgated under the Exchange Act.
(c)
“
Applicable Laws
” means the legal requirements relating to the Plan and the Awards under applicable provisions
of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.
(d)
“
Assumed
” means that pursuant to a Corporate Transaction either (i) the Award is expressly affirmed by the
Company or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply by operation of law)
by the successor entity or its Parent in connection with the Corporate Transaction with appropriate adjustments to the number
and type of securities of the successor entity or its Parent subject to the Award and the exercise or purchase price thereof which
at least preserves the compensation element of the Award existing at the time of the Corporate Transaction as determined in accordance
with the instruments evidencing the agreement to assume the Award.
(e)
“
Award
” means the grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Restricted Stock Unit
or other right or benefit under the Plan.
(f)
“
Award Agreement
” means the written agreement evidencing the grant of an Award executed by the Company and
the Grantee, including any amendments thereto.
(g)
“
Board
” means the Board of Directors of the Company.
(h)
“
Change in Control
” means a change in ownership or control of the Company effected through any of the following
transactions:
(i)
the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company
or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities; or
(ii)
a change in the composition of the Board over a period of twelve (12) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised
of individuals who are Continuing Directors; or
(iii)
the consummation of Corporate Transaction; excluding, however, a Corporate Transaction pursuant to which:
(A)
all or substantially all of the individuals and entities who have beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of the total combined voting power of the Company’s outstanding voting securities Company’s immediately
prior to such Corporate Transaction will have beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act), directly
or indirectly, of more than fifty percent (50%) of the total combined voting power of the then outstanding voting securities of
the acquiring entity or the corporation or entity resulting from such Corporate Transaction (including, without limitation, the
Company or other entity that as a result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) (the “Resulting Entity”) in substantially the same proportions
as their ownership of the Company’s voting securities, immediately prior to such Corporate Transaction; and
(B)
individuals who were members of the Board before the Corporation Transaction (or whose appointment or election is endorsed by
a majority of such members of the Board) will continue to constitute at least a majority of the members of the board of directors
of the Resulting Entity; or
(iv)
a complete liquidation or dissolution of the Company.
(i)
“
Code
” means the Internal Revenue Code of 1986, as amended.
(j)
“
Committee
” means any committee composed of members of the Board appointed by the Board to administer the Plan.
(k)
“
Common Stock
” means the common stock of the Company.
(l)
“
Company
” means OncoSec Medical Incorporated, a Nevada corporation, or any successor entity that adopts the
Plan in connection with a Corporate Transaction.
(m)
“
Consultant
” means any person (other than an Employee or a Director, solely with respect to rendering services
in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory
services to the Company or such Related Entity.
(n)
“
Continuing Directors
” means members of the Board who either (i) have been Board members continuously for a
period of at least twelve (12) months or (ii) have been Board members for less than twelve (12) months and were elected or nominated
for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at
the time such election or nomination was approved by the Board.
(o)
“
Continuous Service
” means that the provision of services to the Company or a Related Entity in any capacity
of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective
termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of
providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before
a termination as an Employee, Director or Consultant can be effective under Applicable Laws. A Grantee’s Continuous Service
shall be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which the Grantee
provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee,
Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related
Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other authorized personal leave. For purposes of each Incentive
Stock Option granted under the Plan, if such leave exceeds three (3) months, and reemployment upon expiration of such leave is
not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the
day three (3) months and one (1) day following the expiration of such three (3) month period.
(p)
“
Corporate Transaction
” means any of the following transactions:
(i)
a merger, reorganization, share exchange or consolidation; or
(ii)
the sale, transfer or other disposition of all or substantially all of the assets of the Company.
(q)
“
Covered Employee
” means an Employee who is a “covered employee” under Section 162(m)(3) of the
Code.
(r)
“
Director
” means a member of the Board or the board of directors of any Related Entity.
(s)
“
Disability
” means as defined under the long-term disability policy of the Company or the Related Entity to
which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company or the Related
Entity to which the Grantee provides service does not have a long-term disability plan in place, “Disability” means
that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Grantee will
not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the
Administrator in its discretion.
(t)
“
Dividend Equivalent Right
” means a right entitling the Grantee to compensation measured by dividends paid
with respect to Common Stock.
(u)
“
Employee
” means any person, including an Officer or Director, who is in the employ of the Company or any Related
Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the
manner and method of performance. The payment of a director’s fee by the Company or a Related Entity shall not be sufficient
to constitute “employment” by the Company.
(v)
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
(w)
“
Fair Market Value
” means, as of any date, the value of Common Stock determined as follows:
(i)
If the Common Stock is listed on one or more established stock exchanges or national market systems, including without limitation
The New York Stock Exchange, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on the principal exchange or system on which the Common Stock is listed (as determined by the Administrator)
on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last
trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source
as the Administrator deems reliable;
(ii)
If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities
dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a share of Common Stock
shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such
prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or
(iii)
In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith.
(x)
“Grantee” means an Employee, Director or Consultant who receives an Award under the Plan.
(y)
“
Incentive Stock Option
” means an Option intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code.
(z)
“
Non-Qualified Stock Option
” means an Option not intended to qualify as an Incentive Stock Option.
(aa)
“
Officer
” means a person who is an officer of the Company or a Related Entity within the meaning of Section
16 of the Exchange Act and the rules and regulations promulgated thereunder.
(bb)
“
Option
” means an option to purchase Shares pursuant to an Award Agreement granted under the Plan.
(cc)
“
Parent
” means a “parent corporation”, whether now or hereafter existing, as defined in Section
424(e) of the Code.
(dd)
“
Performance-Based Compensation
” means compensation qualifying as “performance-based compensation”
under Section 162(m) of the Code.
(ee)
“
Plan
” means this 2011 Stock Incentive Plan, as amended and restated.
(ff)
“
Registration Date
” means the first to occur of (i) the date the Common Stock is listed on one or more established
stock exchanges or national market systems, including without limitation The New York Stock Exchange; and (ii) in the event of
a Corporate Transaction, the date of the consummation of the Corporate Transaction if the same class of securities of the successor
corporation (or its Parent) issuable in such Corporate Transaction shall have been sold to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended,
on or prior to the date of consummation of such Corporate Transaction.
(gg)
“
Related Entity
” means any Parent or Subsidiary of the Company.
(hh)
“
Replaced
” means that pursuant to a Corporate Transaction the Award is replaced with a comparable stock award
or a cash incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the
compensation element of such Award existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same (or a more favorable) vesting schedule applicable to such Award. The determination of Award comparability shall
be made by the Administrator and its determination shall be final, binding and conclusive.
(ii)
“
Restricted Stock
” means Shares issued under the Plan to the Grantee for such consideration, if any, and subject
to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions
as established by the Administrator.
(jj)
“
Restricted Stock Units
” means an Award which may be earned in whole or in part upon the passage of time or
the attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities
or a combination of cash, Shares or other securities as established by the Administrator.
(kk)
“
Rule 16b-3
” means Rule 16b-3 promulgated under the Exchange Act or any successor thereto.
(ll)
“
SAR
” means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established
by the Administrator, measured by appreciation in the value of Common Stock.
(mm)
“
Share
” means a share of the Common Stock.
(nn)
“
Subsidiary
” means a “subsidiary corporation”, whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3.
Stock Subject to the Plan
.
(a)
Subject to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to all Awards
(including Incentive Stock Options) is seven million five hundred thousand (7,500,000) Shares, and commencing with
the first business day of each calendar year beginning with 2018, such maximum aggregate number of Shares shall be increased by
a number equal to the lesser of (i) three percent (3%) of the number of Shares outstanding as of the last day of the immediately
preceding calendar year, (ii) one million (1,000,000) Shares, and (iii) such lesser number of Shares as may be determined by the
Board. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock.
(b)
Any Shares covered by an Award (or portion of an Award) which is forfeited, canceled or expires (whether voluntarily or involuntarily)
shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares which may be issued
under the Plan. Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by
the Company at the lower of their original purchase price or their Fair Market Value at the time of repurchase, such Shares shall
become available for future grant under the Plan. To the extent not prohibited by the listing requirements of The New York Stock
Exchange (or other established stock exchange or national market system on which the Common Stock is traded) or Applicable Law,
any Shares covered by an Award which are surrendered (i) in payment of the Award exercise or purchase price (including pursuant
to the “net exercise” of an option pursuant to Section 7(b)(v)) or (ii) in satisfaction of tax withholding obligations
incident to the exercise of an Award shall be deemed not to have been issued for purposes of determining the maximum number of
Shares which may be issued pursuant to all Awards under the Plan, unless otherwise determined by the Administrator.
4.
Administration of the Plan.
(a)
Plan Administrator
.
(i)
Administration with Respect to Directors and Officers
. With respect to grants of Awards to Directors or Employees who are
also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related
transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.
(ii)
Administration With Respect to Consultants and Other Employees
. With respect to grants of Awards to Employees or Consultants
who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated
by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Awards and may limit such authority as the Board determines from time to time.
(iii)
Administration With Respect to Covered Employees
. Notwithstanding the foregoing, grants of Awards to any Covered Employee
intended to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of a Committee) which
is comprised solely of two or more Directors eligible to serve on a committee making Awards qualifying as Performance-Based Compensation.
In the case of such Awards granted to Covered Employees, references to the “Administrator” or to a “Committee”
shall be deemed to be references to such Committee or subcommittee.
(iv)
Administration Errors
. In the event an Award is granted in a manner inconsistent with the provisions of this subsection
(a), such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.
(b)
Powers of the Administrator.
Subject to Applicable Laws and the provisions of the Plan (including any other powers given
to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in
its discretion:
(i)
to select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder;
(ii)
to determine whether and to what extent Awards are granted hereunder;
(iii)
to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder;
(iv)
to approve forms of Award Agreements for use under the Plan;
(v)
to determine the terms and conditions of any Award granted hereunder;
(vi)
to amend the terms of any outstanding Award granted under the Plan, provided that any amendment that would adversely affect the
Grantee’s rights under an outstanding Award shall not be made without the Grantee’s written consent, provided, however,
that an amendment or modification that may cause an Incentive Stock Option to become a Non-Qualified Stock Option shall not be
treated as adversely affecting the rights of the Grantee. Notwithstanding the foregoing, (A) the reduction or increase of the
exercise price of any Option awarded under the Plan and the base appreciation amount of any SAR awarded under the Plan and (B)
canceling an Option or SAR at a time when its exercise price or base appreciation amount (as applicable) exceeds the Fair Market
Value of the underlying Shares, in exchange for another Option, SAR, Restricted Stock, or other Award, in each case, shall not
be subject to shareholder approval;
(vii)
to construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement,
granted pursuant to the Plan;
(viii)
to grant Awards to Employees, Directors and Consultants employed outside the United States on such terms and conditions different
from those specified in the Plan as may, in the judgment of the Administrator, be necessary or desirable to further the purpose
of the Plan; and
(ix)
to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.
The
express grant in the Plan of any specific power to the Administrator shall not be construed as limiting any power or authority
of the Administrator; provided that the Administrator may not exercise any right or power reserved to the Board. Any decision
made, or action taken, by the Administrator or in connection with the administration of this Plan shall be final, conclusive and
binding on all persons having an interest in the Plan.
(c)
Indemnification
. In addition to such other rights of indemnification as they may have as members of the Board or as Officers
or Employees of the Company or a Related Entity, members of the Board and any Officers or Employees of the Company or a Related
Entity to whom authority to act for the Board, the Administrator or the Company is delegated shall be defended and indemnified
by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses, including attorneys’
fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding,
or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure
to act under or in connection with the Plan, or any Award granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim,
investigation, action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim, investigation,
action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however,
that within thirty (30) days after the institution of such claim, investigation, action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at the Company’s expense to defend the same.
5.
Eligibility
. Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. Incentive
Stock Options may be granted only to Employees of the Company or a Parent or a Subsidiary of the Company. An Employee, Director
or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to
such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as the Administrator may determine from time
to time.
6.
Terms and Conditions of Awards
.
(a)
Types of Awards
. The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director
or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance
of (i) Shares, (ii) cash or (iii) an Option, a SAR, or similar right with a fixed or variable price related to the Fair Market
Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other conditions. Such awards include, without limitation, Options, SARs,
sales or bonuses of Restricted Stock, Restricted Stock Units or Dividend Equivalent Rights, and an Award may consist of one such
security or benefit, or two (2) or more of them in any combination or alternative.
(b)
Designation of Award
. Each Award shall be designated in the Award Agreement. In the case of an Option, the Option shall
be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation,
an Option will qualify as an Incentive Stock Option under the Code only to the extent the $100,000 limitation of Section 422(d)
of the Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code is calculated based on the aggregate Fair Market
Value of the Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a
Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company). For purposes of
this calculation, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the grant date of the relevant Option. In the event that the Code or the regulations
promulgated thereunder are amended after the date the Plan becomes effective to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to Incentive Stock Options, then such different limit will be automatically incorporated
herein and will apply to any Options granted after the effective date of such amendment.
(c)
Conditions of Award
. Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions
of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture
provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction
of any performance criteria. The performance criteria established by the Administrator may be based on any one of, or combination
of, the following: (i) net earnings or net income (before or after taxes), (ii) earnings per share or earnings per share growth,
total units or unit growth, (iii) net sales, sales growth, total revenue or revenue growth, (iv) operating income, net operating
profit or pre-tax profit, (v) return measures (including, but not limited to, return on assets, capital, invested capital, equity,
sales or revenue, (vi) cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity,
and cash flow return on investment), (vii) earnings before or after taxes, interest, depreciation, and/or amortization, (viii)
gross or operating margins, (ix) productivity ratios, (x) share price or relative share price (including, but not limited to,
growth measures and total stockholder return), (xi) expense targets, (xii) margins, (xiii) operating efficiency, (xiv) market
share or change in market share, (xv) customer retention or satisfaction, (xvi) working capital targets, (xvii) completion of
strategic financing goals, acquisitions or alliances and clinical progress, (xviii) company project milestones and (xix) economic
value added (net operating profit after tax minus the sum of capital multiplied by the cost of capital). The performance criteria
may be applicable to the Company, Related Entities and/or any individual business units of the Company or any Related Entity.
Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as
specified in the Award Agreement. In addition, the performance criteria shall be calculated in accordance with generally accepted
accounting principles, but excluding the effect (whether positive or negative) of any change in accounting standards and any other
item that is either unusual or infrequent in nature, as determined in accordance with Accounting Standards Codification Topic
225-20 “Extraordinary and Unusual Item” by the Administrator, occurring after the establishment of the performance
criteria applicable to the Award intended to be performance-based compensation. Each such adjustment, if any, shall be made solely
for the purpose of providing a consistent basis from period to period for the calculation of performance criteria in order to
prevent the dilution or enlargement of the Grantee’s rights with respect to an Award intended to be performance-based compensation.
(d)
Acquisitions and Other Transactions
. The Administrator may issue Awards under the Plan in settlement, assumption or substitution
for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another
entity, an interest in another entity or an additional interest in a Related Entity whether by merger, stock purchase, asset purchase
or other form of transaction.
(e)
Deferral of Award Payment
. The Administrator may establish one or more programs under the Plan to permit selected Grantees
the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or
other event that absent the election would entitle the Grantee to payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of,
and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms,
conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program.
(f)
Separate Programs
. The Administrator may establish one or more separate programs under the Plan for the purpose of issuing
particular forms of Awards to one or more classes of Grantees on such terms and conditions as determined by the Administrator
from time to time.
(g)
Individual Limitations on Awards
.
(i)
Individual Limit for Options and SARs
. For Options and SARs that are intended to be Performance-Based Compensation, the
maximum number of Shares with respect to which Options and SARs may be granted to any Grantee in any fiscal year of the Company
shall be five hundred thousand (500,000) Shares. The foregoing limitation shall be adjusted proportionately in connection with
any change in the Company’s capitalization pursuant to Section 10, below. To the extent required by Section 162(m) of the
Code or the regulations thereunder, in applying the foregoing limitation with respect to a Grantee, if any Option or SAR is canceled,
the canceled Option or SAR shall continue to count against the maximum number of Shares with respect to which Options and SARs
may be granted to the Grantee. For this purpose, the repricing of an Option (or in the case of a SAR, the base amount on which
the stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Common Stock) shall be
treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.
(ii)
Individual Limit for Restricted Stock and Restricted Stock Units
. For awards of Restricted Stock and Restricted Stock Units
that are intended to be Performance-Based Compensation, the maximum number of Shares with respect to which such Awards may be
granted to any Grantee in any fiscal year of the Company shall be five hundred thousand (500,000) Shares. The foregoing limitation
shall be adjusted proportionately in connection with any change in the Company’s capitalization pursuant to Section 10,
below.
(h)
Deferral
. If the vesting or receipt of Shares under an Award is deferred to a later date, any amount (whether denominated
in Shares or cash) paid in addition to the original number of Shares subject to such Award will not be treated as an increase
in the number of Shares subject to the Award if the additional amount is based either on a reasonable rate of interest or on one
or more predetermined actual investments such that the amount payable by the Company at the later date will be based on the actual
rate of return of a specific investment (including any decrease as well as any increase in the value of an investment).
(i)
Early Exercise
. The Award Agreement may, but need not, include a provision whereby the Grantee may elect at any time while
an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested
Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or
to any other restriction the Administrator determines to be appropriate.
(j)
Term of Award
. The term of each Award shall be the term stated in the Award Agreement, provided, however, that the term
of an Incentive Stock Option shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the Incentive
Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement.
Notwithstanding the foregoing, the specified term of any Award shall not include any period for which the Grantee has elected
to defer the receipt of the Shares or cash issuable pursuant to the Award.
(k)
Transferability
of Awards. Incentive Stock Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the
Grantee, only by the Grantee. Other Awards shall be transferable (i) by will and by the laws of descent and distribution and (ii)
during the lifetime of the Grantee, to the extent and in the manner authorized by the Administrator. Notwithstanding the foregoing,
the Grantee may designate one or more beneficiaries of the Grantee’s Award in the event of the Grantee’s death on
a beneficiary designation form provided by the Administrator.
(l)
Time of Granting Awards
. The date of grant of an Award shall for all purposes be the date on which the Administrator makes
the determination to grant such Award, or such other later date as is determined by the Administrator.
7.
Award Exercise or Purchase Price, Consideration and Taxes
.
(a)
Exercise or Purchase Price
. The exercise or purchase price, if any, for an Award shall be as follows:
(i)
In the case of an Incentive Stock Option:
(A)
granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the per Share exercise
price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
(B)
granted to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(ii)
In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than one hundred percent (100%) of
the Fair Market Value per Share on the date of grant.
(iii)
In the case of Awards intended to qualify as Performance-Based Compensation, the exercise or purchase price, if any, shall be
not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(iv)
In the case of SARs, the base appreciation amount shall not be less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.
(v)
In the case of other Awards, such price as is determined by the Administrator.
(vi)
Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in accordance with the provisions of the relevant instrument
evidencing the agreement to issue such Award.
(b)
Consideration. Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase
of an Award including the method of payment, shall be determined by the Administrator. In addition to any other types of consideration
the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the
following:
(i)
cash;
(ii)
check;
(iii)
surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require
which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as
to which said Award shall be exercised;
(iv)
with respect to Options, if the exercise occurs on or after the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions to a Company designated brokerage firm to effect
the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise
price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for
the purchased Shares directly to such brokerage firm in order to complete the sale transaction;
(v)
with respect to Options, payment through a “net exercise” such that, without the payment of any funds, the Grantee
may exercise the Option and receive the net number of Shares equal to (i) the number of Shares as to which the Option is being
exercised, multiplied by (ii) a fraction, the numerator of which is the Fair Market Value per Share (on such date as is determined
by the Administrator) less the exercise price per Share, and the denominator of which is such Fair Market Value per Share (the
number of net Shares to be received shall be rounded down to the nearest whole number of Shares); or
(vi)
any combination of the foregoing methods of payment.
The
Administrator may at any time or from time to time, by adoption of or by amendment to the standard forms of Award Agreement described
in Section 4(b)(iv), or by other means, grant Awards which do not permit all of the foregoing forms of consideration to be used
in payment for the Shares or which otherwise restrict one or more forms of consideration.
(c)
Taxes
. No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has
made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., federal, state, or local income and employment
tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares. Upon exercise or vesting
of an Award the Company shall withhold or collect from the Grantee an amount sufficient to satisfy such tax obligations, including,
but not limited to, by surrender of the whole number of Shares covered by the Award sufficient to satisfy the amount required
to be withheld (provided the amount withheld does not exceed the maximum statutory tax rate for an employee in the applicable
jurisdiction(s) or such lesser amount as is necessary to avoid adverse accounting treatment) reduced to the lowest whole number
of Shares if such number of Shares withheld would result in withholding a fractional Share with any remaining tax withholding
settled in cash.
8.
Exercise of Award
.
(a)
Procedure for Exercise; Rights as a Stockholder
.
(i)
Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Award Agreement.
(ii)
An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with
the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the
Award is exercised has been made, including, to the extent selected, use of the broker-dealer sale and remittance procedure to
pay the purchase price as provided in Section 7(b)(iv).
(b)
Exercise of Award Following Termination of Continuous Service
.
(i)
An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following
the termination of a Grantee’s Continuous Service only to the extent provided in the Award Agreement.
(ii)
Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee’s Continuous Service
for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last
day of the original term of the Award, whichever occurs first.
(iii)
Any Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise
of Incentive Stock Options following the termination of a Grantee’s Continuous Service shall convert automatically to a
Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent exercisable by its terms for the period specified
in the Award Agreement.
9.
Conditions Upon Issuance of Shares
.
(a)
If at any time the Administrator determines that the delivery of Shares pursuant to the exercise, vesting or any other provision
of an Award is or may be unlawful under Applicable Laws, the vesting or right to exercise an Award or to otherwise receive Shares
pursuant to the terms of an Award shall be suspended until the Administrator determines that such delivery is lawful and shall
be further subject to the approval of counsel for the Company with respect to such compliance. The Company shall have no obligation
to effect any registration or qualification of the Shares under federal or state laws.
(b)
As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant
at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable
Laws.
10.
Adjustments Upon Changes in Capitalization
. Subject to any required action by the stockholders of the Company and Section
11 hereof, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance
under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase
price of each such outstanding Award, the maximum number of Shares with respect to which Awards may be granted to any Grantee
in any calendar year, as well as any other terms that the Administrator determines require adjustment shall be proportionately
adjusted for (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, recapitalization, combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii) any
other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) any
other transaction with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock,
separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or
complete) or any similar transaction; provided, however that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.” In the event of any distribution of cash or other
assets to stockholders other than a normal cash dividend, the Administrator shall also make such adjustments as provided in this
Section 10 or substitute, exchange or grant Awards to effect such adjustments (collectively “adjustments”). Any such
adjustments to outstanding Awards will be effected in a manner that precludes the enlargement of rights and benefits under such
Awards. In connection with the foregoing adjustments, the Administrator may, in its discretion, prohibit the exercise of Awards
or other issuance of Shares, cash or other consideration pursuant to Awards during certain periods of time. Except as the Administrator
determines, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect,
and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award.
11.
Acceleration of Awards Upon a Change in Control
. Except as provided otherwise in an Award Agreement, in the event of a
Change in Control and irrespective of whether the Award is Assumed or Replaced, (a) outstanding Options and SARs shall immediately
vest and become exercisable; and (b) the restrictions and other conditions applicable to outstanding Restricted Stock, Restricted
Stock Units, and other Share-based Awards, including vesting requirements, shall immediately lapse, and any performance criteria
relevant to such Awards shall be deemed to have been achieved at the target performance level; such Awards shall be free of all
restrictions and fully vested; and, with respect to Restricted Stock Units, shall be payable immediately in accordance with their
terms or, if later, as of the earliest permissible date under Section 409A of the Code. The Administrator may provide that Awards
that remain outstanding after vesting pursuant to the preceding sentence will be Assumed or Replaced in connection with the Change
in Control. With respect to Options and SARs, the Administrator may also provide for the cashing out of outstanding and vested
Options and SARs based on the based upon the per-Share consideration being paid in connection with such Change in Control, less
the applicable exercise price or base amount; provided, however, that holders of Options and SARs shall be entitled to consideration
in respect of cancellation of such Awards only if the per-Share consideration less the applicable exercise price or base amount
is greater than $0, and to the extent that the per-share consideration is less than or equal to the applicable exercise price
or base amount, such Awards shall be cancelled for no consideration. Awards need not be treated uniformly. Notwithstanding the
foregoing, with respect to any Award that constitutes deferred compensation under Section 409A of the Code, to the extent required
to comply with Section 409A of the Code, a transaction that does not constitute a change in control event under Treasury Regulation
Section 1.409A-3(i)(5)(i) shall not be considered a Change in Control.
(a)
Effect of Acceleration on Incentive Stock Options
. Any Incentive Stock Option accelerated under this Section 11 in connection
with a Change in Control shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000
dollar limitation of Section 422(d) of the Code is not exceeded.
12.
Effective Date and Term of Plan
. The Plan first became effective upon its adoption by the Board on August 5, 2011. Subject
to stockholder approval of the amendment and restatement of the Plan by the Company’s stockholders at the Company’s
Annual Meeting of Stockholders on December 6, 2016, the Plan shall continue in effect for a term of ten (10) years following the
date of such Annual Meeting, unless sooner terminated.
13.
Amendment, Suspension or Termination of the Plan
.
(a)
The Board may at any time amend, suspend or terminate the Plan; provided, however, that no such amendment shall be made without
the approval of the Company’s stockholders to the extent such approval is required by Applicable Laws.
(b)
No Award may be granted during any suspension of the Plan or after termination of the Plan.
(c)
No suspension or termination of the Plan (including termination of the Plan under Section 11, above) shall adversely affect any
rights under Awards already granted to a Grantee.
14.
Reservation of Shares
.
(a)
The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient
to satisfy the requirements of the Plan.
(b)
The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.
15.
No Effect on Terms of Employment/Consulting Relationship
. The Plan shall not confer upon any Grantee any right with respect
to the Grantee’s Continuous Service, nor shall it interfere in any way with his or her right or the right of the Company
or any Related Entity to terminate the Grantee’s Continuous Service at any time, with or without cause, and with or without
notice.
16.
No Effect on Retirement and Other Benefit Plans
. Except as specifically provided in a retirement or other benefit plan
of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions
under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of
any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of
compensation. The Plan is not a “Pension Plan” or “Welfare Plan” under the Employee Retirement Income
Security Act of 1974, as amended.
17.
Stockholder Approval
. The grant of Incentive Stock Options under the Plan shall be subject to approval by the stockholders
of the Company within twelve (12) months before or after the date the Plan is adopted excluding Incentive Stock Options issued
in substitution for outstanding Incentive Stock Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The Administrator may grant Incentive Stock Options under
the Plan prior to approval by the stockholders, but until such approval is obtained, no such Incentive Stock Option shall be exercisable.
In the event that stockholder approval is not obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified Stock Options.
18.
Unfunded Obligation
. Grantees shall have the status of general unsecured creditors of the Company. Any amounts payable
to Grantees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation,
Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity shall be
required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect
to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments,
which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any
trust or any Grantee account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company
or any Related Entity and a Grantee, or otherwise create any vested or beneficial interest in any Grantee or the Grantee’s
creditors in any assets of the Company or a Related Entity. The Grantees shall have no claim against the Company or any Related
Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.
19.
Construction
. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation
of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural
shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.
20.
Nonexclusivity
of the Plan. Neither the adoption of the Plan by the Board, the submission of the Plan to the stockholders
of the Company for approval, nor any provision of the Plan will be construed as creating any limitations on the power of the Board
to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of Awards
otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
ANNEX
B
CONTINGENT
OPTION GRANT
ONCOSEC
MEDICAL INCORPORATED 2017 STOCK OPTION AWARD
NOTICE
OF STOCK OPTION AWARD
|
Grantee’s
Name and Address:
|
Daniel
J. O’Connor
5820
Nancy Ridge Drive
San
Diego, CA 92121
|
You
(the “Grantee”) have been granted an option to purchase shares of Common Stock, subject to the terms and conditions
of this Notice of Stock Option Award (the “Notice”) and the Stock Option Award Agreement (the “Option Agreement”)
attached hereto, as follows. Unless otherwise defined herein, the terms defined in the Option Agreement shall have the same defined
meanings in this Notice.
|
Award
Number:
|
|
|
Date
of Award:
|
November
7, 2017
|
|
Vesting
Commencement Date:
|
January
12, 2018
|
|
Exercise
Price per Share:
|
$1.25
|
|
Total
Number of Shares Subject to the Option (the Shares”):
|
2,000,000
|
|
Total
Exercise Price:
|
$2,500,000
|
|
Type
of Option:
|
Non-Qualified
Stock Option
|
|
Expiration
Date:
|
November
7, 2027
|
|
Post-Termination
Exercise Period:
|
Three
(3) Months
|
Vesting
Schedule
:
Subject
to the Grantee’s Continuous Service and other limitations set forth in this Notice and the Option Agreement, the Option
may be exercised, in whole or in part, in accordance with the following schedule:
One
million (1,000,000) Options shall vest upon the Company’s stockholders’ approval of the Option at the Company’s
first annual meeting following the Date of Award and one twenty-fourth (1/24th) of the remaining one million (1,000,000) Contingent
Options shall vest on each monthly anniversary of the date of such stockholder approval. If the Company’s stockholders do
not approve the Option, the Option shall terminate immediately following the Company’s first annual meeting following the
Date of Award. Notwithstanding the foregoing, in the event that the Company terminates Grantee’s Continuous Service and
such termination is not For Cause or if the Grantee resigns for Good Cause, in each case, following the Company’s first
annual meeting following the Date of Award, the Options shall vest in full subject to the Grantee’s execution, delivery
and non-revocation of a general release of claims in favor of the Company and its affiliates within forty-five (45) days following
the termination date (and non-revocation thereof within seven (7) days thereafter).
During
any authorized leave of absence, the vesting of the Option as provided in this schedule shall be suspended after the leave of
absence exceeds a period of three (3) months. Vesting of the Option shall resume upon the Grantee’s termination of the leave
of absence and return to service to the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the
length of the suspension.
The
Grantee hereby agrees that all questions of interpretation and administration relating to this Notice and the Option Agreement
shall be resolved by the Administrator in accordance with Section 15 of the Option Agreement. The Grantee further agrees to the
venue selection in accordance with Section 16 of the Option Agreement. The Grantee further agrees to notify the Company upon any
change in the residence address indicated in this Notice.
IN
WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Option is to be governed by the terms
and conditions of this Notice and the Option Agreement.
|
OncoSec
Medical Incorporated
|
|
|
A
Nevada corporation
|
|
|
|
|
|
By:
|
/s/
Punit S. Dhillon
|
|
|
Title:
|
President
|
|
THE
GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S
CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE OR THE OPTION AGREEMENT SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT
TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S
RIGHT OR THE RIGHT OF THE COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE THE GRANTEE’S CONTINUOUS
SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.
The
Grantee acknowledges receipt of a copy of the Option Agreement, and represents that he or she is familiar with the terms and provisions
thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed
this Notice and the Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing
this Notice, and fully understands all provisions of this Notice and the Option Agreement. The Grantee hereby agrees that all
questions of interpretation and administration relating to this Notice and the Option Agreement shall be resolved by the Administrator
in accordance with Section 15 of the Option Agreement. The Grantee further agrees to the venue selection in accordance with Section
16 of the Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated
in this Notice.
|
Dated:
November 7, 2017
|
|
Signed:
|
|
|
|
|
|
|
|
/s/
Daniel J. O’Connor
|
|
|
|
Grantee
|
Award
Number:
ONCOSEC
MEDICAL INCORPORATED
2017 CONTINGENT STOCK OPTION AWARD
STOCK
OPTION AWARD AGREEMENT
1.
Grant of Option
. OncoSec Medical Incorporated, a Nevada corporation (the “Company”) hereby grants to the Grantee
(the “Grantee”) named in the Notice of Stock Option Award (the “Notice”) an option (the “Option”)
to purchase the Total Number of Shares of Common Stock subject to the Option (the “Shares”) set forth in the Notice,
at the Exercise Price per Share set forth in the Notice (the “Exercise Price”) subject to the terms and provisions
of this Stock Option Award Agreement (the “Option Agreement”) and the Notice which are incorporated herein by reference.
The Option is not intended to qualify as an incentive stock option as defined in Section 422 of the code. Accordingly, the Option
is a non-qualified stock option.
2.
Exercise of Option
.
(a)
Right to Exercise
. The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the
Notice and with the applicable provisions of this Option Agreement. The Option shall be subject to the provisions of Section 17
of this Option Agreement relating to the exercisability or termination of the Option in the event of a Change in Control. The
Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as
determined by the Administrator. In no event shall the Company issue fractional Shares.
(b)
Method of Exercise
. The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Appendix
A) or by such other procedure as specified from time to time by the Administrator which shall state the election to exercise the
Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required
by the Administrator. The exercise notice shall be delivered in person, by certified mail, or by such other method (including
electronic transmission) as determined from time to time by the Administrator to the Company accompanied by payment of the Exercise
Price and all applicable income and employment taxes required to be withheld. The Option shall be deemed to be exercised upon
receipt by the Company of such notice accompanied by the Exercise Price and all applicable withholding taxes, which, to the extent
selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price
provided in Section 4(e) below to the extent such procedure is available to the Grantee at the time of exercise and such an exercise
would not violate any Applicable Law.
(c)
Taxes
. No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee
or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment
tax withholding obligations, including, without limitation, such other tax obligations of the Grantee incident to the receipt
of Shares (the “Tax Withholding Obligation”). Notwithstanding the foregoing, at any time not less than five (5) business
days (or such fewer number of business days as determined by the Administrator) before any Tax Withholding Obligation arises (e.g.,
an exercise date), the Grantee may elect to satisfy the Grantee’s Tax Withholding Obligation that the Company determines
is sufficient by, if permissible under Applicable Law, directing the Company to withhold from those Shares otherwise issuable
to the Grantee the whole number of Shares sufficient to satisfy the minimum applicable Tax Withholding Obligation. The Grantee
acknowledges that the withheld Shares may not be sufficient to satisfy the Grantee’s minimum Tax Withholding Obligation.
Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as practicable, including through additional
payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the withholding of Shares described
above. Upon exercise of the Option, the Company or the Grantee’s employer may offset or withhold (from any amount owed by
the Company or the Grantee’s employer to the Grantee) or collect from the Grantee or other person an amount sufficient to
satisfy the Tax Withholding Obligation. Furthermore, in the event of any determination that the Company and/or a Related Entity
has failed to withhold a sum sufficient to pay all withholding taxes due in connection with the Option, the Grantee agrees to
pay the Company and/or the Related Entity the amount of such deficiency in cash within five (5) days after receiving a written
demand from the Company and/or the Related Entity to do so, whether or not the Grantee is an employee of the Company and/or the
Related Entity at that time.
(d)
Section 16(b)
. Notwithstanding any provision of this Option Agreement to the contrary, other than termination of the Grantee’s
Continuous Service for Cause, if a sale within the applicable time periods set forth in Sections 6, 7 or 8 herein of Shares acquired
upon the exercise of the Option would subject the Grantee to suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such Shares by the Grantee
would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Grantee’s termination
of Continuous Service, or (iii) the date on which the Option expires.
3.
Grantee’s Representations
. Concurrently with the grant of this Option, Participant shall deliver to the Company its
Investment Representation Statement in the form attached hereto as Appendix B.
4.
Method of Payment
. Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at the
election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law and, provided further,
that the portion of the Exercise Price equal to the par value of the Shares must be paid in cash or other legal consideration
permitted by the Delaware General Corporation Law:
(a)
cash;
(b)
check;
(c)
surrender of Shares held for the requisite period, if any, necessary to avoid a charge to the Company’s earnings for financial
reporting purposes, or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require
which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as
to which the Option is being exercised;
(d)
payment through a “net exercise” such that, without the payment of any funds, the Grantee may exercise the Option
and receive the net number of Shares subject to the Option equal to (i) the number of Shares as to which the Option is being exercised,
multiplied by (ii) a fraction, the numerator of which is the Fair Market Value per Share (on such date as is determined by the
Administrator) less the Exercise Price per Share, and the denominator of which is such Fair Market Value per Share (the number
of net Shares to be received shall be rounded down to the nearest whole number of Shares); or
(e)
payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions
to a Company-designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company
sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives
to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale
transaction.
5.
Restrictions on Exercise
. The Option may not be exercised if the issuance of the Shares subject to the Option upon such
exercise would constitute a violation of any Applicable Laws or if the Shares subject to the Option have not been registered under
the Securities Act of 1933 pursuant to an effective Registration Statement on Form S-8. Grantee acknowledges that the Company
makes no representation or warranty regarding the eligibility of the Option for inclusion on a Registration Statement on Form
S-8 or the likelihood that any such Registration Statement on Form S-8 will be declared effective. If the exercise of the Option
within the applicable time periods set forth in Sections 6, 7 and 8 of this Option Agreement is prevented by the provisions of
this Section 5, the Option shall remain exercisable until one (1) month after the date the Grantee is notified by the Company
that the Option is exercisable, but in any event no later than the Expiration Date set forth in the Notice.
6.
Termination or Change of Continuous Service
. In the event the Grantee’s Continuous Service terminates, the Grantee
may, but only during the Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of such
termination (the “Termination Date”). The Post-Termination Exercise Period shall commence on the Termination Date.
In no event, however, shall the Option be exercised later than the Expiration Date set forth in the Notice. In the event of the
Grantee’s change in status from Employee, Director or Consultant to any other status of Employee, Director or Consultant,
the Option shall remain in effect and the Option shall continue to vest in accordance with the Vesting Schedule set forth in the
Notice. Except as provided in Sections 7 and 8 below, to the extent that the Option was unvested on the Termination Date, or if
the Grantee does not exercise the vested portion of the Option within the Post-Termination Exercise Period, the Option shall terminate.
7.
Disability of Grantee
. In the event the Grantee’s Continuous Service terminates as a result of his or her Disability,
the Grantee may, but only within twelve (12) months commencing on the Termination Date (but in no event later than the Expiration
Date), exercise the portion of the Option that was vested on the Termination Date. To the extent that the Option was unvested
on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the time specified herein,
the Option shall terminate.
8.
Death of Grantee
. In the event of the termination of the Grantee’s Continuous Service as a result of his or her death,
or in the event of the Grantee’s death during the Post-Termination Exercise Period or during the twelve (12) month period
following the Grantee’s termination of Continuous Service as a result of his or her Disability, the person who acquired
the right to exercise the Option pursuant to Section 9 may exercise the portion of the Option that was vested at the date of termination
within twelve (12) months commencing on the date of death (but in no event later than the Expiration Date). To the extent that
the Option was unvested on the date of death, or if the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.
9.
Transferability of Option
. The Option may not be transferred in any manner other than by will or by the laws of descent
and distribution, provided, however, that the Option may be transferred during the lifetime of the Grantee to the extent and in
the manner authorized by the Administrator. Notwithstanding the foregoing, the Grantee may designate one or more beneficiaries
of the Grantee’s Option in the event of the Grantee’s death on a beneficiary designation form provided by the Administrator.
Following the death of the Grantee, the Option, to the extent provided in Section 8, may be exercised (a) by the person or persons
designated under the deceased Grantee’s beneficiary designation or (b) in the absence of an effectively designated beneficiary,
by the Grantee’s legal representative or by any person empowered to do so under the deceased Grantee’s will or under
the then applicable laws of descent and distribution. The terms of the Option shall be binding upon the executors, administrators,
heirs, successors and transferees of the Grantee.
10.
Term of Option
. The Option must be exercised no later than the Expiration Date set forth in the Notice or such earlier
date as otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or
effect and may not be exercised.
11.
Tax Consequences
. The Grantee may incur tax liability as a result of the Grantee’s purchase or disposition of the
Shares. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES. It is the intent of
the Company that the Option be exempt from Section 409A of the Code (“
Section 409A
”). Nevertheless, the Company
makes no representation that the Option will be exempt from or comply with Section 409A and makes no undertaking to prevent Section
409A from applying to the Option or to mitigate its effects on the Option. The Grantee is encouraged to consult a tax adviser
regarding the potential impact of Section 409A.
12.
Entire Agreement: Governing Law
. The Notice and this Option Agreement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and
the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except
by means of a writing signed by the Company and the Grantee. Nothing in the Notice and this Option Agreement (except as expressly
provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Notice and this Option
Agreement are to be construed in accordance with and governed by the internal laws of the State of California without giving effect
to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any provision of the Notice or this Option Agreement be determined
to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions
shall nevertheless remain effective and shall remain enforceable.
13.
Construction
. The captions used in the Notice and this Option Agreement are inserted for convenience and shall not be deemed
a part of the Option for construction or interpretation. Except when otherwise indicated by the context, the singular shall include
the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless
the context clearly requires otherwise.
14.
Adjustments Upon Changes in Capitalization
. Subject to any required action by the stockholders of the Company and Section
17 hereof, the number of Shares covered by the Option, the exercise price of the Option, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification of the Shares,
or similar transaction affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other transaction
with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including
a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar
transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” In the event of any distribution of cash or other assets to stockholders other than a
normal cash dividend, the Board shall also make such adjustments as provided in this Section 14 or substitute, exchange or grant
an award to effect such adjustments (collectively “adjustments”). Any such adjustments to the Option will be effected
in a manner that precludes the enlargement of rights and benefits under the Option. In connection with the foregoing adjustments,
the Administrator may, in its discretion, prohibit the exercise of the Option or other issuance of Shares, cash or other consideration
pursuant to the Option during certain periods of time. Such adjustment shall be made by the Administrator and its determination
shall be final, binding and conclusive. Except as the Administrator determines, 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 hereof shall
be made with respect to, the number or price of Shares subject to the Option.
15.
Administration and Interpretation
. Any question or dispute regarding the administration or interpretation of the Notice
or this Option Agreement shall be submitted by the Grantee or by the Company to the Administrator. The resolution of such question
or dispute by the Administrator shall be final and binding on all persons.
16.
Venue
. The Company, the Grantee, and the Grantee’s assignees pursuant to Section 9 (the “parties”) agree
that any suit, action, or proceeding arising out of or relating to the Notice or this Option Agreement shall be brought in the
United States District Court for the Southern District of California (or should such court lack jurisdiction to hear such action,
suit or proceeding, in a California state court in the County of San Diego) and that the parties shall submit to the jurisdiction
of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the
laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions of this Section 16
shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be
modified to the minimum extent necessary to make it or its application valid and enforceable.
17.
Acceleration of Award Upon a Change in Control
. In the event of a Change in Control and irrespective of whether the Option
is Assumed or Replaced, the Option shall immediately vest and become exercisable and any performance criteria relevant to the
Option shall be deemed to have been achieved at the target performance level. The Administrator may provide that if the Option
remains outstanding after vesting pursuant to the preceding sentence, it will be Assumed or Replaced in connection with the Change
in Control. The Administrator may also provide for the cashing out of the Option based on the based upon the per-Share consideration
being paid in connection with such Change in Control, less the applicable exercise price; provided, however, that the Grantee
shall be entitled to consideration in respect of cancellation of the Option only if the per-Share consideration less the applicable
exercise price or base amount is greater than $0, and to the extent that the per-Share consideration is less than or equal to
the applicable exercise price, the Option shall be cancelled for no consideration. Notwithstanding the foregoing, if the Option
constitutes deferred compensation under Section 409A, to the extent required to comply with Section 409A, a transaction that does
not constitute a change in control event under Treasury Regulation Section 1.409A-3(i)(5)(i) shall not be considered a Change
in Control.
18.
Notices
. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon
personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in
the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such other address as such party may designate in writing
from time to time to the other party.
19.
Amendment and Delay to Meet the Requirements of Section 409A
. The Grantee acknowledges that the Company, in the exercise
of its sole discretion and without the consent of the Grantee, may amend or modify this Option Agreement in any manner and delay
the issuance of any Shares issuable pursuant to this Option Agreement to the minimum extent necessary to meet the requirements
of Section 409A as amplified by any Treasury regulations or guidance from the Internal Revenue Service as the Company deems appropriate
or advisable. In addition, the Company makes no representation that the Award will comply with Section 409A and makes no undertaking
to prevent Section 409A from applying to the Award or to mitigate its effects on any deferrals or payments made in respect of
the Units. The Grantee is encouraged to consult a tax adviser regarding the potential impact of Section 409A.
20.
Definitions
. As used herein, the following definitions shall apply:
(a)
“
Administrator
” means the Board or any of the Committees appointed to administer this Option Agreement.
(b)
“
Affiliate
” and “
Associate
” shall have the respective meanings ascribed to such terms in
Rule 12b-2 promulgated under the Exchange Act.
(c)
“
Applicable Laws
” means the legal requirements applicable to the Option under applicable provisions of federal
securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market
system, and the rules of any non-U.S. jurisdiction applicable to stock options granted to residents therein.
(d)
“
Assumed
” means that pursuant to a Corporate Transaction either (i) the Option is expressly affirmed by the
Company or (ii) the contractual obligations represented by the Option are expressly assumed (and not simply by operation of law)
by the successor entity or its Parent in connection with the Corporate Transaction with appropriate adjustments to the number
and type of securities of the successor entity or its Parent subject to the Option and the exercise or purchase price thereof
which at least preserves the compensation element of the Option existing at the time of the Corporate Transaction as determined
in accordance with the instruments evidencing the agreement to assume the Option.
(e)
“
Board
” means the Board of Directors of the Company.
(f)
“
Cause
” has the meaning of “For Cause” as defined in the Employment Agreement.
(g)
“
Change in Control
” means a change in ownership or control of the Company effected through any of the following
transactions:
(i)
the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company
or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities; or
(ii)
a change in the composition of the Board over a period of twelve (12) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised
of individuals who are Continuing Directors; or
(iii)
the consummation of Corporate Transaction; excluding, however, a Corporate Transaction pursuant to which:
(1)
all or substantially all of the individuals and entities who have beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of the total combined voting power of the Company’s outstanding voting securities Company’s immediately
prior to such Corporate Transaction will have beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act), directly
or indirectly, of more than fifty percent (50%) of the total combined voting power of the then outstanding voting securities of
the acquiring entity or the corporation or entity resulting from such Corporate Transaction (including, without limitation, the
Company or other entity that as a result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) (the “
Resulting Entity
”) in substantially the same
proportions as their ownership of the Company’s voting securities, immediately prior to such Corporate Transaction; and
(2)
individuals who were members of the Board before the Corporation Transaction (or whose appointment or election is endorsed by
a majority of such members of the Board) will continue to constitute at least a majority of the members of the board of directors
of the Resulting Entity; or
(iv)
a complete liquidation or dissolution of the Company.
(h)
“
Code
” means the Internal Revenue Code of 1986, as amended
(i)
“
Committee
” means any committee composed of members of the Board appointed by the Board to administer the Plan.
(j)
“
Common Stock
” means the common stock of the Company.
(k)
“
Company
” means OncoSec Medical Incorporated, a Nevada corporation, or any successor entity that adopts this
Option Agreement in connection with a Corporate Transaction.
(l)
“
Consultant
” means any person (other than an Employee or a Director, solely with respect to rendering services
in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory
services to the Company or such Related Entity.
(m)
“
Continuing Directors
” means members of the Board who either (i) have been Board members continuously for a
period of at least twelve (12) months or (ii) have been Board members for less than twelve (12) months and were elected or nominated
for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at
the time such election or nomination was approved by the Board.
(n)
“
Continuous Service
” means that the provision of services to the Company or a Related Entity in any capacity
of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective
termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of
providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before
a termination as an Employee, Director or Consultant can be effective under Applicable Laws. A Grantee’s Continuous Service
shall be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which the Grantee
provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee,
Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related
Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other authorized personal leave.
(o)
“
Corporate Transaction
” means any of the following transactions:
(i)
a merger, reorganization, share exchange or consolidation; or
(ii)
the sale, transfer or other disposition of all or substantially all of the assets of the Company.
(p)
“
Director
” means a member of the Board or the board of directors of any Related Entity.
(q)
“
Disability
” means as defined under the long-term disability policy of the Company or the Related Entity to
which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company or the Related
Entity to which the Grantee provides service does not have a long-term disability plan in place, “Disability” means
that the Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. The Grantee will
not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the
Administrator in its discretion.
(r)
“
Employee
” means any person, including an Officer or Director, who is in the employ of the Company or any Related
Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the
manner and method of performance. The payment of a director’s fee by the Company or a Related Entity shall not be sufficient
to constitute “employment” by the Company.
(s)
“
Employment Agreement
” means the Executive Employment Agreement entered into between the Grantee and the Company,
dated November 7, 2017, as may be amended from time to time.
(t)
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
(u)
“
Fair Market Value
” means, as of any date, the value of Common Stock determined as follows:
(i)
If the Common Stock is listed on one or more established stock exchanges or national market systems, including without limitation
The NASDAQ Global Select Market, The NASDAQ Global Market or The NASDAQ Capital Market of The NASDAQ Stock Market LLC, its Fair
Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination
(or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing
sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii)
If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities
dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a share of Common Stock
shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such
prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such
other source as the Board deems reliable; or
(iii)
In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith.
(v)
“
Good Cause
” has the meaning of “Good Cause” as defined in the Employment Agreement.
(w)
“
Non-Qualified Stock Option
” means an Option not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code.
(x)
“
Officer
” means a person who is an officer of the Company or a Related Entity within the meaning of Section
16 of the Exchange Act and the rules and regulations promulgated thereunder.
(y)
“
Parent
” means a “parent corporation,” whether now or hereafter existing, as defined in Section
424(e) of the Code.
(z)
“
Related Entity
” means any Parent or Subsidiary of the Company.
(aa)
“
Replaced
” means that pursuant to a Corporate Transaction the Option is replaced with a comparable stock award
or a cash incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the
compensation element of the Option existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same (or a more favorable) vesting schedule applicable to the Option. The determination of comparability shall be made
by the Administrator and its determination shall be final, binding and conclusive.
(bb)
“
Share
” means a share of the Common Stock.
(cc)
“
Subsidiary
” means a “subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.
END
OF AGREEMENT
APPENDIX
A
EXERCISE
NOTICE
OncoSec
Medical Incorporated
5820
Nancy Ridge Drive
San
Diego, CA 92121
Attention:
Secretary
1.
Exercise of Option
. Effective as of __________, 20__, the undersigned (the “Grantee”) hereby elects to exercise
the Grantee’s option to purchase shares of the Common Stock (the “Shares”) of OncoSec Medical Incorporated (the
“Company”) under and pursuant to the Stock Option Award Agreement (the “Option Agreement”) and Notice
of Stock Option Award (the “Notice”) dated _____________, 20__. Unless otherwise defined herein, the terms defined
in the Option Agreement shall have the same defined meanings in this Exercise Notice.
2.
Representations of the Grantee
. The Grantee acknowledges that the Grantee has received, read and understood the Notice
and the Option Agreement and agrees to abide by and be bound by their terms and conditions.
3.
Rights as Stockholder
. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided
in Section 14 of the Option Agreement.
4.
Delivery of Payment
. The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the
extent selected and permitted, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay
the Exercise Price provided in Section 4(e) of the Option Agreement.
5.
Tax Consultation
. The Grantee understands that the Grantee may suffer adverse tax consequences as a result of the Grantee’s
purchase or disposition of the Shares. The Grantee represents that the Grantee has consulted with any tax consultants the Grantee
deems advisable in connection with the purchase or disposition of the Shares and that the Grantee is not relying on the Company
for any tax advice.
6.
Taxes
. The Grantee agrees to satisfy all applicable foreign, federal, state and local income and employment tax withholding
obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the
Company to satisfy such obligations.
7.
Successors and Assigns
. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees,
and this agreement shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding
upon the Grantee and his or her heirs, executors, administrators, successors and assigns.
8.
Construction
. The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of
this agreement for construction or interpretation. Except when otherwise indicated by the context, the singular shall include
the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless
the context clearly requires otherwise.
9.
Administration and Interpretation
. The Grantee hereby agrees that any question or dispute regarding the administration
or interpretation of this Exercise Notice shall be submitted by the Grantee or by the Company to the Administrator. The resolution
of such question or dispute by the Administrator shall be final and binding on all persons.
10.
Governing Law; Severability
. This Exercise Notice is to be construed in accordance with and governed by the internal laws
of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. Should any provision
of this Exercise Notice be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the
fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.
11.
Notices
. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon
personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in
the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in
writing from time to time to the other party.
12.
Further Instruments
. The parties agree to execute such further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this agreement.
13.
Entire Agreement
. The Notice and the Option Agreement are incorporated herein by reference and together with this Exercise
Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be
modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Nothing
in the Notice, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any
rights or remedies on any persons other than the parties.
|
Submitted
by:
|
Accepted
by:
|
|
GRANTEE:
|
ONCOSEC
MEDICAL INCORPORATED
|
|
|
|
|
|
By:
|
|
|
(Signature)
|
|
|
|
|
Title:
|
|
|
Address:
|
|
Address
:
|
|
|
|
5820
Nancy Ridge Drive
|
|
|
|
San
Diego, CA 92121
|
APPENDIX
B
ONCOSEC
MEDICAL INCORPORATED 2017 CONTINGENT STOCK OPTION AWARD
INVESTMENT
REPRESENTATION STATEMENT
|
GRANTEE:
|
DANIEL
J. O’CONNOR
|
|
COMPANY:
|
ONCOSEC
MEDICAL INCORPORATED
|
|
SECURITY:
|
OPTIONS
TO PURCHASE COMMON STOCK
|
|
AMOUNT:
|
____________
SHARES
|
|
DATE:
|
____________,
20__
|
In
connection with the above listed Options to purchase the Common Stock of OncoSec Medical Incorporated, a Nevada corporation (the
“
Company
”) pursuant to the Company’s 2017 Contingent Stock Option Award and any subsequent exercise of
such Options (such options and the underlying shares of Common Stock, collectively, the “
Securities
”), the
undersigned Grantee represents to the Company the following:
(a)
Grantee has either a pre-existing personal or business relationship with the Company or its officers, directors, or controlling
persons, or by reason of his or her business or financial experience or the business or financial experience of his or her professional
advisors who are unaffiliated with and who are not compensated by the Company, directly or indirectly, it can reasonably be assumed
to have the capacity to protect his or her own interest in connection with the issuance of the Securities. Grantee is acquiring
these Securities for investment for Grantee’s own account only and not with a view to, or for resale in connection with,
any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).
(b)
Grantee represents that Grantee is a resident of the state of New Jersey.
|
Signature
of Grantee:
|
|
|
|
Date:
|
|
|
ANNEX
C
CONTINGENT
OPTION GRANT
ONCOSEC
MEDICAL INCORPORATED 2017 STOCK OPTION AWARD
NOTICE
OF STOCK OPTION AWARD
|
Grantee’s
Name and Address:
|
Daniel
J. O’Connor
|
|
|
5820
Nancy Ridge Drive
|
|
|
San
Diego, CA 92121
|
You
(the “Grantee”) have been granted an option to purchase shares of Common Stock, subject to the terms and conditions
of this Notice of Stock Option Award (the “Notice”) and the Stock Option Award Agreement (the “Option Agreement”)
attached hereto, as follows. Unless otherwise defined herein, the terms defined in the Option Agreement shall have the same defined
meanings in this Notice.
|
Award
Number:
|
|
|
|
Date
of Award:
|
|
November
7, 2017
|
|
Vesting
Commencement Date:
|
|
January
12, 2018
|
|
Exercise
Price per Share:
|
|
$1.25
|
|
Total
Number of Shares Subject to the Option (the Shares”):
|
|
500,000
|
|
Total
Exercise Price:
|
|
$625,000
|
|
Type
of Option:
|
|
Non-Qualified
Stock Option
|
|
Expiration
Date:
|
|
November
7, 2027
|
|
Post-Termination
Exercise Period:
|
|
Three
(3) Months
|
Vesting
Schedule
:
Subject
to the Grantee’s Continuous Service and other limitations set forth in this Notice and the Option Agreement, the Option
may be exercised, in whole or in part, in accordance with the following schedule:
Two
hundred fifty thousand (250,000) Options shall be fully vested on the date that the Company achieves one hundred percent (100%)
enrollment in the first cohort of the Pisces Study (the “Enrollment Date”) and two hundred fifty thousand (250,000)
Options shall vest on the first anniversary of the Enrollment Date. If the Company’s stockholders do not approve the Option,
the Option shall terminate immediately following the Company’s first annual meeting following the Date of Award.
The
Grantee hereby agrees that all questions of interpretation and administration relating to this Notice and the Option Agreement
shall be resolved by the Administrator in accordance with Section 15 of the Option Agreement. The Grantee further agrees to the
venue selection in accordance with Section 16 of the Option Agreement. The Grantee further agrees to notify the Company upon any
change in the residence address indicated in this Notice.
IN
WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Option is to be governed by the terms
and conditions of this Notice and the Option Agreement.
|
OncoSec
Medical Incorporated
|
|
|
A
Nevada corporation
|
|
|
|
|
|
By:
|
/s/
Punit S. Dhillon
|
|
|
Title:
|
President
|
|
THE
GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S
CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE OR THE OPTION AGREEMENT SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT
TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S
RIGHT OR THE RIGHT OF THE COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE THE GRANTEE’S CONTINUOUS
SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.
The
Grantee acknowledges receipt of a copy of the Option Agreement, and represents that he or she is familiar with the terms and provisions
thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed
this Notice and the Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing
this Notice, and fully understands all provisions of this Notice and the Option Agreement. The Grantee hereby agrees that all
questions of interpretation and administration relating to this Notice and the Option Agreement shall be resolved by the Administrator
in accordance with Section 15 of the Option Agreement. The Grantee further agrees to the venue selection in accordance with Section
16 of the Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated
in this Notice.
|
Dated:
November 7, 2017
|
|
Signed:
|
|
|
|
/s/
Daniel J. O’Connor
|
|
|
|
Grantee
|
Award
Number:
ONCOSEC
MEDICAL INCORPORATED
2017 CONTINGENT STOCK OPTION AWARD
STOCK
OPTION AWARD AGREEMENT
1.
Grant of Option
. OncoSec Medical Incorporated, a Nevada corporation (the “Company”) hereby grants to the Grantee
(the “Grantee”) named in the Notice of Stock Option Award (the “Notice”) an option (the “Option”)
to purchase the Total Number of Shares of Common Stock subject to the Option (the “Shares”) set forth in the Notice,
at the Exercise Price per Share set forth in the Notice (the “Exercise Price”) subject to the terms and provisions
of this Stock Option Award Agreement (the “Option Agreement”) and the Notice which are incorporated herein by reference.
The Option is not intended to qualify as an incentive stock option as defined in Section 422 of the code. Accordingly, the Option
is a non-qualified stock option.
2.
Exercise of Option
.
(a)
Right to Exercise
. The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the
Notice and with the applicable provisions of this Option Agreement. The Option shall be subject to the provisions of Section 17
of this Option Agreement relating to the exercisability or termination of the Option in the event of a Change in Control. The
Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as
determined by the Administrator. In no event shall the Company issue fractional Shares.
(b)
Method of Exercise
. The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Appendix
A) or by such other procedure as specified from time to time by the Administrator which shall state the election to exercise the
Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required
by the Administrator. The exercise notice shall be delivered in person, by certified mail, or by such other method (including
electronic transmission) as determined from time to time by the Administrator to the Company accompanied by payment of the Exercise
Price and all applicable income and employment taxes required to be withheld. The Option shall be deemed to be exercised upon
receipt by the Company of such notice accompanied by the Exercise Price and all applicable withholding taxes, which, to the extent
selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price
provided in Section 4(e) below to the extent such procedure is available to the Grantee at the time of exercise and such an exercise
would not violate any Applicable Law.
(c)
Taxes
. No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee
or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment
tax withholding obligations, including, without limitation, such other tax obligations of the Grantee incident to the receipt
of Shares (the “Tax Withholding Obligation”). Notwithstanding the foregoing, at any time not less than five (5) business
days (or such fewer number of business days as determined by the Administrator) before any Tax Withholding Obligation arises (e.g.,
an exercise date), the Grantee may elect to satisfy the Grantee’s Tax Withholding Obligation that the Company determines
is sufficient by, if permissible under Applicable Law, directing the Company to withhold from those Shares otherwise issuable
to the Grantee the whole number of Shares sufficient to satisfy the minimum applicable Tax Withholding Obligation. The Grantee
acknowledges that the withheld Shares may not be sufficient to satisfy the Grantee’s minimum Tax Withholding Obligation.
Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as practicable, including through additional
payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the withholding of Shares described
above. Upon exercise of the Option, the Company or the Grantee’s employer may offset or withhold (from any amount owed by
the Company or the Grantee’s employer to the Grantee) or collect from the Grantee or other person an amount sufficient to
satisfy the Tax Withholding Obligation. Furthermore, in the event of any determination that the Company and/or a Related Entity
has failed to withhold a sum sufficient to pay all withholding taxes due in connection with the Option, the Grantee agrees to
pay the Company and/or the Related Entity the amount of such deficiency in cash within five (5) days after receiving a written
demand from the Company and/or the Related Entity to do so, whether or not the Grantee is an employee of the Company and/or the
Related Entity at that time.
(d)
Section 16(b)
. Notwithstanding any provision of this Option Agreement to the contrary, other than termination of the Grantee’s
Continuous Service for Cause, if a sale within the applicable time periods set forth in Sections 6, 7 or 8 herein of Shares acquired
upon the exercise of the Option would subject the Grantee to suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such Shares by the Grantee
would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Grantee’s termination
of Continuous Service, or (iii) the date on which the Option expires.
3.
Grantee’s Representations
. Concurrently with the grant of this Option, Participant shall deliver to the Company its
Investment Representation Statement in the form attached hereto as Appendix B.
4.
Method of Payment
. Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at the
election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law and, provided further,
that the portion of the Exercise Price equal to the par value of the Shares must be paid in cash or other legal consideration
permitted by the Delaware General Corporation Law:
(a)
cash;
(b)
check;
(c)
surrender of Shares held for the requisite period, if any, necessary to avoid a charge to the Company’s earnings for financial
reporting purposes, or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require
which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as
to which the Option is being exercised;
(d)
payment through a “net exercise” such that, without the payment of any funds, the Grantee may exercise the Option
and receive the net number of Shares subject to the Option equal to (i) the number of Shares as to which the Option is being exercised,
multiplied by (ii) a fraction, the numerator of which is the Fair Market Value per Share (on such date as is determined by the
Administrator) less the Exercise Price per Share, and the denominator of which is such Fair Market Value per Share (the number
of net Shares to be received shall be rounded down to the nearest whole number of Shares); or
(e)
payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions
to a Company-designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company
sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives
to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale
transaction.
5.
Restrictions on Exercise
. The Option may not be exercised if the issuance of the Shares subject to the Option upon such
exercise would constitute a violation of any Applicable Laws or if the Shares subject to the Option have not been registered under
the Securities Act of 1933 pursuant to an effective Registration Statement on Form S-8. Grantee acknowledges that the Company
makes no representation or warranty regarding the eligibility of the Option for inclusion on a Registration Statement on Form
S-8 or the likelihood that any such Registration Statement on Form S-8 will be declared effective. If the exercise of the Option
within the applicable time periods set forth in Sections 6, 7 and 8 of this Option Agreement is prevented by the provisions of
this Section 5, the Option shall remain exercisable until one (1) month after the date the Grantee is notified by the Company
that the Option is exercisable, but in any event no later than the Expiration Date set forth in the Notice.
6.
Termination or Change of Continuous Service
. In the event the Grantee’s Continuous Service terminates, the Grantee
may, but only during the Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of such
termination (the “Termination Date”). The Post-Termination Exercise Period shall commence on the Termination Date.
In no event, however, shall the Option be exercised later than the Expiration Date set forth in the Notice. In the event of the
Grantee’s change in status from Employee, Director or Consultant to any other status of Employee, Director or Consultant,
the Option shall remain in effect and the Option shall continue to vest in accordance with the Vesting Schedule set forth in the
Notice. Except as provided in Sections 7 and 8 below, to the extent that the Option was unvested on the Termination Date, or if
the Grantee does not exercise the vested portion of the Option within the Post-Termination Exercise Period, the Option shall terminate.
7.
Disability of Grantee
. In the event the Grantee’s Continuous Service terminates as a result of his or her Disability,
the Grantee may, but only within twelve (12) months commencing on the Termination Date (but in no event later than the Expiration
Date), exercise the portion of the Option that was vested on the Termination Date. To the extent that the Option was unvested
on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the time specified herein,
the Option shall terminate.
8.
Death of Grantee
. In the event of the termination of the Grantee’s Continuous Service as a result of his or her death,
or in the event of the Grantee’s death during the Post-Termination Exercise Period or during the twelve (12) month period
following the Grantee’s termination of Continuous Service as a result of his or her Disability, the person who acquired
the right to exercise the Option pursuant to Section 9 may exercise the portion of the Option that was vested at the date of termination
within twelve (12) months commencing on the date of death (but in no event later than the Expiration Date). To the extent that
the Option was unvested on the date of death, or if the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.
9.
Transferability of Option
. The Option may not be transferred in any manner other than by will or by the laws of descent
and distribution, provided, however, that the Option may be transferred during the lifetime of the Grantee to the extent and in
the manner authorized by the Administrator. Notwithstanding the foregoing, the Grantee may designate one or more beneficiaries
of the Grantee’s Option in the event of the Grantee’s death on a beneficiary designation form provided by the Administrator.
Following the death of the Grantee, the Option, to the extent provided in Section 8, may be exercised (a) by the person or persons
designated under the deceased Grantee’s beneficiary designation or (b) in the absence of an effectively designated beneficiary,
by the Grantee’s legal representative or by any person empowered to do so under the deceased Grantee’s will or under
the then applicable laws of descent and distribution. The terms of the Option shall be binding upon the executors, administrators,
heirs, successors and transferees of the Grantee.
10.
Term of Option
. The Option must be exercised no later than the Expiration Date set forth in the Notice or such earlier
date as otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or
effect and may not be exercised.
11.
Tax Consequences
. The Grantee may incur tax liability as a result of the Grantee’s purchase or disposition of the
Shares. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES. It is the intent of
the Company that the Option be exempt from Section 409A of the Code (“
Section 409A
”). Nevertheless, the Company
makes no representation that the Option will be exempt from or comply with Section 409A and makes no undertaking to prevent Section
409A from applying to the Option or to mitigate its effects on the Option. The Grantee is encouraged to consult a tax adviser
regarding the potential impact of Section 409A.
12.
Entire Agreement: Governing Law
. The Notice and this Option Agreement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and
the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except
by means of a writing signed by the Company and the Grantee. Nothing in the Notice and this Option Agreement (except as expressly
provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Notice and this Option
Agreement are to be construed in accordance with and governed by the internal laws of the State of California without giving effect
to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any provision of the Notice or this Option Agreement be determined
to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions
shall nevertheless remain effective and shall remain enforceable.
13.
Construction
. The captions used in the Notice and this Option Agreement are inserted for convenience and shall not be deemed
a part of the Option for construction or interpretation. Except when otherwise indicated by the context, the singular shall include
the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless
the context clearly requires otherwise.
14.
Adjustments Upon Changes in Capitalization
. Subject to any required action by the stockholders of the Company and Section
17 hereof, the number of Shares covered by the Option, the exercise price of the Option, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification of the Shares,
or similar transaction affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other transaction
with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including
a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar
transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” In the event of any distribution of cash or other assets to stockholders other than a
normal cash dividend, the Board shall also make such adjustments as provided in this Section 14 or substitute, exchange or grant
an award to effect such adjustments (collectively “adjustments”). Any such adjustments to the Option will be effected
in a manner that precludes the enlargement of rights and benefits under the Option. In connection with the foregoing adjustments,
the Administrator may, in its discretion, prohibit the exercise of the Option or other issuance of Shares, cash or other consideration
pursuant to the Option during certain periods of time. Such adjustment shall be made by the Administrator and its determination
shall be final, binding and conclusive. Except as the Administrator determines, 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 hereof shall
be made with respect to, the number or price of Shares subject to the Option.
15.
Administration and Interpretation
. Any question or dispute regarding the administration or interpretation of the Notice
or this Option Agreement shall be submitted by the Grantee or by the Company to the Administrator. The resolution of such question
or dispute by the Administrator shall be final and binding on all persons.
16.
Venue
. The Company, the Grantee, and the Grantee’s assignees pursuant to Section 9 (the “parties”) agree
that any suit, action, or proceeding arising out of or relating to the Notice or this Option Agreement shall be brought in the
United States District Court for the Southern District of California (or should such court lack jurisdiction to hear such action,
suit or proceeding, in a California state court in the County of San Diego) and that the parties shall submit to the jurisdiction
of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the
laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions of this Section 16
shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be
modified to the minimum extent necessary to make it or its application valid and enforceable.
17.
Acceleration of Award Upon a Change in Control
. In the event of a Change in Control and irrespective of whether the Option
is Assumed or Replaced, the Option shall immediately vest and become exercisable and any performance criteria relevant to the
Option shall be deemed to have been achieved at the target performance level. The Administrator may provide that if the Option
remains outstanding after vesting pursuant to the preceding sentence, it will be Assumed or Replaced in connection with the Change
in Control. The Administrator may also provide for the cashing out of the Option based on the based upon the per-Share consideration
being paid in connection with such Change in Control, less the applicable exercise price; provided, however, that the Grantee
shall be entitled to consideration in respect of cancellation of the Option only if the per-Share consideration less the applicable
exercise price or base amount is greater than $0, and to the extent that the per-Share consideration is less than or equal to
the applicable exercise price, the Option shall be cancelled for no consideration. Notwithstanding the foregoing, if the Option
constitutes deferred compensation under Section 409A, to the extent required to comply with Section 409A, a transaction that does
not constitute a change in control event under Treasury Regulation Section 1.409A-3(i)(5)(i) shall not be considered a Change
in Control.
18.
Notices
. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon
personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in
the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such other address as such party may designate in writing
from time to time to the other party.
19.
Amendment and Delay to Meet the Requirements of Section 409A
. The Grantee acknowledges that the Company, in the exercise
of its sole discretion and without the consent of the Grantee, may amend or modify this Option Agreement in any manner and delay
the issuance of any Shares issuable pursuant to this Option Agreement to the minimum extent necessary to meet the requirements
of Section 409A as amplified by any Treasury regulations or guidance from the Internal Revenue Service as the Company deems appropriate
or advisable. In addition, the Company makes no representation that the Award will comply with Section 409A and makes no undertaking
to prevent Section 409A from applying to the Award or to mitigate its effects on any deferrals or payments made in respect of
the Units. The Grantee is encouraged to consult a tax adviser regarding the potential impact of Section 409A.
20.
Definitions
. As used herein, the following definitions shall apply:
(a)
“
Administrator
” means the Board or any of the Committees appointed to administer this Option Agreement.
(b)
“
Affiliate
” and “
Associate
” shall have the respective meanings ascribed to such terms in
Rule 12b-2 promulgated under the Exchange Act.
(c)
“
Applicable Laws
” means the legal requirements applicable to the Option under applicable provisions of federal
securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market
system, and the rules of any non-U.S. jurisdiction applicable to stock options granted to residents therein.
(d)
“
Assumed
” means that pursuant to a Corporate Transaction either (i) the Option is expressly affirmed by the
Company or (ii) the contractual obligations represented by the Option are expressly assumed (and not simply by operation of law)
by the successor entity or its Parent in connection with the Corporate Transaction with appropriate adjustments to the number
and type of securities of the successor entity or its Parent subject to the Option and the exercise or purchase price thereof
which at least preserves the compensation element of the Option existing at the time of the Corporate Transaction as determined
in accordance with the instruments evidencing the agreement to assume the Option.
(e)
“
Board
” means the Board of Directors of the Company.
(f)
“
Cause
” has the meaning of “For Cause” as defined in the Employment Agreement.
(g)
“
Change in Control
” means a change in ownership or control of the Company effected through any of the following
transactions:
(i)
the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company
or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities; or
(ii)
a change in the composition of the Board over a period of twelve (12) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised
of individuals who are Continuing Directors; or
(iii)
the consummation of Corporate Transaction; excluding, however, a Corporate Transaction pursuant to which:
(1)
all or substantially all of the individuals and entities who have beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of the total combined voting power of the Company’s outstanding voting securities Company’s immediately
prior to such Corporate Transaction will have beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act), directly
or indirectly, of more than fifty percent (50%) of the total combined voting power of the then outstanding voting securities of
the acquiring entity or the corporation or entity resulting from such Corporate Transaction (including, without limitation, the
Company or other entity that as a result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) (the “
Resulting Entity
”) in substantially the same
proportions as their ownership of the Company’s voting securities, immediately prior to such Corporate Transaction; and
(2)
individuals who were members of the Board before the Corporation Transaction (or whose appointment or election is endorsed by
a majority of such members of the Board) will continue to constitute at least a majority of the members of the board of directors
of the Resulting Entity; or
(iv)
a complete liquidation or dissolution of the Company.
(h)
“
Code
” means the Internal Revenue Code of 1986, as amended
(i)
“
Committee
” means any committee composed of members of the Board appointed by the Board to administer the Plan.
(j)
“
Common Stock
” means the common stock of the Company.
(k)
“
Company
” means OncoSec Medical Incorporated, a Nevada corporation, or any successor entity that adopts this
Option Agreement in connection with a Corporate Transaction.
(l)
“
Consultant
” means any person (other than an Employee or a Director, solely with respect to rendering services
in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory
services to the Company or such Related Entity.
(m)
“
Continuing Directors
” means members of the Board who either (i) have been Board members continuously for a
period of at least twelve (12) months or (ii) have been Board members for less than twelve (12) months and were elected or nominated
for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at
the time such election or nomination was approved by the Board.
(n)
“
Continuous Service
” means that the provision of services to the Company or a Related Entity in any capacity
of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective
termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of
providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before
a termination as an Employee, Director or Consultant can be effective under Applicable Laws. A Grantee’s Continuous Service
shall be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which the Grantee
provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee,
Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related
Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other authorized personal leave.
(o)
“
Corporate Transaction
” means any of the following transactions:
(i)
a merger, reorganization, share exchange or consolidation; or
(ii)
the sale, transfer or other disposition of all or substantially all of the assets of the Company.
(p)
“
Director
” means a member of the Board or the board of directors of any Related Entity.
(q)
“
Disability
” means as defined under the long-term disability policy of the Company or the Related Entity to
which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company or the Related
Entity to which the Grantee provides service does not have a long-term disability plan in place, “Disability” means
that the Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. The Grantee will
not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the
Administrator in its discretion.
(r)
“
Employee
” means any person, including an Officer or Director, who is in the employ of the Company or any Related
Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the
manner and method of performance. The payment of a director’s fee by the Company or a Related Entity shall not be sufficient
to constitute “employment” by the Company.
(s)
“
Employment Agreement
” means the Executive Employment Agreement entered into between the Grantee and the Company,
dated November 7, 2017, as may be amended from time to time.
(t)
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
(u)
“
Fair Market Value
” means, as of any date, the value of Common Stock determined as follows:
(i)
If the Common Stock is listed on one or more established stock exchanges or national market systems, including without limitation
The NASDAQ Global Select Market, The NASDAQ Global Market or The NASDAQ Capital Market of The NASDAQ Stock Market LLC, its Fair
Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination
(or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing
sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii)
If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities
dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a share of Common Stock
shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such
prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such
other source as the Board deems reliable; or
(iii)
In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith.
(v)
“
Non-Qualified Stock Option
” means an Option not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code.
(w)
“
Officer
” means a person who is an officer of the Company or a Related Entity within the meaning of Section
16 of the Exchange Act and the rules and regulations promulgated thereunder.
(x)
“
Parent
” means a “parent corporation,” whether now or hereafter existing, as defined in Section
424(e) of the Code.
(y)
“
Related Entity
” means any Parent or Subsidiary of the Company.
(z)
“
Replaced
” means that pursuant to a Corporate Transaction the Option is replaced with a comparable stock award
or a cash incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the
compensation element of the Option existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same (or a more favorable) vesting schedule applicable to the Option. The determination of comparability shall be made
by the Administrator and its determination shall be final, binding and conclusive.
(aa)
“
Share
” means a share of the Common Stock.
(bb)
“
Subsidiary
” means a “subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.
END
OF AGREEMENT
APPENDIX
A
EXERCISE
NOTICE
OncoSec
Medical Incorporated
5820
Nancy Ridge Drive
San
Diego, CA 92121
Attention:
Secretary
1.
Exercise of Option
. Effective as of _______, the undersigned (the “Grantee”) hereby elects to exercise the
Grantee’s option to purchase shares of the Common Stock (the “Shares”) of OncoSec Medical Incorporated (the
“Company”) under and pursuant to the Stock Option Award Agreement (the “Option Agreement”) and Notice
of Stock Option Award (the “Notice”) dated _____________, 20__. Unless otherwise defined herein, the terms defined
in the Option Agreement shall have the same defined meanings in this Exercise Notice.
2.
Representations of the Grantee
. The Grantee acknowledges that the Grantee has received, read and understood the Notice
and the Option Agreement and agrees to abide by and be bound by their terms and conditions.
3.
Rights as Stockholder
. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided
in Section 14 of the Option Agreement.
4.
Delivery of Payment
. The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the
extent selected and permitted, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay
the Exercise Price provided in Section 4(e) of the Option Agreement.
5.
Tax Consultation
. The Grantee understands that the Grantee may suffer adverse tax consequences as a result of the Grantee’s
purchase or disposition of the Shares. The Grantee represents that the Grantee has consulted with any tax consultants the Grantee
deems advisable in connection with the purchase or disposition of the Shares and that the Grantee is not relying on the Company
for any tax advice.
6.
Taxes
. The Grantee agrees to satisfy all applicable foreign, federal, state and local income and employment tax withholding
obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the
Company to satisfy such obligations.
7.
Successors and Assigns
. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees,
and this agreement shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding
upon the Grantee and his or her heirs, executors, administrators, successors and assigns.
8.
Construction
. The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of
this agreement for construction or interpretation. Except when otherwise indicated by the context, the singular shall include
the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless
the context clearly requires otherwise.
9.
Administration and Interpretation
. The Grantee hereby agrees that any question or dispute regarding the administration
or interpretation of this Exercise Notice shall be submitted by the Grantee or by the Company to the Administrator. The resolution
of such question or dispute by the Administrator shall be final and binding on all persons.
10.
Governing Law; Severability
. This Exercise Notice is to be construed in accordance with and governed by the internal laws
of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. Should any provision
of this Exercise Notice be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the
fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.
11.
Notices
. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon
personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in
the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in
writing from time to time to the other party.
12.
Further Instruments
. The parties agree to execute such further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this agreement.
13.
Entire Agreement
. The Notice and the Option Agreement are incorporated herein by reference and together with this Exercise
Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be
modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Nothing
in the Notice, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any
rights or remedies on any persons other than the parties.
|
Submitted
by:
|
Accepted
by:
|
|
GRANTEE:
|
ONCOSEC
MEDICAL INCORPORATED
|
|
|
|
|
|
By:
|
|
|
(Signature)
|
|
|
|
|
Title:
|
|
|
Address:
|
|
Address:
|
|
|
|
5820
Nancy Ridge Drive
|
|
|
|
San
Diego, CA 92121
|
APPENDIX
B
ONCOSEC
MEDICAL INCORPORATED 2017 CONTINGENT STOCK OPTION AWARD
INVESTMENT
REPRESENTATION STATEMENT
|
GRANTEE:
|
DANIEL
J. O’CONNOR
|
|
COMPANY:
|
ONCOSEC
MEDICAL INCORPORATED
|
|
SECURITY:
|
OPTIONS
TO PURCHASE COMMON STOCK
|
|
AMOUNT:
|
_________
SHARES
|
|
DATE:
|
_________,
20__
|
In
connection with the above listed Options to purchase the Common Stock of OncoSec Medical Incorporated, a Nevada corporation (the
“
Company
”) pursuant to the Company’s 2017 Contingent Stock Option Award and any subsequent exercise of
such Options (such options and the underlying shares of Common Stock, collectively, the “
Securities
”), the
undersigned Grantee represents to the Company the following:
(a)
Grantee has either a pre-existing personal or business relationship with the Company or its officers, directors, or controlling
persons, or by reason of his or her business or financial experience or the business or financial experience of his or her professional
advisors who are unaffiliated with and who are not compensated by the Company, directly or indirectly, it can reasonably be assumed
to have the capacity to protect his or her own interest in connection with the issuance of the Securities. Grantee is acquiring
these Securities for investment for Grantee’s own account only and not with a view to, or for resale in connection with,
any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).
(b)
Grantee represents that Grantee is a resident of the state of New Jersey.
|
Signature
of Grantee:
|
|
|
|
Date:
|
|
|