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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant  ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
Precipio, Inc.
(Name of Registrant as Specified inIn Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as providedFee computed on table in exhibit required by theItem 25(b) per Exchange Act Rule 0-11(a)(2)Rules 14a-6(i)(1) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount previously paid:
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4 Science Park
New Haven, Connecticut 06511
April 29, 202125, 2023
Dear Stockholder:
You are cordially invited to attend our 20212023 Annual Meeting of Stockholders (the “Annual Meeting”), which will be held virtually via live webcast at www.virtualshareholdermeeting.com/PRPO2021,PRPO2023, on Friday,Thursday, June 18, 2021,15, 2023, at 4:10:00 p.m.a.m. Eastern time.Time. You will be able to attend the meeting online and submit questions during the meeting by visiting the website listed above. You will also be able to vote your shares electronically at the Annual Meeting. The meeting will be held online only. We are pleased to use the virtual meeting format to facilitate stockholder attendance, voting, and questions by leveraging technology to communicate more effectively and efficiently with our stockholders. This format allows stockholders to participate fully from any location, without the cost of travel. Because the Annual Meeting is virtual and being conducted electronically, stockholders cannot attend the Annual Meeting in person. Instructions regarding how to attend the meeting online and details concerning the business to be conducted at the Annual Meeting are more fully described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement which are a part of this invitation.
At the Annual Meeting, stockholders will be asked to vote on each of the sixfour proposals set forth in the Notice of Annual Meeting of Stockholders and the proxy statement, which describedescribes the formal business to be conducted at the Annual Meeting and follow this letter.
It is important that your shares are represented and voted at the Annual Meeting regardless of the size of your holdings. Whether or not you plan to attend the Annual Meeting, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or vote electronically via the Internet or by telephone, if permitted by the broker or other nominee that holds your shares. Voting electronically, by telephone, or by returning your proxy card in advance of the Annual Meeting does not deprive you of your right to attend the Annual Meeting. Please review the instructions on each of your voting options described in the Proxy Statement.
If you have any questions concerning thethis Proxy Statement or our upcoming Annual Meeting and you are the stockholder of record of your shares, please contact Precipio’s CEOPrecipio, Inc.’s Chief Executive Officer Ilan Danieli at (203) 787-7888 ex. 536. If your shares are held by a broker or other nominee (that is, in “street name”), please contact your broker or otheranother nominee for questions concerning the Annual Meeting.
Thank you for your continued support. We look forward to seeing those of you who will be able to attend the Annual Meeting.
 
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Sincerely yours,
 
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/S/ ILAN DANIELIs/ Ilan Danieli
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Ilan Danieli
 
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Chief Executive Officer

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4 Science Park
New Haven, Connecticut 06511
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held June 18, 202115, 2023
To the Stockholders of Precipio, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of Precipio, Inc. (the “Company”) which will be held virtually via live webcast at www.virtualshareholdermeeting.com/PRPO2021,PRPO2023, on Friday,Thursday, June 18, 2021,15, 2023, at 4:10:00 p.m.a.m. Eastern time.Time. Stockholders will be able to listen to and participate in the meeting live, submit questions, and vote online.by entering the 16-digit control number included on your proxy card. Because the Annual Meeting is virtual and being conducted electronically, stockholders cannot attend the Annual Meeting in person. The Annual Meeting is being held for the following purposes:
(1)1.
To elect Kathleen D. LaPorteRichard Sandberg, Douglas Fisher, M.D. and Ron A. AndrewsJeffrey Cossman, M.D. as Class IIIII directors for terms to expire in 2024 (“Proposal One”);2026;
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To hold an advisory (non-binding) vote to approve named executive compensation (“Proposal Two”);
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To hold an advisory (non-binding) vote on the frequency of future advisory votes on executive compensation (“Proposal Three”);
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To approve an amendment to and restatement of the Company’s 2017 Stock Option and Incentive Plan (the “2017 Plan”) to increase the number of shares authorized for issuance under the 2017 Plan by 925,000 shares (“Proposal Four – Amendment No 1 to the 2017 Plan”);
(5)
To approve an amendment to and restatement of the 2017 Plan to remove the limitation on the number of Stock Options or Stock Appreciation Rights (as such term is defined the 2017 Plan) that may be issued to any one individual grantee during any one calendar year (“Proposal Five - Amendment No 2 to the 2017 Plan”);
(6)2.
To ratify the appointment of Marcum LLP as our independent registered public accounting firm for the year ending December 31, 2021 (“Proposal Six”);2023;
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To authorize the Company’s Board of Directors to, in its discretion, to amend the Company’s Third Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio not less than 1-for-2 and not greater than 1-for-30 at any time prior to the one-year anniversary of the date on which the reverse stock split is approved by the Company’s stockholders at the Annual Meeting without further approval or authorization of our stockholders and with our Board of Directors able to elect to abandon such proposed amendment and not effect the reverse stock split authorized by stockholders, in its sole discretion, and, in connection therewith, to decrease the number of authorized shares of our common stock on a basis proportional to the reverse stock split ratio; and
(7)4.
To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on Friday, April 23, 202121, 2023 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting.
The Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 4:10:00 p.m.a.m. Eastern timeTime on Friday,Thursday, June 18, 2021.15, 2023. Online check-in will begin at 3:9:45 p.m.a.m. Eastern time,Time, and you should allow approximately 15 minutes for the online check-in procedures.
Your vote is important. We encourage you to vote in advance, even if you plan to attend the Annual Meeting online. To vote online or by phone, you will need to use your 16-digit control number found on the Notice of Internet Availability of Proxy Materials, the proxy card or the voting instruction form.
The Company is pleased to take advantage of Securities and Exchange Commission (the “SEC”) rules that allow companies to furnish their proxy materials over the Internet. The Company is mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of the proxy materials and our Annual Report for the fiscal year ended December 31, 20202022 on Form 10-K filed with the SEC on March 29, 202130, 2023 (“Annual Report”). The Notice of Internet Availability contains instructions on how to access those documents and to cast your vote via the Internet. The Notice of Internet Availability also contains instructions on how to request a paper copy of our proxy materials and our Annual Report. This method of notice and access gives the Company a low-cost way to furnish stockholders with their proxy materials. If you previously chose to receive proxy materials electronically, you will continue to receive access to these materials via email unless you elect otherwise.

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The Notice of Internet Availability will be mailed on or about May 4, 2021April 25, 2023 to our beneficial owners and stockholders of record who owned our common stock at the close of business on the Record Date. All stockholders who do not receive a Notice will receive a paper copy of the proxy materials and the Annual Report by mail. This process allows the Company to provide its stockholders with the information they need on a more timely basis, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.
ImpactIn order to attend the Annual Meeting virtually, you will be required to enter the control number provided in the Notice of Covid-19
Our business may have been disrupted and materially adversely affectedAvailability or the proxy card at www.virtualshareholdermeeting.com/PRPO2023. Beneficial owners of shares held in street name will need to follow the instructions provided in the voting instructions form by the recent outbreakbroker, bank or other nominee that holds their shares. Please see the “General Information” section of COVID-19. In December 2019, an outbreakthe proxy statement that accompanies this notice for more details regarding the logistics of respiratory illness causedthe virtual Annual Meeting. You will not be able to attend the Annual Meeting in person.
Your vote is important. Whether or not you are able to attend the Annual Meeting and vote your shares online, it is important that your shares be represented. To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the Annual Meeting, by a strain of novel coronavirus, COVID-19, began in China. As of March 2021, that outbreak has led to numerous confirmed cases worldwide, includingsubmitting your proxy over the Internet or by telephone as described in the United States. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce. Global health concerns, such as coronavirus, could also result in social, economic, and labor instabilityinstructions included in the countries in which weNotice of Availability or by signing, dating and returning the third parties with whom we engage operate. The spreadproxy card. Voting promptly will help avoid the additional expense of COVID-19 has createdfurther solicitation to ensure a worldwide humanitarian and economic crisis. The events we are living through are in many ways unprecedented, with large-scale quarantines, border closings, school closings, and physical distancing. Governments and communities have been jolted into actionquorum at the meeting.
We encourage you to “flattenaccess the curve.” As an organizationAnnual Meeting early. Online check-in will begin approximately 15 minutes before 4:00 pm Eastern Time. If you encounter difficulties during the check-in or meeting time, we have accelerated our actionstechnicians available to protect employees, customers and suppliers.
help you. The progression of the outbreak and its effects on our business and operations are uncertain. While we can only estimate the financial impacts to our business, based on current data, we have experienced business interruptions in certain urban markets that continue to range from 30% to 85%. With the understanding that it is extremely difficult to project the full and ongoing impact of state-by-state quarantine and shelter-in-place orders, we anticipate that such rules and restrictions on businessestechnical support contact information will continue through 2021 and quite possibly beyond, in various degrees, as the country re-opens state by state, county by county and city by city. Returning to normalcy is conditioned on many factors surrounding the control and or eradication of COVID-19. The extent of the impact of the ongoing COVID-19 pandemicbe posted on the Company's operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, and impact on the Company's customers, employees and vendors, all of which are uncertain and cannot be predicted. These uncertainties could have a material adverse effect on our business, financial condition or results of operations. We have been actively monitoring the COVID-19 situation and its impact on the global economy and the Company. As the global pandemic evolves, we will continue to monitor the extent to which COVID-19 impacts our revenues, expenses and liquidity.virtual meeting login page.
As such, we are unable to provide additional insight on the impact to our business at this time. Going forward, we expect that challenges to our business will continue. We have been and will continue to be prudent in managing through this economic crisis. Digital connectivity is now fundamental to the continuity of our business operations. We continually engage our employees and customers in keeping safe. We monitor adherence to governmental guidelines. We have employed remote work where possible. In this unchartered time, we recognize the needThank you for frequent and transparent communication to all parties. As necessary, we will provide additional information related to this economic condition, including the impact to our future operating results due to downturns in global economies and financial markets.
your continued support.
 
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By Order of the Board of Directors
 
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/S/ ILAN DANIELIs/ Ilan Danieli
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Ilan Danieli, Chief Executive Officer
Connecticut
April 29, 202125, 2023
Whether or not you expect to attend the Annual Meeting, we urge you to vote for your shares at your earliest convenience. This will ensure the presence of a quorum at the Annual Meeting. Promptly voting your shares will save Precipio, Inc. the expenses and extra work of additional solicitation. Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting if you desire to do so, as your proxy is revocable at your option. Your vote is important, so please act today!
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on Friday,Thursday, June 18, 2021:15, 2023. This Proxy Statement, the accompanying form of proxy card and our Annual Report, including consolidated financial statements, are available on the Internet at http://precipiodx.com. Under rules issued by the Securities and Exchange Commission (the “SEC”), we are providing access to our proxy materials both by sending you this full set of proxy materials and by notifying you of the availability of our proxy materials on the Internet. The information contained on or that may be obtained from our website is not, and shall not be, deemed to be, a part of this Proxy Statement. You can review filings we make with the SEC at its website (www.sec.gov), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports electronically filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).as. Our Code of Conduct and Ethics and the charters of our Nominating and Governance Committee, Audit Committee, and Compensation Committee of the Board of Directors may be accessed within the Investor Relations section of our website.

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GENERAL INFORMATION FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS
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VOTING SECURITIES AND BENEFICIAL OWNERSHIP BY PRINCIPAL STOCKHOLDERS, DIRECTORS AND OFFICERS
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MATTERS TO BE VOTED ON:
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PROPOSAL NO. 1—ELECTION OF CLASS II DIRECTORS
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PROPOSAL NO. 2—RATIFICATION OF THE APPOINTMENT OF MARCUM LLP AS PRECIPIO’s INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023
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PROPOSAL NO. 3—APPROVAL OF REVERSE STOCK SPLIT
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REPORT OF THE AUDIT COMMITTEE
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HOUSEHOLDING
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STOCKHOLDER PROPOSALS
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OTHER MATTERS
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4 Science Park
New Haven, Connecticut 06511
PROXY STATEMENT
for
20212023 ANNUAL MEETING OF STOCKHOLDERS
of
PRECIPIO, INC.
GENERAL INFORMATION
The Board of Directors (the “Board”) of Precipio, Inc. (the “Company”) is soliciting your proxy to vote at the Annual Meeting of Stockholders (the “Annual Meeting”) which will be held virtually via live webcast at www.virtualshareholdermeeting.com/PRPO2021,PRPO2023, on Friday,Thursday, June 18, 2021,15, 2023, at 4:10:00 p.m.a.m. Eastern time.Time. Stockholders will be able to listen to and participate in the meeting live, submit questions, and vote online. Because the Annual Meeting is virtual and being conducted electronically, stockholders cannot attend the Annual Meeting in person. Only stockholders of record as of the close of business on Friday, April 23, 202121, 2023 (the “Record Date”) are entitled to vote at the Annual Meeting. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 4:10:00 p.m.a.m. Eastern time Friday,Time Thursday, June 18, 2021.15, 2023. Online check-in will begin at 3:9:45 p.m.a.m. Eastern time,Time, and you should allow approximately 15 minutes for the online check-in procedures.
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide our beneficial owners and stockholders of record access to our proxy materials over the Internet. Beneficial owners are stockholders whose shares of our common stock are held in the name of a broker, bank or other agent (i.e., in “street name”). Accordingly, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be mailed on or about May 4, 2021April 25, 2023 to our beneficial owners and stockholders of record who owned our common stock at the close of business on the Record Date.
Beneficial owners and stockholders of record will have the ability to access the proxy materials on a website referred to in the Notice or request that a printed set of the proxy materials be sent to them by following the instructions in the Notice. Beneficial owners and stockholders of record who have previously requested to receive paper copies of our proxy materials will receive paper copies of the proxy materials instead of a Notice.
This proxy statement has been prepared by the management of Precipio, Inc.
All properly submitted proxies will be voted in accordance with the instructions contained in those proxies. If no instructions are specified, the proxies will be voted in accordance with the recommendation of our board of directors with respect to each of the matters set forth in the accompanying Notice of Meeting. You may revoke your proxy at any time before it is exercised at the meeting by giving our corporate secretary written notice to that effect.
We made this proxy statement and our Annual Report to Stockholders for the fiscal year ended December 31, 2022 available to stockholders on or about April 25, 2023.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Stockholders to be Held on June 15, 2023:
This proxy statement and our 2022 Annual Report to Stockholders are
available for viewing, printing and downloading at www.proxyvote.com.
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission (the “SEC”), except for exhibits, will be furnished without charge to any stockholder upon written request to Precipio, Inc., 4 Science Park, New Haven, Connecticut 06511, Attention: Corporate Secretary. This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 are also available on the SEC’s website at www.sec.gov.
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QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
When are this proxy statement and the accompanying materials scheduled to be sent to stockholders?
We have elected to provide access to our proxy materials to our stockholders via the Internet. Accordingly, on or about April 25, 2023, we will begin mailing the Notice of Availability. Our proxy materials, including the Notice of the 2023 Annual Meeting of Stockholders, this proxy statement and the accompanying proxy card or, for shares held in street name (i.e., held for your account by a broker, bank or other nominee), a voting instruction form, and the 2022 Annual Report to Stockholders (the “2022 Annual Report”), will be mailed or made available to stockholders on the Internet on or about the same date.
How to Attend the Annual Meeting
We are pleased to use the virtual meeting format to facilitate stockholder attendance, voting and questions by leveraging technology to communicate more effectively and efficiently with our stockholders. This format allows stockholders to participate fully from any location, without the cost of travel.
To participate in the Annual Meeting, you must be a stockholder of record and log in with your 16-digit control number found on the Notice of Internet Availability of Proxy Materials, the proxy card or the voting instruction form. Whether or not you participate in the Annual Meeting online, it is important that your shares are included in the voting process.
If you are a beneficial stockholder, please follow the instructions on the voting instruction form provided by your bank or broker or other nominee to attend the Annual Meeting online. Please contact your bank or broker if you have questions about how to obtain your control number.
Interested persons may also access the Annual Meeting as guests, but will not be able to vote or ask questions during the Annual Meeting.
How to Ask Questions at the Annual Meeting
Stockholders may submit questions during the Annual Meeting using the “Ask a Question” field on the virtual meeting website.
You will need to log in with your 16-digit control number found on the Notice of Internet Availability of Proxy Materials, the proxy card or the voting instruction form to submit a question.
Time has been allocated on the agenda to respond to questions submitted during the Annual Meeting. Questions we do not answer during the Annual Meeting will be answered in writing and posted on the Company’s website at www.precipiodx.com/investors.html. Please refer to the Annual Meeting Rules of Conduct and Procedures for more information on how to ask questions. The Rules of Conduct and Procedures are available at www.proxyvote.com and during the Annual Meeting at www.virtualshareholdermeeting.com/PRPO2023.
A replay of the Annual Meeting will be made available promptly at www.precipiodx.com/investors.html and remain available for at least one year.
Why did I Receive a Notice of Internet Availability of Proxy Materials in the Mail instead of a Full Set of Proxy Materials?
We are pleased to take advantage of the SEC rule that allows companies to furnish their proxy materials over the Internet.Accordingly, we have sent to our stockholders of record a Notice of Internet Availability of Proxy Materials. Instructions on how to access the proxy materials over the Internet free of charge or to request a paper copy may be found in the Notice.Notice of Internet Availability of Proxy Materials. Our stockholders may request to receive proxy materials in printed form by mail or electronically on an ongoing basis. A stockholder’s election to receive proxy materials by mail or electronically will remain in effect until the stockholder changes the stockholder’s election.
What Does it Mean if I Receive More than One Notice?
If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each Notice to ensure that all of your shares are voted.
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What proposals will be voted on at the Board recommend IAnnual Meeting?
There are four matters on which a vote onis scheduled at the proposals?Annual Meeting:
(1)
The election of Richard Sandberg, Douglas Fisher, M.D. and Jeffrey Cossman, M.D. as Class II directors to serve until the 2026 annual meeting of stockholders and until his successor has been duly elected and qualified, or until his or her earlier death, resignation or removal (“Election of Directors Proposal”);
(2)
The ratification of the appointment of Marcum LLP as our independent registered public accounting firm for the year ending December 31, 2023 (“Ratification of Appointment of Independent Registered Public Accounting Firm Proposal”); and
(3)
The approval of the authorization of the Company’s Board of Directors to, in its discretion, to amend the Company’s Third Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio not less than 1-for-2 and not greater than 1-for-30 at any time prior to the one-year anniversary of the date on which the reverse stock split is approved by the Company’s stockholders at the Annual Meeting without further approval or authorization of our stockholders and with our Board of Directors able to elect to abandon such proposed amendment and not effect the reverse stock split authorized by stockholders, in its sole discretion, and, in connection therewith, to decrease the number of authorized shares of our common stock on a basis proportional to the reverse stock split ratio (“Reverse Stock Split Proposal”).
Who is soliciting my vote?
Our Board recommends that youof Directors is soliciting your vote “FOR”for the matters noted under items 1 – 6.Annual Meeting.
Who Can Vote?
Stockholders who owned common stock at the close of business on Friday, April 23, 202121, 2023 (the “Record Date”), are entitled to vote at the Annual Meeting.
On the Record Date, there were 18,133,06323,436,798 shares of our common stock outstanding and entitled to vote.vote with respect to all matters to be acted upon at the Annual Meeting. Each stockholder of record is entitled to one vote for each share of our common stock held by such stockholder.
You do not need to attend the Annual Meeting to vote your shares. Shares represented by valid proxies, received in time for the Annual Meeting and not revoked prior to the Annual Meeting, will be voted at the Annual Meeting. A stockholder may revoke a proxy before the proxy is voted by delivering to our Secretary a signed statement of revocation or a duly executed proxy card bearing a later date. Any stockholder who has executed a proxy card but attends the Annual Meeting in person may revoke the proxy and vote at the Annual Meeting.
What is the Difference Between Holding Shares as a Record Holder and as a Beneficial Owner (Holding Shares in Street Name)?
If your shares are registered in your name with our transfer agent EQ Shareowner Services you are the “record holder” of those shares. If you are a record holder, these proxy materials have been provided directly to you by the Company.
If your shares are held in a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials have been forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct this organization on how to vote your shares.
Who May Attend the Annual Meeting?
Only record holders and beneficial owners of our common stock, or their duly authorized proxies, may attend the Annual Meeting. If your shares of common stock are held in street name, you will need to bring a copy of a brokerage statement or other documentation reflecting your stock ownership as of the Record Date.
How Many Votes Do I Have?
Each share of common stock that you own entitles you to one vote.
How Do I Vote?
Whether you plan to attend the virtual Annual Meeting online or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. You may specify whether your shares should
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be voted for or withheld for each nominee for director, and how your shares should be voted with respect to each of the other proposals. Except as set forth below, if you properly submit a proxy without
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giving specific voting instructions, your shares will be voted in accordance with the Board’s recommendations as noted below. Voting by proxy will not affect your right to attend the virtual Annual Meeting. If your shares are registered directly in your name through our stock transfer agent, EQ Shareowner Services, or you have stock certificates, you may vote:
By mail. Complete and mail the proxy card in the enclosed postage prepaid envelope. Your proxy will be voted in accordance with your instructions. If you sign the proxy card, but do not specify how you want your shares voted, they will be voted as recommended by the Board. Proxy cards submitted by mail must be received no later than by June 14, 2023 to be voted at the Annual Meeting.
By Internet.Telephone. www.proxyvote.com.You may vote using a touch-tone telephone by calling 1-800-690-6903, 24 hours a day, seven days a week. You will need the 16-digit control number included on the Notice of Internet Availability of Proxy Materials or the proxy card. Votes submitted by telephone must be received by 11:59 p.m., Eastern Time, on June 14, 2023.
By Internet (before the Annual Meeting). You may vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the 16-digit control number included on the Notice of Internet Availability of Proxy Materials or the proxy card. Votes submitted through the Internet must be received by 11:59 p.m., Eastern Time, on June 14, 2023.
By Attending the Virtual Annual Meeting. This year’s Annual Meeting will be a completely virtual meeting of stockholders and will be webcast live over the internet. Please go to www.virtualshareholdermeeting.com/PRPO2021PRPO2023 for instructions on how to attend and participate in the Annual Meeting. You will need the 16-digit control number included on the Notice of Internet Availability of Proxy Materials, the proxy card or the voting instruction form. If you previously voted via the Internet (or by telephone or mail), you will not limit your right to vote virtually at the Annual Meeting. The Annual Meeting webcast will begin promptly On Thursday, June 15, 2023 at 10:00 a.m. Eastern Time. We encourage you to access the Annual Meeting prior to the start time. Online check-in will begin at 9:45 a.m. Eastern Time, and you should allow ample time for the check-in procedures. Please note that to participate in the Annual Meeting, you will need to contact the bank, broker or other nominee who holds your shares to obtain a broker’s proxy card and use the control number found on the broker’s proxy card.
What Constitutes a Quorum for the Annual Meeting?
Our Amended and Restated Bylaws (the “Bylaws”), provide that a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. There are 23,436,798 shares of our common stock outstanding and entitled to vote on the record date. Therefore, a quorum will be present if 11,718,400 shares of our common stock are present in person or represented by executed proxies timely received by us at the Annual Meeting. Shares present virtually during the Annual Meeting will be considered shares of common stock represented in person at the meeting.
Under the General Corporation Law of the State of Delaware, shares that are voted “abstain” or “withheld” and broker “non-votes” are counted as present for purposes of determining whether a quorum is present at the Annual Meeting. If a quorum is not present, the meeting may be adjourned until a quorum is obtained.
How is the vote counted?
Under our bylaws, any proposal other than an election of directors is decided by a majority of the votes properly cast for and against such proposal, except where a larger vote is required by law or by our Third Amended and Restated Certificate of Incorporation, or bylaws.
Each holder of common stock is entitled to one vote for each share held by such stockholder as of the record date on each matter to come before the Annual Meeting, including the election of a director. Votes cast during the Annual Meeting or by proxy by mail, via the Internet or by telephone will be tabulated by the inspector of election appointed for the Annual Meeting, who will also determine whether a quorum is present. Abstentions and broker “non-votes” are not included in the tabulation of the voting results on any such proposal and, therefore, do not have an impact on such proposals. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item, and has not received instructions from the beneficial owner.
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To be elected, the directors nominated via Proposal No. 1 must receive a plurality of the votes properly cast on the proposal, meaning that the three director nominees receiving the most votes “FOR” will be elected. If nominees are unopposed, election requires only a single “FOR” vote. Shares voting “withheld” have no effect on the election of directors.
The vote required, and the method of calculation, for each proposal at the Annual Meeting is described below. To be elected, the directors nominated via Proposal No. 1 must receive a plurality of the votes properly cast on the proposal, meaning that the four director nominees receiving the most votes “FOR” will be elected. If nominees are unopposed, election requires only a single “FOR” vote. Shares voting “withheld” have no effect on the election of directors.
The vote required, and the method of calculation, for each proposal at the Annual Meeting is described below.
Proposal
​​
Vote Required
​​
Discretionary
Voting
Permitted?
Election of Directors
​​
Plurality
​​
No
Approval of the Ratification of the Appointment of Marcum LLP as our Independent Registered Public Accounting Firm
​​
Majority of votes cast
​​
Yes
Approval of Reverse Stock Split
​​
Majority of votes cast
​​
Yes
Proposal One – Election of Directors
The three class II director nominees receiving the highest number of votes, in person or by proxy, will be elected. You may vote “FOR” all nominees, “WITHHOLD” for all nominees, or you may vote “FOR” all nominees except for one or more nominees you “WITHHOLD” by specifying the name of the nominees on your proxy card. This proposal is not considered to be a discretionary item, so if you do not instruct your broker how to vote with respect to this proposal, your broker may not vote on this proposal, and those votes will be counted as broker “non-votes.” Withheld votes and broker non-votes will have no effect on the outcome of the election of the directors.
Proposal Two – Approval of the Ratification of Marcum LLP as our Independent Registered Public Accounting Firm
Approval of this proposal requires the affirmative vote of a majority of the votes properly cast for and against this proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” from voting on this proposal. If you abstain from voting on this proposal, the abstention will have no effect on the proposal. This proposal is considered to be a discretionary item, and your broker will be able to vote on this proposal even if it does not receive instructions from you. Accordingly, we do not anticipate that there will be any broker non-votes on this proposal; however, any broker non-votes will have no effect on this proposal.
Proposal Three – Approval of Reverse Stock Split
To approve Proposal 3, holders of a majority of the votes cast on the matter must vote “FOR” the proposal. For amending the Company’s Third Amended and Restated Certificate of Incorporation to effect a reverse stock split of Company common stock (without reducing the authorized number of shares of Company common stock), in the range of 1-for-2 to 1-for-30 share if and when determined by the Company’s board of directors, the votes cast “FOR” must exceed the votes cast “AGAINST.” If you abstain from voting on this proposal, the abstention will have no effect on the proposal. This proposal is considered to be a discretionary item, and your broker will be able to vote on this proposal even if it does not receive instructions from you. Accordingly, we do not anticipate that there will be any broker non-votes on this proposal; however, any broker non-votes will have no effect on this proposal.
What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessing the virtual meeting website?
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting website during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting login page.
What do I do if my shares are held in “street name”?
If your shares are held in “street name” (held in the name ofa brokerage account or by a bank broker or other nominee),holder of record, you must provideare considered the “beneficial owner” of shares held in “street name.” The proxy materials have been forwarded to you by your broker,
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bank broker or other nominee who is considered, with instructionsrespect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares and can do so as follows:
By Internet or by telephone. Follow thefollowing their instructions you receivefor voting. Please refer to information from your broker to vote by Internet or telephone.
By mail. You will receive instructions from yourbank, broker or other nominee explainingon how to votesubmit your shares.
voting instructions.
How Will my Shares be Voted if I Give No Specific Instruction?does the Board recommend that you vote on the proposals?
We must vote your shares asOur Board recommends that you have instructed. If there is a matter on which a stockholder of record has given no specific instruction but has authorized us generally to vote the shares, they will be voted as follows:vote:
“FOR” Proposal One—the electionElection of the Board nominees as directors;Directors Proposal
“FOR” Proposal Two—the approval, on an advisory (non-binding) basis,Ratification of the compensationAppointment of our named executive officers, as set forth in this Proxy Statement;
“FOR” Proposal Three—the approval on an advisory (non-binding) vote on the frequency of future advisory votes on executive compensation;
“FOR” Proposal Four—Amendment No 1 to the 2017 Plan;
“FOR” Proposal Five—Amendment No 2 to the 2017 Plan;Independent Registered Public Accounting Firm Proposal; and
“FOR” Proposal Six—ratification of the selection of Marcum LLP as our independent public accountant for the fiscal year ending December 31, 2021.Reverse Stock Split Proposal.
This authorization would exist, for example,What happens if a stockholder of record merely signs, dates and returns the proxy card but does not indicate how its shares are to be voted on one or more proposals. If other matters properly come before the Annual Meeting and you do not provide specific voting instructions, your shares willis postponed or adjourned?
Your proxy may be voted at the discretionpostponed or adjourned meeting. You will still be able to change your proxy until it is voted.
If there are insufficient votes to approve Proposals 1, 2 or 3, your proxy may be voted by the persons named in the proxy to adjourn the Annual Meeting in order to solicit additional proxies in favor of the proxies.approval of such proposal. If the Annual Meeting is adjourned or postponed for any purpose, at any subsequent reconvening of the meeting, your proxy will be voted in the same manner as it would have been voted at the original convening of the Annual Meeting unless you withdraw or revoke your proxy. Your proxy may be voted in this manner even though it may have been voted on the same or any other matter at a previous session of the Annual Meeting.
May I Change or Revoke My Proxy?
If you give us your proxy, you may change or revoke it at any time before the Annual Meeting. You may change or revoke your proxy in any one of the following ways:
signing a new proxy card and submitting it as instructed above;
if your shares are held in street name, re-voting by Internet or by telephone as instructed above – only your latest Internet or telephone vote will be counted;
if your shares are registered in your name, notifying the Company’s Secretary in writing before the Annual Meeting that you have revoked your proxy; oro
attending the Annual Meeting in person and voting in person. Attending the Annual Meeting in person will not in and of itself revoke a previously submitted proxy unless you specifically request it.
3
Will My Shares Be Voted If I Do Not Return My Proxy Card?
If your shares are registered in your name or if you have stock certificates, they will not be voted if you do not return your proxy card by mail, telephone, internet or vote at the Annual Meeting as described above under “How Do I Vote?” If your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter, or because your broker chooses not to vote on a matter for which it does have discretionary voting authority, this is referred to as a “broker non-vote.” The New York Stock Exchange (“NYSE”) has rules that govern brokers who have record ownership of listed company stock (including stock such as ours that is listed on The Nasdaq Capital Market or Nasdaq) held in brokerage accounts for their clients who beneficially own the shares. Under these rules, brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“routine matters”), but do not have the discretion to vote uninstructed shares as to certain other matters (“non-routine matters”). Under NYSE interpretations, Proposal 1 (election of the Board nominees as directors), Proposal 2 (the approval, on an advisory (non-binding) basis, of the compensation of our named executive officers), Proposal 3 (the approval on an advisory (non-binding) vote on the frequency of future advisory votes on executive compensation) and Proposals 4 and 5 (2017 Stock Option Plan Amendment No 1 and Amendment No.2) is considered a non-routine matter and Proposal 5 (ratification of our independent public accountant) is considered a routine matter. interpretations:
•
Proposal 1 – Election of Directors is considered a non-routine matter.
•
Proposal 2 – Ratification of Appointment of Independent Registered Public Accounting Firm is considered a routine matter.
•
Proposal 3 – Reverse Stock Split Proposal is considered a routine matter.
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If your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares, as described above under “How Do I Vote?,” the bank, broker or other nominee has the authority, even if it does not receive instructions from you, to vote your unvoted shares for Proposal 5 (the ratificationthe Ratification of our independent public accountant) but Appointment of Independent Registered Public Accounting Firm.
The bank, broker or other nominee does not have authority to vote your unvoted shares for Election of Directors Proposal, 1 (electionReverse Stock Split Proposal and the Adjournment Proposal, which are all matters on which banks, brokers or other nominees are expected to have discretionary voting authority under applicable stock exchange rules.
What if I do not specify how my shares are to be voted?
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board nominees as directors) Proposal 2 (the approval, on an advisory (non-binding) basis, ofBoard. The Board’s recommendations are set forth above.
How do I ask questions during the compensation of our named executive officers), Proposal 3 (the approval on an advisory (non-binding) vote on the frequency of future advisory votes on executive compensation) and Proposal 4 (2017 Stock Option Plan Amendment). We encourage you to provide voting instructions. This ensures your shares will be voted atVirtual Annual Meeting?
Stockholders may submit questions during the Annual Meeting using the “Ask a Question” field on the virtual meeting website. You will need to log in with your 16-digit control number found on the manner you desire.
What Vote is RequiredNotice of Internet Availability of Proxy Materials, the proxy card or the voting instruction form to Approve Each Proposal and How are Votes Counted?
Proposal 1:
Election of Directors
​​
The directors must be elected by a plurality vote. Our stockholders do not have the rightsubmit a question. Please refer to cumulate votes in the election of directors. If a stockholder votes to “abstain” with respect to this proposal, such stockholder’s shares will not be voted with respect to this proposal. Broker non-votes and withheld votes will not be counted as votes cast for this proposal and as such will have no impact on the outcome of this proposal.
​​
Proposal 2:
The approval on an advisory (non-binding) basis, of the compensation of our named executive officers
​​
The affirmative vote of a majority of the voting power present in person or represented by proxy held by the holders of our common stock at the Annual Meeting is required to approve, on an advisory basis, the compensation of our named executive officers, as set forth in this Proxy Statement. Abstentions will be counted as votes against this proposal. Broker non-votes will not be counted as votes cast for this proposal.
​​
Proposal 3:
The approval on an advisory (non-binding) vote on the frequency of future advisory votes on executive compensation
​​
The affirmative vote of a majority of the voting power present in person or represented by proxy held by the holders of our common stock at the Annual Meeting is required to approve, on an advisory basis, the frequency of future advisory votes on executive compensation, as set forth in this Proxy Statement. Abstentions will be counted as votes against this proposal. Broker non-votes will not be counted as votes cast for this proposal.
​​
Proposals 4 and 5:
2017 Stock Option Plan Amendments
​​
Approval of these proposals require the affirmative vote of a majority of the outstanding shares of our Common Stock present virtually in the meeting or by proxy at the Annual Meeting and entitled to vote thereon as of the Record Date. You may vote “FOR,” “AGAINST” or “ABSTAIN” from voting on either of these proposals. For purposes of determining whether either of these proposals have passed, abstentions will have the effect of a vote AGAINST each proposal. Broker non-votes will have no effect on the proposals.
4
Proposal 6:
Ratification of the Appointment of Marcum LLP as our Independent Public Accountant for the Fiscal Year Ending December 31, 2021
​​
The affirmative vote of a majority of the votes cast for this proposal is required to ratify the appointment of the Company’s independent public accountant. Abstentions will be counted towards the tabulation of votes cast on this proposal and will have the same effect as a negative vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint the Company’s independent accountant. However, if our stockholders do not ratify the appointment of Marcum LLP as the Company’s independent public accountant for the fiscal year ending December 31, 2021, the Audit Committee of the Board may reconsider its appointment.
How are Votes Counted?
Votes will be counted by the inspector of election appointed for the Annual Meeting who will separately count,Rules of Conduct and Procedures for the election of directors, “For,” “Withhold” and broker non-votes; and, with respect to the other proposals, votes “For” and “Against,” abstentions and broker non-votes. Broker non-votes will not be included in the tabulation of the voting results of any of the proposals and, therefore, will have no effectmore information on such proposals.
What is a Broker Non-Vote?
If your shares are held in street name, you must instruct the organization who holds your shares how to vote your shares. If you sign your proxy card but do not provide instructions on how your broker should vote on “routine” proposals, your broker will vote your shares as recommended by the Board. If you do not provide voting instructions, your shares will not be voted on any “non-routine” proposals. This vote is called a “broker non-vote.” Because broker non-votesask questions. The Rules of Conduct and Procedures are not considered under Delaware law to be entitled to voteavailable at www.proxyvote.com and during the Annual Meeting broker non-votes will not be included in the tabulationat www.virtualshareholdermeeting.com/PRPO2023.
Where may I find copies of the voting results of any of the proposalsProxy Materials and therefore, will have no effect on these proposals.
What Constitutes a Quorum for the Annual Meeting?Report?
The presence, virtually inNotice of Internet Availability of Proxy Materials and Proxy Statement and Annual Report are posted on the meeting or by proxy, of the holders of a majority of the shares entitled to voteCompany’s website at the Annual Meeting is necessary to constitute a quorumwww.precipiodx.com/investors.html and at the Annual Meeting. Votes of stockholders of record who are present at the Annual Meeting virtually in the meeting or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists.
Householding of Annual Disclosure Documents
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Proxy Availability Notice or other Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as householding, potentially provides extra convenience for stockholders and cost savings for companies. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards.
This year, a number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A Notice or proxy materials will be delivered in one single envelope to multiple stockholders sharing an address unless contrary instructions have been received from one or more of the affected stockholders. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent.
Those stockholders who either (i) do not wish to participate in “householding” and would like to receive their own sets of our annual disclosure documents in future years or (ii) who share an address with another one of our stockholders and who would like to receive only a single set of our annual disclosure documents should follow the instructions described below:
Stockholders whose shares are registered in their own name should contact our transfer agent, EQ Shareowner Services, 1110 Centre Pointe Curve Suite 101, Mendota Heights, MN 55120, Tel: 855-217-6361.
5
Stockholders whose shares are held by a broker or other nominee should contact such broker or other nominee directly and inform them of their request. Stockholders should be sure to include their name, the name of their brokerage firm and their account number.www.proxyvote.com.
Who is paying for this proxy solicitation?
In addition to mailed proxy materials, our directors, officers and employees may also solicit proxies in person, by telephone, or by other means of communication. We will not pay our directors, officers and employees any additional compensation for soliciting proxies. We may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
WhenWhat Interest Do Officers and Directors Have in Matters to Be Acted Upon?
Members of the Board of Directors and executive officers of the Company do not have any interest in any proposal that is not shared by all other stockholders of the Company except for Proposal One.
Do I Have Dissenters’ Rights of Appraisal?
Our stockholders do not have appraisal rights under Delaware law or under our governing documents with respect to the matters to be voted upon at the Annual Meeting.
What are stockholder proposals due for next year’s annual meeting?the consequences if the Reverse Stock Split Proposal is not approved by stockholders?
At our annual meeting each year,If stockholders fail to approve the Reverse Stock Split Proposal, our Board of Directors submitswould not have the authority to stockholders its nominees for election as directors. In addition,effect the BoardReverse Stock Split to, among other things, facilitate the continued listing of Directors may submit other mattersour common stock on the Nasdaq Stock Market, or Nasdaq, by increasing the per share trading price of our common stock to help ensure a price per share high enough to satisfy the stockholders for action at the annual meeting.
$1.00 per share minimum bid price requirement. Any stockholder who meets the requirementsinability of the proxy rules under the Exchange Act may submit proposals to theour Board of Directors to be presentedeffect the Reverse Stock Split could expose us to delisting from Nasdaq.
Will the Company change its name as a result of the Reverse Stock Split?
No. The Company will retain the name “Precipio, Inc.” and will remain incorporated under the laws of the State of Delaware.
Will the Reverse Stock Split change the business of the Company?
No. The Reverse Stock Split will not change the current business of the Company.
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Will the Company have the same directors and executive officers that the Company currently has following the Reverse Stock Split?
Yes. The executive officers and members of the Board will not change as a result of the Reverse Stock Split.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to Be Held on Monday June 13, 2022: The Notice of Annual Meeting of Stockholders, our Proxy Statement and our 2022 Annual Report are available at www.proxyvote.com.
The following documents are being made available to all stockholders entitled to notice of and to vote at the nextAnnual Meeting:
1)
This proxy statement.
2)
The accompanying proxy.
3)
Our 2022 Annual Report.
The 2022 Annual Report includes our consolidated financial statements for the fiscal year ended December 31, 2022, but is not a part of this proxy statement. You can also find a copy of our 2022 Annual Report on Form 10-K on the Internet through the Securities and Exchange Commission’s electronic data system called EDGAR at www.sec.gov or through the Investor Relations section of our website at http://precipiodx.com.
How may stockholders submit matters for consideration at an annual meeting. Such proposals must comply with the requirements of Rule 14a-8 under the Exchange Act andmeeting?
The required notice must be submitted in writing and received by notice delivered or mailed by first-class United States mail, postage prepaid, to our Secretarycorporate secretary at our principal executive offices atnot later than the address set forth aboveclose of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is convened more than 30 days before or more than 60 days after the first anniversary of the preceding year’s annual meeting, or if no annual meeting were held in the preceding year, a stockholder’s notice must be so received not later than the close of business on the later of (A) the 90th day prior to the scheduled date of such annual meeting or (B) the tenth day following the day on which public announcement of the date of such annual meeting was first made.
In addition, any stockholder proposal intended to be included in the proxy statement for the next annual meeting of our stockholders in 2024 must also satisfy the requirements of SEC Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and must be received not later than March 30, 2022.January 2, 2024. If the date of the annual meeting is moved by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, then notice must be received within a reasonable time before we begin to print and send proxy materials in order to be considered for inclusion in the proxy materials to be disseminated by the Board of Directors for such annual meeting. Wematerials. If that happens, we will publicly announce the deadline for submitting a proposal in a press release or in a document filed with the SEC.
Our AmendedIn addition to satisfying the foregoing requirements, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 16, 2024. Stockholder proposals and Restated Bylaws also provide for separatethe required notice proceduresshould be addressed to recommend a person for nomination as a director or to propose business to be considered by stockholders at a meeting. To be considered timely under these provisions, the stockholder’s notice must be received by our Secretary at our principal executive offices at the address set forth above (i) no later than 35 days prior to the date of the annual meeting; provided, however, that if less than 35 days’ notice of a meeting of stockholders is given to the stockholders, such notice must be made or delivered to our Secretary not later than the close of business on the seventh day following the day on which the notice of a meeting was mailed; and (ii) in the case of a special meeting of stockholders, no later than the close of business on the tenth day following the day on which notice of the date of the meeting was mailed. Our Amended and Restated Bylaws also specify requirements as to the form and content of a stockholder’s notice.
The Board of Directors, a designated committee thereof or the chairman of the meeting may refuse to acknowledge the introduction of any stockholder proposal if it is not made in compliance with the applicable notice provisions.above.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in our Current Report on Form 8-K within four (4) business days after the Annual Meeting.
What Interest Do Officers and Directors Have in Matters to Be Acted Upon?
Members of the Board of Directors and executive officers of the Company do not have any interest in any proposal that is not shared by all other stockholders of the Company except for Proposal 1.
Do I Have Dissenters’ Rights of Appraisal?
Our stockholders do not have appraisal rights under Delaware law or under our governing documents with respect to the matters to be voted upon at the Annual Meeting.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to Be Held on June 18, 2021: The Notice of Annual Meeting of Stockholders, our Proxy Statement and our 2020 Annual Report are available at www.proxyvote.com.
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The following documents are being made available to all stockholders entitled to notice of and to vote at the Annual Meeting:
1)
This proxy statement.
2)
The accompanying proxy.
3)
Our 2020 Annual Report.
The 2020 Annual Report includes our consolidated financial statements for the fiscal year ended December 31, 2020, but is not a part of this proxy statement. You can also find a copy of our 2020 Annual Report on Form 10-K on the Internet through the Securities and Exchange Commission’s electronic data system called EDGAR at www.sec.gov or through the Investor Relations section of our website at http://precipiodx.com.
7
VOTING SECURITIES AND BENEFICIAL OWNERSHIP BY
PRINCIPAL STOCKHOLDERS, DIRECTORS AND OFFICERS
Beneficial Ownership of Common Stock
On the Record Date there were 18,133,06323,436,798 issued and outstanding shares of our common stock.stock and 47 outstanding shares of Series B preferred stock
The following table provides information known to the Company with respect to beneficial ownership of the Company’s common stock by its directors, by its named executive officers, by all of its current executive officers and directors as a group, and by each person the Company believes beneficially owns more than 5% of its outstanding common stock as of the Record Date. Percentage ownership calculations for beneficial ownership for each person or entity are based on 18,133,06323,436,798 shares outstanding as of the Record Date, April 23, 2021.21, 2023. The number of shares beneficially owned by each person or group as of the Record Date includes shares of the Company’s common stock that such person or group had the right to acquire on or within 60 days after the Record Date, including, but not limited to, upon the exercise of options, warrants to purchase common stock or the conversion of securities into common stock. Except as otherwise indicated in the table below, addresses of named beneficial owners are in care of Precipio, Inc., 4 Science Park, New Haven, CT 06511. Beneficial ownership information of persons other than our current executive officers and directors is based on available information including, but not limited to, Schedules 13D, 13F or 13G filed with the SEC or information supplied by these persons.
Name of Beneficial Owner
​​
Number of Shares
Beneficially Owned
​​
Percent of Class
Executive Officers and Directors:
​​
 
​​
 
Ilan Danieli(1)
​​
111,719
​​
*
Carl R. Iberger(2)
​​
54,630
​​
*
Jeffrey Cossman, M.D.(3)
​​
56,041
​​
*
David S. Cohen(4)
​​
925,087
​​
5.1%
Richard Sandberg(5)
​​
24,564
​​
*
Douglas Fisher, M.D.(3)
​​
34,291
​​
*
Kathleen D. LaPorte(3)
​​
33,564
​​
*
Ron A. Andrews(3)
​​
949
​​
*
All executive officers and directors as a group (8 persons)(6)
​​
1,240,845
​​
6.7%
Name of Beneficial Owner
​​
Number of Shares
Beneficially
Owned
​​
Percent of Class
Named Executive Officers and Directors:
​​
 
​​
 
Ilan Danieli(1)
​​
516,458
​​
2.2%
Jeffrey Cossman, M.D.(2)
​​
148,457
​​
*
David S. Cohen(3)
​​
900,673
​​
3.8%
Richard Sandberg(4)
​​
159,336
​​
*
Douglas Fisher, M.D.(2)
​​
126,707
​​
*
Kathleen D. LaPorte(2)
​​
126,240
​​
*
Ron A. Andrews(2)
​​
83,448
​​
*
Ayman Mohamed(5)
​​
233,989
​​
*
All executive officers and directors as a group (11 persons)(6)
​​
2,672,104
​​
10.6%
*
Represents beneficial ownership of less than 1% of the shares of Common Stock.
(1)
Consists of 11,314 shares of Common Stock owned by IDP Holdings, LLC. (Mr. Danieli is the sole member and manager of IDP Holdings, LLC.)LLC), 10,14845,732 shares of Common Stock owned by Mr. Danieli pursuant to acquisitions under a 10b5-1 plan and 90,257459,412 shares of Common Stock issuable to Mr. Danieli upon the exercise of stock options that are exercisable or will become exercisable within 60 days after the Record Date.
(2)
Consists solely of 1,137 shares of Common Stock owned by Mr. Iberger and 53,493 shares of Common Stock issuable to Mr. Iberger upon the exercise of stock options that are exercisable or will become exercisable within 60 days after the Record Date.
(3)
Consists solely of (i) 669,427 shares of Common Stock; (ii) 74,539 shares of Common Stock issuable upon exercise of warrants to purchase shares of Common Stock that are exercisable or will become exercisable within 60 days after the Record Date; and (iii) 126,707 shares of Common Stock issuable upon the exercise of stock options that are exercisable or will become exercisable within 60 days after the Record Date.
(4)
Consists of (i) 802,23240,846 shares of Common Stock; (ii) 88,564Stock owned by Mr. Sandberg and 118,490 shares of Common Stock issuable upon exercise of warrants to purchase shares of Common Stock that are exercisable or will become exercisable within 60 days of April 23, 2020; and (iii) 34,291 shares of Common Stock issuableMr. Sandberg upon the exercise of stock options that are exercisable or will become exercisable within 60 days after the Record Date. Based on information provided to the Company by the stockholder and disclosed in a Schedule 13G filed on July 11, 2017. The business address for David S. Cohen is 299 Bishop Avenue, Bridgeport, Connecticut 06610.
(5)
Consists of 8463,799 shares of Common Stock owned by Mr. SandbergMohamed and 23,718230,190 shares of Common Stock issuable to Mr. SandbergMohamed upon the exercise of stock options that are exercisable or will become exercisable within 60 days after the Record Date.
(6)
Includes shares which may be acquired by executive officers and directors as a group within 60 days after the Record Date through the exercise of stock options or warrants.
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PROPOSAL ONE: ONE
ELECTION OF DIRECTORS
Board of Directors and Committees
Our Board consists of seven directors which are elected by the holders of our common stock. The Board is divided into three classes, Class I, Class II and Class III, with directors in each class serving for a term of three years.
The term of office of the current Class I, Class II and Class III and the directors representing each class is set out below.
NAME
​​
Term expiry
​​
Class
Ilan Danieli
​​
20222025 Annual Meeting
​​
I
David S. Cohen
​​
20222025 Annual Meeting
​​
I
Douglas Fisher, M.D.
​​
2023 Annual Meeting
​​
II
Jeffrey Cossman, M.D.
​​
2023 Annual Meeting
​​
II
Richard Sandberg
​​
2023 Annual Meeting
​​
II
Kathleen D. LaPorte
​​
20212024 Annual Meeting
​​
III
Ron A. Andrews
​​
20212024 Annual Meeting
​​
III
Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the Annual Meeting of stockholders in the year in which their term expires.
The Board has nominated Kathleen D. LaPorteDouglas Fisher M.D., Jeffery Cossman M.D. and Ron A. AndrewsRichard Sandberg for election by the stockholders as the Class IIIII directors to serve three-year terms expiring at the Annual Meeting of stockholders in 2024.2026. Each of the nominated directors has expressed his intention to continue to serve on the Board if elected. There are no arrangements or understandings between each of the directors and any other person pursuant to which they were selected as nominees.
Our Amended and Restated Bylaws provide that directors are elected by a plurality vote. Therefore, our directors will be elected as if they are the nominees receiving the highest number of affirmative votes. This means that votes withheld and broker non-votes with respect to the election of the directors will have no effect on the election of such directors. If one of the directors is unable to serve as a director, the Board may nominate a substitute nominee. In that case, the Board will vote all valid proxies that voted in favor of the director that is unable to serve, for the election of the substitute nominee.
Certain biographical information regarding our director nominees and directors continuing in office after the Annual Meeting, including their ages is set forth below.below in “Information About Our Board Of Directors”. In each individual’s biography we have highlighted specific experience, qualifications, and skills that have led the Board to conclude that such individual is a valued member of our Board. In addition to these specific attributes, all of our directors have significant expertise in one or more areas of importance to our business and have high-level managerial experience in relatively complex organizations or are accustomed to dealing with complex problems. We believe all of our directors are individuals of high character and integrity, are able to work well with others, and have sufficient time to devote to the affairs of our company.
Vote Required
The nominees for director who receive the greatest number of votes FOR election (also known as a plurality) will be elected as directors. If nominees are unopposed, election requires only a single “FOR” vote. Shares voting “withheld” have no effect on the election of directors. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one or more of the nominees.nominees. Votes that are withheld will not be included in the vote tally for the election of directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of directors. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote.
Recommendation of the Board of Directors
THEOUR BOARD OF DIRECTORS RECOMMENDS THAT YOUTHE STOCKHOLDERS VOTE “FOR”“FOR” THE DIRECTOR NOMINEES NAMED IN PROPOSAL ONE
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INFORMATION ABOUT OUR BOARD OF DIRECTORS
BOARD COMPOSITION
Our Board of Directors is made up of seven individuals, each with a valuable core set of skills, talents and attributes that make them appropriate for our Company'sCompany’s Board as a whole. When searching for new Board candidates, the Nominating and Governance Committee considers the evolving needs of the Company'sCompany’s global business and searches for Board candidates that fill any current or anticipated future needs or gaps in skills, experience and overall Board composition.
Board Practices Support Thoughtful Board Composition
Board Composition to Support Company Strategy
The Board and the Nominating and Governance Committee regularly evaluate the size and composition of the Board to ensure appropriate alignment with the Company’s evolving business and strategic needs.
Policy on Board Diversity
The Board believes that it is essential that directors represent diverse perspectives, skills and experience. When evaluating the various qualifications, experiences and backgrounds of Board candidates, the Board reviews and discusses many aspects of diversity such as gender, race, national origin, education, professional experience, geographic representation and differences in viewpoints and skills. To the extent possible, director recruitment efforts include several of these factors and the Board strives to recruit candidates that enhance the Board'sBoard’s diversity.
Board Refreshment
The Board believes the fresh perspectives brought by new directors are critical to a forward-looking and strategic Board when appropriately balanced by the deep understanding of the Company’s business provided by longer-serving directors.
Director Succession Planning
The Nominating and Governance Committee reviews the short- and long-term strategies and interests of the Company to determine what current and future skills and experience are required of the Board in exercising its oversight function.
Our Board’s Qualifications
As determined by our Board and the Nominating and Governance Committee, all of our directors and director candidates possess the following qualifications:
Director Qualification
​​
Description
Financial Literacy
​​
Directors and candidates should be “financially literate” as such qualification is interpreted by the Board in its business judgment.
 
​​
 
Leadership Experience
​​
Directors and candidates should possess significant leadership experience, such as experience in business, finance/accounting, financial services regulation, education or government, and shall possess qualities reflecting a proven record of accomplishment and ability to work with others.
 
​​
 
Commitment to Our Values
​​
Directors and candidates shall be committed to promoting our financial success and preserving and enhancing our business and ethical reputation, as embodied in our codes of conduct and ethics.
 
​​
 
Absence of Conflicting Commitments
​​
Directors and candidates should not have commitments that would conflict with the time requirement commitments of a director.
 
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Director Qualification
​​
Description
Reputation and Integrity
​​
Directors and candidates shall be of high repute and recognized integrity and not have been convicted in a criminal proceeding (excluding traffic violations and other minor offenses). Such person shall not have been found in a civil proceeding to have violated any federal or state securities or commodities law and shall not be subject to any court or regulatory order or decree limiting his or her business activity, including in connection with the purchase or sale of any security or commodity.
 
​​
 
Knowledge and Experience
​​
Directors and candidates should possess knowledge and experience that will complement that of other directors and promote the creation of stockholder value.
The process undertaken by the Nominating and Governance Committee in recommending qualified director candidates is described under “Nominating and Corporate Governance Committee” below. All of our directors bring significant executive leadership derived from their careers and professions. When considering whether our current directors have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the Company'sCompany’s business and structure, the Nominating and Governance Committee and the Board of Directors focuses primarily on the information discussed in each of the director'sdirector’s individual biographies described below.
NAME
​
AGE
​
Position
​
Board member
since year
​
AGE
​
Position
​
Board member
since year
Ilan Danieli
​
49
​
Chief Executive Officer, Director
​
2017
​
51
​
Chief Executive Officer Director
​
2017
David S. Cohen
​
62
​
Director, Member of the Nominating and Corporate Governance Committee
​
2017
​
64
​
Director Member of the Nominating and Corporate Governance Committee
​
2017
Douglas Fisher, M.D.
​
45
​
Director, Chair of the Compensation Committee and Member of the Audit Committee
​
2017
​
47
​
Director Chair of the Compensation Committee Member of the Audit Committee
​
2017
Jeffrey Cossman, M.D.
​
74
​
Director, Chair of the Nominating and Corporate Governance Committee
​
2017
​
76
​
Director Chair of the Nominating and Corporate Governance Committee
​
2017
Kathleen D. LaPorte
​
59
​
Director, Chair of the Audit Committee
​
2018
​
61
​
Director Chair of the Audit Committee
​
2018
Richard Sandberg
​
78
​
Chairman Director and Member of the Audit Committee
​
2019
​
80
​
Chairman Director and Member of the Audit Committee
​
2019
Ron A. Andrews
​
60
​
Director Member of the Compensation Committee
​
2021
​
63
​
Director Member of the Compensation Committee
​
2021
Ilan Danieli, Chief Executive Officer

Mr. Danieli, age 49, assumed the role of51, has served as our Chief Executive Officer and Directoras a member of the Company inour board of directors since June 2017. Prior to that, Mr. Danieli was the founder of Precipio Diagnostics LLC and was its Chief Executive Officer since 2011. Withfrom 2011 until 2017. Mr. Danieli has over 20 years managing small and medium-size companies, some of his previous experiences include Chief Operating Officer of Osiris Therapeutics, Inc., a publicly-traded company based in New York City with operations in the US, Canada, Europe and Asia; VP of Operations for Laurus Capital Management LLC, a multi billion-dollarmulti-billion dollar hedge fund; and various other entrepreneurial ventures. Mr. Danieli holds an MBAhas a Master’s in Business Administration from the Darden School of Business at the University of Virginia, and a BAbachelor’s degree in Economics from Bar-Ilan University in Israel. As founder and Chief Executive Officer of the Company since its inception in 2011, Mr. Danieli has developed a unique understanding of the market need. Mr. Danieli has assembled the Company’s management team and is closely familiar with the team’s skill sets and capabilities needed to execute on the Company’s vision. Furthermore, Mr. Danieli possesses both the operational, financial, sales and marketing background to contribute to the Company’s board decisions on strategy and execution.
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David S. Cohen

Mr. Cohen, age 62,64, was appointed as a director of the Company in November 2017. Mr. Cohen is the Chief Operating Officer and co-owner of Standard Oil of Connecticut, Inc. the largest independent petroleum retailing company in Connecticut. He founded several highly successful ventures, including: Standard Security Systems, a provider of electronic security services; ResCom Energy, a multi-state supplier of deregulated electricity; Moneo Technology Solutions, a provider of security and network infrastructure solutions; and My Gene Counsel, a cancer bioinformatics company. Mr. Cohen is also a highly experienced investor in numerous start-up and Early Stage
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early stage businesses. He currently serves on the Boards of: Gallatin Financial LLC, Emme Controls LLC, Foresite MSP, LLC, My Gene Counsel, LLC, The Platt & LaBonia Company LLC, and Sirona Medical Technologies.Technologies, Inc.. Mr. Cohen holds a B.A. from Harvard College and an MBAMaster’s in Business Administration from the Harvard Business School. Mr. Cohen brings to the Board a wealth of experience as a serial entrepreneur that has built several successful companies, as well as a strong investment track record. Mr. Cohen has been an Early-Stageearly-stage investor in Precipio, Inc. and brings his deep familiarity of the business to help guide management and the Board in its strategy.
Douglas Fisher, M.D.

Mr. Fisher, age 45,47, was appointed as director of the Company in September 2017. Dr. Fisher is currently an Executive in ResidencePartner at InterWestRevelation Partners, LLC, a venture capital firm, where he has worked since March 2009.2020. Prior to joining Revelation, Dr. Fisher was a Partner and Executive-In-Residence at InterWest Partners LLC (“InterWest”) for almost 14 years where he focused on biopharma, diagnostics, and medical device investing. While at InterWest, Dr. Fisher also works and servesserved as the Chief Business Officer atof Sera Prognostics, Inc. since January 2015.(NASDAQ: SERA), a diagnostics company based in Salt Lake City, UT. Prior to joining InterWest, Dr. Fisher served as Vice President of New Leaf Venture Partners LLC, a private equity and venture capital firm, from January 2006 to March 2009. Prior to joining New Leaf, Dr. Fisher was a project leader with The Boston Consulting Group, Inc., a global management consulting firm, from November 2003 to February 2006. He currently serves on the board of Aspen Neurosciences, and previously served on the boards of Obalon Therapeutics, Inc., Gynesonics, Inc., Lycera Pharmaceuticals Corp, and Indi Molecular, Inc., and previously served on the board of QuatRx Pharmaceuticals Company, Cardiac Dimensions, PMV Pharmaceuticals, Inc., and Sera Prognostics, Inc. Dr. Fisher holds an A.B. and a B.S. from Stanford University, an M.D. from the University of Pennsylvania School of Medicine and an MBA from The Wharton School of Business at the University of Pennsylvania. Dr. Fisher’s diverse background as both a physician, and an investor in biotech markets, is extremely beneficial to the Board in planning the Company’s strategic growth and how to approach and manage the financial markets.
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Jeffrey Cossman, M.D.

Dr. Cossman, age 74,76, was appointed as a director of the Company in September 2017. Dr. Cossman is a world-recognized expert in medical diagnostics with a career spanning research, academics and industry. From 2014 to 2022, Dr. Cossman was a founder of and served asMedical Advisor for Epigenomics AG. from 2010 to 2014, Dr. Cossman was Founder, Chief Executive Officer and Chairman of the Board at United States Diagnostic Standards, Inc. from 2010 to 2014, and asInc.. He is a Co-Founder of the Association for Molecular Pathology (AMP). He was a member of the Board of Directors of The Personalized Medicine Coalition from 2008 to 2014. Prior to that, heDr. Cossman served as Chief Scientific Officer and as member of the Board of Directors of The Critical Path Institute, and as Medical Director of Gene Logic, Inc. He was Professor and Chairman of the Department of Pathology at Georgetown University Medical Center where he heldwas the Oscar Benwood Hunter Chair of Pathology and hePathology. He served as Senior Investigator in Hematopathology at the National Cancer Institute. From 2014, Mr. Cossman is serving as a medical advisor to Epigenomics AG. Dr. Cossman holds a B.S. from the University of Michigan and an M.D. from the University of Michigan Medical School. He is board-certified in pathologyPathology and trained in pathologyPathology and hematopathologyHematopathology at the University of Michigan, Stanford University and the National Institutes of Health. The Board believes that, as former chairChairman of the departmentDepartment of pathologyPathology of Georgetown University, a premier academic institution, Dr. Cossman provides significant insight and guidance as to how the company should execute on its model. Furthermore, his experience in the molecular diagnostics field is significant to the Company’s strategy. He is a pioneer of the field of Molecular Diagnostics and invented some of the first DNA-based molecular diagnostic tests for cancer, which are now in worldwide clinical use.
Kathleen D. LaPorte

Ms. LaPorte, age 59,61, was appointed as a director of the Company in 2018. Ms. LaPorte is an executive and venture capital investor with 30 years’ experience building innovative life sciences companies. Ms. LaPorte served as general partner with Sprout Group from 1993 to2005.to 2005. Ms. LaPorte was one of the founders of New Leaf Venture Partners in 2005 and stayed with New Leaf Venture Partners until 2011. She was a co-founder of Health TechHealthTech Capital, a group of healthcare technology focused private and corporate investors. Ms. LaPorte served as chief business officer and later as CEO of Nodality Inc., an immuno-oncology diagnostics company during the years 2014 to 2016. In addition to the above, Ms. LaPorte served as a member of the audit committee of Affymax, IncInc. during years 2002 to2013.to 2013. She currently serves as Audit Committee Chair of Bolt Biotherapeutics, Inc., Compensation Committee Chair of 89bio, Inc., the Board of Phoenix Biotech Acquisition Corporation, and on several private company boards. Ms. LaPorte has a B.S. in biology from Yale University and an MBA from Stanford University Graduate School of Business. Ms. LaPorte’s experience complements the diverse expertise of our board with relevant skills and network from her years of involvement within the diagnostic spheresphere.
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Richard Sandberg, Chairman

Mr. Sandberg, age 78,80, was appointed as director of the Company in 2019. Mr. Sandberg2019 and has served as our Chairman of the Board of directors since March 2021. Mr .Sandberg is a seasoned executive with a substantial track record as an executive in and a director of emerging diagnostic companies like Precipio. In 1984, Mr. Sandberg founded Dianon Systems, Inc., a leading anatomic pathology laboratory based in Stratford, CT and
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served at various times as its Chairman, Chief Executive Officer, and Chief Financial Officer. He subsequentlyMore recently, Mr. Sandberg served from 2008 to June of 2019 as Chairman of Oxford Immunotec Global PLC and as a Director from 2008 until its sale to PerkinElmer, Inc. in March, 2021. Between those assignments he served as Chairman and Chief Financial Officer of Lifecodes Corporation, a pioneer in DNA testing technology; Chief Financial Officer and Director of Matritech, Inc., a publicly traded biotechnology company specializing in proteomic diagnostic products for the early detection of a variety of cancers; and as Chief Financial Officer of Critical Diagnostics Inc.,Inc, a company specializing in developing new diagnostic tests for cardiology. More recently, Mr. Sandberg served from 2008 to June of 2019 as Chairman of Oxford Immunotec Global PLC and as a Director from 2008 until its sale to Perkin Elmer in March, 2021. Mr. Sandberg currently serves as the Chairman and Chief Executive Officer of Resolys Bio, Inc,Inc., a privately held pharmaceutical company focused on treating chronic traumatic brain injury, a position has held since September 2017. He continues to serve as chairman, director and/or executive officer of multiple privately held healthcare companies in the United States and Europe, including Poplar Healthcare LLC, a large independent anatomic pathology in Memphis, Tennessee, which entered into a joint venture with the Company in March of 2020. Mr. Sandberg earned his bachelor’s degree in Business from Northwestern University and his Master of Business Administration from Harvard Business School. Mr. Sandberg brings substantial market, operational, and financial experience to the Board which can contribute to the Company’s board decisions on strategy and execution.
Ron A. Andrews

Mr. Andrews, age 60,63, was appointed a director of the Company in March 2021. Mr. Andrews joinedis currently Managing Partner, Ph Blueprint, a strategic advisory firm supporting companies in the BoardDiagnostics and Molecular Diagnostics markets. Prior to December of Directors of Oncocyte Corporation as a board member in April 2018 and has2022, he served as the President and Chief Executive Officer of Oncocyte Corporation since July 1, 2019. Mr. Andrews is the founder and former principal of the Bethesda Group, a consulting firm that advises companies in the molecular diagnostics and genomics fields. Prior to founding the Bethesda Group Psychological Services, LLC in 2015, Mr. Andrews served as President of the Genetic Sciences Division of Thermo Fisher Scientific Inc. (“Thermo Fisher”) from September 2013 to December 2014, and as the President of Medical Sciences Venture for Life Technologies Corporation (“Life Technologies”) from February 2012 to September 2013 when Life Technologies was acquired by Thermo Fisher. From 2004 to December 2010, Mr. Andrews was the Chief Executive Officer and Vice Chairman of the Board of Directors of Clarient, Inc., a cancer diagnostics company From December 2010 to February 2012, he served as CEO of GE Molecular Diagnostics after Clarient was acquired by GE Healthcare. Mr. Andrews also held management positions with companies in diagnostics and related medical fields, including Roche Molecular Diagnostics, Immucor, Inc., and Abbott Labs.Laboratories. Mr. Andrews also serves as the Executive Chairman of SimBioSys, Inc, a director of Oxford Immunotec.Chicago based AI company. Mr. Andrews is also a member of the Board of Governors of CancerLinQ LLC, a wholly-owned non-profit subsidiary of the American Society of Clinical Oncology. Mr. Andrews Graduated from Wofford College in 1981 with degrees in Biology and Chemistry.
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Mr. Andrews’ focus on democratizing important academic capabilities to empower community oncologists and pathologists with diagnostic tools that enable accurate, rapid delivery of important information allowing them to provide the best care for their patient is of significant value to the Company growing its products business.
Resignation of Directors
Effective March 1, 2021, Mr. Rimer resigned from the Board and the Company’s Audit Committee and Compensation Committee. The Board accepted that Mr. Rimer become an observer, and in such capacity, Mr. Rimer will attend, in a non-voting observer capacity, all meetings of the Board. On March 1, 2021, Mr. Andrews was appointed as a member of the Board and Compensation Committee to fill the Board vacancy left by Mr. Rimer’s resignation.
Code of Business Conduct and Ethics
On March 1, 2021, certain stylistic, technical and administrative amendments to the Company’s Code of Business Conduct and Ethics applicable to directors, officers and employees of the Company and its subsidiaries (including our principal executive officer, principal financial officer, principal accounting officer and controller) as approved by the Board, upon recommendation from the Governance and Nominating Committee, took effect. The Code of Business Conduct and Ethics is available in the Investor Relations section of our website at www.precipiodx.com. In order to satisfy our disclosure requirements under Item 5.05 of Form 8-K, we will disclose amendments to, or waivers of, certain provisions of our Code of Business Conduct and Ethics relating to our chief executive officer, chief financial officer, chief accounting officer, controller or persons performing similar functions on our website promptly following the adoption of any such amendment or waiver. The Code provides that any waivers of, or changes to, the Code that apply to the Company’s executive officers or directors may be made only by the Audit Committee. In addition, the Code includes updated procedures for non-executive officer employees to seek waivers of the Code.
13
Corporate Governance
Our Board has determined that having an independent director serve as the Chairperson of the Board is in the best interests of our stockholders. Our Chairperson of the Board is Mr. Richard Sandberg. We believe that this leadership structure enhances the accountability of our CEO to the Board and strengthens the Board’s independence from management. While both Mr. Sandberg and Mr. Danieli are actively engaged in significant matters affecting our Company, such as long-term strategy, we believe splitting these leadership positions enables Mr. Danieli to focus his efforts on running our business and managing our Company while permitting Mr. Sandberg to focus on the governance of our Company, including Board oversight.
Anti-Hedging Policy
We have adopted an insider trading policy that, among other things, expressly prohibits all of our employees, including our named executive officers, as well as our directors, and certain of their family members and related entities, from engaging in short sales of our securities, purchases or sales of puts, calls or other derivative securities based on our securities; and purchases of financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or offset any decrease in the market value of our securities.
Director Attendance at Meetings
Our Board conducts its business through meetings, both in person and telephonic, and by actions taken by written consent in lieu of meetings. During the fiscal year ended December 31, 2020,2022, our Board held eight (8)thirteen (13) meetings. 12 of which meetings were held in-person or by telephone and one was through a written consent. All directors attended at least 75%90% of the meetings of our Board and of the committees of our Board on which they served during the fiscal year ended December 31, 2020.2022. Our Board encourages all directors to attend our annual meetings of stockholders unless it is not reasonably practicable for a director to do so.
Executive Sessions
Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled throughout the year. In addition, at least twice a year, the independent directors meet in a private session that excludes management and any non-independent directors. Each executive session of the independent directors are presided over by the Chair of the Board, if the Chair of the Board qualifies as independent, or by the lead director, if the Chair of the Board does not qualify as independent.
Director Attendance at Annual Meetings of Stockholders
We do not have a formal policy regarding the attendance of our Board members at our annual meetings of stockholders, but we expect all directors to make every effort to attend any meeting of stockholders. Two out of the seven directors then serving attended our annual meeting of stockholders held in 2022.
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COMMITTEES OF OUR BOARD OF DIRECTORS
Our Board has established and delegated certain responsibilities to its standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
Audit Committee
We have a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Act. The Audit Committee’s primary duties and responsibilities include monitoring the integrity of our consolidated financial statements, monitoring the independence and performance of our independent registered public accounting firm, and monitoring our compliance with applicable legal and regulatory requirements. The functions of the Audit Committee also include reviewing periodically with our independent registered public accounting firm the performance of the services for which they are engaged, including reviewing the scope of the annual audit and its results, reviewing with management and the auditors the adequacy of our internal accounting controls, reviewing with management and the auditors the financial results prior to the filing of quarterly and annual reports, reviewing fees charged by our independent registered public accounting firm and reviewing any transactions between our Company and related parties. Our independent registered public accounting firm reports directly and is accountable solely to the Audit Committee. The Audit Committee has the sole authority to hire and fire the independent registered public accounting firm and is responsible for the oversight of the performance of their duties, including ensuring the independence of the independent registered public accounting firm. The Audit Committee also approves in advance the retention of, and all fees to be paid to, the independent registered public accounting firm. The rendering of any auditing services and all non-auditing services by the independent registered public accounting firm is subject to prior approval of the Audit Committee.
The Audit Committee operates under a written charter which is available in the Investor Relations section of our website at www.precipiodx.com. The Audit Committee is required to be composed of directors who are independent under the rules of the SEC and Nasdaq’s listing standards.
Fiscal year 20202022 activity
During fiscal year ended December 31, 2020,2022, the Audit Committee fulfilled its duties and responsibilities as outlined in the charter. The Committee meets at least twice each quarter; once in connection with quarterly Board
14
meetings and once to review the quarterly Form 10-Q or annual Form 10-K. In addition, the Committee meets as needed to address emerging accounting, compliance, or other matters or for educational training. Specifically, the Committee:
Reviewed and discussed with management and the independent registered public accounting firm the Company’s consolidated financial statements and related periodic reports filed with the SEC;
Met in periodic executive sessions with each of management and the independent registered public accounting firm to discuss the results of the audit by the independent auditors, their evaluations of internal controls, and the overall quality of the Company’s financial reporting, and any other matters as appropriate; and
Reviewed the Company’s related party transactions and Policy for Related Party Transactions
The current members of the Audit Committee are directors Ms. LaPorte, the Chairperson of the Audit Committee, Dr. Fisher and Mr. Sandberg, all of whom have been determined by the Board to be independent under the Nasdaq listing standards and rules adopted by the SEC applicable to audit committee members. The Board has determined that Ms. LaPorte, Dr. Fisher and Mr. Sandberg each qualifies as an “audit committee financial expert” under the rules adopted by the SEC and the Sarbanes Oxley Act of 2002. The Audit Committee met eight (8) times during the fiscal year ended December 31, 20202022. Four times were during each of the quarterly meetings and four (4) additional were telephonic meetings in conjunction with the filings of the quarterly and annual reports of the Company. The Audit Committee did not take any actions by written consent.
Report of the Audit Committee
The Company’s management is responsible for the preparation of the Company’s consolidated financial statements and for maintaining an adequate system of internal controls and processes for that purpose. Marcum LLP (“Marcum”) acts as the Company’s independent registered public accounting firm and they are responsible for conducting an independent audit of the Company’s annual consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (“PCAOB”) and issuing a report on the results of their audit. The Audit Committee is responsible for providing independent, objective oversight of both of these processes.
The Audit Committee has reviewed and discussed the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2020 with management of the Company and with representatives of Marcum. The Audit Committee's discussions with Marcum also included the matters required by Auditing Standard No. 1300, Auditor Communications, as adopted by the PCAOB. In addition, the Audit Committee received the written disclosures and the letter from Marcum required by applicable requirements of the PCAOB regarding its communications with the Audit Committee concerning independence and has discussed with Marcum its independence from the Company and its management.
Based on the reviews and discussions described above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, for filing with the SEC.
​​
Kathleen D. LaPorte, Chairperson
​​
Douglas Fisher, M.D.
​​
Richard Sandberg
Compensation Committee
The primary duties and responsibilities of our standing Compensation Committee are to review, modify and approve the overall compensation policies for the Company, including the compensation of the Company’s Chief Executive Officer and other senior management; establish and assess the adequacy of director compensation; and
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approve the adoption, amendment and termination of the Company’s stock option plans, pension and profit sharing plans, bonus plans and similar programs. The Compensation Committee may delegate to one or more officers the authority to make grants of options and restricted stock to eligible individuals other than officers and directors, subject to certain limitations. Additionally, the Compensation Committee has the authority to form subcommittees and to delegate authority to any such subcommittee. The Compensation Committee also has the authority, in its sole discretion, to select, retain and obtain, at the expense of the Company, advice and assistance from internal or external legal, accounting or other advisors and consultants. Moreover, the Compensation Committee has sole authority to
15
retain and terminate any compensation consultant to assist in the evaluation of director, Chief Executive Officer or senior executive compensation, including sole authority to approve such consultant’s reasonable fees and other retention terms, all at the Company’s expense.
The Compensation Committee considers the risks associated with our compensation policies and practices with respect to both executive compensation and compensation generally. The Compensation Committee considers the Company's long-standing culture, which emphasizes incremental continuous improvement and sustained long-term stockholder value creation, and ensures that these factors are reflected in the design of the Company's compensations plans. Our compensation program is structured so that a considerable amount of our incentive-eligible employees' compensation is tied to the long-term health of the Company. We avoid the type of disproportionately large, annual incentives that could encourage employees to take risks that may not be in our stockholder's long-term interests and we weight our management's incentive compensation toward profitability and long-term performance decisions.
The Compensation Committee operates under a written charter which is available on our website at www.precipiodx.com. All members of the Compensation Committee must satisfy the independence requirements of Nasdasq which areNasdaq applicable to compensation committee members. The members of the Compensation Committee are not and have never been officers or employees of the Company or any of its subsidiaries. No directors or executive officers of our Company serve on the compensation committee of another company of which a member of our Compensation Committee is an officer.
The Compensation Committee currently consists of directors Dr. Fisher and Mr. Andrews. Each of the Compensation Committee members has been determined by the Board to be independent under Nasdaq listing standards applicable to compensation committee members. The Compensation Committee met six (6) times in the fiscal year ended December 31, 20202022, once during each of the quarterly meetings and two (2) additional telephonic meetings.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee identifies, reviews and evaluates candidates to serve on the Board; reviews and assesses the performance of the Board and the committees of the Board; and assesses the independence of our directors. The Nominating and Corporate Governance Committee is also responsible for reviewing the composition of the Board’s committees and making recommendations to the entire Board regarding the chairpersonship and membership of each committee. In addition, the Nominating and Corporate Governance Committee is responsible for developing corporate governance principles and periodically reviewing and assessing such principles, as well as periodically reviewing the Company’s policy statements to determine their adherence to the Company’s Code of Business Conduct and Ethics.
The Nominating and Corporate Governance Committee has adopted a Director Nominees Consideration Policy, whereby Board candidates are identified primarily through suggestions made by directors, management and stockholders of the Company. We have implemented no material changes to the procedures by which stockholders may recommend nominees for the Board. The Nominating and Corporate Governance Committee will consider director nominees recommended by stockholders that are submitted in writing to the Company’s Corporate Secretary in a timely manner and which provide necessary biographical and business experience information regarding the nominee. The Nominating and Corporate Governance Committee has reviewed its Director Nominee Consideration Policy and it does not intend to alter the manner in which it evaluates candidates, including the criteria considered by the Nominating Committee, based on whether or not the candidate was recommended by a stockholder. The Board does not prescribe any minimum qualifications for director candidates, and all candidates for director will be evaluated based on their qualifications, diversity, age, skill and such other factors as deemed appropriate by the Nominating and Corporate Governance Committee given the current needs of the Board, the committees of the Board and the Company. Although the Nominating
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We consider diversity, such as gender, race, ethnicity and Corporate Governance Committee doesmembership of an underrepresented communities, among those meaningful factors in identifying and considering director nominees, but do not have a specific policy onformal diversity it considerspolicy. The Board evaluates each individual in the criteria noted above in selecting nominees for directors, including members from diverse backgrounds who combinecontext of the Board as a broad spectrumwhole, with the objective of assembling a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience and expertise. background in these various areas
Absent other factors which may be material to its evaluation of a candidate, the Nominating and Corporate Governance Committee expects to recommend to the Board for selection incumbent directors who express an interest in continuing to serve on the Board. Following its evaluation of a proposed director’s candidacy, the Nominating and Corporate Governance Committee will make a recommendation as to whether the Board should nominate the proposed director candidate for election by the stockholders of the Company.
Richard Sandberg, Douglas Fisher, M.D. and Jeffrey Cossman, M.D. the director nominees to be elected at the Annual Meeting, were each initially recommended for reelection to our Board by other members of the Board serving at the time and by members of management. In determining to nominate each director nominee at this Annual Meeting, the nominating and corporate governance committee and Board evaluated each nominee in accordance with our standard review process for director candidates in connection with a director’s initial appointment and his or her nomination for election or re-election, as applicable, at the Annual Meeting.
16
When considering whether the directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on the information discussed in each of the board member’s biographical information set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. This process resulted in the Board’s nomination of the incumbent directors named in this Proxy Statement and proposed for election by you at the Annual Meeting.
The Nominating and Corporate Governance Committee operates under a written charter which is available on our website at www.precipiodx.com. No member of the Nominating and Corporate Governance Committee may be an employee of the Company and each member must satisfy the independence requirements of Nasdaq and the SEC.
The Nominating and Corporate Governance Committee currently consists of directors Dr. Cossman and Mr. Cohen each of whom has been determined by the Board to be independent under the Nasdaq listing standards. The Nominating and Corporate Governance Committee met foursix (6) times in the fiscal year ended December 31, 20202022, once during each of the quarterly meetings and did not take anytwo (2) additional telephonic meetings. Not actions were taken by written consent.
The following matrix highlights the mix of key skills, qualities, attributes, and experiences of the board members that, among other factors, led the Nominating and Corporate Committee to recommend the individuals for election to the Board. The matrix is intended to depict notable areas of focus for each director, and not having a mark does not mean that a particular director does not possess that qualification or skill. Nominees have developed competencies in these skills through education, direct experience, and oversight responsibilities. Additional biographical information on each nominee is set out below starting on page 11 above.
Director Skills
​​
Sandberg
​​
Danieli
​​
LaPorte
​​
Fisher
​​
Cossman
​​
Cohen
​​
Andrews
Core
​​
​​
​​
​​
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Leadership
​​
•
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•
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•
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•
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•
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•
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•
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Corporate Governance
​​
•
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•
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•
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•
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•
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•
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•
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Risk Management
​​
•
​​
•
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•
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•
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•
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•
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•
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Financial
​​
•
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•
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•
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•
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•
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•
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•
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​​
Sandberg
​​
Danieli
​​
LaPorte
​​
Fisher
​​
Cossman
​​
Cohen
​​
Andrews
Strategic
​​
​​
​​
​​
​​
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Global Business and Operations
​​
•
​​
•
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•
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•
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•
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•
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•
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Brand and Marketing
​​
•
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•
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•
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•
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•
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People and Culture
​​
•
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•
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•
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•
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•
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•
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•
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Innovation and Technology
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•
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•
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•
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•
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•
Diversity is one factor considered when considering candidates to serve on the Board of Directors. The Board believes that diversity supports its goal of best serving the Company and our shareholders, customers, and employees. The below table provides a summary view of the diversity attributes of the Board of Directors as of April 13, 2023. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f). The demographic information presented below is based on voluntary self-identification by each nominee.
Board Size:
​​
​​
​​
​​
Total Number of Directors
​​
7
​​
​​
​​
Gender:
​​
Male
​​
Female
​​
Non-
Binary
​​
Gender
Undisclosed
Number of directors based on gender identity
​​
5
​​
1
​​
—
​​
1
Number of directors who identify in any of the categories below:
​​
 
​​
 
​​
 
​​
 
African American or Black
​​
 
​​
—
​​
—
​​
—
Alaskan Native or American Indian
​​
—
​​
—
​​
—
​​
—
Asian
​​
—
​​
—
​​
—
​​
—
Hispanic or Latinx
​​
 
​​
—
​​
—
​​
—
Native Hawaiian or Pacific Islander
​​
—
​​
—
​​
—
​​
—
White
​​
5
​​
1
​​
—
​​
—
Two or More Races or Ethnicities
​​
—
​​
—
​​
—
​​
—
LQBTQ+
​​
—
Undisclosed
​​
 
​​
 
​​
 
​​
1
Corporate Governance Best Practice summary
Precipio’s Board oversees the CEO and other senior management in the competent and ethical operation of Precipio, Inc. on a day-to-day basis and assures that the long-term interests of stockholders are being served.
Board Composition and
Independence
​​
Board and Committee
Practices
​​
Stockholder Rights
• All directors are independent except CEO

• Separation of the Chair and CEO roles

• 100% independent committees

• Executive sessions provided for all quarterly Board and committee meetings

• Board has significant interaction with senior management and access to other employees
​​
• All members of the Audit Committee are financial experts

• 90% attendance by directors at Board and committee meetings in 2022

• Commitment to diversity of board composition in terms of gender, race, national origin, education, professional experience, geographic representation and difference in viewpoints and skills
​​
• Single class of stock with equal voting rights

• Annual elections for directors depending on their class

• Proxy access for stockholders
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Oversight of Risk Management
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including economic risks, financial risks, legal and regulatory risks and others, such as the impact of competition. Management is responsible for the day-to-day management of the risks that we face, while our Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our Board is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed. Our Board assesses major risks facing our Company and options for their mitigation in order to promote our stockholders’ interests in the long-term health of our Company and our overall success and financial strength. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for us. The involvement of our full Board in the risk oversight process allows our Board to assess management’s appetite for risk and also determine what constitutes an appropriate level of risk for our Company. Our Board regularly includes agenda items at its meetings relating to its risk oversight role and meets with various members of management on a range of topics, including corporate governance and regulatory obligations, operations and significant transactions, risk management, insurance, pending and threatened litigation and significant commercial disputes.
While our Board is ultimately responsible for risk oversight, various committees of our Board oversee risk management in their respective areas and regularly report on their activities to our entire Board. In particular, the Audit Committee has the primary responsibility for the oversight of financial risks facing our Company. The Audit Committee’s charter provides that it will discuss our major financial risk exposures and the steps we have taken to monitor and control such exposures. Our Board has also delegated primary responsibility for the oversight of all executive compensation and our employee benefit programs to the Compensation Committee. The Compensation Committee strives to create incentives that encourage a level of risk-taking behavior consistent with our business strategy.
We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing our Company and that our Board’s leadership structure provides appropriate checks and balances against undue risk taking.
Employee Compensation Risks
As part of its oversight of our executive compensation program, the compensation committee considers the impact of our executive compensation program, and the incentives created by the compensation awards that it administers, on our risk profile. In addition, the compensation committee reviews the compensation policies and procedures for all employees, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to us. The compensation committee has determined that, for all employees, our compensation programs are not reasonably likely to have a material adverse effect on us.
Communications with the Board of Directors
Stockholders and other parties may communicate directly with the Board of Directors or the relevant board member by addressing communications to:
Precipio, Inc.
c/o Corporate Secretary
4 Science Park
New Haven, CT 06511
You may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer, supplier, or other interested party. All stockholder correspondence will be compiled by our corporate secretary. Communications will be distributed to the Board of Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. A copy of any such written communication may also be forwarded to Precipio’s legal counsel and a copy of such communication may be retained for a reasonable period of time. The director may discuss the matter with Precipio’s legal counsel,
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with independent advisors, with non-management directors, or with Precipio’s management, or may take other action or no action as the director determines in good faith is necessary, using reasonable judgment, and applying his or her own discretion. Items that are unrelated to the duties and responsibilities of the Board of Directors may be excluded, such as:
junk mail and mass mailings;
resumes and other forms of job inquiries;
surveys; and
solicitations and advertisements.
17
In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is filtered out will be made available to any independent director upon request.
The audit committee oversees the procedures for the receipt, retention, and treatment of complaints received by Precipio, Inc. regarding accounting, internal accounting controls, or audit matters, and the confidential, anonymous submission by employees and third parties of concerns regarding questionable accounting, internal accounting controls or auditing matters. We have also established a toll-free telephone number for the reporting of such activity, which is 1-844-703-8157.
Director Independence
Our Company is governed by our Board. Currently, each member of our Board, other than Ilan Danieli, our Chief Executive Officer, is an independent director and all standing committees of our Board are composed entirely of independent directors, in each case under Nasdaq’s independence definition applicable to boards of directors. For a director to be considered independent, our Board must determine that the director has no relationship which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Members of the Audit Committee also must satisfy a separate SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from us or any of our subsidiaries other than their directors’ compensation. In addition, under SEC rules, an Audit Committee member who is an affiliate of the issuer (other than through service as a director) cannot be deemed to be independent. In determining the independence of members of the Compensation Committee, Nasdaq listing standards require our Board to consider certain factors, including but not limited to: (1) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by us to the director, and (2) whether the director is affiliated with us, one of our subsidiaries or an affiliate of one of our subsidiaries. Under our Compensation Committee Charter, members of the Compensation Committee also must qualify as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and as “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. The independent members of the Board are Ms. LaPorte, Mr. JeffreyDr. Cossman, M.D., Mr. DouglasDr. Fisher, M.D., Mr. Ron A Andrews, Mr. Sandberg and Mr. Richard Sandberg.
Information Regarding Executive Officers
Our executive officers, their ages and their respective positions are as follows:
Ilan Danieli, Founder & Chief Executive Officer, age 49
Mr. Danieli’s biography is set forth above.
Carl R. Iberger, Chief Financial Officer, age 68
Mr. Iberger was named Chief Financial Officer in October 2016. From 1990 through 2015, Mr. Iberger held the positions of Chief Financial Officer and Executive Vice President at Dianon Systems, DigiTrace Care Services and SleepMed, Inc. Mr. Iberger has significant diagnostic healthcare experience in mergers and acquisitions, private equity transactions, public offerings and executive management in high growth environments. Mr. Iberger holds a Masters Degree in Finance from Hofstra University and a Bachelor of Science Degree in Accounting from the University of Connecticut.Cohen.
Family Relationships
There are no family relationships among the officers and directors, nor are there any arrangements or understanding between any of the Directors or Officers of our Company or any other person pursuant to which any Officer or Director was or is to be selected as an officer or director.
Involvement in Certain Legal Proceedings
During the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been:
the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any Federal or State authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
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found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law;
the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law or regulation; (b) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Section 16(a) Beneficial Ownership Reporting ComplianceCulture and Human Capital Management
Section 16(a)Recruiting, developing and engaging our workforce is critical to executing our strategy and achieving business success. The board oversees and is regularly updated on the company’s leadership development and talent management strategies designed to recruit, develop and retain business leaders who can drive the Company’s growth objectives and build long-term stockholder value. Our board is continuously focused on culture and human capital management priorities for promoting a safe, inclusive and respectful work environment, where employees across our entire workforce feel empowered to speak on issues important to them, inspired to act ethically and with integrity and raise concerns and encouraged to implement new and innovative ideas in the best interests of the Exchange Actbusiness.
The board is keenly interested in ensuring that the Company maintains and promotes a culture that fosters the rulesvalues, behaviors and attributes necessary to advance the Company’s business strategy and purpose. To foster employee engagement and commitment, we follow a robust process to listen to employees, take action and measure our progress with on-going employee conversations, transparent communications and employee engagement surveys. The Board receives regular updates on matters of the SEC require our directors, certain officersemployee culture and beneficial owners of more than 10% of our outstanding common stock to file reports of their ownership and changes in ownership of our common stock with the SEC. Based solely on our review of the copies of such forms received by us and upon written representations of the Reporting Persons received by us, we believe that there has been compliance with all Section 16(a) filing requirements applicable to such Reporting Persons with respect to the fiscal year ended December 31, 2020.engagement.
Related Person Transactions
SinceThere have been no transactions since January 1, 2019, the Company was2020 to which we have been a party to a transactionparticipant in which the amount involved exceeded or will exceed $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which its director and holderany of our directors, executive officers or holders of more than 5% of our capital stock, or any classmembers of our voting stock hastheir immediate family, had or will have a direct or indirect material interest. David S. Cohen, one ofinterest, other than compensation arrangements which are described under “Executive Compensation” and “Director Compensation,” and other than the Company’s directors, has participated as an investor in the transactiontransactions described below.
As disclosed in the Company’s Form 8-K filed on April 23, 2018 and amended on April 26, 2018, on April 20, 2018, the Company entered into a securities purchase agreement (the “2018 Note Agreement”) with certain investors (the “April 2018 Investors”), pursuant to which the Company would issue up to approximately (i) $3,296,703 in Senior Secured Convertible Promissory Notes with an interest rate of 8% per annum and an original issue discount of 9% (the “ Bridge Notes”) and (ii) warrants in an amount equal to the number of shares of common stock issuable upon conversion of the Bridge Notes based on the conversion price at the time of issuance (the “Convertible Debt Transaction”). Some of the warrants were issued with a one-year term and some with a five-year term. The initial closing of the Convertible Debt Transaction provided the Company with $1,660,000 of gross proceeds for the issuance of Bridge Notes with an aggregate principal of $1,824,176. On July 6, 2018, the stockholders of the Company approved, for purposes of complying with applicable Nasdaq Listing Rules, the potential issuance of more than 20% of the Company’s common stock
As previously disclosed in connectionour 2021 Proxy Statement filed on Form DEF 14A with the Convertible Debt Transaction. Following such approval, additional closings providedSEC on April 29, 2021, since April 2018, we amended the Company with $1,340,000 of gross proceeds for the issuance of Bridge Notes with an aggregate principal of $1,374,426.
On September 20, 2018, immediately after the final drawdownterms of the Bridge Notes the Company entered into an agreement with the April 2018 Investors whereby the exercise price of alland warrants issued to the April 2018 Investors were amended from $11.25 to $7.50. On November 29, 2018, the Company entered intoin connection therewith. In connection with this transaction, a member of our board of directors, Mr. David S. Cohen was issued an amendment and restatement agreement (the “Amendment Agreement”) amending and restating the termsaggregate of the 2018 Note Agreement. The Amendment Agreement provided for the issuance of up to $1,318,681 of additional Bridge Notes together with applicable warrants,$439,560 in one or more tranches, with substantially the same terms and conditions as the previously issued Bridge Notes and related warrants. The conversion priceprincipal of the Bridge Notes was amended so that it shall be equaland issued warrants to the greater of $3.75 or $0.75 above the closing bid pricepurchase 74,539 shares of our common stock on the date prior to the original issue date. In the event thestock. The Bridge Notes are not paid in full priorissued to 180 days after the original issue date, the conversion price shall be equalMr. Cohen have been converted into 744,840 shares of common stock. See “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” for more information related to 80%Mr. Cohen’s ownership of the lowest volume weighted average price in the 10 trading days prior to the date of the notice of conversion, but in no event below the floor price of $2.25. The Amendment Agreement was approved by the stockholders of the Company on December 20, 2019.our securities.
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On April 16, 2019,DIRECTOR COMPENSATION
It is our Board’s general policy that compensation for independent directors should be a mix of cash and equity-based compensation. As part of a director’s total compensation, and to create a direct linkage between corporate performance and stockholder interests, our Board believes that a meaningful portion of a director’s compensation should be provided in, or otherwise based on, the Company entered intovalue of appreciation in our common stock.
Our Board has the authority to approve all compensation payable to our directors, although our Compensation Committee is responsible for making recommendations to our Board regarding this compensation. Additionally, our Chief Executive Officer may also make recommendations or assist our Compensation Committee in making recommendations regarding director compensation. Our Board and Compensation Committee annually review our director compensation.
Cash Compensation
Directors who are also our employees are not separately compensated for serving on the Board other than reimbursement for out-of-pocket expenses related to attendance at Board and committee meetings. Independent directors are paid an annual retainer of $35,000 and receive reimbursement for out-of-pocket expenses related to attendance at Board and committee meetings. Independent directors serving as Chairman of the Board receive an additional amendmentannual retainer of $23,500. Independent directors serving as members on the Audit Committee, Compensation Committee and restatement agreement (“Amendment No.2 Agreement”) amendingNominating and restating the termsCorporate Governance Committee receive an additional annual retainer of $7,500, $5,000 and $4,000, respectively. The chairperson of the 2018 Note Agreement (as first amended pursuant toAudit Committee, Compensation Committee and Nominating and Corporate Governance Committee receives an additional annual retainer of $15,000, $10,000 and $7,000, respectively.
In the Amendment Agreement”). The Amendment No. 2 Agreement providedfiscal year ended December 31, 2022, the Company with approximately $0.9 million of gross proceeds for the issuance of Bridge Notes with an aggregate principal of $1.0 million (the “April 2019 Bridge Notes”) together with applicable warrants, with substantially the same terms and conditions as the previously issued Bridge Notes and related warrants. The 9% discount associated with the April 2019 Bridge Notes was approximately $0.1 million and was recorded as a debt discount. In connection with the April 2019 Bridge Note issuances, the Company issued to the investors 147,472 warrantsdirectors were granted non-qualified options to purchase shares of common stock of the Company with a five-year term and exercise price of $5.40 (the “April 2019 Warrants”). The conversion price of the April 2019 Bridge Notes shall be equal to the greater of $3.75 or $0.75 above the closing bid price of our common stock on the date prior to the original issue date. In the event the April 2019 Bridge Notes are not paid in full prior to 180 days after the original issue date, the conversion price shall be equal to 80% of the lowest volume weighted average price in the 10 trading days prior to the date of the notice of conversion, but in no event below the floor price of $2.25. Pursuant to the Amendment No.2 Agreement, previously issued warrants were amended such that the exercise price of such warrants was amended from $7.50 to $5.40 and any warrant that had a one-year term was amended to have a five-year term. The Company reviewed the amendments to the warrants and determined that they will be treated as a modification of an outstanding equity instrument at the time of the Amendment No.2 Agreement.stock.
On May 14, 2019, the Company entered into a securities purchase agreement pursuant to which the Company was provided with $1.0 million of gross proceeds for the issuance of Bridge Notes with an aggregate principal of $1.1 million (the “May 2019 Bridge Notes”) together with applicable warrants, with substantially the same terms and conditions as the previously issued Bridge Notes and related warrants. The 9% discount associated with the May 2019 Bridge Notes was approximately $0.1 million and was recorded as a debt discount. In connection with the May 2019 Bridge Note issuances, the Company issued to the investors 154,343 warrants to purchase shares of common stock of the Company with a five year term and exercise price of $9.56 (the “May 2019 Warrants”). The conversion price of the May 2019 Bridge Notes is $7.12, provided that a) in the event the notes are not paid in full prior to 180 days after the original issue date or b) upon a registration statement (as defined in the purchase agreement) being declared effective, whichever occurs earlier, the conversion price shall be equal to 80% of the lowest volume weighted average price in the 10 trading days prior to the date of the notice of conversion, but in no event below the floor price of $2.25.
The April 2019 Bridge Notes, April 2019 Warrants, May 2019 Bridge Notes and May 2019 Warrants were issued to the April 2018 Investors and David S. Cohen, who is a Company director. Prior to entering into the Convertible Debt Transaction, Mr. Cohen provided proper notice to the Company in compliance with the Company’s Related Party Transaction Policy and the Company’s Board reviewed and approved Mr. Cohen’s participation after determining that the issuance and sale of the April 2019 Bridge Notes, April 2019 Warrants, May 2019 Bridge Notes and May 2019 Warrants to Mr. Cohen was fair to and in the best interests of the Company.
As disclosed in the Company’s Form 10-K filed on March 27, 2020, the Company entered into an amendment agreement with certain investors (the “March 2020 Amendment”) on March 26, 2020, amending the terms of the Amendment No. 2 Agreement and the securities purchase agreement dated May 14, 2019. The March 2020 Amendment is attached as Annex A to this Proxy Statement and is incorporated by reference hereto. As a result of the March 2020 Amendment, (i) the maturity date of each of the April 2019 Bridge Notes and each of the May 2019 Bridge Notes was extended by three months from April 16, 2020 to July 16, 2020, (ii) the floor price at which conversions may occur under the April 2019 Bridge Notes and the May 2019 Bridge Notes was amended from $2.25 to $0.40, and (iii) guaranteed interest on the April 2019 Bridge Notes and the May 2019 Bridge Notes was amended from twelve months to eighteen months.
On March 25, 2020, the Board approved the March 2020 Amendment in order to enable the holders of the April 2019 Bridge Notes and May 2019 Bridge Notes to convert such notes into shares of the Company’s common stock, which in turn allows the Company to retain capital to be allocated to working capital, growing the Company’s sales force and business development team, as well as product development. As of the Record Date there no April 2019 Bridge Notes or May 2019 Bridge Notes outstanding.
On April 16, 2019, Mr. Cohen invested $100,000 in return for $109,890 of April 2019 Bridge Notes together with 16,386 warrants to purchase shares of common stock of the Company and on May 14, 2019, Mr. Cohen invested $200,000 in return for $219,780 of May 2019 Bridge Notes together with 30,869 warrants to purchase shares of common stock of the Company. As of the Record Date, the bridge notes issued to Mr. Cohen during 2019, plus interest, have been converted by Mr. Cohen into 692,092 shares of common stock of the Company and none of the warrants issued to Mr. Cohen during 2019 have been exercised. Mr. Cohen’s total beneficial ownership information, as of the Record Date, is discussed in the beneficial ownership table on page 8.
20
EXECUTIVE COMPENSATION
Director Summary Compensation Table
The following table sets forthprovides information regarding our compensation awarded to, paid to or earned by our “named executive officers” for services renderednon-employee directors during the fiscal yearsyear ended December 31, 20202022. During the fiscal year ended December 31, 2022, one employee, Ilan Danieli, served as a member of our board of directors as well as an employee. Directors who are our employees did not receive compensation for serving on the Board or its committees in the fiscal year ended December 31, 2022, and 2019.their compensation is outlined in the “Summary Compensation Table” above.
Name and Principal Position
​​
Year
​​
Salary ($)
​​
Bonus ($)
​​
Option Awards
($)(1)
​​
All Other
Compensation
($)(2)
​​
Total ($)
Ilan Danieli,(3)
Chief Executive Officer
​​
2020
​​
261,218
​​
60,000
​​
117,600
​​
13,674
​​
452,492
​
2019
​​
250,000
​​
—
​​
34,000
​​
13,556
​​
297,556
Carl R. Iberger,(4)
Chief Financial Officer
​​
2020
​​
216,025
​​
75,000
​​
129,360
​​
11,551
​​
431,936
​
2019
​​
200,000
​​
—
​​
34,000
​​
10,671
​​
244,674
Ahmed Zaki Sabet,(5)
Chief Operations Officer
​​
2020
​​
139,904
​​
15,000
​​
64,760
​​
13,890
​​
233,554
​
2019
​​
150,000
​​
10,000
​​
34,000
​​
13,758
​​
207,758
Ayman A. Mohamed,(6)
VP R&D
​​
2020
​​
162,548
​​
15,000
​​
70,720
​​
14,558
​​
262,826
​
2019
​​
150,000
​​
10,000
​​
34,000
​​
13,804
​​
207,804
Name
​​
Fees Earned
or Paid in
Cash ($)(3)
​​
Option
Awards ($)(1)(2)
​​
All Other
Compensation
($)
​​
Total ($)
David S. Cohen
​​
39,000
​​
59,200
​​
—
​​
98,200
Douglas Fisher
​​
52,500
​​
59,200
​​
—
​​
111,700
Jeffrey Cossman
​​
42,000
​​
59,200
​​
—
​​
101,200
Kathleen D. LaPorte
​​
50,000
​​
59,200
​​
—
​​
109,200
Richard Sandberg
​​
75,000
​​
59,200
​​
—
​​
134,200
Ron A. Andrews
​​
40,000
​​
59,200
​​
—
​​
99,200
(1)
The amountsamount in this column reflectreflects the aggregate grant date fair value of theeach stock option awardsaward granted during the respective fiscal year as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) TopicASC 718, excluding the effect of estimated forfeitures. The amounts shown may not correspond to the actual value that may be recognized by the named executive officer. The fair value calculationrecognized. For a full description of options granted during 2020 used the following assumptions: risk free interest rates of 0.40% to 1.68% based on the U.S. Treasury yield in effect at the time of grant; expected life of six years; and volatility of 138% to 141% based on historical volatility of the Company’s common stock over a time that is consistent with the expected life of the option. For 2020 option grants, the assumptions we used to calculate fair value are includeduse in calculating these amounts, see Note 1312 to our audited financial statements for fiscal year ended December 31, 2020,2022, which is included in our annual report on Form 10-K for the fiscal year ended December 31, 20202022, filed with the SEC on March 29, 2021.30, 2023. Our named executive officersdirectors will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options on the date the options are exercised.
(2)
Represents health insurance premiums paid by the Company.
(3)
Mr. Danieli was appointed our Chief Executive Officer effective as of June 29, 2017. Prior to that, Mr. Danieli was the Chief Executive Officer of Precipio Diagnostics, Inc. since November 2011. An employment agreement with Mr. Danieli was executed by the Company and Mr. Danieli on August 7, 2018.
(4)
Mr. Iberger was appointed our Chief Financial Officer effective June 29, 2017. Prior to that, Mr. Iberger was the Chief Financial Officer of Precipio Diagnostics, Inc. since October 1, 2016. An employment agreement with Mr. Iberger was executed by the Company and Mr. Iberger on August 7, 2018
(5)
Mr. Sabet was appointed our Chief Operations Officer effective June 29, 2017. Prior to that, Mr. Sabet was the Chief Operations Officer of Precipio Diagnostics, Inc. since November 2011. An employment agreement with Mr. Sabet was executed by the Company and Mr. Sabet on August 7, 2018.
(6)
Mr. Mohamed was appointed our VP R&D effective June 29, 2017. Prior to that, Mr. Mohamed was the Chief Technology Officer of Precipio Diagnostics, Inc. since November 2011. An employment agreement with Mr. Mohamed was executed by the Company and Mr. Mohamed on August 7, 2018.
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(2)
The aggregate outstanding options for each non-employee director as of December 31, 2022 is set out herewith:
Name
​​
Aggregate Options
Outstanding (#)
David S. Cohen
​​
114,207
Douglas Fisher
​​
114,207
Jeffrey Cossman
​​
135,957
Kathleen D. LaPorte
​​
113,740
Richard Sandberg
​​
105,990
Ron A. Andrews
​​
72,240
(3)
Includes the following amounts for being chairman of the board or a chairperson of a committee; Mr. Sandberg $23,500, Mr. Fisher $10,000; Mr. Cossman $7,000; and Ms. LaPorte $15,000.
20202022 Grants of Option Plan-Based Awards to ExecutivesDirectors
The following table sets forth certain information with respect to grants of plan-based awards in fiscal year ended December 31, 20202022 to our named executive officers.directors. The stock option awards granted in fiscal year ended December 31, 20202022 were granted under the Company’s 2017 Stock Option and Incentive Plan, as amended (the “2017 Plan”). During the fiscal year ended December 31, 2020,2022, no other equity awards were granted to our named executive officers.directors. See the notes below the table for details on option vesting schedules.
Name
​​
Grant Date
​​
All Other Option Awards:
Number of Securities
Underlying Options
(#)
​​
Exercise or Price of
Option Awards
($/sh)(1)
​​
Grant Date
Fair Value of
Option Awards
($)(2)
Ilan Danieli
Stock options(3)
​​
 
​​
 
​​
 
​​
 
​
1/16/2020
​​
60,000
​​
2.14
​​
117,600
 
​​
 
​​
 
​​
 
​​
 
Carl R. Iberger
Stock options(3)
​​
 
​​
 
​​
 
​​
 
​
1/16/2020
​​
66,000
​​
2.14
​​
129,360
 
​​
 
​​
 
​​
 
​​
 
Ahmed Zaki Sabet
Stock options(3)
​​
 
​​
 
​​
 
​​
 
​
1/16/2020
​​
30,000
​​
2.14
​​
58,800
​
7/2/2020
​​
5,000
​​
1.30
​​
5,960
​​
​​
​​
​​
Ayman A. Mohamed
Stock options(3)
​​
​​
​​
​​
​
1/16/2020
​​
30,000
​​
2.14
​​
58,800
​
7/2/2020
​​
10,000
​​
1.30
​​
11,920
Name
​​
Grant Date
​​
All Other Option
Awards: Number of
Securities Underlying
Options (#)
​​
Exercise or Price of
Option Awards
($/sh)(1)
​​
Grant Date Fair
Value of Option
Awards ($)(2)
David S. Cohen Stock options(3)
​​
1/11/2022
​​
40,000
​​
1.54
​​
59,200
Douglas Fisher Stock options(3)
​​
1/11/2022
​​
40,000
​​
1.54
​​
59,200
Jeffrey Cossman Stock options(3)
​​
1/11/2022
​​
40,000
​​
1.54
​​
59,200
Kathleen D. LaPorte Stock options(3)
​​
1/11/2022
​​
40,000
​​
1.54
​​
59,200
Richard Sandberg Stock options(3)
​​
1/11/2022
​​
40,000
​​
1.54
​​
59,200
Ron A. Andrews Stock options(3)
​​
1/11/2022
​​
40,000
​​
1.54
​​
59,200
(1)
The exercise price of the stock awards representsrepresent the fair market value of our common stock on the date of grant as defined in the 2017 Plan.
(2)
The amount in this column reflects the aggregate grant date fair value of each stock award granted in accordance with ASC 718, excluding the effect of estimated forfeitures. The amounts shown may not correspond to the actual value that may be recognized. The fair value calculation of options granted during the fiscal year ended December 31, 20202022 used the following assumptions: risk free interest ratesrate of 0.40% to 1.68%1.60% based on the U.S. Treasury yield in effect at the time of grant; expected life of six years; and volatility of 138% to 141%167% based on historical volatility of the Company’s common stock over a time that is consistent with the expected life of the option. Our directors will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options on the date the options are exercised.
(3)
The award vests over a one-year period with 12 equal monthly installments and so long as the director remains a director of the Company or a Subsidiary on such dates.
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Equity Compensation Plan Information
The following equity compensation plan information summarizes plans and securities approved and not approved by security holders as of December 31, 2022.
 
​​
(a)
​​
(b)
​​
(c)
PLAN CATEGORY
​​
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and
rights
​​
Weighted-average
exercise price of
outstanding
options, warrants
and rights
​​
Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a) )
Equity compensation plans approved by security holders
​​
3,681,336(1)
​​
$2.84
​​
170,218(2)
Equity compensation plans not approved by security holders
​​
—
​​
—
​​
—
Total
​​
3,681,336
​​
$2.84
​​
170,218
(1)
Includes shares of our common stock issuable upon exercise of options to purchase common stock awarded under our 2006 Plan and 2017 Plan.
(2)
All shares of our common stock available for future issuance are from our 2017 Plan.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Our executive officers, their ages and their respective positions are as follows:
Ilan Danieli, Founder & Chief Executive Officer, age 51
Mr. Danieli’s biography is set forth above in “INFORMATION ABOUT OUR BOARD OF DIRECTORS - Our Board’s Qualifications.
Matthew Gage, Interim Chief Financial Officer, age 56
Mr. Gage was appointed Interim Chief Financial Officer of Precipio, Inc. effective March 21, 2022. Mr. Gage served as Director of Financial Reporting and Analysis of Precipio, Inc. since joining the Company in June 2017 following its acquisition of Transgenomic Inc., where he was Director of Financial Reporting and Analysis from 2014 until the acquisition. Mr. Gage has over 30 years of experience in company finance, 25 years of which being with publicly traded companies. Mr. Gage holds a Bachelor of Science Degree in Business Administration from Bryant University.
Dr. Ayman Mohamed, Chief Technology Officer, age 39
Dr. Mohamed is one of the co-founders of Precipio, Inc. (NASDAQ: PRPO), and currently serves as Precipio’s Chief Technology Officer, as well as the laboratory’s Technical Director. In this dual role, Dr. Mohamed is responsible for conceptualization and invention of proprietary technologies, through design and development, economic cost analysis and modeling, testing and validation; and finally, the technical implementation of the technologies for clinical use in Precipio’s laboratories. Dr. Mohamed has been responsible for the development and introduction of IV-Cell™, HemeScreen®, and ICE-COLD PCR™. Prior to Precipio, Dr. Mohamed served in various technical and research positions in both commercial diagnostic companies as well as academic centers such as Yale University. Dr. Mohamed is also a certified CAP inspector. Mr. Mohamed holds an MD and a Masters in Human Genetics from the University of Alexandria, Egypt.
Ahmed Zaki Sabet, Chief Operating Officer, age 38
Ahmed Zaki Sabet has been with Precipio since co-founding the company in 2011 and currently serves as the Chief Operating Officer. He holds over 12 years of experience in laboratory management primarily focusing on cancer diagnostics. Prior to Precipio, Mr. Sabet has served as a consultant with the College of American Pathologists (CAP) as well as several diagnostic companies in setting up their specialized cancer testing operations. Mr. Sabet holds a Bachelor of Science degree in Biomedical Engineering from the New Jersey Institute of Technology.
Miri Chiko-Radomski, Chief Legal Counsel, age 47
Miri Chiko-Radomski our Chief Legal Counsel since 2018, has extensive international legal experience equity capital markets matters, general corporate matters, corporate restructurings, corporate governance, company law issues and M&A transactions. Miri holds an LL.B. from the University of East Anglia and an L.LM. from King’s College London.
Overview
Our executive compensation programs are designed to attract, motivate, incentivize and retain our executive officers, who contribute to our long-term success. Pay that is competitive, rewards performance and effectively aligns the interests of our executive officers with those of our long-term stockholders is key to our compensation program design and decisions. We structure our executive compensation programs to be heavily weighted towards long-term equity incentives that correlate with the growth of sustainable long-term value for our stockholders.
As a smaller reporting company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. Included in this discussion is specific information about the compensation earned or paid in fiscal 2022 to the following specified individuals: (i) the individual who served as the Chief Executive Officer of the Company during the fiscal year 2022 (ii) the next two most highly compensated executive officers of the Company during fiscal year 202 which include the Company’s former chief financial officer, who served as our chief financial officer during the fiscal year. Our named executive officers for fiscal 2022 are:
Ilan Danieli, our Chief Executive Officer and Founder;
Ayman A. Mohamed, our Vice President of Research and Development; and
Carl Iberger, our former Chief Financial Officer
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Summary Executive Compensation Table
The following table sets forth compensation awarded to, paid to or earned by our named executive officers for services rendered during fiscal years ended December 31, 2022 and 2021.
Name and Principal Position
​​
Year
​​
Salary ($)
​​
Bonus ($)(1)
​​
Option Awards
($)(2)
​​
All Other
Compensation
($)(3)
​​
Total ($)
Ilan Danieli,
Chief Executive Officer
​​
2022
​​
300,000
​​
—
​​
481,000
​​
24,103
​​
805,103
​
2021
​​
300,000
​​
165,000
​​
1,245,732
​​
15,960
​​
1,726,692
Ayman A. Mohamed,
VP R&D
​​
2022
​​
200,000
​​
10,000
​​
111,000
​​
24,103
​​
345,103
​
2021
​​
175,000
​​
60,000
​​
748,000
​​
19,500
​​
1,002,500
Carl R. Iberger(4)
Former Chief Financial Officer
​​
2022
​​
57,692
​​
187,500
​​
222,000
​​
12,384
​​
479,576
​
2021
​​
250,000
​​
90,000
​​
905,832
​​
13,225
​​
1,259,057
(1)
The amounts in this column represent discretionary annual cash bonuses that each of our named executive officers earned in each respective fiscal year and paid the next fiscal year.
(2)
The amounts in this column reflect the aggregate grant date fair value of the stock option awards granted during the respective fiscal year as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, excluding the effect of estimated forfeitures. The amounts shown may not correspond to the actual value that may be recognized by the named executive officers. For a full description of the assumptions we use in calculating these amounts, see Note 12 to our audited financial statements for fiscal year ended December 31, 2022, which is included in our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 30, 2023. Our named executive officers will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options on the date the options are exercised.
(3)
Amounts represent employee portion of health insurance premiums paid by the Company on behalf of the executives and their dependents, which is different than the coverage offered to the Company’s regular employees.
(4)
Mr. Iberger served as our Chief Financial Officer from October 2016 until his retirement from Precipio, Inc. on March 21, 2022 at the age of 68. Bonus amount of $187,500 for Mr. Iberger represents post-employment payments as per his employment agreement.
Narrative to 2022 Summary Compensation Table
Base Salary
We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. Base salaries are reviewed annually, typically in connection with our annual performance review process, which are adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience. None of our 2022 named executive officers is currently party to an employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary. During fiscal 2022, the annual base salaries for Messrs. Danieli, Mohamed and Iberger were $300,000, $200,000 and $250,000, respectively.
Cash Incentive Compensation/Bonuses
During fiscal 2022, Messrs. Danieli, Mohamed and Iberger earned bonuses in the amounts as set forth in the “Summary Compensation Table” above.
Equity Compensation
Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period. Accordingly, our board of directors periodically reviews the equity incentive compensation of our named executive officers and may grant equity incentive awards to them from time to time. None of our executive officers is currently party to an employment agreement that provides for an automatic grant of long-term equity incentives. During fiscal 2022, we granted stock options to each of our named executive officers, as described in more detail in the “Outstanding Equity Awards at 2022 Year End” table below.
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401(k) Savings Plan
We maintain a 401(k) retirement savings plan for the benefit of our employees, including our named executive officers, who satisfy certain eligibility requirements. Under the 401(k) plan, eligible employees may elect to defer a portion of their compensation, within the limits prescribed by the Code, on a pre-tax or after-tax (Roth) basis, through contributions to the 401(k) plan. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As a tax-qualified retirement plan, pre-tax contributions to the 401(k) plan and earnings on those pre-tax contributions are not taxable to the employees until distributed from the 401(k) plan, and earnings on Roth contributions are not taxable when distributed from the 401(k) plan. The 401(k) plan authorizes employer discretionary match contributions. Currently we do not match contributions that eligible participants make to the 401(k) plan.
Health and Welfare Benefits
Our named executive officers, like all full-time employees, are eligible to participate in our health and welfare benefit plans. In addition, the Company pays the entire monthly premium for such health and welfare benefits for our named executive officers and their dependents, as described in more detail in the “Summary Executive Compensation” table above.
Perquisites and Personal Benefits
We generally do not provide perquisites to our executives.
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2022 Grants of Option Plan-Based Awards to Executives
The following table sets forth certain information with respect to grants of plan-based awards in fiscal year ended December 31, 2022 to our named executive officers. The stock option awards granted in fiscal year ended December 31, 2022 were granted under the Company’s 2017 Stock Option and Incentive Plan, as amended (the “2017 Plan”). During the fiscal year ended December 31, 2022, no other equity awards were granted to our named executive officers. See the notes below the table for details on option vesting schedules.
Name
​​
Grant Date
​​
All Other Option Awards:
Number of Securities
Underlying Options
(#)
​​
Exercise or Price of
Option Awards
($/sh)(1)
​​
Grant Date
Fair Value of
Option Awards
($)(2)
Ilan Danieli
Stock options(3)
​​
 
​​
 
​​
 
​​
 
​
1/11/2022
​​
325,000
​​
1.54
​​
481,000
 
​​
 
​​
 
​​
 
​​
 
Ayman A. Mohamed
Stock options(3)
​​
 
​​
 
​​
 
​​
 
​
1/11/2022
​​
75,000
​​
1.54
​​
​111,000
 
​​
 
​​
 
​​
 
​​
 
Carl R. Iberger(4)
Stock options(3)
​​
 
​​
 
​​
 
​​
 
​
1/11/2022
​​
150,000
​​
1.54
​​
​222,000
(1)
The exercise price of the stock awards represent the fair market value of our common stock on the date of grant as defined in the 2017 Plan.
(2)
The amount in this column reflects the aggregate grant date fair value of each stock award granted in accordance with ASC 718, excluding the effect of estimated forfeitures. The amounts shown may not correspond to the actual value that may be recognized. For a full description of the assumptions we use in calculating these amounts, see Note 13 to our audited financial statements for fiscal year ended December 31, 2022, which is included in our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 30, 2023. Our named executive officers will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options on the date the options are exercised.
(3)
The award vests over a four-year period. Twenty-five percent (25%) of the options vest on the first anniversary of the grant and thereafter the reminder shall vest byin 36 equal monthly, installments and so long asprovided that the executive officer remains an employee of the Company or a Subsidiary on such dates.as of the applicable vesting date.
(4)
Mr. Iberger retired as Chief Financial Officer effective March 21, 2022. Also, effective March 21, 2022, in connection with his retirement and per the terms of his stock option agreements, all of Mr. Iberger’s unvested stock options became fully vested.
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Outstanding Equity Awards at Fiscal 20202022 Year-End
The following table provides certainsets forth information concerningregarding all outstanding option awards held by our named executive officers as of December 31, 2020.2022. Unless noted, all stock options in the table below were granted under the Company’s 2017 Stock Option and Incentive Plan, as amended (the “2017 Plan”).
​
 
​​
Stock Option Awards(1)
​
 
​​
Stock Option Awards(1)
Name
​
Option Award
Grant Date
​
Number of
Securities
Underlying
Unexercised
Options (#)
(Exercisable)
​
Number of
Securities
Underlying
Unexercised
Options (#)
(Unexercisable)
​
Option
Exercise
Price ($)
​
Option
Expiration
Date
​
Option Award
Grant Date
​
Number of
Securities
Underlying
Unexercised
Options (#)
(Exercisable)
​
Number of
Securities
Underlying
Unexercised
Options (#)
(Unexercisable)
​
Option
Exercise
Price ($)
​
Option
Expiration
Date
Ilan Danieli
​​
9/26/2017
​
3,612
​
833
​
28.05
​
9/26/2027
​​
9/26/2017(2)
​
4,445
​
—
​
28.05
​
9/26/2027
​
2/16/2018
​
47,223
​
19,444
​
10.65
​
2/16/2028
​
2/16/2018(2)
​
66,667
​
—
​
10.65
​
2/16/2028
​
3/18/2019
​
7,292
​
9,375
​
2.25
​
3/18/2029
​
3/18/2019
​
15,626
​
1,041
​
2.25
​
3/18/2029
​
1/16/2020
​
—
​
60,000
​
2.14
​
1/16/2030
​
1/16/2020
​
43,750
​
16,250
​
2.14
​
1/16/2030
Ilan Danieli
​
1/4/2021
​
31,945
​
34,721
​
2.10
​
1/4/2031
​
8/3/2021
​
120,000
​
240,000
​
3.22
​
8/3/2031
​
1/11/2022
​
—
​
325,000
​
1.54
​
1/11/2032
​
​
​
​
​
​​
2/16/2018(2)
​
18,334
​
—
​
10.65
​
2/16/2028
​
3/18/2019
​
15,626
​
1,041
​
2.25
​
3/18/2029
​
1/16/2020
​
21,875
​
8,125
​
2.14
​
1/16/2030
Ayman A. Mohamed
​
7/2/2020
​
6,042
​
3,958
​
1.30
​
7/2/2030
​
1/4/2021
​
31,625
​
34,375
​
2.10
​
1/4/2031
​
7/8/2021
​
70,834
​
129,166
​
3.21
​
7/8/2031
​
1/11/2022
​
—
​
75,000
​
1.54
​
1/11/2032
​
​
​
​
​
​
​
​
​
​
​​
9/26/2017
​
3,612
​
833
​
28.05
​
9/26/2027
​​
9/26/2017(2)
​
4,445
​
—
​
28.05
​
9/26/2027
​
2/16/2018
​
14,167
​
5,833
​
10.65
​
2/16/2028
​
2/16/2018(2)
​
20,000
​
—
​
10.65
​
2/16/2028
Carl Iberger
​
3/18/2019
​
7,292
​
9,375
​
2.25
​
3/18/2029
​
3/18/2019(2)
​
16,667
​
—
​
2.25
​
3/18/2029
​
1/16/2020
​
—
​
66,000
​
2.14
​
1/16/2030
​
1/16/2020(2)
​
66,000
​
—
​
2.14
​
1/16/2030
​
​
​
​
​
​​
2/16/2018
​
12,987
​
5,347
​
10.65
​
2/16/2028
Ahmed Zaki Sabet
​
3/18/2019
​
7,292
​
9,375
​
2.25
​
3/18/2029
​
1/16/2020
​
—
​
30,000
​
2.14
​
1/16/2030
​
7/2/2020
​
—
​
5,000
​
1.30
​
7/2/2030
​
​
​
​
​
Ayman A. Mohamed
​​
2/16/2018
​
12,987
​
5,347
​
10.65
​
2/16/2028
​
3/18/2019
​
7,292
​
9,375
​
2.25
​
3/18/2029
​
1/16/2020
​
—
​
30,000
​
2.14
​
1/16/2030
​
7/2/2020
​
—
​
10,000
​
1.30
​
7/2/2030
Carl Iberger
​​
1/4/2021(2)
​
66,666
​
—
​
2.10
​
1/4/2031
​
8/3/2021(2)
​
250,000
​
—
​
3.22
​
8/3/2031
​
1/11/2022(2)
​
150,000
​
—
​
1.54
​
1/11/2032
(1)
TheExcept as noted below, all of the shares subject to the option award vests over a four yearfour-year period. Twenty-five percent (25%) of the optionsshares subject to the option vest on the first anniversary of the grant date and thereafter the reminder shallremaining seventy-five (75%) of shares subject to the option vest byin 36 equal monthly installments and so long asthereafter, provided that the executive officer remains an employee of the Company or a Subsidiary on such dates.as of the applicable vesting date. Pursuant to the applicable executive officer’s employment agreement, upon a termination of employment without cause or upon a resignation of employment for good reason, 100% of the unvested shares subject to the option will vest and become exercisable as of the date of termination.
(2)
The shares subject to the option are fully vested.
(3)
Shares were granted under the Company’s 2006 Equity Incentive Plan
Fiscal Year 20202022 Option Exercises and Stock Vested
No stock options were exercised by any of our named executive officers during the fiscal year ended December 31, 2020.2022.
AgreementsCompensation Arrangements and Employment Agreement with Ourour Named Executive Officers
The Company has entered into employment agreements with each of Mr. Danieli, Mr. Iberger, Mr. Sabet,Mohamed, and Mr. Mohamed.Iberger.
Employment Agreement with Mr. Ilan Danieli
On August 7, 2018, the Company entered into a revised employment agreement with Ilan Danieli, effective as of that date (the “Danieli Employment Agreement”), in connection with his existing role as Chief Executive Officer
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of the Company. Pursuant to the Danieli Employment Agreement, Mr. Danieli will receive anCompany, which set forth his annual base salary, in the amount of $250,000 per year and will be entitled to participate in the Company’s health plan and benefits on terms available to other Company employees.
Mr. Danieli is eligiblehis eligibility to receive an annual bonus in accordance with the recommendations made by the Compensation Committee of the Board or a majority of the independent members of the Board. Board, and his eligibility to participate in the Company’s health plan and benefits on terms available to other Company employees.
In addition, under the Danieli Employment Agreement, Mr. Danieli shall be eligible to receive stock options or other equity incentive awards in the Company subject to approval of the Compensation Committee of the Board. The Danieli Employment Agreement subjects Mr. Danieli to certain restrictive covenants, including confidential and proprietary information covenants, 12-month non-competition and non-solicitation covenants and the Danieli Employment Agreement also includes a 280G clawback.
23
In the event of a termination of employment by the Company without cause or upon a termination of employment by Mr. Danieli for good reason (as such terms are defined in the Danieli Employment Agreement), Mr. Danieli, subject to execution of a release, shall be entitled to (i) 9 months of continued annual base salary at a lump sumrate equal to $200,000, less applicable withholding; (ii) a monthly cash payment equal to 9 months ofthe monthly employer contribution the Company would have made to provide group health, dental and all other insurance coverages to Mr. Danieli and his base salary in effect at the date of termination, less applicable withholding (ii)family, if Mr. Danieli is eligible for and elects COBRA benefits, for a period of 9 months or such period as further described in the Danieli Employment Agreementmonths; and (iii) accelerated vesting of all unvested stock options or equity awards.
Upon death or termination of employment by virtue of disability, Mr. Danieli (or his estate or beneficiaries as applicable) shall have no right to receive any compensation or benefit pursuant to the terms of the agreement on and after the effective date of the termination of employment other than (i) annual salary earned and accrued under the agreement prior to the effective date of terminationtermination; (ii) earned, accrued and vested benefits and paid time off under the agreement prior to the effective date of termination, subject to the terms of the plans applicable thereto (and any applicable laws and regulations); and (iii) reimbursement under the Agreement for expenses incurred prior to the effective date of termination, subject to the terms of the agreement and the policies applicable thereto.
If a sale event occurs (as defined in the Danieli Employment Agreement) and the Company, its subsidiaries or a successor entity, as the case may be, terminates the employment agreement and the employment of Mr. Danieli without cause or Mr. Danieli terminates the agreement and his employment for good reason, in either case within 12 months following such sale event, then Mr. Danieli shall be entitled to receive Change(i) 12 months of Control Severance as set out in the terms of the agreement.
The description of the Danieli Employment Agreement set forth herein does not purporthis base salary at a rate equal to be complete and is qualified in its entirety by reference to the full text thereof, which was attached as Exhibit 10.1(a) to the Current Report on Form 8-K filed by the Company on August 9, 2018.
On August 26, 2020, following the recommendation of the Compensation Committee of the Board, the Board approved an adjustment to(a) the base salary in effect at the date of termination or (b) $200,000, payable in a lump sum; (ii) 12 months of bonus payout earned at 100% of plan; (iii) a monthly cash payment equal to the monthly employer contribution the Company would have made to provide group health, dental and all other insurance coverages to Mr. Danieli effective August 1, 2020, wherebyand his base salary was increased by $50,000 tofamily, if Mr. Danieli is eligible for and elects COBRA benefits, for a new annual base salaryperiod of $300,000.12 months; and (iv) accelerated vesting of all unvested stock options or equity awards..
Employment Agreement with Mr. Carl Iberger
On August 7, 2018, the Company entered into a revised employment agreement with Carl Iberger, effective as of that date (the “Iberger Employment Agreement”), in connection with his existing role as Chief Financial Officer of the Company. PursuantCompany, which set forth his annual base salary, his eligibility to the Iberger Employment Agreement, Mr. Iberger will receive an annual salarybonus in accordance with the amountrecommendations made by the Compensation Committee of $200,000 per yearthe Board, and will be entitledhis eligibility to participate in the Company’s health plan and benefits on terms available to other Company employees.
In addition, under the Iberger Employment Agreement, Mr. Iberger is eligible to receive an annual bonus in accordance with the recommendations made by the Compensation Committee of the Board. In addition, Mr. Iberger shall be eligible to receive stock options or other equity incentive awards in the Company subject to approval of the Compensation Committee of the Board. The Iberger Employment Agreement subjects Mr. Iberger to certain restrictive covenants, including confidential and proprietary information covenants, 12-month non-competition and non-solicitation covenants and the Iberger Employment Agreement contains a 280G clawback.
In the event of a termination of employment by the Company without cause or upon a termination of employment by Mr. Iberger for good reason (as such terms are defined in the Iberger Employment Agreement), subject to execution of a release, Mr. Iberger shall be entitled to (i) 9 months of continued annual base salary at a lump sumrate equal to $200,000, less applicable withholding; (ii) a monthly cash payment equal to 9 months ofthe monthly employer contribution the Company would have made to provide group health, dental and all other insurance coverages to Mr. Iberger and his base salary in effect at the date of termination, less applicable withholding (ii)family, if Mr. Iberger is eligible for and elects COBRA benefits for a period of 9 months or such period as further described in the Iberger Employment Agreementmonths; and (iii) accelerated vesting of all unvested stock options or equity awards.
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Upon death or termination of employment by virtue of disability, Mr. Iberger (or his estate or beneficiaries as applicable) shall havehad no right to receive any compensation or benefit pursuant to the terms of the agreement on and after the effective date of the termination of employment other than (i) annual salary earned and accrued under the agreement prior to the effective date of terminationtermination; (ii) earned, accrued and vested benefits and paid time off under the agreement prior to the effective date of termination, subject to the terms of the plans applicable thereto (and any applicable laws and regulations); and (iii) reimbursement under the Agreement for expenses incurred prior to the effective date of termination, subject to the terms of the agreement and the policies applicable thereto.
If a sale event occurs (as defined in the Iberger Employment Agreement) and the Company, its subsidiaries or a successor entity, as the case may be, terminates the employment agreement and the employment of Mr. Iberger without cause or Mr. Iberger terminates the agreement and his employment for good reason, in either case within 12 months following such sale event, then Mr. Iberger shall be entitled to receive Change of Control Severance as set out in the terms of the agreement.
24
The description of the Iberger Employment Agreement set forth herein does not purport to be complete and is qualified in its entirety by reference to the full text thereof, which is attached hereto as Exhibit 10.1(b) to the Current Report on Form 8-K filed by the Company on August 9, 2018.
On August 26, 2020, following the recommendation of the Compensation Committee of the Board, the Board approved an adjustment to the base salary of Mr. Iberger, effective August 1, 2020 whereby his base salary was increased by $50,000 to a new annual base salary of $250,000.
Employment Agreement with Mr. Ahmed Zaki Sabet
On August 7, 2018, the Company entered into a revised employment agreement with Ahmed Zaki Sabet, effective as of that date (the “Sabet Employment Agreement”), in connection with his existing role as Chief Operations Officer of the Company. Pursuant to the Sabet Employment Agreement, Mr. Sabet will receive an annual salary in the amount of $150,000 per year and will be entitled to participate in the Company’s health plan and benefits on terms available to other Company employees.
Mr. Sabet is eligible to receive an annual bonus such amount as shall be determined in the sole discretion of the Chief Executive Officer of the Company based on recommendation of the Compensation Committee of the Board. In addition, Mr. Sabet shall be eligible to receive stock options or other equity incentive awards in the Company subject to approval of the Compensation Committee of the Board.
In the event of termination without cause or for good reason (as such terms are defined in the Sabet Employment Agreement), Mr. Sabet shall be entitled to (i) 12 months of his base salary at a lump sum paymentrate equal to 9 months of his(a) the base salary in effect at the date of termination less applicable withholdingor (b) $200,000, payable in a lump sum; (ii) 12 months of bonus payout earned at 100% of plan; (iii) a monthly cash payment equal to the monthly employer contribution the Company would have made to provide group health, dental and all other insurance coverages to Mr. Iberger and his family, if Mr. Iberger is eligible for and elects COBRA benefits, for a period of 9 months or such period as further described in the Sabet Employment Agreement12 months; and (iii)(iv) accelerated vesting of all unvested stock options or equity awards.
Upon death or termination of employment by virtue of disability, Mr. Sabet (or his estate or beneficiaries as applicable) shall have no right to receive any compensation or benefit pursuant to the terms of the agreement on and after the effective date of the termination of employment other than (i) annual salary earned and accrued under the agreement prior to the effective date of termination (ii) earned, accrued and vested benefits and paid time off under the agreement prior to the effective date of termination, subject to the terms of the plans applicable thereto (and any applicable laws and regulations); and (iii) reimbursement under the Agreement for expenses incurred prior to the effective date of termination, subject to the terms of the agreement and the policies applicable thereto.
If a sale event occurs (as defined in the Sabet Employment Agreement) and the Company, its subsidiaries or a successor entity, as the case may be, terminates the employment agreement and the employment of Mr. Sabet without cause or Mr. Sabet terminates the agreement and his employment for good reason, in either case within 12 months following such sale event, then Mr. Sabet shall be entitled to receive Change of Control Severance as set out in the terms of the agreement.
The description of the Sabet Employment Agreement set forth herein does not purport to be complete and is qualified in its entirety by reference to the full text thereof, which is attached as Exhibit 10.1(c) to the Current Report on Form 8-K filed by the Company on August 9, 2018.
Employment Agreement with Mr. Ayman Mohamed
On August 7, 2018, the Company entered into a revised employment agreement with Ayman Mohamed, effective as of that date (the “Mohamed Employment Agreement”), in connection with his existing role as VP R&D of the Company. PursuantCompany, which set forth his. Annual base salary, his eligibility to the Mohamed Employment Agreement, Mr. Mohamed will receive an annual salarybonus in accordance with the amountrecommendations made by the Compensation Committee of $150,000 per yearthe Board, and will be entitledhis eligibility to participate in the Company’s health plan and benefits on terms available to other Company employees.
Mr.In addition, under the Mohamed is eligible to receive an annual bonus such amount as shall be determined in the sole discretion of the Chief Executive Officer of the Company based on recommendation of the Compensation Committee of the Board. In addition,Employment Agreement, Mr. Mohamed shall be eligible to receive stock options or other equity incentive awards in the Company subject to approval of the Compensation Committee of the Board. The Mohamed Employment Agreement subjects Mr. Mohamed to certain restrictive covenants, including confidential and proprietary information covenants, 12-month non-competition and non-solicitation covenants and the Mohamed Employment Agreement includes a 280G clawback.
25
In the event of a termination of employment by the Company without cause or upon a termination of employment by Mr. Mohamed for good reason (as such terms are defined in the Mohamed Employment Agreement), Mr. Mohamed shall be entitled to (i) 9 months of continued annual base salary at a lump sumrate equal to $150,000, less applicable withholding (ii) a monthly cash payment equal to 9 months ofthe monthly employer contribution the Company would have made to provide group health, dental and all other insurance coverages to Mr. Mohamed and his base salary in effect at the date of termination, less applicable withholding (ii)family, if Mr. Mohamed is eligible for and elects COBRA benefits for a period of 9 months or such period as further described in the Mohamed Employment Agreement and (iii) accelerated vesting of all unvested stock options or equity awards.
Upon death or termination of employment by virtue of disability, Mr. Mohamed (or his estate or beneficiaries as applicable) shall have no right to receive any compensation or benefit pursuant to the terms of the agreement on and after the effective date of the termination of employment other than (i) annual salary earned and accrued under the agreement prior to the effective date of termination (ii) earned, accrued and vested benefits and paid time off under the agreement prior to the effective date of termination, subject to the terms of the plans applicable thereto (and any applicable laws and regulations); and (iii) reimbursement under the Agreement for expenses incurred prior to the effective date of termination, subject to the terms of the agreement and the policies applicable thereto.
If a sale event occurs (as defined in the Mohamed Employment Agreement) and the Company, its subsidiaries or a successor entity, as the case may be, terminates the employment agreement and the employment of Mr. Mohamed without cause or Mr. Mohamed terminates the agreement and his employment for good reason, in either case within 12 months following such sale event, then Mr. Mohamed shall be entitled to receive Change(i) 12 months of Control Severance as set outhis base salary at a rate equal to (a) the base salary in effect at the termsdate of the agreement.
The descriptiontermination or (b) $150,000, payable in a lump sum; (ii) 12 months of the Mohamed Employment Agreement set forth herein does not purport to be complete and is qualified in its entirety by referencebonus payout earned at 100% of plan; (iii) a monthly cash payment equal to the full text thereof, which is attached as Exhibit 10.1(e) to the Current Report on Form 8-K filed bymonthly employer contribution the Company on August 9, 2018.would have made to provide group health, dental and all other insurance coverages to Mr. Mohamed and his family, if Mr. Mohamed is eligible for and elects COBRA benefits, for a period of 12 months; and (iv) accelerated vesting of all unvested stock options or equity awards.
Effective January 1, 2020, Mr. Mohamed’s base salary was increased by $25,000 to a new annual base salary of $175,000.
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Compensation Risk Analysis
We have reviewed our material compensation policies and practices for all employees and have concluded that these policies and practices are not reasonably likely to have a material adverse effect on us. While risk-taking is a necessary part of growing a business, our compensation philosophy is focused on aligning compensation with the long-term interests of our stockholders as opposed to rewarding short-term management decisions that could pose long-term risks.
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DIRECTOR COMPENSATIONPay Versus Performance
It is our Board’s general policy that compensation for independent directors should be a mix of cash and equity-based compensation. As part of a director’s total compensation, and to create a direct linkage between corporate performance and stockholder interests, our Board believes that a meaningful portion of a director’s compensation should be provided in, or otherwise based on, the value of appreciation in our common stock.
Our Board has the authority to approve all compensation payable to our directors, although our Compensation Committee is responsible for making recommendations to our Board regarding this compensation. Additionally, our Chief Executive Officer may also make recommendations or assist our Compensation Committee in making recommendations regarding director compensation. Our Board and Compensation Committee annually review our director compensation.
Cash Compensation
Directors who are also our employees are not separately compensated for serving on the Board other than reimbursement for out-of-pocket expenses related to attendance at Board and committee meetings. Independent directors are paid an annual retainer of $30,000 and receive reimbursement for out-of-pocket expenses related to attendance at Board and committee meetings. Independent directors serving as Chairmanrequired by Section 953(a) of the Board receive an additional annual retainerDodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of $15,000. Independent directors serving as members onRegulation S-K, we are providing the Audit Committee, Compensation Committeefollowing information about the relationship between executive compensation actually paid and Nominating and Corporate Governance Committee receive an additional annual retainer of $7,000, $5,000 and $4,000, respectively. The chairpersoncertain financial performance of the Audit Committee,Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation Committee– Compensation Discussion and Nominating and Corporate Governance Committee receives an additional annual retainer of $10,000, $8,000 and $7,000, respectively.Analysis.”
In the fiscal year ended December 31, 2020, the directors were granted non-qualified options to purchase shares of our common stock.
Director Summary Compensation Table
The following table provides information regarding our compensation for non-employee directors during the fiscal year ended December 31, 2020. Directors who are our employees did not receive compensation for serving on the Board or its committees in the fiscal year ended December 31, 2020.
Name
​​
Fees Earned
or Paid in Cash
($)(5)
​​
Option
Awards
($) (1)(4)
​​
All Other
Compensation
($)
​​
Total ($)
David S. Cohen
​​
34,000
​​
19,468
​​
—
​​
53,468
Douglas Fisher
​​
55,333
​​
19,468
​​
—
​​
74,801
Mark Rimer(2)
​​
42,000
​​
19,468
​​
—
​​
61,468
Jeffrey Cossman
​​
37,000
​​
45,394
​​
—
​​
82,394
Kathleen D. LaPorte
​​
40,000
​​
19,468
​​
—
​​
59,468
Richard Sandberg
​​
34,667
​​
16,190
​​
—
​​
50,857
Ron A. Andrews(3)
​​
—
​​
—
​​
—
​​
—
Year
​​
Summary
Compensation
Table Total for
PEO(1)
​​
Compensation
Actually Paid
to PEO(2)
​​
Average
Summary
Compensation
Table Total for
Non-PEO
NEOs(3)
​​
Average
Compensation
Actually Paid
to Non-PEO
NEOs(4)
​​
Value of
Initial Fixed
$100
Investment
Based On:
​​
Net Income
(millions)(6)
​
Total
Shareholder
Return(5)
​
(a)
​​
(b)
​​
(c)
​​
(d)
​​
(e)
​​
(f)
​​
(h)
2022
​​
$805,103
​​
$137,939
​​
$412,340
​​
$221,026
​​
$26.64
​​
($12,178)
2021
​​
$1,726,692
​​
$1,108,981
​​
$1,079,529
​​
$692,442
​​
$76.33
​​
($8,517)
(1)
The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Danieli (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table.”
(2)
The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Danieli, as computed in this column reflectsaccordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the aggregateactual amount of compensation earned by or paid to Mr. Danieli during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Danieli’s total compensation for each year to determine the compensation actually paid:
Year
​​
Reported
Summary
Compensation
Table Total for
PEO
​​
Reported
Value of Equity
Awards(a)
​​
Equity
Award
Adjustments(b)
​​
Compensation
Actually Paid to
PEO
2022
​​
$805,103
​​
$(481,000)
​​
$(186,164)
​​
$137,939
2021
​​
$1,726,692
​​
($1,245,732)
​​
$628,021
​​
$1,108,981
(a)
The grant date fair value of each stock award granted in accordance with ASC 718, excludingequity awards represents the effect of estimated forfeitures. The amounts shown may not correspond to the actual value that may be recognized. The fair value calculation of options granted during the fiscal year ended December 31, 2020 used the following assumptions: risk free interest rates of 0.40% to 1.68%, based on the U.S. Treasury yield in effect at the time of grant; expected life of six years; and volatility of 138% to 141% based on historical volatilitytotal of the Company’s common stock over a time that is consistent withamounts reported in the expected life of“Stock Awards” and “Option Awards” columns in the option. Our directors will only realize compensation toSummary Compensation Table for the extent the trading price of our common stock is greater than the exercise price of such stock options on the date the options are exercised.
(2)
Mr. Rimer resigned from the Board effective March 1, 2021.
(3)
Mr. Andrews was elected a director of the Company on March 1, 2021.
27
(4)
The aggregate outstanding options for each non-employee director as of December 31, 2020 are:
Name
​​
Aggregate Options
Outstanding (#)
David S. Cohen
​​
24,207
Douglas Fisher
​​
24,207
Mark Rimer
​​
24,207
Jeffrey Cossman
​​
45,957
Kathleen D. LaPorte
​​
23,740
Richard Sandberg
​​
15,990
Ron A. Andrews
​​
—
(5)
Includes the following amounts for being chairman of the board or a chairperson of a committee; Mr. Fisher $23,000; Mr. Cossman $7,000; and Ms. LaPorte $10,000
Equity Compensation Plan Information
The following equity compensation plan information summarizes plans and securities approved and not approved by security holders as of December 31, 2020.
 
​​
(a)
​​
(b)
​​
(c)
PLAN CATEGORY
​​
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and
rights
​​
Weighted-average
exercise price of
outstanding
options, warrants
and rights
​​
Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)
Equity compensation plans approved by security holders
​​
822,992(1)
​​
$4.46
​​
90,682(2)
Equity compensation plans not approved by security holders
​​
—
​​
—
​​
—
Total
​​
822,992
​​
$4.46
​​
90,682
(1)
Includes shares of our common stock issuable upon exercise of options to purchase common stock awarded under our 2006 Plan and 2017 Plan.
(2)
All shares of our common stock available for future issuance are from our 2017 Plan.
28
PROPOSAL TWO
CONDUCT AN ADVISORY VOTE TO APPROVE NAMED EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, we are providing our stockholders with the opportunity to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.
The advisory vote on executive compensation is a non-binding vote on the compensation of the Company’s “Named Executive Officers,” as described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, set forth in this Proxy Statement. The advisory vote on executive compensation is not a vote on the Company’s general compensation policies, compensation of the Company’s Board of Directors, or the Company’s compensation policies as they relate to risk management. The Dodd-Frank Act requires the Company to hold the advisory vote on executive compensation at least once every three years.
Our compensation policies are designed to align our key executives’ compensation with both our business objectives and the interests of our stockholders. We also seek to provide compensation policies that attract, motivate and retain key executives who are critical to our success. A significant portion of the compensation we provide to our key executives is directly related to our financial performance and stockholder value.
We recommend that our stockholders review the application of our compensation philosophy and the elements of compensation provided to each named executive officer as reflected in the discussion and tables included in the “Executive Compensation” section of this Proxy Statement below.
We believe our executive compensation policies are designed appropriately and are functioning as intended to produce long-term value for our stockholders. Accordingly, we are asking our stockholders to approve the overall application of our compensation policies to our named executive officers through this advisory vote. The vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our named executive officers and the policies and procedures described in this Proxy Statement.
For the reasons stated above, the Board recommends that our stockholders vote “for” the following advisory resolution at our Annual Meeting:
“ RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the proxy statement for the 2021 Annual Meeting of Stockholders of the Company pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Executive Compensation, compensation tables and related narrative discussion, is hereby APPROVED on an advisory, non-binding basis.”
The affirmative vote of a majority of the voting power present in person or represented by proxy held by the holders of our common stock at the Annual Meeting is required to approve this advisory resolution. Because this proposal is advisory, the results of the vote on this proposal will not be binding on our Board, Compensation Committee or our management. To the extent there is any significant vote against the compensation of our named executive officers as disclosed in this Proxy Statement, however, the Compensation Committee will evaluate whether any actions are necessary in the future to address those concerns.
Vote Required
The affirmative vote of the holders of a majority of the shares present and entitled to vote on the proposal at the Annual Meeting is required to approval this proposal. Abstentions will have the same effect as voting against the proposal and broker non-votes will have no effect upon the proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL TWO.
29
PROPOSAL THREE
ADVISORY VOTE ON FREQUENCY OF
FUTURE NAMED EXECUTIVE OFFICER COMPENSATION VOTES
This Proposal Three allows our stockholders the opportunity to indicate how frequently we should seek an advisory vote on the compensation of our named executive officers (i.e., the “say-on-pay” vote), such as Proposal Two included on the prior section of this Proxy statement. By voting on this Proposal Three, stockholders may indicate whether they would prefer an advisory vote on named executive officer compensation every year, every two years, or every three years. We are required to solicit stockholder votes on the frequency of future say-on-pay proposals at least once every six years, although we may seek stockholder input more frequently.
Our Board of Directors has determined that an advisory vote on executive compensation that occurs every three years is the most appropriate alternative for our Company, and therefore our Board of Directors recommends that you vote for a three-year interval as the frequency for future advisory votes on executive compensation.
We believe that the structure of executive compensation arrangements should be in place for a number of years between stockholder advisory votes, in order to allow the Board of Directors and stockholders time to evaluate the effectiveness of those arrangements. A vote every three years will also allow stockholders to better judge our executive compensation program with respect to our long-term performance.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years, or abstain from voting when you indicate your preference in response to the resolution set forth below. While this vote is advisory, and not binding on the Board of Directors, the Board of Directors will carefully consider the outcome of the vote in determining the frequency of future advisory votes on named executive officer compensation.
Stockholders will be asked at the Annual Meeting to approve the following resolution pursuant to this Proposal Three:
“ RESOLVED, that the stockholders of the Company vote in favor of a non-binding, advisory vote to hold the say-on-pay vote at an annual meeting of stockholders every three years.”
Vote Required
The affirmative vote of the holders of a majority of the shares present and entitled to vote on the proposal at the Annual Meeting is required to approval this proposal. Abstentions will have the same effect as voting against the proposal and broker non-votes will have no effect upon the proposal.
Recommendation of the Board of Directors
THE BOARD RECCOMENDS A VOTE “FOR” THE RESOLUTION PURSUANT TO PROPOSAL THREE.
30
PROPOSAL FOUR
TO AMEND AND RESTATE THE 2017 STOCK OPTION AND INCENTIVE PLAN
AMENDMENT NO. 1
and PROPOSAL FIVE
TO AMEND AND RESTATE THE 2017 STOCK OPTION AND INCENTIVE PLAN
AMENDMENT NO. 2
Overview
The Board of Directors believes that stock options and other stock-based incentive awards can play an important role in the success of the Company by encouraging and enabling the employees, officers, non-employee directors and consultants of the Company and its subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. The Board of Directors anticipates that providing such persons with a direct stake in the Company will assure a closer identification of the interests of such individuals with those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company.
On April 23, 2021 the Board of Directors approved a resolution to amend the Company's Amended and Restated 2017 Stock Option and Incentive Plan (the “ 2017 Plan”), subject to shareholders approval, to make the following amendments:
(a)
Amendment No. 1. To increase the authorized number of shares authorized for issuance under the 2017 Plan by 925,000 shares; andapplicable year.
(b)
Amendment No. 2. To removeThe equity award adjustments for each applicable year include the limitationaddition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the numberapplicable year prior to the vesting date that are not otherwise reflected in the fair value of Stock Optionssuch award or Stock Appreciation Rights (as such term is definedincluded in any other component of total compensation for the 2017 Plan) that may be issuedapplicable year. The valuation assumptions used to any one individual grantee during any one calendar year.calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
This amendment is designed to enhance the flexibility of the Compensation Committee in granting stock options and other awards to our officers, employees, non-employee directors and consultants and to ensure that the Company can continue to grant stock options and other awards to such persons at levels determined to be appropriate by the Compensation Committee.
Summary of Material Features
The following summary of the material features of the Plan is qualified in its entirety by reference to the complete text of the Plan which is filed as Exhibit 10.12 to the Company's Annual Report.
As of the Record Date, the 2017 Plan has cumulatively reserved for issuance approximately 1.8 million shares since it became effective on June 5, 2017, or approximately 10% of the current Common Stock outstanding;
Shares of Common Stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Common Stock or otherwise terminated (other than by exercise) under the 2017 Plan are added back to the shares of Common Stock available for issuance under the 2017 Plan. Shares of Common Stock reacquired by the Company on the open market will not be added to the reserved pool under the 2017 Plan;
The award of stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights is permitted under the 2017 Plan;
No dividends or dividend equivalents may be paid on full value awards (restricted stock, restricted stock units and performance share awards) subject to performance vesting until such shares are actually earned upon satisfaction of the performance criteria;
The value of all equity awards made under the 2017 Plan and all other cash compensation paid by the Company to any non-employee director in any calendar year may not exceed $500,000;
Any material amendment to the 2017 Plan is subject to approval by our stockholders;
The term of the 2017 Plan will expire on the tenth anniversary of the date on which our stockholders approved the 2017 Plan; and
31
Each January 1, the number of shares of Common Stock reserved and available for issuance under the 2017 Plan will be cumulatively increased by 5% of the number of shares of Common Stock outstanding on the immediately preceding December 31 or such lesser number of shares of Common Stock determined by the Administrator (as defined in the 2017 Plan).
Based solely on the closing price of our Common Stock as reported by The NASDAQ Capital Market on April 23, 2021 and the maximum number of shares that would have been available for awards as of such date taking into account the proposed increase described herein (but not the effect of the annual “evergreen” increases), the maximum aggregate market value of the Common Stock that could potentially be issued under the 2017 Plan is approximately $2.6 million.
The 2017 Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”), which has the authority to set the number, exercise price, term and vesting provisions of the awards granted under the Plan, subject to the terms thereof. Either incentive or non-qualified stock options may be granted to employees of the Company, but only non-qualified stock options may be granted to non-employee directors and advisors. However, in either case, the Plan requires that stock options must be granted at exercise prices not less than the fair market value of the common stock on the date of the grant. Options issued under the plan vest over periods as determined by the Committee and expire 10 years after the date the option was granted.
Rationale for the amendments to the 2017 Plan
The 2017 Plan is critical to our ongoing effort to build stockholder value. Our equity incentive program is broad-based and equity incentive awards are, and we expect will be going forward, an important component of our executive and non-executive employees’ compensation.
The Board believes that increasing the number of shares available for issuance under the 2017 Plan by 925,000 shares and the removal of the limitation on the number of shares that may be issued to an individual, is consistent with the Company’s compensation philosophy (and with responsible compensation policies generally) and will preserve the Company’s ability to attract and retain capable officers, employees, directors and consultants. The Board believes that the number of shares currently available for issuance under the 2017 Plan is not sufficient in view of our compensation structure and strategy, and that the availability of the additional shares will help the Company to have a more sufficient number of shares of common stock authorized for issuance under the 2017 Plan. The Board adopted this amendment to ensure that, as we grow over the coming year, we can operate effectively in our recruitment efforts, and create incentives for the retention of employees and other service providers, by granting the equity arrangements available under the 2017 Plan to employees, directors, and key consultants at levels determined appropriate by the Compensation Committee.
The request to increase the current available share reserve of the 2017 Plan by 925,000, if approved by the shareholders, will make available a total of 1,359,423 shares for grant or approximately 7% of the outstanding Common Stock of the Company.
Summary of the 2017 Plan
The following is a summary of the material terms and conditions of the 2017 Plan, as proposed to be amended, and is qualified in its entirety by the full text of the 2017 Plan that is attached hereto as Annex B.
Plan Administration. The 2017 Plan is administered by the Compensation Committee. The Compensation Committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2017 Plan. The Compensation Committee may delegate to our Chief Executive Officer the authority to grant awards to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and not subject to Section 162(m) of the Code, subject to certain limitations and guidelines.
Eligibility. Persons eligible to participate in the 2017 Plan are those full or part-time officers, employees, non-employee directors and consultants of the Company and its subsidiaries as selected from time to time by the Compensation Committee in its discretion. Approximately 63 individuals are currently eligible to participate in the 2017 Plan, which includes two officers, 55 employees who are not officers, and six non-employee directors.
Stock Options. The 2017 Plan permits the granting of (1) options to purchase Common Stock intended to qualify as incentive stock options under Section 422 of the Code and (2) options that do not so qualify. Options granted under
32
the 2017 Plan will be non-qualified options if they fail to qualify as incentive options or exceed the annual limit on incentive stock options. Incentive stock options may only be granted to employees of the Company and its subsidiaries. Non-qualified options may be granted to any persons eligible to receive incentive options and to non-employee directors and consultants. The option exercise price of each option is determined by the Compensation Committee but may not be less than 100% of the fair market value of the Common Stock on the date of grant. Fair market value for this purpose is the last reported sale price of the shares of Common Stock on The NASDAQ Capital Market on the date of grant. The exercise price of an option may not be reduced after the date of the option grant, other than to appropriately reflect changes in our capital structure.
The term of each option will be fixed by the Compensation Committee and may not exceed ten years from the date of grant. The Compensation Committee will determine at what time or times each option may be exercised. Options may be made exercisable in installments and the exercisability of options may be accelerated by the Compensation Committee. In general, unless otherwise permitted by the Compensation Committee, no option granted under the 2017 Plan is transferable by the optionee other than by will or by the laws of descent and distribution, and options may be exercised during the optionee’s lifetime only by the optionee, or by the optionee’s legal representative or guardian in the case of the optionee’s incapacity.
Upon exercise of options, the option exercise price must be paid in full either in cash, by certified or bank check or other instrument acceptable to the Compensation Committee or by delivery (or attestation to the ownership) of shares of Common Stock that are not subject to restrictions under any Company plan. Subject to applicable law, the exercise price may also be delivered to the Company by a broker pursuant to irrevocable instructions to the broker from the optionee. In addition, the Compensation Committee may permit non-qualified options to be exercised using a net exercise feature which reduces the number of shares issued to the optionee by the number of shares with a fair market value equal to the exercise price.
To qualify as incentive options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive options that first become exercisable by a participant in any one calendar year.
Stock Appreciation Rights. The Compensation Committee may award stock appreciation rights subject to such conditions and restrictions as the Compensation Committee may determine. Stock appreciation rights entitle the recipient to shares of Common Stock equal to the value of the appreciation in the stock price over the exercise price. The exercise price is the fair market value of the Common Stock on the date of grant. The maximum term of a stock appreciation right is ten years.
Restricted Stock. The Compensation Committee may award shares of Common Stock to participants subject to such conditions and restrictions as the Compensation Committee may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued service to us through a specified restricted period. During the vesting period, restricted stock awards may be credited with dividend equivalent rights (but dividend equivalents payable with respect to restricted stock awards with vesting tied to the attainment of performance criteria shall not be paid unless and until such performance conditions are attained).
Restricted Stock Units. The Compensation Committee may award restricted stock units to any participants. Restricted stock units are ultimately payable in the form of shares of Common Stock and may be subject to such conditions and restrictions as the Compensation Committee may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued service to the Company through a specified vesting period. In the Compensation Committee’s sole discretion, it may permit a participant to make an advance election to receive a portion of his or her future cash compensation otherwise due in the form of a deferred stock unit award, subject to the participant’s compliance with the procedures established by the Compensation Committee and requirements of Section 409A of the Code. During the deferral period, the deferred stock awards may be credited with dividend equivalent rights (but dividend equivalents payable with respect to restricted stock awards with vesting tied to the attainment of performance criteria shall not be paid unless and until such performance conditions are attained).
Unrestricted Stock Awards. The Compensation Committee may also grant shares of Common Stock which are free from any restrictions under the 2017 Plan. Unrestricted stock may be granted to any participant in recognition of past services or other valid consideration and may be issued in lieu of cash compensation due to such participant.
33
Performance Share Awards. The Compensation Committee may grant performance share awards to any participant, which entitle the recipient to receive shares of Common Stock upon the achievement of certain performance goals and such other conditions as the Compensation Committee shall determine.
Dividend Equivalent Rights. The Compensation Committee may grant dividend equivalent rights to participants, which entitle the recipient to receive credits for dividends that would be paid if the recipient had held specified shares of Common Stock. Dividend equivalent rights granted as a component of another award subject to performance vesting may be paid only if the related award becomes vested. Dividend equivalent rights may be settled in cash, shares of Common Stock or a combination thereof, in a single installment or installments, as specified in the award.
Cash-Based Awards. The Compensation Committee may grant cash bonuses under the 2017 Plan to participants. The cash bonuses may be subject to the achievement of certain performance goals.
Change of Control Provisions. The 2017 Plan provides that upon the effectiveness of a “sale event” as defined in the 2017 Plan, except as otherwise provided by the Compensation Committee in the award agreement, all stock options and stock appreciation rights will automatically become fully exercisable and the restrictions and conditions on all other awards with time-based conditions will automatically be deemed waived, unless the parties to the sale event agree that such awards will be assumed or continued by the successor entity. Awards with conditions and restrictions relating to the attainment of performance goals may become vested and non-forfeitable in connection with a sale event in the Compensation Committee’s discretion or to the extent specified in the relevant award agreement. In addition, the Company may make or provide for payment, in cash or in kind, to participants holding options and stock appreciation rights equal to the difference between the per share cash consideration and the exercise price of the options or stock appreciation rights. The Compensation Committee shall also have the option to make or provide for a payment, in cash or in kind, to grantees holding other awards in an amount equal to the per share cash consideration multiplied by the number of vested shares under such awards. All awards will terminate in connection with a sale event unless they are assumed by the successor entity.
Adjustments for Stock Dividends, Stock Splits, Etc. The 2017 Plan requires the Compensation Committee to make appropriate adjustments to the number of shares of Common Stock that are subject to the 2017 Plan, to certain limits in the 2017 Plan, and to any outstanding awards to reflect stock dividends, stock splits, extraordinary cash dividends and similar events.
Tax Withholding. Participants in the 2017 Plan are responsible for the payment of any federal, state or local taxes that the Company is required by law to withhold upon the exercise of options or stock appreciation rights or vesting of other awards. Subject to approval by the Compensation Committee, participants may elect to have the minimum tax withholding obligations satisfied by authorizing the Company to withhold shares of Common Stock to be issued pursuant to the exercise or vesting.
Amendments and Termination. The Board of Directors may at any time amend or discontinue the 2017 Plan and the Compensation Committee may at any time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose. However, no such action may adversely affect any rights under any outstanding award without the holder’s consent. To the extent required under the rules of The NASDAQ Capital Market, any amendments that materially change the terms of the 2017 Plan will be subject to approval by our stockholders. Amendments shall also be subject to approval by our stockholders if and to the extent determined by the Compensation Committee to be required by the Code to preserve the qualified status of incentive options or to ensure that compensation earned under the 2017 Plan qualifies as performance-based compensation under Section 162(m) of the Code. The Compensation Committee is authorized to exercise discretion to reduce the exercise price of outstanding stock options and stock appreciation rights or effect the repricing of such awards through cancellation and re-grants.
Effective Date of 2017 Plan. The Board of Directors originally adopted the 2017 Plan on December 13, 2016, and the 2017 Plan became originally effective on June 5, 2017, the date it was approved by stockholders. The 2017 Plan, as amended and restated, was adopted by the Board of Directors on December 17, 2017. Awards of incentive options may be granted under the 2017 Plan until December 17, 2027. No other awards may be granted under the 2017 Plan after the date that is ten years from the date of stockholder approval.
34
New Plan Benefits
Because the grant of awards under the 2017 Plan is within the discretion of the Compensation Committee, the Company cannot determine the dollar value or number of shares of Common Stock that will in the future be received by or allocated to any participant in the 2017 Plan. Accordingly, in lieu of providing information regarding benefits that will be received under the 2017 Plan, the following table provides information concerning the benefits that were received by the following persons and groups during the fiscal year ended December 31, 2020: each named executive officer; all current executive officers, as a group; all current directors who are not executive officers, as a group; and all employees and consultants who are not executive officers, as a group.
 
​​
Option Awards
Name
​​
Weighted Average
Exercise Price
Per Share
​​
Number of
Shares
Ilan Danieli, Chief Executive Officer and Director
​​
$2.14
​​
60,000
Carl Iberger, Chief Financial Officer
​​
$2.14
​​
66,000
All current executive officers, as a group
​​
$2.05
​​
246,000
All current directors who are not executive officers, as a group
​​
$1.73
​​
88,000
All current employees and consultants who are not executive officers, as a group
​​
$2.16
​​
99,550
Tax Aspects Under the Code
The following is a summary of the principal federal income tax consequences of certain transactions under the 2017 Plan. It does not describe all federal tax consequences under the 2017 Plan, nor does it describe state or local tax consequences.
Incentive Options. No taxable income is generally realized by the optionee upon the grant or exercise of an incentive option. If shares of Common Stock issued to an optionee pursuant to the exercise of an incentive option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then (i) upon sale of such shares, any amount realized in excess of the option price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (ii) the Company will not be entitled to any deduction for federal income tax purposes. The exercise of an incentive option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an incentive option are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), generally (i) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares of Common Stock at exercise (or, if less, the amount realized on a sale of such shares of Common Stock) over the option price thereof, and (ii) we will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the incentive option is paid by tendering shares of Common Stock.
If an incentive option is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a non-qualified option. Generally, an incentive option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, the three-month rule does not apply.
Non-Qualified Options. No income is realized by the optionee at the time the option is granted. Generally (i) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the option price and the fair market value of the shares of Common Stock on the date of exercise, and we receive a tax deduction for the same amount, and (ii) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss depending on how long the shares of Common Stock have been held. Special rules will apply where all or a portion of the exercise price of the non-qualified option is paid by tendering shares of Common Stock. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.
Other Awards. The Company generally will be entitled to a tax deduction in connection with an award under the 2017 Plan in an amount equal to the ordinary income realized by the participant at the time the participant
Year
​​
Year End
Fair Value
of Equity
Awards
​​
Year over
Year Change
in Fair Value of
Outstanding
and Unvested
Equity
Awards
​​
Fair Value as
of Vesting
Date of
Equity
Awards
Granted and
Vested in the
Year
​​
Year over
Year
Change in
Fair Value
of Equity
Awards
Granted in
Prior Years
that Vested
in the Year
​​
Fair Value at
the End of
the Prior
Year of
Equity
Awards that
Failed to
Meet
Vesting
Conditions
in the Year
​​
Value of
Dividends or
other
Earnings Paid
on Stock or
Option
Awards not
Otherwise
Reflected in
Fair Value or
Total
Compensation
​​
Total
Equity
Award
Adjustments
2022
​​
$154,816
​​
($298,955)
​​
$0
​​
($42,025)
​​
$0
​​
$0
​​
$(186,164)
2021
​​
$622,973
​​
($20,940)
​​
$0
​​
$25,987
​​
$0
​​
$0
​​
$628,021
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recognizes such income. Participants typically are subject to income tax and recognize such tax at the time that an award is exercised, vests or becomes non-forfeitable, unless the award provides for a further deferral.
Parachute Payments. The vesting of any portion of an award that is accelerated due to the occurrence of a change in control (such as a sale event) may cause a portion of the payments with respect to such accelerated awards to be treated as “parachute payments” as defined in the Code. Any such parachute payments may be non-deductible to the Company, in whole or in part, and may subject the recipient to a non-deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).
Limitation on Deductions. Under Section 162(m) of the Code, the Company’s deduction for certain awards under the 2017 Plan may be limited to the extent that the Chief Executive Officer or other executive officer whose compensation is required to be reported in the summary compensation table (other than the Principal Financial Officer) receives compensation in excess of $1 million a year (other than performance-based compensation that otherwise meets the requirements of Section 162(m) of the Code). The 2017 Plan is structured to allow certain awards to qualify as performance-based compensation.
Required Vote
A quorum being present, the approval of the 2017 Plan Amendment Proposal requires the affirmative vote of a majority of the shares of our Common Stock present in person or by proxy at the Special Meeting and entitled to vote thereon as of the Record Date. Abstentions will have the effect of a vote AGAINST the proposal. Broker non-votes will have no effect on the proposal.
Recommendation of the Board of Directors
THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL FOUR and THE BOARD RECOMMENDS A
VOTE “FOR” PROPOSAL FIVE.
(3)
The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Danieli) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Danieli) included for purposes of calculating the average amounts in each applicable year are as follows:
Year
​​
PEO
​​
Non-PEO NEOs
2022
​​
Ilan S. Danieli
​​
Carl R. Iberger, Ayman A. Mohamed
2021
​​
Ilan S. Danieli
​​
Carl R. Iberger, Ahmed Zaki Sabet, Ayman A. Mohamed
(4)
The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Danieli), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Danieli) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Danieli) for each year to determine the compensation actually paid, using the same methodology described above in Note 2:
Year
​​
Average
Reported
Summary
Compensation
Table Total for
Non-PEO
NEOs
​​
Average
Reported
Value of Equity
Awards
​​
Average Equity
Award
Adjustments(a)
​​
Average
Compensation
Actually Paid to
Non-PEO NEOs
2022
​​
$412,340
​​
($166,500)
​​
$(24,814)
​​
$221,026
2021
​​
$1,079,529
​​
($800,611)
​​
$413,524
​​
$692,442
(a)
The amounts deducted or added in calculating the total average equity award adjustments are as follows:
Year
​​
Average
Year End
Fair Value
of Equity
Awards
​​
Year over
Year Average
Change in
Fair Value of
Outstanding
and Unvested
Equity
Awards
​​
Average Fair
Value as of
Vesting Date
of Equity
Awards
Granted and
Vested in the
Year
​​
Year over
Year
Average
Change in
Fair Value
of Equity
Awards
Granted in
Prior Years
that Vested
in the Year
​​
Average Fair
Value at the
End of the
Prior Year
of Equity
Awards that
Failed to
Meet
Vesting
Conditions
in the Year
​​
Average
Value of
Dividends or
other
Earnings Paid
on Stock or
Option
Awards not
Otherwise
Reflected in
Fair Value or
Total
Compensation
​​
Total
Average
Equity
Award
Adjustments
2022
​​
$17,863
​​
($90,313)
​​
$99,002
​​
($51,366)
​​
$0
​​
$0
​​
$(24,814)
2021
​​
$412,977
​​
($16,495)
​​
$0
​​
$17,042
​​
$0
​​
$0
​​
$413,524
(5)
Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period.
(6)
The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year.
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Relationship Between Financial Performance Measures
The graphs below illustrate the relationship between compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs, with (i) our cumulative TSR and (ii) our net income, in each case, for the fiscal years ended December 31, 2022 and 2021.
TSR amounts reported in the graph assume an initial fixed investment of $100, and that all dividends, if any, were reinvested.


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PROPOSAL SIXTWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Our Audit Committee has appointed Marcum LLP (“Marcum”) as our independent registered public accounting firm for the fiscal year ending December 31, 2021.2023. The Board recommends that stockholders vote for the ratification of such appointment. In the event of a negative vote on such ratification, the Board and Audit Committee will reconsider the selection, though a change will not necessarily be made. Even if the appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our stockholders’ best interests.
Independent Registered Public Accounting Firm
On July 9, 2017 the Audit Committee, acting on behalf of the Board, appointed Marcum as the Company’s independent registered public accounting firm. Marcum has served as our independent registered public accounting firm since 2017.
The audit committee is solely responsible for selecting our independent registered public accounting firm for the fiscal year ending December 31, 2023. Stockholder approval is not required to appoint Marcum as our independent registered public accounting firm. However, the board of directors believes that submitting the appointment of Marcum to the stockholders for ratification is good corporate governance. If the stockholders do not ratify this appointment, the audit committee will reconsider whether to retain Macrum. If the selection of Marcum is ratified, the audit committee, at its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interest of Precipio, Inc. and its stockholders.
We expect a representative of Marcum to be present in person or by telephone at the Annual Meeting and available to respond to appropriate questions. Marcum will also have the opportunity to make a statement if they desire to do so.
The following table shows information about fees that were billed or were expected to be billed by Marcum for the fiscal years ended December 31, 20192021 and 2020:2022:
 
​​
20192021
Audit fees
​​
$278,335262,443
Audit-related fees
​​
—
Tax fees
​​
—
All other fees
​​
—
Total fees
​​
$278,335262,443
 
​​
20202022
Audit fees
​​
$303,233305,539
Audit-related fees
​​
—
Tax fees
​​
—
All other fees
​​
—
Total fees
​​
$303,233305,539
Audit Fees.Audit fees consist of services rendered for the audit of our consolidated financial statements.
Audit-Related Fees.Audit-Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and the review of our consolidated financial statements and which are not reported under Audit Fees.
Tax Fees.Tax services consist primarily of planning, advice and compliance, or return preparation, for U.S. federal, state and local, as well as international jurisdictions.
All Other Fees. None.
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Pre-Approval of Audit and Non-Audit Services
Under the Audit Committee Charter, the Audit Committee is required to pre-approve all audit and non-audit services to be provided to us by our independent registered public accounting firm and its member firms. All services provided by our independent registered public accounting firm in the fiscal year ended December 31, 20202022 were pre-approved by the Audit Committee.
37
Assessment
The Audit Committee assessed Marcum’s performance as independent registered public accounting firm during the fiscal year ended December 31, 2020.2022. The Committee assessed the performance of Marcum’s lead audit engagement partner and the audit team. The Committee reviewed a variety of indicators of audit quality including:
The quality and candor of Marcum’s communications with the Audit Committee and management;
How effectively Marcum maintained its independence and employed its independent judgment, objectivity, and professional approach;
The depth and expertise of the Marcum’s audit team; and
Marcum’s tenure as the Company’s independent registered public accounting firm and safeguards in place to maintain its independence.
As a result of its evaluation, the Audit Committee concluded that the selection of Marcum as the independent registered public accounting firm our fiscal year ending December 31, 20212023 is in the best interest of the Company and its stockholders.
Vote Required
The affirmative vote of a majority of the votes cast for this proposal is required to ratify the appointment of the Company’sMarcum as our independent public accountant. Abstentions will be counted towards the tabulation of votes cast on this proposal and will have the same effect as a negative vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint the Company’s independent accountant. However, if our stockholders do not ratify the appointment of Marcum as the Company’s independent public accountant for the fiscal year ending December 31, 2021,2023, the Audit Committee may reconsider its appointment.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AS SET OUT IN PROPOSAL SIX.TWO.
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PROPOSAL 3
AUTHORIZATION OF THE BOARD TO, IN ITS DISCRETION, TO AMEND OUR THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK AT A RATIO OF ONE-FOR-TWO TO ONE-FOR-THIRTY AND IN CONNECTION THEREWITH, TO DECREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK ON A BASIS PROPORTIONAL TO THE REVERSE STOCK SPLIT RATIO
General
On April 13 2023, the Board unanimously adopted resolutions approving, declaring advisable and recommending to the stockholders for their approval a proposal to authorize the Board, in its discretion, to amend our Third Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding common stock at a ratio in the range of one-for-two (1:2) or not more than one-for-thirty (1:30), such ratio to be determined by the Board, at any time prior to the one-year anniversary of the date on which the reverse stock split is approved by our stockholders at the Annual Meeting, with the exact ratio to be set within this range by our Board of Directors at its sole discretion and, in connection therewith, to decrease the number of authorized shares of our common stock on a basis proportional to the reverse stock split ratio (the “Reverse Stock Split”).
In its sole discretion, the Board of Directors may alternatively elect to abandon such proposed certificate of amendment and not effect the Reverse Stock Split approved by stockholders. Upon the effectiveness of the certificate of amendment to our Third Amended and Restated Certificate of Incorporation, effecting the Reverse Stock Split, (a) the outstanding shares of our common stock will be combined into a lesser number of shares such that one share of our common stock will be issued for a specified number of shares in accordance with the ratio for the Reverse Stock Split selected by our Board of Directors and (b) the number of authorized shares of our common stock will be decreased on a basis proportional to the reverse stock split ratio.
The form of the proposed certificate of amendment to our Third Amended and Restated Certificate of Incorporation, to effect the Reverse Stock Split is attached as Annex A to this Proxy Statement. The certificate of amendment to our Third Amended and Restated Certificate of Incorporation, that will be filed to effect the Reverse Stock Split, will include the Reverse Stock Split ratio fixed by our Board of Directors, within the range approved by our stockholders.
Pursuant to the law of Delaware, our state of incorporation, the Board must adopt any amendment to our Third Amended and Restated Certificate of Incorporation and submit the amendment to our stockholders for their approval. Approval of this proposal will grant the Board the authority (but not the obligation), without further action by the stockholders, to carry out such action any time prior to one year from the date of the Annual Meeting, with the exact exchange ratio and timing to be determined at the discretion of the Board. The exchange ratio range of one-for-two (1:2) or not more than one-for-thirty (1:30) is based on the recent trading price of our common stock.
If the Reverse Stock Split Proposal is approved by our stockholders, the Reverse Stock Split would become effective upon the time specified in the certificate of amendment to our Third Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware. The exact timing of the filing of the certificate of amendment and the Reverse Stock Split will be determined by our Board of Directors based on its evaluation as to when such action will be the most advantageous to us and our stockholders, but the Reverse Stock Split will not occur after the one-year anniversary of the date on which the reverse stock split is approved by our stockholders at the Annual Meeting. In addition, our Board of Directors reserves the right, notwithstanding stockholder approval and without further action by our stockholders, to abandon the certificate of amendment and the Reverse Stock Split if, at any time prior to the effectiveness of the filing of the certificate of amendment with the Secretary of State, our Board of Directors, in its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders to proceed.
The primary purpose for effecting the Reverse Stock Split is to increase the per-share trading price of our common stock so as to:
maintain the listing of our common stock on the Nasdaq Capital Market and avoid delisting of our common stock from Nasdaq in the future on the basis of the Bid Price Rule (as defined below). Detailed discussion is set under “Reasons for the Reverse Split” below;
increase the acceptability of our common stock to long-term investors who may not find our shares attractive at their current prices due to the trading volatility often associated with stocks below certain prices;
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decrease price volatility for our common stock, as small price movements currently may cause relatively large percentage changes in our stock price;
make our common stock eligible for investment by brokerage houses and institutional investors that have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin; and/or
make our common stock more attractive for investors who may be dissuaded from purchasing stocks below certain prices because the brokerage commissions, as a percentage of the total transaction value, tend to be higher for such low-priced stocks.
Reducing the number of outstanding shares of our common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of our common stock. A number of the anticipated benefits of the proposed Reverse Stock Split discussed above are contingent upon the split resulting in an increase in the per share market price of our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed, would result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split or that the market price of our common stock will not decrease in the future. Additionally, we cannot assure you that the market price per share of our common stock after the Reverse Stock Split will increase in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after the reverse stock split may be lower than the total market capitalization before the Reverse Stock Split.
In evaluating whether to effect the Reverse Stock Split, our Board of Directors has taken, and will take, into consideration negative factors associated with reverse stock splits. These factors include the negative perception of reverse stock splits held by many investors, analysts and other stock market participants, as well as the fact that the stock price of some companies that have effected reverse stock splits has subsequently declined back to pre-reverse stock split levels. In approving and recommending the Reverse Stock Split Proposal, our Board of Directors determined that these potential negative factors were significantly outweighed by the potential benefits.
Criteria to be Used for Decision to Apply the Reverse Stock Split
If our stockholders approve the Reverse Stock Split Proposal, our Board of Directors will be authorized, but not obligated, to proceed with the Reverse Stock Split. The exact ratio of the Reverse Stock Split, within the 1-for-2 to 1-for-30 range, would be determined by our Board of Directors and publicly announced by us prior to the effective time of the Reverse Stock Split. In determining whether to proceed with the Reverse Stock Split and setting the appropriate ratio for the Reverse Stock Split, our Board of Directors will consider, among other things, factors such as:
Nasdaq’s minimum price per share requirements;
the historical trading prices and trading volume of our common stock;
the number of shares of our common stock outstanding;
the then-prevailing and expected trading prices and trading volume of our common stock and the anticipated impact of the Reverse Stock Split on the trading market for our common stock;
the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs;
business developments affecting us; and
prevailing general market and economic conditions.
Reasons for the Reverse Stock Split
Our Board of Directors is seeking authority to effect the Reverse Stock Split as the reverse stock split would help us to maintain our listing on the Nasdaq Capital Market. By potentially increasing the per share trading value of our common stock, the reverse stock split would reduce the risk that our common stock could be delisted from the Nasdaq Capital Market.
Our common stock is publicly traded and listed on the Nasdaq Capital Market under the symbol “PRPO.” Our Board of Directors believes that, in addition to increasing the price of our common stock to meet the price criteria for continued
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listing on the Nasdaq Capital Market, the Reverse Stock Split would potentially also make our common stock more attractive to a broader range of institutional and other investors. Accordingly, for these and other reasons discussed below, we believe that effecting the Reverse Stock Split is in the Company’s and the stockholders’ best interests.
As previously reported on October 28, 2022, Precipio, Inc. (the “Company”) received a letter from The Nasdaq Stock Market LLC notifying the Company that for the past 30 consecutive business days, the closing bid price per share of its common stock was below the $1.00 minimum bid price requirement for continued listing on the Nasdaq Capital Market, as required by Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). As a result, the Company was notified by Nasdaq Stock Market LLC that it is not in compliance with the Bid Price Rule. Nasdaq has provided the Company with 180 calendar days, or until April 26, 2023, to regain compliance with the Bid Price Rule. This notification has no immediate effect on the Company’s listing on the Nasdaq Capital Market or on the trading of the Company’s common stock.
To regain compliance with the Bid Price Rule, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during the 180-calendar day grace period. If the Company’s common stock does not regain compliance with the Bid Price Rule during this grace period, it may be eligible for an additional grace period of 180 calendar days provided that the Company satisfies Nasdaq’s continued listing requirement for market value of publicly held shares and all other initial listing standards for listing on The Nasdaq Capital Market, other than the minimum bid price requirement, and provides written notice to Nasdaq of its intention to cure the delinquency during the second grace period, by effecting a reverse stock split, if necessary. If the Company meets these requirements, Nasdaq will inform the Company that it has been granted an additional 180 calendar days. However, if it appears to Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice that the Company’s securities will be subject to delisting.
The Company intends to monitor the closing bid price of its common stock and may, if appropriate, evaluate various courses of action to regain compliance with the Bid Price Rule. However, there can be no assurance that the Company will be able to regain compliance with the Bid Price Rule.
In the event we are delisted from Nasdaq, the only established trading market for our common stock would be eliminated, and we would be forced to list our shares on the OTC Markets or another quotation medium, depending on our ability to meet the specific listing requirements of those quotation systems. As a result, an investor would likely find it more difficult to trade or obtain accurate price quotations for our shares. Delisting would likely also reduce the visibility, liquidity, and value of our common stock, reduce institutional investor interest in our company, and may increase the volatility of our common stock. Delisting could also cause a loss of confidence of potential industry partners, lenders, and employees, which could further harm our business and our future prospects. We believe that effecting the Reverse Stock Split may help us avoid delisting from Nasdaq and any resulting consequences.
In addition, our Board of Directors believes that the increase in the market price of our common stock that will result from the Reverse Stock Split could encourage investor interest and improve the marketability of our common stock to a broader range of investors, and thus enhance our liquidity. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current share price of our common stock may result in an investor paying transaction costs that represent a higher percentage of total share value than would be the case if our share price were higher. Our Board of Directors believes that the higher share price that may result from the Reverse Stock Split could enable institutional investors and brokerage firms with such policies and practices to invest in our common stock.
Although we expect that the Reverse Stock Split will increase the market price of our common stock as a result of having fewer outstanding shares, the Reverse Stock Split may not result in a permanent increase in the market price of our common stock, which will continue to be dependent on many factors, including general economic, market and industry conditions and other factors detailed from time to time in the reports we file with the SEC.
Certain Risks Associated with the Reverse Stock Split
There can be no assurance that the total market capitalization of our common stock after the implementation of the Reverse Stock Split will be equal to or greater than the total market capitalization before the Reverse Stock Split or that the per-share market price of our common stock following the Reverse Stock Split will increase in proportion
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to the reduction in the number of shares of our common stock outstanding in connection with the Reverse Stock Split. Also, we cannot assure you that the Reverse Stock Split will lead to a sustained increase in the trading price of our common stock. The trading price of our common stock may change due to a variety of other factors, including our ability to successfully accomplish our business goals, market conditions and the market perception of our business. A decline in the market price of the common stock after the reverse stock split may result in a greater percentage decline than would occur in the absence of the Reverse Stock Split. The market price of the common stock is based on our performance and other factors, which are unrelated to the number of shares of common stock outstanding. You should also keep in mind that the implementation of the Reverse Stock Split does not have an effect on the actual or intrinsic value of our business or a stockholder’s proportional ownership in our company (subject to the treatment of fractional shares). However, should the overall value of our common stock decline after the proposed Reverse Stock Split, then the actual or intrinsic value of the shares of our common stock held by you will also proportionately decrease as a result of the overall decline in value.
Further, the liquidity of our common stock may be harmed by the proposed Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the expected increase in stock price as a result of the Reverse Stock Split is not sustained. For instance, the proposed Reverse Stock Split may increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting sales. If we effect the Reverse Stock Split, the resulting per-share stock price may nevertheless fail to attract institutional investors and may not satisfy the investing guidelines of such investors and, consequently, the trading liquidity of our common stock may not improve.
The reverse stock split may result in some stockholders owning “odd lots” of fewer than 100 shares of the common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
While our Board of Directors has proposed the Reverse Stock Split to bring the price of our common stock back above $1.00 per share to meet the requirements for the continued listing of our common stock on Nasdaq, there is no guarantee that the price of our common stock will not decrease in the future, or that our common stock will remain in compliance with Nasdaq listing standards. Additionally, there can be no guarantee that the closing bid price of our common stock will remain at or above $1.00 for 10 consecutive trading days, whether following the Reverse Stock Split or otherwise, which is required to cure our current Nasdaq listing standard deficiency.
Effect of the Reverse Stock Split
If the Reverse Stock Split Proposal is approved by our stockholders, and our Board of Directors elects to effect the Reverse Stock Split, the number of outstanding shares of common stock will be reduced in proportion to the ratio of the split chosen by our Board of Directors. As of the effective time of the Reverse Stock Split, we would also adjust and proportionately decrease the number of shares of our common stock reserved for issuance upon exercise of, and adjust and proportionately increase the exercise price of, all options and other rights to acquire our common stock. In addition, as of the effective time of the Reverse Stock Split, we would adjust and proportionately decrease the total number of shares of our common stock that may be the subject of the future grants under our stock plans.
The Reverse Stock Split would be effected simultaneously for all outstanding shares of our common stock. The Reverse Stock Split would affect all of our stockholders uniformly and would not change any stockholder’s percentage ownership interest in our company, except to the extent that the Reverse Stock Split results in any of our stockholders owning fractional shares. We will not issue any fractional shares as a result of the Reverse Stock Split, and in lieu thereof any stockholders that would otherwise be entitled to receive a fractional share will be entitled to a cash payment. The Reverse Stock Split would not change the terms of our common stock. The Reverse Stock Split is not intended as, and would not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following the Reverse Stock Split, we would continue to be subject to the periodic reporting requirements of the Exchange Act.
After the effective time of the Reverse Stock Split, our common stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers will need to be exchanged for stock certificates with the new CUSIP numbers by following the procedures described below.
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Assuming Reverse Stock Split ratios of 1-for-2 (1:2), 1-for-15 (1:15) and 1-for-30 1:30), which reflect the low end, middle and high end of the range that our stockholders are being asked to approve the following table contains approximate information relating to our common stock, our preferred stock, our options, and our convertible notes under each of the possible split ratios (without giving effect to the treatment of fractional shares discussed below in “Mechanics of the Reverse Stock Split-Fractional Shares”), based on approximately share information as of April 21, 2023.
 
​​
Date: April 21,
2023
​​
One-for-Two
Split (1:2)
​​
One-for-Fifteen
Split (1:15)
​​
One-for-Thirty
Split (1:30)
Number of authorized shares of common stock
​​
150,000,000
​​
150,000,000
​​
150,000,000
​​
150,000,000
Number of outstanding shares of common stock
​​
23,436,798
​​
11,718,399
​​
1,562,453
​​
781,226
Number of authorized shares of preferred stock
​​
15,000,000
​​
15,000,000
​​
15,000,000
​​
15,000,000
Number of designated shares of Series B preferred stock
​​
6,900
​​
6,900
​​
6,900
​​
6,900
Number of outstanding shares of Series B preferred stock
​​
47
​​
47
​​
47
​​
47
Number of shares of common stock reserved for issuance upon conversion of outstanding Series B preferred stock
​​
117,500
​​
58,750
​​
7,833
​​
3,916
Number of shares of common stock reserved for issuance upon exercise of outstanding stock options, stock appreciation rights, common stock warrants and convertible notes
​​
5,305,418
​​
2,652,709
​​
353,694
​​
176,847
Number of shares of common stock reserved for issuance in connection with future awards under our equity compensation plans
​​
227,902
​​
113,951
​​
15,193
​​
7,596
Number of authorized and unreserved shares of preferred stock not outstanding
​​
14,999,953
​​
14,999,953
​​
14,999,953
​​
14,999,953
Number of authorized and unreserved shares of common stock not outstanding
​​
120,912,382
​​
135,456,191
​​
148,060,825
​​
149,030,413
If our Board of Directors does not implement the Reverse Stock Split prior to the one-year anniversary of the date on which the Reverse Stock Split is approved by our stockholders at the Annual Meeting, the authority granted in this proposal to implement the Reverse Stock Split would terminate.
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in the Reverse Stock Split Proposal, except to the extent of their ownership in shares of our common stock and securities exercisable for our common stock, which shares and securities would be subject to the same proportionate adjustment in accordance with the terms of the Reverse Stock Split as all other outstanding shares of our common stock and securities exercisable for our common stock.
Authorized Shares of Common Stock
Pursuant to our Third Amended and Restated Certificate of Incorporation, as amended, we currently have 150,000,000 shares of common stock authorized for issuance. On December 20, 2018, the Company’s stockholders approved the proposal to authorize the Company’s Board of Directors to, in its discretion, amend the Company’s Third Amended and Restated Certificate of Incorporation to increase the total number of authorized shares of common stock from 150,000,000 shares to 250,000,000 shares. The Company has not yet implemented this increase.
At the present time, the Company does not have any plans, proposals or arrangements, written or otherwise, to issue any of the authorized but unissued shares of common stock that would become available as a result of the effectiveness of the amendment to our Third Amended and Restated Certificate of Incorporation to effect the reverse stock split of our outstanding shares of common stock. However, it is highly likely that we will issue additional shares in the future. Please see “Potential Anti-Takeover Effects” below for more information.
Although the reverse stock split will not have any dilutive effect on our stockholders (other than de minimis adjustments that may result from the treatment of fractional shares), if the Reverse Split Proposal is approved by the Company’s stockholders and a reverse stock split is effectuated, a reverse stock split would reduce, on a proportionate basis for each stockholder, the aggregate number of shares of common stock outstanding without reducing the total
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number of shares of common stock authorized for issuance, whether or not such number remains at 150,000,000 or is increased to 250,000,000. As a result, additional authorized shares of common stock will be available for issuance at such times and for such purposes as the Board may deem advisable without further action by our stockholders, except as required by applicable laws and regulations. Any such future issuance of common stock could, depending on the circumstances, be used to deter a potential takeover or have a further dilutive effect on the earnings per share, voting power and other interests of existing stockholders.
Procedure for Effecting a Reverse Stock Split and Exchange of Stock Certificates
If stockholders approve the Reverse Stock Split Proposal, and if our Board of Directors determines to effect the Reverse Stock Split (with the ratio to be determined in the discretion of the Board of Directors within the parameters described), we will file with the Secretary of State of the State of Delaware a certificate of amendment to our Third Amended and Restated Certificate of Incorporation, in the form attached hereto as Annex A, reflecting such reverse stock split ratio determined by the Board of Directors. The Reverse Stock Split will become effective at the time and on the date of filing of, or at such later time as is specified in, the certificate of amendment, which we refer to as the “effective time” and the “effective date,” respectively. The effective time of the certificate of amendment shall be determined in the discretion of our Board of Directors and in accordance with applicable law. Beginning at the effective time, each certificate representing shares of common stock will be deemed for all corporate purposes to evidence ownership of the number of whole shares into which the shares previously represented by the certificate were combined pursuant to the Reverse Stock Split.
Our Board of Directors has approved the amendment to our Third Amended and Restated Certificate of Incorporation in the form attached hereto as Annex A. The ratio of the Reverse Stock Split, within the parameters described, and the implementation and timing of such Reverse Stock Split shall be determined in the discretion of our Board of Directors.
Following any reverse stock split, stockholders holding physical certificates would need to exchange those certificates. As we are now fully participating in the direct registration system, you will not receive a replacement physical certificate. Instead you will receive uncertificated shares and a written confirmation from our transfer agent, indicating the whole number of uncertificated shares you own after the effect of the Reverse Stock Split and a cash payment in lieu of any fractional shares.
If the Reverse Stock Split is implemented, our transfer agent will advise registered stockholders of the procedures to be followed to exchange certificates in a letter of transmittal to be sent to stockholders. No written confirmations will be issued to a stockholder until the stockholder has surrendered the stockholder’s outstanding certificate(s), together with the properly completed and executed letter of transmittal, to our transfer agent. Any old shares submitted for transfer, whether pursuant to a sale, other disposition or otherwise, will automatically be exchanged for new shares. Stockholders should not destroy any stock certificate(s) and should not submit any certificate(s) until requested to do so. Our common stock will also receive a new CUSIP number on any new stock certificates issued representing post-reverse stock split shares.
Certain of our registered stockholders hold some or all of their shares electronically in book-entry form with our transfer agent. These stockholders do not hold physical certificates evidencing their ownership of our common stock. However, they are provided with a statement reflecting the number of shares of our common stock registered in their accounts. If a stockholder holds shares of common stock in book-entry form with our transfer agent, no action needs to be taken to receive post-Reverse Stock Split shares or payment in lieu of fractional shares, if applicable. If a stockholder is entitled to post-Reverse Stock Split shares, a transaction statement will automatically be sent to the stockholder’s address of record indicating the number of shares of our common stock held following the Reverse Stock Split.
Upon the Reverse Stock Split, we intend to treat stockholders holding our common stock in “street name,” through a bank, broker or other nominee, in the same manner as registered stockholders whose shares are registered in their names. Brokers, banks or other nominees will be instructed to process a reverse stock split for their beneficial holders holding our common stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing a reverse stock split. If you hold your shares with a bank, broker or other nominee and if you have any questions in this regard, we encourage you to contact your nominee. If you are entitled to a payment in lieu of any fractional share interest, a check will be mailed to you at your registered address as soon as practicable after our transfer agent completes the aggregation and sale described below in “Fractional Shares.”
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Fractional Shares
We will not issue fractional shares in connection with the Reverse Stock Split. Instead, stockholders who otherwise would be entitled to receive fractional shares because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio would be entitled to receive a cash payment in lieu thereof at a price equal to the fraction of a share to which the stockholder would otherwise be entitled multiplied by the closing price of our common stock as reported on Nasdaq on the effective date of the Reverse Stock Split. Stockholders who own their shares in certificated form will receive such cash payment in lieu of fractional shares following the surrender of their pre-Reverse Stock Split certificate(s) for post- Reverse Stock Split shares. The ownership of a fractional share interest will not give the holder any voting, dividend or other rights, except to receive the above-described cash payment.
No Appraisal Rights
No action is proposed herein for which the laws of the State of Delaware, or our Third Amended and Restated Certificate of Incorporation, or our Bylaws provide a right to our stockholders to dissent and obtain an appraisal of, or payment for, such stockholders’ capital stock.
Accounting Matters
If the Reverse Stock Split is implemented, the par value per share of our common stock will remain unchanged at $0.01 per share after the reverse stock split. As a result of the reverse stock split, at the effective time of the reverse stock split, the stated capital on our balance sheet attributable to the common stock, which consists of the par value per share of the common stock multiplied by the aggregate number of shares of the common stock issued and outstanding, will be reduced in proportion to the reverse stock split ratio. Correspondingly, our additional paid-in capital account, which consists of the difference between our stated capital and the aggregate amount paid to us upon issuance of all currently outstanding shares of common stock, will be credited with the amount by which the stated capital is reduced. Our stockholders’ equity, in the aggregate, will remain unchanged. In addition, the per share net income or loss of our common stock, for all periods, will be restated because there will be fewer outstanding shares of common stock.
Reservation of Right to Abandon the Reverse Stock Split
Our Board of Directors reserves the right to abandon the amendment to our Third Amended and Restated Certificate of Incorporation, described in this Reverse Stock Split Proposal without further action by our stockholders at any time before the effective time, even if stockholders approve such amendment at the Annual Meeting. By voting in favor of the amendment to our Third Amended and Restated Certificate of Incorporation, stockholders are also expressly authorizing the Board of Directors to determine not to proceed with, and abandon, the Reverse Stock Split if it should so decide.
Potential Anti-Takeover Effects
Since the reverse stock split will result in increased available shares of common stock, it may be construed as having an anti-takeover effect. Although neither the Board nor management views this proposal as an anti-takeover measure, and the Board has no current plans to utilize the additional authorized shares to entrench present management, we could use the increased available shares to resist or frustrate a third-party transaction providing an above-market premium that is favored by a majority of the independent stockholders. For example, we could privately place shares with purchasers who might side with the Board in opposing a hostile takeover bid or issue shares to a holder which would, thereafter, have sufficient voting power to assure that any proposal to amend or repeal our Bylaws or certain provisions of the Third Amended and Restated Certificate of Incorporation would not receive the requisite vote.
There are no provisions in our Third Amended and Restated Certificate of Incorporation or Bylaws or other material agreements to which we are a party that would, in our management’s judgment, have an anti-takeover effect; however, our Amended and Restated Bylaws contain certain advance notification requirements for nominations of persons for election to the Board and proposals by stockholders at annual and special meetings of stockholders.
The Board is not aware of any pending takeover or other transactions that would result in a change in control of the Company, and the proposal was not adopted to thwart any such efforts.
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Dissenters’ or Appraisal Rights
Under the General Corporation Law of the State of Delaware, our stockholders are not entitled to any dissenters’ or appraisal rights with respect to the Reverse Stock Split, and we will not independently provide stockholders with any such right.
Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following discussion is a summary of the material U.S. federal income tax consequences of the proposed Reverse Stock Split to us and to U.S. Holders (as defined below). This discussion does not purport to be a complete analysis of all potential tax consequences and is based on the Internal Revenue Code of 1986, as amended, which we refer to as the Code, U.S. Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service, which we refer to as the IRS, in each case in effect as of the date of this Proxy Statement. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below and there can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the proposed Reverse Stock Split.
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our common stock that, for U.S. federal income tax purposes, is or is treated as (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or any other entity or arrangement treated as a corporation) created or organized under the laws of the United States, any state thereof, or the District of Columbia; (iii) an estate, the income of which is subject to U.S. federal income tax regardless of its source; or (iv) a trust if (1) its administration is subject to the primary supervision of a court within the United States and all of its substantial decisions are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code ), or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.
This discussion is limited to U.S. Holders who hold our common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to the particular circumstances of a U.S. Holder, including the impact of the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to U.S. Holders that are subject to special rules, including, without limitation, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, grantor trusts, tax-exempt organizations, dealers or traders in securities, commodities or currencies, stockholders who hold our common stock as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes, persons whose functional currency is not the U.S. dollar, persons who acquired their common stock pursuant to the exercise of employee stock options or otherwise as compensation, or U.S. Holders who actually or constructively own 10% or more of our voting stock.
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Accordingly, partnerships (and other entities treated as partnerships for U.S. federal income tax purposes) holding our common stock and the partners in such entities should consult their own tax advisors regarding the U.S. federal income tax consequences of the proposed Reverse Stock Split to them.
In addition, the following discussion does not address the U.S. federal estate and gift tax, alternative minimum tax, or state, local and non-U.S. tax law consequences of the proposed Reverse Stock Split. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after, or at the same time as the proposed Reverse Stock Split, whether or not they are in connection with the proposed Reverse Stock Split. This discussion should not be considered as tax or investment advice, and the tax consequences of the proposed Reverse Stock Split may not be the same for all stockholders.
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Please consult your own tax advisor concerning the particular U.S. federal tax consequences of the proposed Reverse Stock Split, as well as the consequences arising under the laws of any other taxing jurisdiction, including any state, local or foreign tax consequences.
Tax Consequences to the Company. The proposed Reverse Stock Split is intended to be treated as a “recapitalization” pursuant to Section 368(a)(1)(E) of the Code. As a result, we should not recognize taxable income, gain or loss in connection with the proposed Reverse Stock Split.
Tax Consequences to U.S. Holders. A U.S. Holder generally should not recognize gain or loss upon the proposed Reverse Stock Split for U.S. federal income tax purposes, except with respect to cash received in lieu of a fractional share of our common stock, as discussed below. A U.S. Holder’s aggregate adjusted tax basis in the shares of our common stock received pursuant to the proposed Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of our common stock exchanged therefor (reduced by the amount of such basis that is allocated to any fractional share of our common stock). The U.S. Holder’s holding period in the shares of our common stock received pursuant to the proposed Reverse Stock Split should include the holding period in the shares of our common stock exchanged therefor. U.S. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of shares of common stock surrendered in a recapitalization, such as the proposed Reverse Stock Split, to shares received in the recapitalization. U.S. Holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A U.S. Holder that, pursuant to the proposed Reverse Stock Split, receives cash in lieu of a fractional share of our common stock should recognize capital gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion of the U.S. Holder’s aggregate adjusted tax basis in the shares of our common stock surrendered that is allocated to such fractional share. Such capital gain or loss will be short term if the pre-Reverse Stock Split shares were held for one year or less at the effective time of the Reverse Stock Split and long term if held for more than one year.
A U.S. Holder may be subject to information reporting and backup withholding on cash paid in lieu of a fractional share in connection with the proposed Reverse Stock Split. A U.S. Holder will be subject to backup withholding if such U.S. Holder is not otherwise exempt and such U.S. Holder does not provide its taxpayer identification number in the manner required or otherwise fails to comply with applicable backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against a U.S. Holder’s federal income tax liability, if any, provided the required information is timely furnished to the IRS. U.S. Holders should consult their own tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
The U.S. federal income tax discussion set forth above does not discuss all aspects of U.S. federal income taxation that may be relevant to a particular stockholder in light of such stockholder’s circumstances and income tax situation. Accordingly, we urge you to consult with your own tax advisor with respect to all of the potential U.S. federal, state, local and foreign tax consequences to you of the proposed Reverse Stock Split.
Vote Required and Board of Directors Recommendation
Pursuant to the Delaware General Corporation Law, this proposal must be approved by the affirmative vote of stockholders holding a majority of the shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting. Abstentions and any broker non-votes with respect to this proposal will have no effect on this proposal.
OUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE AUTHORIZATION OF THE BOARD TO, IN ITS DISCRETION, TO AMEND OUR THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK AT A RATIO OF ONE-FOR-TWO TO ONE-FOR-THIRTY AND IN CONNECTION THEREWITH, TO DECREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK ON A BASIS PROPORTIONAL TO THE REVERSE STOCK SPLIT RATIO
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REPORT OF THE AUDIT COMMITTEE
The Company’s management is responsible for the preparation of the Company’s consolidated financial statements and for maintaining an adequate system of internal controls and processes for that purpose. Marcum LLP (“Marcum”) acts as the Company’s independent registered public accounting firm and they are responsible for conducting an independent audit of the Company’s annual consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (“PCAOB”), and issuing a report on the results of their audit. The Audit Committee is responsible for providing independent, objective oversight of both of these processes.
The Audit Committee has received the written disclosures and the letter from Marcum required by applicable requirements of the PCAOB regarding the Marcum’s communications with the Audit Committee concerning independence and has discussed with Marcum its independence. The Audit Committee has reviewed and discussed the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2022 with management of the Company and with representatives of Marcum. The Audit Committee’s discussions with Marcum also included the matters required by Auditing Standard No. 1300, Auditor Communications, as adopted by the PCAOB. In addition, the Audit Committee received the written disclosures and the letter from Marcum required by applicable requirements of the PCAOB regarding its communications with the Audit Committee concerning independence, and has discussed with Marcum its independence from the Company and its management.
Based on the reviews and discussions described above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for filing with the SEC.
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Kathleen D. LaPorte, Chairperson
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Douglas Fisher, M.D.
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Richard Sandberg
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HOUSEHOLDING
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our documents, including the annual report to stockholders and proxy statement, may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you upon written or oral request to Precipio, Inc., 4 Science Park, New Haven, Connecticut 06511, Attention: Corporate Secretary, telephone: (203) 787-7888. If you want to receive separate copies of the proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and phone number.
STOCKHOLDER PROPOSALS
A stockholder who would like to have a proposal considered for inclusion in our 2024 proxy statement must submit the proposal in accordance with the procedures outlined in Rule 14a-8 of the Exchange Act so that it is received by us no later than January 2, 2024. However, if the date of the 2024 Annual Meeting of Stockholders is changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before we begin to print and send our proxy statement for the 2023 Annual Meeting of Stockholders. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholder proposals should be addressed to Precipio, Inc., 4 Science Park, New Haven, Connecticut 06511, Attention: Corporate Secretary.
If a stockholder wishes to propose a nomination of persons for election to our board of directors or present a proposal at an annual meeting but does not wish to have the proposal considered for inclusion in our proxy statement and proxy card, our bylaws establish an advance notice procedure for such nominations and proposals. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered timely notice in proper form to our corporate secretary of the stockholder’s intention to bring such business before the meeting.
The required notice must be in writing and received by our corporate secretary at our principal executive offices not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is convened more than 30 days before or more than 60 days after the first anniversary of the preceding year’s annual meeting, or if no annual meeting were held in the preceding year, a stockholder’s notice must be so received not later than the close of business on the later of (A) the 90th day prior to the scheduled date of such annual meeting or (B) the tenth day following the day on which public announcement of the date of such annual meeting was first made. For stockholder proposals to be brought before the 2024 Annual Meeting of Stockholders, the required notice must be received by our corporate secretary at our principal executive offices not later than March 17, 2024 and no earlier than February 5, 2024. Stockholder proposals and the required notice should be addressed Precipio, Inc., 4 Science Park, New Haven, Connecticut 06511, Attention: Corporate Secretary.
To comply with the universal proxy rules stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than 60 days prior to the anniversary of the Annual Meeting, or April 16, 2023.
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SOLICITATION OF PROXIES
This solicitation is made on behalf of the Board of Directors. We will bear the costs of preparing, mailing, online processing and other costs of the proxy solicitation made by the Board of Directors. Certain of our officers and employees may solicit the submission of proxies authorizing the voting of shares in accordance with the recommendations of the Board of Directors. Such solicitations may be made by telephone, facsimile transmission or personal solicitation. No additional compensation will be paid to such officers, directors or regular employees for such services. We will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in sending proxy material to stockholders.
OTHER MATTERS
As of the date of this proxy statement, the Board knows of no other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the best judgment and in the discretion of the persons voting the proxies.
 
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By Order of the Board of Directors of
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Precipio, Inc.
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Sincerely,
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/s/ Ilan Danieli
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Ilan Danieli
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President and Chief Executive Officer
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New Haven, Connecticut

April 29, 2021
39
Annex A
AMENDMENT NO. 1
TO
8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTES
This Amendment No. 1 to 8% Senior Secured Convertible Promissory Notes (this “Amendment”), dated as of March , 2020 (the “Effective Date”), is entered into by and between Precipio, Inc., a Delaware corporation, (the “Company”), having its principal place of business at 4 Science Park, New Haven, CT 06511, (the “Company”), and [NAME OF NOTEHOLDER] (the “Holder”).
RECITALS
WHEREAS, the Company issued to the Holder that certain 8% Senior Secured Convertible Promissory Notes set out in Schedule A to this Amendment (the “Original Notes”);
WHEREAS, Section 10(f) of the Original Notes provides that the Original Notes and any provision therein may be amended by the written consent of the Company and the Holder; and
WHEREAS, the Company and the Holder desire to amend certain terms of the Original Notes.
NOW THEREFORE, in consideration of the mutual promises contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Holder, intending to be legally bound, hereby agree as follows:
AGREEMENT
1.
Capitalized Terms. Except as may be expressly provided herein, all capitalized terms used herein shall have the meanings assigned to them in the Original Notes.
2.
Amendments to the Original Notes:
a.
The Parties desire to extend the due date of the Original Notes with a due date April 16, 2020 by three (3) months thereby the Original Notes will become due on July 16, 2020.
b.
The Parties desire to amend the definition of “Floor Price” and as such the definition shall hereby be amended and read as follows: “Floor Price means $0.40 per share”.
c.
Section 2 (Interest) of the Original Notes shall be amended to read “ The Company shall pay interest to the Holder on the aggregate principal amount of this Note at the rate of 8% per annum, with eighteen (18) months of interest guaranteed, which amount shall be payable in full regardless of how long the this Note remains outstanding.
3.
Conforming Changes. All provisions in the Original Notes and any amendments, attachments, schedules or exhibits thereto in conflict with this Amendment shall be and hereby are changed to conform to this Amendment.
4.
Representations and Warranties. The Company hereby represents and warrants as follows:
a.
The Representations and Warranties made in the securities purchase agreement dated April 20, 2018 (as amended from time to time) and the securities purchase agreement dated May 14, 2020 (jointly the “Purchase Agreements”) pursuant to which Purchase Agreements the Original Notes have been issued to the Holder were true and correct as of the date made and are also true on and as of the date hereof and with the same force and effect as it made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
b.
No Default or Event of Default has occurred and is continuing.
c.
Authority, Etc. The execution and delivery by the Company of this Amendment and the Company’s performance of this Amendment (i) are within the Company’s powers, (ii) have been duly authorized by all necessary action on the part of the Company, (iii) do not contravene, or constitute a default under, any provision of any Applicable Law, the Charter Documents of the Company and/or any agreement, judgment, injunction, order, decree or other instrument binding upon the Company.
A-1
d.
Enforceability of Obligations. This Amendment has been duly executed and delivered by the Company. This Amendment and the Original Notes as amended constitutes the valid and legally binding agreement of the Company, in each case enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether enforcement is sought in equity or at law).
e.
The holding period of the Original Notes for purposes of Rule 144 remains unchanged and unaffected by this Amendment
f.
The Company shall publicly disclose the substance of this Amendment no later than the Company’s filing of its annual report on form 10-K which is expected to be filed on or about March 27th 2020. None disclosure pursuant this item (f) shall render this Amendment null and void.
5.
Full Force and Effect. The Original Notes is not amended hereby and shall remain in full force and effect, except as otherwise set forth in this Amendment. The parties hereby ratify and confirm the terms and conditions of the Original Notes, as supplemented and amended by this Amendment.
6.
Applicable law. The substantive laws of the applicable state, as well as terms regarding forum and jurisdiction, as originally provided in the Original Notes shall govern the construction of this Agreement and the rights and remedies of the parties hereto.
7.
Counterparts. This Amendment may be executed in counterparts (including by means of facsimile or electronic transmission), each of which shall be deemed an original but all of which, when taken together, will constitute one and the same agreement.
Signature page follows
A-2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.1 to the 8% Senior Secured Convertible Promissory Notes to be duly executed by their respective authorized signatories as of the date first indicated above.
PRECIPIO, INC.
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By:
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Name: Ilan Danieli
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Title: CEO
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR HOLDER FOLLOWS]
A-3
HOLDER SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused the Amendment No.1 to the 8% Senior Secured Convertible Promissory Notes to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Investor:
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Signature of Authorized Signatory of Holder
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Name of Authorized Signatory:
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Title of Authorized Signatory:
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Email Address of Authorized Signatory:
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Address for Notice to Investor:
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A-4
Schedule A

8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE DATED APRIL 16, 2019
Holder
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Amount
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8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE DATED MAY 14, 2019
Holder
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Amount
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A-5
EXHIBITS
Exhibit A
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Form of Officer’s Certificate
Exhibit B
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Form of Resolutions of Board of Directors of the Company
Exhibit C
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Form of Secretary’s Certificate
Exhibit D
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Form of Letter to Transfer Agent
A-6
EXHIBIT A
FORM OF OFFICER’S CERTIFICATE
This Officer’s Certificate (“Certificate”) is being delivered pursuant to Section 8(e) of that certain Purchase Agreement dated as of March 26, 2020, (“Purchase Agreement”), by and between PRECIPIO, INC., a Delaware corporation (the “Company”), and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”). Terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase Agreement.
The undersigned, , of the Company, hereby certifies, on behalf of the Company and not in his individual capacity, as follows:
1.
I am the of the Company and make the statements contained in this Certificate;
2.
The representations and warranties of the Company are true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in Section 4 of the Purchase Agreement, in which case, such representations and warranties are true and correct without further qualification) as of the date when made and as of the Commencement Date as though made at that time (except for representations and warranties that speak as of a specific date, in which case such representations and warranties are true and correct as of such date);
3.
The Company has performed, satisfied and complied in all material respects with covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date.
4.
The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is generally able to pay its debts as they become due.
IN WITNESS WHEREOF, I have hereunder signed my name on this day of .
 
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Name:
Ilan Danieli
Title:
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President and Chief Executive Officer
The undersigned as SecretaryNew Haven, Connecticut

April 25, 2023
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Annex A
CERTIFICATE OF AMENDMENT
OF
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PRECIPIO, INC.
(Pursuant to Section 242 of PRECIPIO, INC.the General Corporation Law of the State of Delaware)
THE UNDERSIGNED, being a duly appointed and authorized officer of Precipio, Inc., a corporation organized and existing under and by virtue of the laws of the State of Delaware corporation,(the “Corporation”), does hereby certifiescertify, on behalf of the Corporation, as follows for the purpose of amending the Corporation’s Third Amended and Restated Certificate of Incorporation, as amended:
1.
The name of this corporation is Precipio, Inc.
2.
This Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation was duly adopted by written consent of the board of directors and the stockholders of the Corporation in accordance with the applicable provisions of Sections 222, 228, 242 and 245 of the General Corporation Law of the State of Delaware.
3.
That the Corporation’s Amended and Restated Certificate of Incorporation, as amended, is hereby amended hereby amended by adding the following new paragraph as Section 4.6:
“Upon the filing and effectiveness (the “Effective Time”) of this Certificate Amendment to the Corporation’s Third Amended and Restated Certificate of Incorporation, as amended, pursuant to the Delaware General Corporation Law, each   (   ) shares of the Common Stock issued immediately prior to the Effective Time (the “Old Common Stock”) shall be reclassified and combined into one validly issued, fully paid and non-assessable share of the Corporation’s common stock, $0.001 par value per share (the “New Common Stock”), without any action by the holder thereof (the “Reverse Stock Split”) and without increasing or decreasing the authorized number of shares of Common Stock or the Preferred Stock. No fractional shares of New Common Stock shall be issued as a result of the Reverse Stock Split and, in lieu thereof, upon surrender after the Effective Time of a certificate or book entry position which formerly represented shares of Old Common Stock that were issued and outstanding immediately prior to the Effective Time, any person who would otherwise be entitled to a fractional share of New Common Stock as a result of the Reverse Stock Split, following the Effective Time, shall be entitled to receive a cash payment equal to the fraction of a share of New Common Stock to which such holder would otherwise be entitled multiplied by the closing price per share of the New Common Stock on The Nasdaq Capital Market at the close of business on the date of the Effective Time. Each certificate that theretofore represented shares of Old Common Stock shall thereafter represent that number of shares of New Common Stock into which the shares of Old Common Stock represented by such certificate shall have been reclassified and combined; provided, that each person holding of record a stock certificate or certificates that represented shares of Old Common Stock shall receive, upon surrender of such certificate or certificates, a new certificate or certificates evidencing and representing the number of shares of New Common Stock to which such person is entitled under the duly elected, appointed, qualifiedforegoing reclassification and acting combination. The Reverse Stock Split shall occur automatically without any further action by the holders of the shares of Common Stock and thatPreferred Stock affected thereby. All rights, preferences and privileges of the signature appearing above is his genuine signature.Common Stock and the Preferred Stock shall be appropriately adjusted to reflect the Reverse Stock Split in accordance with this Third Amended and Restated Certificate of Incorporation.”
IN WITNESS WHEREOF, this Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Corporation has been executed this       day of     , 202 .
By:
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Secretary
A-7
EXHIBIT B
FORM OF COMPANY RESOLUTIONS
FOR SIGNING PURCHASE AGREEMENT
UNANIMOUS WRITTEN CONSENT OF
PRECIPIO, INC.
In accordance with the corporate laws of the state of Delaware, the undersigned, being all of the directors of PRECIPIO, INC., a Delaware corporation (the “Corporation”) do hereby consent to and adopt the following resolutions as the action of the Board of Directors for and on behalf of the Corporation and hereby direct that this Consent be filed with the minutes of the proceedings of the Board of Directors:
WHEREAS, there has been presented to the Board of Directors of the Corporation a draft of the Purchase Agreement (the “Purchase Agreement”) by and between the Corporation and Lincoln Park Capital Fund, LLC (“Lincoln Park”), providing for the purchase by Lincoln Park of up to Ten Million Dollars ($10,000,000) of the Corporation’s common stock, $0.01 par value per share (the “Common Stock”); and
WHEREAS, after careful consideration of the Purchase Agreement, the documents incident thereto and other factors deemed relevant by the Board of Directors, the Board of Directors has determined that it is advisable and in the best interests of the Corporation to engage in the transactions contemplated by the Purchase Agreement, including, but not limited to, the issuance of 250,000 shares of Common Stock to Lincoln Park as a commitment fee (the “Commitment Shares”) and the sale of shares of Common Stock to Lincoln Park up to the available amount under the Purchase Agreement (the “Purchase Shares”).
Transaction Documents
NOW, THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase Agreement are hereby approved and (the “Authorized Officers”) are severally authorized to execute and deliver the Purchase Agreement, and any other agreements or documents contemplated thereby including, without limitation, a registration rights agreement (the “Registration Rights Agreement”) providing for the registration of the shares of the Company’s Common Stock issuable in respect of the Purchase Agreement on behalf of the Corporation, with such amendments, changes, additions and deletions as the Authorized Officers may deem to be appropriate and approve on behalf of, the Corporation, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and
FURTHER RESOLVED, that the terms and provisions of the Registration Rights Agreement by and among the Corporation and Lincoln Park are hereby approved and the Authorized Officers are authorized to execute and deliver the Registration Rights Agreement (pursuant to the terms of the Purchase Agreement), with such amendments, changes, additions and deletions as the Authorized Officer may deem appropriate and approve on behalf of, the Corporation, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and
FURTHER RESOLVED, that the terms and provisions of the forms of Irrevocable Transfer Agent Instructions and Notice of Effectiveness of Registration Statement (collectively, the “Instructions”) are hereby approved and the Authorized Officers are authorized to execute and deliver the Instructions on behalf of the Company in accordance with the Purchase Agreement, with such amendments, changes, additions and deletions as the Authorized Officers may deem appropriate and approve on behalf of, the Corporation, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and
Execution of Purchase Agreement
FURTHER RESOLVED, that the Corporation be and it hereby is authorized to execute the Purchase Agreement providing for the purchase of up to Ten Million Dollars ($10,000,000) of the Corporation’s common stock; and
Issuance of Common Stock
FURTHER RESOLVED, that the Corporation is hereby authorized to issue to Lincoln Park Capital Fund, LLC, 250,000 shares of Common Stock as Commitment Shares and that upon issuance of the Commitment Shares pursuant to the Purchase Agreement the Commitment Shares shall be duly authorized, validly issued, fully paid and nonassessable with no personal liability attaching to the ownership thereof; and
A-8
FURTHER RESOLVED, that the Corporation is hereby authorized to issue shares of Common Stock upon the purchase of Purchase Shares up to the Available Amount under the Purchase Agreement in accordance with the terms of the Purchase Agreement and that, upon issuance of the Purchase Shares pursuant to the Purchase Agreement, the Purchase Shares will be duly authorized, validly issued, fully paid and nonassessable with no personal liability attaching to the ownership thereof; and
FURTHER RESOLVED, that the Corporation shall initially reserve 40,000,000 shares of Common Stock for issuance as Purchase Shares under the Purchase Agreement.
Approval of Actions
FURTHER RESOLVED, that, without limiting the foregoing, the Authorized Officers are, and each of them hereby is, authorized and directed to proceed on behalf of the Corporation and to take all such steps as deemed necessary or appropriate, with the advice and assistance of counsel, to cause the Corporation to consummate the agreements referred to herein and to perform its obligations under such agreements; and
FURTHER RESOLVED, that the Authorized Officers be, and each of them hereby is, authorized, empowered and directed on behalf of and in the name of the Corporation, to take or cause to be taken all such further actions and to execute and deliver or cause to be executed and delivered all such further agreements, amendments, documents, certificates, reports, schedules, applications, notices, letters and undertakings and to incur and pay all such fees and expenses as in their judgment shall be necessary, proper or desirable to carry into effect the purpose and intent of any and all of the foregoing resolutions, and that all actions heretofore taken by any officer or director of the Corporation in connection with the transactions contemplated by the agreements described herein are hereby approved, ratified and confirmed in all respects.
IN WITNESS WHEREOF, the Board of Directors has executed and delivered this Consent effective as of , 2020.
being all of the directors of PRECIPIO, INC.
A-9
EXHIBIT C
FORM OF SECRETARY’S CERTIFICATE
This Secretary’s Certificate (“Certificate”) is being delivered pursuant to Section 8(k) of that certain Purchase Agreement dated as of March 26, 2020 (“Purchase Agreement”), by and between PRECIPIO, INC., a Delaware corporation (the “Company”) and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”), pursuant to which the Company may sell to the Investor up to Ten Million Dollars ($10,000,000) of the Company's Common Stock, $0.01 par value per share (the “Common Stock”). Terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase Agreement.
The undersigned, , Secretary of the Company, hereby certifies, on behalf of the Company and not in his individual capacity, as follows:
1.  I am the Secretary of the Company and make the statements contained in this Secretary’s Certificate.
2.  Attached hereto as Exhibit A and Exhibit B are true, correct and complete copies of the Company’s bylaws (“Bylaws”) and Certificate of Incorporation (“Charter”), in each case, as amended through the date hereof, and no action has been taken by the Company, its directors, officers or stockholders, in contemplation of the filing of any further amendment relating to or affecting the Bylaws or Charter.
3.  Attached hereto as Exhibit C are true, correct and complete copies of the resolutions duly adopted by the Board of Directors of the Company on , at which a quorum was present and acting throughout. Such resolutions have not been amended, modified or rescinded and remain in full force and effect and such resolutions are the only resolutions adopted by the Company’s Board of Directors, or any committee thereof, or the stockholders of the Company relating to or affecting (i) the entering into and performance of the Purchase Agreement, or the issuance, offering and sale of the Purchase Shares and the Commitment Shares and (ii) and the performance of the Company of its obligation under the Transaction Documents as contemplated therein.
4.  As of the date hereof, the authorized, issued and reserved capital stock of the Company is as set forth on Exhibit D hereto.
IN WITNESS WHEREOF, I have hereunder signed my name on this day of .
Name:
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Secretary
The undersigned as  ��   of PRECIPIO, INC., a Delaware corporation, hereby certifies that is the duly elected, appointed, qualified and acting Secretary of , and that the signature appearing above is his genuine signature.
Title:
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A-10A-1

TABLE OF CONTENTS

EXHIBIT D
FORM OF LETTER TO THE TRANSFER AGENT FOR THE ISSUANCE OF THE COMMITMENT SHARES AT SIGNING OF THE PURCHASE AGREEMENT
[COMPANY LETTERHEAD]
[DATE]
[TRANSFER AGENT]
Re: Issuance of Common Stock to Lincoln Park Capital Fund, LLC
Dear ,
On behalf of PRECIPIO, INC., (the “Company”), you are hereby instructed to issue as soon as possible a book-entry statement representing an aggregate of 250,000 shares of our common stock in the name of Lincoln Park Capital Fund, LLC. The book-entry statement should be dated March 26, 2020. The book-entry statement should bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
The book-entry statement should be sent as soon as possible via overnight mail to the following address:
Lincoln Park Capital Fund, LLC
440 North Wells, Suite 410
Chicago, IL 60654
Attention: Josh Scheinfeld/Jonathan Cope
Thank you very much for your help. Please call me at if you have any questions or need anything further.
PRECIPIO, INC.
​​
​​
​​
BY:
​​
​​
​​
[name]
​​
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[title]
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A-11
Annex B
PRECIPIO, INC.

AMENDED AND RESTATED 2017 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Precipio, Inc. Amended and Restated 2017 Stock Option and Incentive Plan (the “Plan”). The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and Consultants of Precipio, Inc. (the “Company”) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its businesses to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
“Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Administrator” means either the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation committee and which is comprised of not less than two Non-Employee Directors who are independent.
“Award” or “Awards,” except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights.
“Award Certificate” means a written or electronic document setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.
“Board” means the Board of Directors of the Company.
“Cash-Based Award” means an Award entitling the recipient to receive a cash-denominated payment.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
“Consultant” means any natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
“Covered Employee” means an employee who is a “Covered Employee” within the meaning of Section 162(m) of the Code.
“Dividend Equivalent Right” means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the grantee.
“Effective Date” means the date on which the Plan becomes effective as set forth in Section 21.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Fair Market Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator; provided, however, that if the Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national securities exchange, the determination shall be made by reference to market quotations. If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations.
“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.
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“Non-Employee Director” means a member of the Board who is not also an employee of the Company or any Subsidiary.
“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
“Option” or “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.
“Performance-Based Award” means any Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award granted to a Covered Employee that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code and the regulations promulgated thereunder.
“Performance Criteria” means the criteria that the Administrator selects for purposes of establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle. The Performance Criteria (which shall be applicable to the organizational level specified by the Administrator, including, but not limited to, the Company or a unit, division, group, or Subsidiary of the Company) that will be used to establish Performance Goals are limited to the following: total shareholder return, earnings before interest, taxes, depreciation and amortization, net income (loss) (either before or after interest, taxes, depreciation and/or amortization), changes in the market price of the Stock, economic value-added, funds from operations or similar measure, sales or revenue, acquisitions or strategic transactions, operating income (loss), cash flow (including, but not limited to, operating cash flow and free cash flow), return on capital, assets, equity, or investment, return on sales, gross or net profit levels, productivity, expense, margins, operating efficiency, customer satisfaction, working capital, earnings (loss) per share of Stock, sales or market shares and number of customers, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The Administrator may appropriately adjust any evaluation performance under a Performance Criterion to exclude any of the following events that occurs during a Performance Cycle: (i) asset write-downs or impairments, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reporting results, (iv) accruals for reorganizations and restructuring programs, and (v) any item of an unusual nature or of a type that indicates infrequency of occurrence, or both, including those described in the Financial Accounting Standards Board’s authoritative guidance and/or in management’s discussion and analysis of financial condition of operations appearing the Company’s annual report to stockholders for the applicable year.
“Performance Cycle” means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantee’s right to and the payment of a Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award, the vesting and/or payment of which is subject to the attainment of one or more Performance Goals. Each such period shall not be less than 12 months.
“Performance Goals” means, for a Performance Cycle, the specific goals established in writing by the Administrator for a Performance Cycle based upon the Performance Criteria.
“Performance Share Award” means an Award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals.
“Restricted Shares” means the shares of Stock underlying a Restricted Stock Award that remain subject to a risk of forfeiture or the Company’s right of repurchase.
“Restricted Stock Award” means an Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.
“Restricted Stock Units” means an Award of stock units subject to such restrictions and conditions as the Administrator may determine at the time of grant.
“Sale Event” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.
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“Sale Price” means the value as determined by the Administrator of the consideration payable, or otherwise to be received by stockholders, per share of Stock pursuant to a Sale Event.
“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
“Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustments pursuant to Section 3.
“Stock Appreciation Right” means an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.
“Subsidiary” means any corporation or other entity (other than the Company) in which the Company has at least a 50 percent interest, either directly or indirectly.
“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation.
“Unrestricted Stock Award” means an Award of shares of Stock free of any restrictions.
SECTION 2. 
ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
AND DETERMINE AWARDS
(a) Administration of Plan. The Plan shall be administered by the Administrator.
(b) Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the forms of Award Certificates;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award in circumstances involving the grantee’s death, disability, retirement or termination of employment, or a change in control (including a Sale Event);
(vi) subject to the provisions of Section 5(c), to extend at any time the period in which Stock Options may be exercised; and
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.
(c) Delegation of Authority to Grant Awards. Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Awards to individuals who are (i) not subject to the reporting and other provisions of Section 16 of the Exchange Act and (ii) not Covered Employees. Any such delegation by the Administrator shall include a limitation as to the amount of Stock underlying Awards that may be granted
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during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.
(d) Award Certificate. Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service terminates.
(e) Indemnification. Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s articles or bylaws or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.
(f) Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 1,359,423 shares (the “Initial Limit”), subject to adjustment as provided in Section 3(c), plus on January 1, 2021 and each January 1 thereafter, the number of shares of Stock reserved and available for issuance under the Plan shall be cumulatively increased by five percent (5%) of the number of shares of Stock issued and outstanding on the immediately preceding December 31 (the “Annual Increase”) or such lesser number of shares determined by the Administrator. The shares of Stock underlying any Awards that are forfeited, canceled, held back upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan. In the event the Company repurchases shares of Stock on the open market, such shares shall not be added to the shares of Stock available for issuance under the Plan. Subject to such overall limitations, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.
(b) Maximum Awards to Non-Employee Directors. Notwithstanding anything to the contrary in this Plan, the value of all Awards awarded under this Plan and all other cash compensation paid by the Company to any Non-Employee Director in any calendar year shall not exceed $500,000. For the purpose of this limitation, the value of any Award shall be its grant date fair value, as determined in accordance with ASC 718 or successor provision but excluding the impact of estimated forfeitures related to service-based vesting provisions.
(c) Changes in Stock. Subject to Section 3(d) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind
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of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, including the maximum number of shares that may be issued in the form of Incentive Stock Options, (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual grantee and the maximum number of shares that may be granted under a Performance-Based Award, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price, if any, per share subject to each outstanding Restricted Stock Award, and (v) the exercise price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable. The Administrator shall also make equitable or proportionate adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.
(d) Mergers and Other Transactions. In the case of and subject to the consummation of a Sale Event, the parties thereto may cause the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree. To the extent the parties to such Sale Event do not provide for the assumption, continuation or substitution of Awards, upon the effective time of the Sale Event, the Plan and all outstanding Awards granted hereunder shall terminate. In such case, except as may be otherwise provided in the relevant Award Certificate, all Options and Stock Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event, and all Awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with a Sale Event in the Administrator’s discretion or to the extent specified in the relevant Award Certificate. In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation Rights; or (ii) each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights (to the extent then exercisable) held by such grantee. The Company shall also have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees holding other Awards in an amount equal to the Sale Price multiplied by the number of vested shares of Stock under such Awards.
SECTION 4. ELIGIBILITY
Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.
SECTION 5. STOCK OPTIONS
(a) Award of Stock Options. The Administrator may grant Stock Options under the Plan. Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
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Stock Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionee’s election, subject to such terms and conditions as the Administrator may establish.
(b) Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the option price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date.
(c) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than ten years after the date the Stock Option is granted. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.
(d) Exercisability; Rights of a Stockholder. Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. The Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(e) Method of Exercise. Stock Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods except to the extent otherwise provided in the Option Award Certificate:
(i) In cash, by certified or bank check or other instrument acceptable to the Administrator;
(ii) Through the delivery (or attestation to the ownership following such procedures as the Company may prescribe) of shares of Stock that are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date;
(iii) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or
(iv) With respect to Stock Options that are not Incentive Stock Options, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.
Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Option Award Certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). In the event an optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.
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(f) Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Award of Stock Appreciation Rights. The Administrator may grant Stock Appreciation Rights under the Plan. A Stock Appreciation Right is an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.
(b) Exercise Price of Stock Appreciation Rights. The exercise price of a Stock Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant.
(c) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.
(d) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined on the date of grant by the Administrator. The term of a Stock Appreciation Right may not exceed ten years. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.
SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The Administrator may grant Restricted Stock Awards under the Plan. A Restricted Stock Award is any Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives.
(b) Rights as a Stockholder. Upon the grant of the Restricted Stock Award and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Shares and receipt of dividends; provided that if the lapse of restrictions with respect to the Restricted Stock Award is tied to the attainment of performance goals, any dividends paid by the Company during the performance period shall accrue and shall not be paid to the grantee until and to the extent the performance goals are met with respect to the Restricted Stock Award. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d) below, and (ii) certificated Restricted Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.
(c) Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award Certificate. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, if a grantee’s employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee’s legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder. Following such deemed reacquisition of Restricted Shares that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.
(d) Vesting of Restricted Shares. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the
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non-transferability of the Restricted Shares and the Company’s right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Shares and shall be deemed “vested.”
SECTION 8. RESTRICTED STOCK UNITS
(a) Nature of Restricted Stock Units. The Administrator may grant Restricted Stock Units under the Plan. A Restricted Stock Unit is an Award of stock units that may be settled in shares of Stock upon the satisfaction of such restrictions and conditions at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. Except in the case of Restricted Stock Units with a deferred settlement date that complies with Section 409A, at the end of the vesting period, the Restricted Stock Units, to the extent vested, shall be settled in the form of shares of Stock. Restricted Stock Units with deferred settlement dates are subject to Section 409A and shall contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order to comply with the requirements of Section 409A.
(b) Election to Receive Restricted Stock Units in Lieu of Compensation. The Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of future cash compensation otherwise due to such grantee in the form of an award of Restricted Stock Units. Any such election shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the Administrator. Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of Restricted Stock Units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the grantee if such payment had not been deferred as provided herein. The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate. Any Restricted Stock Units that are elected to be received in lieu of cash compensation shall be fully vested, unless otherwise provided in the Award Certificate.
(c) Rights as a Stockholder. A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement of Restricted Stock Units; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the stock units underlying his Restricted Stock Units, subject to the provisions of Section 11 and such terms and conditions as the Administrator may determine.
(d) Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED STOCK AWARDS
Grant or Sale of Unrestricted Stock. The Administrator may grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Stock Award under the Plan. An Unrestricted Stock Award is an Award pursuant to which the grantee may receive shares of Stock free of any restrictions under the Plan. Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.
SECTION 10. CASH-BASED AWARDS
Grant of Cash-Based Awards. The Administrator may grant Cash-Based Awards under the Plan. A Cash-Based Award is an Award that entitles the grantee to a payment in cash upon the attainment of specified Performance Goals. The Administrator shall determine the maximum duration of the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Administrator shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Administrator. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash.
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SECTION 11. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. The Administrator may grant Performance Share Awards under the Plan. A Performance Share Award is an Award entitling the grantee to receive shares of Stock upon the attainment of performance goals. The Administrator shall determine whether and to whom Performance Share Awards shall be granted, the performance goals, the periods during which performance is to be measured, which may not be less than one year except in the case of a Sale Event, and such other limitations and conditions as the Administrator shall determine.
(b) Rights as a Stockholder. A grantee receiving a Performance Share Award shall have the rights of a stockholder only as to shares of Stock actually received by the grantee under the Plan and not with respect to shares subject to the Award but not actually received by the grantee. A grantee shall be entitled to receive shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share Award Certificate (or in a performance plan adopted by the Administrator).
(c) Termination. Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 18 below, in writing after the Award is issued, a grantee’s rights in all Performance Share Awards shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 12. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES
(a) Performance-Based Awards. The Administrator may grant one or more Performance-Based Awards in the form of a Restricted Stock Award, Restricted Stock Units, Performance Share Awards or Cash-Based Award payable upon the attainment of Performance Goals that are established by the Administrator and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Administrator. The Administrator shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for any Performance Cycle. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual. Each Performance-Based Award shall comply with the provisions set forth below.
(b) Grant of Performance-Based Awards. With respect to each Performance-Based Award granted to a Covered Employee, the Administrator shall select, within the first 90 days of a Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the Performance Criteria for such grant, and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award). Each Performance-Based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets. The Performance Criteria established by the Administrator may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to different Covered Employees.
(c) Payment of Performance-Based Awards. Following the completion of a Performance Cycle, the Administrator shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-Based Awards earned for the Performance Cycle. The Administrator shall then determine the actual size of each Covered Employee’s Performance-Based Award.
(d) Maximum Award Payable. The maximum Performance-Based Award payable to any one Covered Employee under the Plan for a Performance Cycle is 250,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) or $1,000,000 in the case of a Performance-Based Award that is a Cash-Based Award.
SECTION 13. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. The Administrator may grant Dividend Equivalent Rights under the Plan. A Dividend Equivalent Right is an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other Award to which it relates) if such shares had been issued to the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee as a component of an award of Restricted Stock Units or Performance Share Award or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the
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Award Certificate. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of an Award of Restricted Stock Units or Performance Share Award shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.
(b) Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.
SECTION 14. TRANSFERABILITY OF AWARDS
(a) Transferability. Except as provided in Section 14(b) below, during a grantee’s lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity. No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.
(b) Administrator Action. Notwithstanding Section 14(a), the Administrator, in its discretion, may provide either in the Award Certificate regarding a given Award or by subsequent written approval that the grantee (who is an employee or director) may transfer his or her Non-Qualified Stock Options to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award. In no event may an Award be transferred by a grantee for value.
(c) Family Member. For purposes of Section 14(b), “family member” shall mean a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50 percent of the voting interests.
(d) Designation of Beneficiary. To the extent permitted by the Company, each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.
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SECTION 15. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.
(b) Payment in Stock. Subject to approval by the Administrator, a grantee may elect to have the Company’s minimum required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount. For purposes of share withholding, the Fair Market Value of withheld shares shall be determined in the same manner as the value of Stock includible in income of the Participants.
SECTION 16. SECTION 409A AWARDS
To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A. In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A) to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.
SECTION 17. TERMINATION OF EMPLOYMENT, TRANSFER, LEAVE OF ABSENCE, ETC.
(a) Termination of Employment. If the grantee’s employer ceases to be a Subsidiary, the grantee shall be deemed to have terminated employment for purposes of the Plan.
(b) For purposes of the Plan, the following events shall not be deemed a termination of employment:
(i) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or
(ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.
SECTION 18. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent. The Administrator is specifically authorized to exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect the repricing of such Awards through cancellation and re-grants. To the extent required under the rules of any securities exchange or market system on which the Stock is listed, to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code, or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 18 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c) or 3(d).
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SECTION 19. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.
SECTION 20. GENERAL PROVISIONS
(a) No Distribution. The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.
(b) Delivery of Stock Certificates. Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.
(c) Stockholder Rights. Until Stock is deemed delivered in accordance with Section 20(b), no right to vote or receive dividends or any other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Option or any other action by the grantee with respect to an Award.
(d) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.
(e) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policies and procedures, as in effect from time to time.
(f) Clawback Policy. Awards under the Plan shall be subject to the Company’s clawback policy, as in effect from time to time.
SECTION 21. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon stockholder approval in accordance with applicable state law, the Company’s bylaws and articles of incorporation, and applicable stock exchange rules. No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the Effective Date and no grants of Incentive Stock Options may be made hereunder after the tenth anniversary of the date the Plan is approved by the Board.
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SECTION 22. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.
DATE APPROVED BY BOARD OF DIRECTORS:
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April 27, 2020
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DATE APPROVED BY STOCKHOLDERS:
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