UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to §240.14a-12
Kiromic BioPharma, Inc. |
(Name of Registrant as Specified in Its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check all boxes that apply):
☒ No fee required
☐ Fee paid previously with preliminary materials
☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) an 0-11
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Kiromic BioPharma, Inc.
7707 Fannin Street; Suite 140
Houston, TX 77054
NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS
To Be Held on JUNE 22, 2022MARCH 7, 2023
Dear Stockholder:
We are pleased to invite you to attend the annualspecial meeting of stockholders (the “AnnualSpecial Meeting”) of Kiromic BioPharma, Inc (“Kiromic” or the “Company”), which will be held on June 22, 2022March 7, 2023 at 9:00 a.m. local time at our offices, located at 7707 Fannin Street, Suite 140, Houston, TX 77054, for the following purposes:
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4. | To transact such other matters as may properly come before the |
Our board of directors has fixed the close of business on April 25, 2022January 18, 2023 as the record date for a determination of stockholders entitled to notice of, and to vote at, the AnnualSpecial Meeting or any adjournment or postponement thereof.
If You Plan to Attend
Please note that space limitations make it necessary to limit attendance of the AnnualSpecial Meeting to our stockholders. Registration and seating will begin at 8:00 a.m. Shares of common stock can be voted at the AnnualSpecial Meeting only if the holder thereof is present in person or by valid proxy.
For admission to the AnnualSpecial Meeting, each stockholder may be asked to present valid picture identification, such as a driver’s license or passport, and proof of stock ownership as of the record date, such as the enclosed proxy card or a brokerage statement reflecting stock ownership. Cameras, recording devices and other electronic devices will not be permitted at the AnnualSpecial Meeting. If you do not plan on attending the AnnualSpecial Meeting, please vote, date and sign the enclosed proxy and return it in the business envelope provided. Even if you do plan to attend the AnnualSpecial Meeting, we recommend that you vote your shares at your earliest convenience in order to ensure your representation at the AnnualSpecial Meeting. Your vote is very important.
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Important Notice Regarding the Availability of Proxy Materials for the AnnualSpecial Meeting to Be Held on June 22, 2022. March 7, 2023.Our 2022 Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2021 are available on our website at https://www.viewproxy.com/kiromic/2022.
The proxy statement and annual report to stockholders areis available at
https://www.viewproxy.com/kiromic/2022.KiromicSM/2023.
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By the Order of the Board of Directors | ||
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| /s/ Michael Nagel | |
| Michael Nagel | |
| Chairperson of the Board of Directors |
Dated: April 29, 2022January 26, 2023
Whether or not you expect to attend the AnnualSpecial Meeting in person, we urge you to vote your shares at your earliest convenience. This will ensure the presence of a quorum at the AnnualSpecial Meeting. Promptly voting your shares will save the Company the expenses and extra work of additional solicitation. An addressed envelope for which no postage is required if mailed in the United States is enclosed if you wish to vote by mail. Submitting your proxy now will not prevent you from voting your shares at the AnnualSpecial Meeting if you desire to do so, as your proxy is revocable at your option. Your vote is important, so please act today!
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PROXY STATEMENT
2022 ANNUAL2023 SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 2022MARCH 7, 2023
AThe board of directors (the “Board”) of Kiromic BioPharma, Inc. (“Kiromic” or the “Company”) is soliciting your proxy is your legal designation of another person to vote the stock you own. That designee is referred to as a proxy holder. Designation of a particular proxy holder can be effected by completion of a written proxy card, or by voting via the Internet or by telephone. If you return a proxy card, or vote by phone or internet, Pietro Bersani and Daniel Clark, our Interim Chief Executive Officer and Interim Chief Financial Officer, respectively, will act as your designated proxy holders for the Annual Meeting and will vote your shares at the AnnualSpecial Meeting as you have instructed themof Stockholders (the “Special Meeting”) to be held at our offices, located at 7707 Fannin Street, Suite 140, Houston, TX 77054, on March 7, 2023, at 9:00 a.m. local time, including at any adjournments or postponements of the proxy card. This way, your shares will be voted whether or not you attend the AnnualSpecial Meeting. Even if you planYou are invited to attend the AnnualSpecial Meeting we urge you to vote on the proposal described in one of the ways described below so that your vote will be counted even ifthis proxy statement. However, you are unable or decidedo not need to attend the Annual Meeting.Special Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card if you received paper copies of the proxy materials, or follow the instructions below to submit your proxy over the Internet.
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
What is a proxy?
A proxy statement is a document that we are required by regulations of the Securities and Exchange Commission, or SEC, to give you when we ask you to provide a proxy to vote your shares at the AnnualSpecial Meeting. Among other things, this Proxy Statement describes the proposals on which stockholders will be voting and provides information about us.
We are soliciting your proxy to vote at the AnnualSpecial Meeting and at any adjournment or postponement of the AnnualSpecial Meeting. We will use the proxies received in connection with proposals to:
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How do I attend the AnnualSpecial Meeting?
The AnnualSpecial Meeting will be held on June 22, 2022,March 7, 2023, at 9:00 a.m. local time at our offices, located at 7707 Fannin Street, Houston, TX 77054. Directions to the AnnualSpecial Meeting may be found at the back of this Proxy Statement. Information on how to vote in person at the AnnualSpecial Meeting is discussed below.
Who May Attend the AnnualSpecial Meeting?
Only record holders and beneficial owners of our common stock, or their duly authorized proxies, may attend the AnnualSpecial 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.
Who is Entitled to Vote?
The Board has fixed the close of business on April 25, 2022January 18, 2023 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the AnnualSpecial Meeting or any adjournment or postponement thereof. Only stockholderstockholders who owned our common stock on the Record Date are entitled to vote at the AnnualSpecial Meeting. On the Record Date, there were 15,751,70120,504,701 shares of our common stock outstanding.
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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, VStock Transfer, Inc., 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 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 AnnualSpecial Meeting. As the beneficial owner, you have the right to instruct this organization on how to vote your shares. The majority of our stockholders hold their shares in street name.
What am I voting on?
There are three (3) matters scheduled for a vote:
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What if another matter is properly brought before the AnnualSpecial Meeting?
The Board knows of no other matters that will be presented for consideration at the AnnualSpecial Meeting. If any other matters are properly brought before the AnnualSpecial Meeting, your proxy gives authority to the designated proxy holders to vote on such matters according to their best judgment.
How Do I Vote?
Stockholders of Record
For your convenience, record holders of our common stock have three methods of voting:
1. | Vote by Internet. The website address for Internet voting is on your proxy card. |
2. | Vote by mail. Mark, date, sign and promptly mail the enclosed proxy card (a postage-paid envelope is provided for mailing in the United States). |
3. | Vote in person. Attend and vote at the Special Meeting. |
4. | Vote by phone. The proxy phone number for voting by telephone is on your proxy card. |
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Beneficial Owners of Shares Held in Street Name
For your convenience, beneficial owners of our common stock have three methods of voting:
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1. | Vote by Internet. The website address for Internet voting is on your vote instruction form. |
2. | Vote by Mail. Mark, date, sign and promptly mail your vote instruction form (a postage-paid envelope is provided for mailing in the United States). |
3. | Vote in Person. Obtain a valid legal proxy from the organization that holds your shares and attend and vote at the Special Meeting. |
4. | Vote by phone. The telephone number for voting by phone is on your vote instruction form. |
All shares entitled to vote and represented by a properly completed and executed proxy received before the AnnualSpecial Meeting and not revoked will be voted at the AnnualSpecial Meeting as instructed in a proxy delivered before the AnnualSpecial Meeting. If you do not indicate how your shares should be voted on a matter, the shares represented by your properly completed and executed proxy will be voted as the Board recommends on each of the enumerated proposals, with regard to any other matters that may be properly presented at the AnnualSpecial Meeting and on all matters incident to the conduct of the AnnualSpecial Meeting. If you are a registered stockholder and attend the AnnualSpecial Meeting, you may deliver your completed proxy card in person. If you are a street name stockholder and wish to vote at the AnnualSpecial Meeting, you will need to obtain a proxy form from the institution that holds your shares. All votes will be tabulated by the inspector of elections appointed for the AnnualSpecial Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes.
We provide Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.
How Many Votes do I Have?
Each share of our common stock that you own as of April 25, 2022January 18, 2023 entitles you to one vote.
Is My Vote Confidential?
Yes, your vote is confidential. Only the inspector of elections, individuals who help with processing and counting your votes and persons who need access for legal reasons will have access to your vote. This information will not be disclosed, except as required by law.
How Will my Shares be Voted if I Give No Specific Instruction?
We must vote your shares as 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:
1. | “FOR” the |
2. | “FOR” |
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3. | “FOR” |
This authorization would exist, for example, 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 AnnualSpecial Meeting and you do not provide specific voting instructions, your shares will be voted at the discretion of the proxies.
How are Votes Counted?
Votes will be counted by the inspector of election appointed for the AnnualSpecial Meeting who will separately count 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.
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What is a Broker Non-Vote?
If you are a beneficial owner of shares held by a broker, bank, trust or other nominee and you do not provide your broker, bank, trustee or other nominee with voting instructions, your shares may constitute “broker non-votes”. Broker non-votes occur on a matter when the broker, bank, trustee or other nominee is not permitted under applicable stock exchange rules to vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters.
Proposal Nos. 1 and 3 are considered “non-routine” matters, while Proposal 2 is considered a “routine” matter. Therefore, if you are a beneficial owner of shares held in street name, andyou 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 Proposal Nos. 1 and 3, andany “non-routine” proposals. This vote is called a broker non-vote will occur on these matters. In tabulating the voting result for any particular proposal, shares that constitute“broker non-vote.” Because broker non-votes are not considered voting power present with respectunder Delaware law to that proposal. Thus,be entitled to vote at the Special Meeting, broker non-votes will not affectbe included in the outcometabulation of the voting results of any of the proposals and, therefore, will have no effect on these proposals.
Our common stock is listed on the Nasdaq Capital Market. However, under current New York Stock Exchange (“NYSE”) rules and interpretations that govern broker non-votes: Proposal No. 1 for the approval of the reverse stock split is considered a discretionary matter, being voted on at the Annual Meeting, assuming that a quorum is obtained. Because Proposal 2 is a “routine” matter,and a broker bank, trustee or other nominee will be permitted to exercise its discretion to vote uninstructed shares on the proposal. Proposal No. 2 and 3 for the approval of the Exchange Cap Proposal and Share Cap Proposal, respectively, are considered non-discretionary matters, and a broker will not be permittee to exercise its discretion to vote uninstructed shares on the proposals. Because NYSE rules apply to all brokers that are members of the NYSE, this proposal, which means there will be no broker non-votesprohibition applies to the Special Meeting even though our common stock is listed on this matter.the Nasdaq Capital Market.
What is an Abstention?
An abstention is a stockholder’s affirmative choice to decline to vote on a proposal. Under Delaware law, abstentions are counted as shares present and entitled to vote at the AnnualSpecial Meeting.
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A “quorum” is necessary to conduct business at the Annual Meeting. A quorum is established if the holders of a majority in voting power of our capital stock issued and outstanding and entitled to vote are present at the Annual Meeting, either in person or represented by proxy. Abstentions will be counted as present for purposes of determining a quorum at the Annual Meeting. Similarly, broker non-votes will be counted as present for purposes of determining a quorum at the Annual Meeting to the extent that the brokers, banks, trustees or other nominees use their discretionary authority to vote such shares on Proposal. 2. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.
How Many Votes are Needed for Each Proposal to Pass?
Proposal |
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To approve, in accordance with Nasdaq Marketplace Rule 5635(d), the issuance of our common stock to YA II PN, Ltd. (“Yorkville”) in excess of the exchange cap of the Standby Equity Purchase Agreement dated October 13, 2022, by and between the Company and Yorkville (included in Appendix B to this proxy statement) |
| A majority of the votes entitled to vote thereon and present at the Special Meeting |
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To approve, in accordance with Nasdaq Marketplace Rule 5635(d), the issuance of our common stock to the holder of the | |
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What Are the Voting Procedures?
In voting by proxy with regard to the election of directors, you may vote in favor of all nominees, withhold your votes as to all nominees, or vote in favor of specific nominees and withhold your votes as to specific nominees. With regard to other proposals,reverse stock split, you may vote in favor of or against the proposal, or you may abstain from voting on the proposal. In voting by proxy with regard to the Exchange Cap Proposal and the Share Cap Proposal, you may vote in favor of or against either proposal, or you may abstain from voting on either proposal. You should specify your respective choices on the accompanying proxy card or your vote instruction form.
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Is My Proxy Revocable?
You may revoke your proxy and reclaim your right to vote at any time before your proxy is voted by giving written notice to the Secretary of Kiromic, by delivering a properly completed, later-dated proxy card or vote instruction form or by voting in person at the AnnualSpecial Meeting. All written notices of revocation and other communications with respect to revocations of proxies should be addressed to: 7707 Fannin Street, Suite 140, Houston, TX 77054, Attention: Secretary, or by facsimile at 866-419-6193. Your most current proxy card or Internet or telphonetelephone proxy is the one that will be counted.
Who is Paying for the Expenses Involved in Preparing and Mailing this Proxy Statement?
All of the expenses involved in preparing, assembling and mailing these proxy materials and all costs of soliciting proxies will be paid by us. We have engaged Alliance Advisors, LLC to assist in the solicitation of proxies and provide related advice and information support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $32,000 in the aggregate. In addition to the solicitation by mail, proxies may be solicited by our officers and other employees by telephone or in person. Such persons will receive no compensation for their services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians, nominees and
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fiduciaries to forward solicitation materials to the beneficial owners of the shares held of record by such persons, and we may reimburse such persons for reasonable out of pocket expenses incurred by them in forwarding solicitation materials.
How can I Find out the Results of the Voting at the AnnualSpecial Meeting?
Preliminary voting results will be announced at the AnnualSpecial Meeting. In addition, final voting results will be disclosed in a Current Report on Form 8-K that we expect to file with the SEC within four business days after the AnnualSpecial Meeting. If final voting results are not available to us in time to file a Form 8-K with the SEC within four business days after the AnnualSpecial Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.
When are Stockholder Proposals Due for the 2023 Annual Meeting?
Any appropriate proposal submitted by a stockholder and intended to be presented at the 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) must behave been submitted in writing to the Company’s Secretary at 7707 Fannin Street, Suite 140, Houston, TX 77054 and received no later than December 30,31, 2022, 2023, to be includable in the Company’s proxy statement and related proxy for the 2023 Annual Meeting. However, if the date of the 2023 Annual Meeting is convened more than 30 days before, or delayed by more than 30 days after, June 22, 2022,2023, to be considered for inclusion in proxy materials for our 2023 Annual Meeting, a stockholder proposal must be submitted in writing to the Company’s Secretary at 7707 Fannin Street, Suite 140, Houston, TX 77054, a reasonable time before we begin to print and send our proxy materials for the 2023 Annual Meeting. A stockholder proposal will need to comply with the SEC regulations under Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Although the Board will consider stockholder proposals, we reserve the right to omit from our proxy statement, or to vote against, stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8.
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Do the Company’s Officers and Directors have an Interest in Any of the Matters to Be Acted Upon at the Annual Meeting?
Members of the Board have an interest in Proposal 1, the election to the Board of the five (5) director nominees set forth herein, as all of the nominees are currently members of the Board. Members of the Board and executive officers of Kiromic do not have any interest in Proposal 2, the ratification of the appointment of our independent registered public accounting firm. Members of the Board and the executive officers of Kiromic are eligible to receive awards under the terms of the 2021 Plan, and they therefore have a substantial interest in Proposal 3.
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THE REVERSE STOCK SPLIT PROPOSAL
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect five (5) directors to hold office until the 2023 Annual Meeting. Directors are elected by a plurality of votes cast by stockholders. In the event the nominees are unable or unwilling to serve as directors at the time of the Annual Meeting, the proxies will be voted for any substitute nominees designated by the present Board or the proxy holders to fill such vacancy, or for the balance of the nominees named without nomination of a substitute, or the size of the Board will be reduced in accordance with the Bylaws of the Company. The Board has no reason to believe that the persons named below will be unable or unwilling to serve as nominees or as directors if elected.
Assuming a quorum is present, the five (5) nominees receiving the highest number of affirmative votes of shares entitled to be voted for such persons will be elected as directors of the Company to serve for a one-year term. Unless marked otherwise, proxies received will be voted “FOR” the election of the nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event, the specific nominees to be voted for will be determined by the proxy holders.
Information with Respect to Director Nominees
Listed below are the current directors who are nominated to hold office until their successors are elected and qualified, and their ages as of April 25, 2022
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The names of the nominees and certain biographical information about each current director standing for election at the Annual Meeting, including a description of his or her business experience, qualifications, education and skills that led our Board to conclude that such individual should serve as a member of our Board, are set forth below:
Pietro Bersani, CPA. Mr. Bersani has served as our interim Chief Executive Officer since January of 2022 and as a member of our Board since June 2020. From April 2020 to January 2022, Mr. Bersani was a Partner with B2B CFO Partners, LLC, which provides strategic management advisory services to owners of privately held companies. From November 2019 to March 2020, he served as the President, and Chief Executive Officer of K.P. Diamond Eagle, Inc., a consulting firm specialized in development of innovative commercial and private aviation business models. He served as a Senior Director within Alvarez & Marsal’s Private Equity Performance Improvement Practice, LLP between August 2018 and October 2019. From October 2016 to July 2018, he served as President and Chief Executive Officer of K.P. Diamond Eagle, Inc. Prior to those professional experiences, Mr. Bersani served as the Chief Financial Officer of Fuel Systems Solutions, Inc. between April 2011 and October 2016. Mr. Bersani is a Certified Public Accountant and is also a Certified Public Auditor and a Chartered Certified Accountant in Italy where he developed a significant knowledge of US GAAP and IFRS. Mr. Bersani earned a BA and MA in Business Economics from L. Bocconi University, Italy.
We believe Mr. Bersani is qualified to serve as a member of our Board because of his strong record of leadership as an executive officer and his financial background.
Americo Cicchetti, PhD. Dr. Cicchetti has served as a member of ourOur board of directors since March 2020. Dr. Cicchetti has servedapproved an amendment to our Certificate of Incorporation, as amended, to combine the outstanding shares of our common stock into a Professorlesser number of Management at Università Cattolica del Sacro Cuore, Faculty of Economics, Rome since 2006. He is also currentlyoutstanding shares (a “Reverse Stock Split”). If approved by the Director of the Graduate School of Health Economics and Management at Università Cattolica del Sacro Cuore.
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In addition to his academic experience, Dr. Cicchetti was a member of the Price and Reimbursement Committee of the Italian National Drug Agency from 2009-2015. He is a member of the European Network of Health Technology Assessment; Member of the Innovation Steering Group of the National HTA Program for Medical Devices (Ministry of Health, Italy); and Member of the National Immunization Technical Advisory Group at the Ministry of Health, Italy since 2019.
He is a member of the European Network of Health Technology Assessment; Member of the Innovation Steering Group of the National HTA Program for Medical Devices (Ministry of Health, Italy); Member of the National Immunization Technical Advisory Group at the Ministry of Health, Italy since 2019; Member of the Health and Research Commission of the Rome Foundation since 2007; and a Member of the Board of Directors of the Health and Research Foundation since 2017.
Furthermore, Dr. Cicchetti has servedstockholders as the Chief Executive Officer and a Director for Molipharma S.R.L. since January 2020, whose core business is the research and development of new drugs and diagnostics aimed at predicting, detecting and treating female oncological diseases. He has also serves as an independent board member for Foundation Health and Research, and Leonida SICAF, a fixed capital investment company. He obtained his PhD in Management from University of Bologna, and his B.A. from University of Rome. Dr. Cicchetti was selected to serve on the board due to his industry experience.
We believe Dr. Cicchetti’s qualifications to serve on our board include his extensive medical knowledge and experience in the pharmaceutical industry.
Michael Nagel. Mr. Nagel has served on our board of directors since October 2020. He has over 30 years of sales and marketing experience in the medical device industry. Since 2012, Mr. Nagel has served as the President and CEO of Vomaris Innovations, Inc, which specializes in wireless microcurrent-generating technologies that are focused on regeneration, healing, and recovery. Previously, Mr. Nagel served as the Chief Commercial Officer of Neomend, a biomaterial company that developed ProGel, a PMA approved surgical sealant for lung surgery. From 1997 to 2005, Mr. Nagel also served as Co-Founder and Vice President of Worldwide Sales and Marketing at Vascular Solutions, Inc.
In addition to Mr. Nagel’s executive experience, he also serves as a director for Franklin Mountain Medical, LLC an early stage company in the structural heart market. Mr. Nagel holds both a B.A. in Business and a M.B.A. from the University of St. Thomas. Mr. Nagel was selected to serve onproposed, the board of directors duewould have the sole discretion to his industry experience.
We believe Mr. Nagel’s qualifications to serve on our board include his industry knowledge and sales and marketing experience.
Dr. Karen Reeves. Dr. Reeves has served on our board of directors since February 2022. Dr. Reeves has served as President and Chief Medical Officer of AZTherapies, Inc., an advanced clinical-stage biopharmaceutical company, since September 2017. Dr. Reeves began her biopharma careereffect the Reverse Stock Split, if at Pfizer Inc. where she served in roles of increasing responsibility including as VP, Head, Global Clinical Submissions Quality. She has more than 25 years of experience in clinical R&D, business development, regulatory, operational development, and management gained at small, medium, and large life science companies. She has also served as Global Head of Medical Science at Astellas Pharma Global Development, Inc., a pharmaceutical company. Dr. Reeves has worked across a variety of therapeutic areas including neuroscience, oncology, immunology, infectious diseases, cardiovascular, and urology, as well as early and late stages of drug development, and is experienced in successful regulatory filings with the FDA and global regulators. She has held faculty positions at Harvard University and Tufts Medical School. Dr. Reeves received her BA from Yale University and her MD degree from University of Vermont Medical School. Dr. Reeves was elected to our board of directors due to her industry experience.
We believe Dr. Reeves’ qualifications to serve on our board include her extensive medical knowledge and experience in the pharmaceutical industry.
Frank Tirelli. Mr. Tirelli has served on our board of directors since January 2022. Mr. Tirelli has served as Chairman of Professional Services and a memberall, within one (1) year of the Strategic Advisory Board at alliantgroup, LP, an international consulting firm since September 2018. Mr. Tirelli has also served ondate the Strategic Advisory Board of Alliant
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Cybersecurity. Since January 2017, Mr. Tirelli has also served as Chief Executive Officer of Finaxstrure Associates LLC, a company that provides board of director advisory services and expert witness services. From 2000 to 2003, Mr. Tirelli served as the President and Chief Executive Officer of Herbalife International Inc. (NYSE: HLF), a publicly traded nutrition company that conducted business in 52 countries and generated $2 billion in sales. Mr. Tirelli has 30 years of experience with Deloitte & Touche LLP (“Deloitte”), one of the world’s premier accounting firms, including service as Chairman and CEO of Deloitte Italy and Vice Chairman of Deloitte U.S. Mr. Tirelliproposal is a licensed CPA in Connecticut and California. He received a BS in Accounting from Boston College and an MBA from Babson College. Mr. Tirelli was selected to serve on the board of directors due to his being an audit committee "financial expert" under the SEC regulations.
We believe Mr. Tirelli’s qualifications to serve on our board include his financial background and leadership experience.
Family Relationships
None.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers have, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.
Board Recommendation
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES TO THE BOARD SET FORTH IN THIS PROPOSAL 1.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
During the year ended December 31, 2021:
Each member of the Board attended at least seventy-five percent (75%) or more of the aggregate of (i) the total number of Board meetings held during the period of such member’s service and (ii) the total number of meetings of committees of the Board on which such member served, during the period of such member’s service.
All Board members are encouraged to attend our annual meetings ofapproved by stockholders in person. In 2021, all of our directors virtually attended our 2021 Annual Meeting of Stockholders.
Director Independence
Our Board has determined that a majority of the Board consists of members who are currently “independent” as that term is defined under Nasdaq Listing Rule 5605(a)(2). The Board considers Americo Cicchetti, Michael Nagel, Karen Reeves and Frank Tirelli to be “independent.” Mr. Bersani, is not considered to be “independent” as defined by Nasdaq Listing Rule 5605(a)(2) due to his position as our Interim Chief Executive Officer.
Board Leadership Structure
Our bylaws and governance principles provide the Board with the flexibility to combine or separate the positions of Chairman and Chief Executive Officer. Michael Nagel currently serves as the Chairman of our Board. Our Board believes that the separation of these positions strengthens the independence of our Board and allows us to have a Chairman focused on the leadership of the Board while allowing our Chief Executive Officer to focus more of his time and energy on managing our operations. The Board currently believes this structure works well to meet the leadership needs of the Board and of the Company. Mr. Pietro Bersani, our Interim-Chief Executive Officer, has comprehensive industry expertise and is able to devote substantial time to the Company, and Mr. Nagel, our Chairman, is able to focus on longer term and strategic matters, and to provide related leadership tofix the Board. As a result, we do not currently intend to combine these positions; however a change in this leadership structure could be made if the Board determines it is in the best long-term interests of stockholders. For example, if the two roles were to be combined, we believe that the independence of the majority of our directors, and the three fully independent Board committees, would provide effective oversight of our management and the Company.
Board Leadership Structure and Role in Risk Oversight
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Management is responsiblespecific ratio for the day-to-day managementcombination within a range of the risks we face, while the Board, asone-for-two (1-for-2) to a whole and through its committees, has responsibility for the oversightmaximum of risk management. In its risk oversight role, the Board is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The Board believes that establishing the right “tone at the top” and that full and open communication between executive management and the Board are essential for effective risk management and oversight. Our CEO communicates frequently with members of the Board to discuss strategy and challenges facing our company. Senior management usually attends our regular quarterly Board meetings and is available to address any questions or concerns raised by the Board on
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risk management-related and any other matters. Each quarter, the Board receives presentations from senior management on matters involving our key areas of operations.
Board Committees
Our Board has established standing Audit, Compensation and Nominating and Corporate Governance Committees to devote attention to specific subjects and to assist it in the discharge of its responsibilities. All committees operate under a written charter adopted by our Board, each of which is available on our Internet website at https://ir.kiromic.com.
Audit Committee
The Audit Committee’s responsibilities include: (i) reviewing the independence, qualifications, services, fees, and performance of the independent registered public accountants, (ii) appointing, replacing and discharging the independent registered public accounting firm, (iii) pre-approving the professional services provided by the independent registered public accounting firm, (iv) reviewing the scope of the annual audit and reports and recommendations submitted by the independent registered public accounting firm, and (v) reviewing our financial reporting and accounting policies, including any significant changes, with management and the independent registered public accounting firm. The Audit Committee also prepares the Audit Committee report that is required pursuant to the rules of the SEC.
The Audit Committee currently consists of Frank Tirelli, chairperson, Americo Cicchetti, and Michael Nagel. The Board has determined that all members of the Audit Committee are “independent” for purposes of service on the Audit Committee as provided under applicable SEC and Nasdaq rules. The Board has determined that Frank Tirelli is an “audit committee financial expert” within the meaning of Item 407(d)(5) of SEC Regulation S-K.one-for-thirty (1-for-30) split. The board of directors has adoptedthe discretion to abandon the amendment and not implement the Reverse Stock Split.
If approved by our stockholders, this proposal would permit (but not require) the board of directors to effect a written charter setting forth the authority and responsibilitiesReverse Stock Split of the Audit Committee.
Compensation Committee
The Compensation Committee has responsibility for assistingoutstanding shares of our common stock within one (1) year of the date the proposal is approved by stockholders, at a specific ratio within a range of one-for-two (1-for-2) to a maximum of a one-for-thirty (1-for-30) split, with the specific ratio to be fixed within this range by the board of directors in among other things, (i) evaluating and making recommendations regarding the compensation of the executive officers and directors of our company, (ii) assuringits sole discretion without further stockholder approval. We believe that the executive officers are compensated effectively in a manner consistent with our stated compensation strategy, (iii) producing an annual report on executive compensation in accordance with the rules and regulations promulgated by the SEC, (iv) periodically evaluating the terms and administration of our incentive plans and benefit programs and (v) monitoring of compliance with the legal prohibition on loans to our directors and executive officers.
The Compensation Committee currently consists of Americo Cicchetti, chairperson, Michael Nagel, and Karen Reeves. The Board has determined that all members of the Compensation Committee are “independent” for purposes of service on the Compensation Committee as provided under applicable listing standards of Nasdaq.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee was, during the year ended December 31, 2021, an officer or employee of ours, was formerly an officer of ours or had any relationship requiring disclosure by us under Item 404 of Regulation S-K. No interlocking relationship as described in Item 407(e)(4) of Regulation S-K exists between any of our executive officers or Compensation Committee members, on the one hand, and the executive officers or compensation committee members of any other entity, on the other hand, nor has any such interlocking relationship existed in the past.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee has responsibility for assistingenabling the board of directors to fix the specific ratio of the Reverse Stock Split within the stated range will provide us with the flexibility to implement it in a manner designed to maximize the anticipated benefits for our stockholders.
In fixing the ratio, the board of directors may consider, among other things, (i) effecting board organization, membershipfactors such as: the initial and function including identifying qualified board nominees, (ii) effectingcontinued listing requirements of the organization, membershipNasdaq Capital Market; the number of shares of our common stock outstanding; potential financing opportunities; and functionprevailing general market and economic conditions.
The Reverse Stock Split, if approved by our stockholders, would become effective upon the filing of board committees including composition and recommendationthe amendment to our Certificate of qualified candidates, (iii) establishment of and subsequent periodic evaluation of successor planning for the chief executive officer and other executive officers, (iv) development and evaluation of criteria for board
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membership such as overall qualifications, term limits, age limits and independence and (v) oversight of complianceIncorporation with the Corporate Governance Guidelines.Secretary of State of the State of Delaware, or at the later time set forth in the amendment. The Nominating and Corporate Governance Committee shall identify and evaluateexact timing of the qualifications of all candidates for nomination for election as directors. Potential nominees are identifiedamendment will be determined by the board of directors based on its evaluation as to when such action will be the criteria, skillsmost advantageous to our Company and qualifications that have been recognizedour stockholders. In addition, the board of directors reserves the right, notwithstanding stockholder approval and without further action by the Nominatingstockholders, to abandon the amendment and Corporate Governance Committee. Whilethe Reverse Stock Split if, at any time prior to the effectiveness of the filing of the amendment with the Secretary of State of the State of Delaware, the board of directors, in its sole discretion, determines that it is no longer in our nominationbest interest and corporate governance policythe best interests of our stockholders to proceed.
The proposed form of amendment to our certificate of incorporation to effect the Reverse Stock Split is attached as Appendix A to this Proxy Statement. Any amendment to our certificate of incorporation to effect the Reverse Stock Split will include the Reverse Stock Split ratio fixed by the board of directors, within the range approved by our stockholders.
Reasons for the Reverse Stock Split
The Company’s primary reasons for approving and recommending the Reverse Stock Split are to make our common stock more attractive to certain institutional investors, which would provide for a stronger investor base and to increase the per share price and bid price of our common stock to regain compliance with the continued listing requirements of Nasdaq.
On March 18, 2022, the Company received a letter from the Listing Qualifications staff of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that it was no longer in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed companies to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Requirement”). The letter noted that the bid price of the Company’s common stock was below $1.00 for the 30-consecutive business day period from February 3, 2022 through March 17, 2022.
The notification letter had no immediate effect on the Company’s listing on the Nasdaq Capital Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 days, or until September 14, 2022, to regain
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compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days.
Since the Company had not regained compliance by September 14, 2022, the Company was eligible for an additional 180 calendar day compliance period. To qualify, the Company was required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market with the exception of the Minimum Bid Requirement and provided Nasdaq with written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. On September 15, 2022, the Company received a letter from Nasdaq advising that the Company has been granted a 180-day extension to March 13, 2023 to regain compliance with the Minimum Bid Price Requirement, in accordance with Nasdaq Listing Rule 5810(c)(3)(A).
However, if it appears to Listing Qualifications staff that the Company will not be able to cure the deficiency, or if the Company does not prescribe specific diversitymeet the other listing standards, the Nominating and Corporate Governance Committee and its independent members seek to identify nominees that have a variety of perspectives, professional experience, education, differences in viewpoints and skills, and personal qualities that will result in a well-rounded board of directors.
The Nominating and Corporate Governance Committee currently consists of Karen Reeves, chairperson, Americo Cicchetti, and Frank Tirelli. The Board has determinedNasdaq could provide notice that the Nominating and Corporate Governance Committee is comprised solely of independent directors, as defined by Nasdaq.
Director Nominations
Criteria for Board Membership
The Nominating and Corporate Governance Committee is responsible for periodically reviewing the applicable skills and characteristics required of Board nominees with the Board in the context of the current Board composition and our circumstances. In making its recommendationsCompany’s common stock will become subject to the Board, the Nominating and Corporate Governance Committee considers, among other things, the qualifications of individual director candidates in light of the Board’s membership criteria as set forth in our Corporate Governance Guidelines. The Nominating and Corporate Governance Committee may utilize a variety of sources, including stockholder recommendations, Board member recommendations, executive search firms, management recommendations or other reasonable means to identify director candidates.
The Nominating and Corporate Governance Committee considers candidates recommended by our Board and management, as well as candidates submitted by our stockholders (as discussed below). Members of the Board or management who wish to recommend that a person be considered for Board membership are required to provide relevant qualifications and other information regarding the prospective candidate to the Nominating and Corporate Governance Committee along with their recommendations and reasons why they believe such person should be considered. The Nominating and Corporate Governance Committee then reviews each of the proposed candidates and determines whether or not to add such person to the proposed candidates list.delisting. In the event the Board determinesCompany receives notice that its common stock is being delisted, Nasdaq rules permit the Company to add an additional Board member,appeal any delisting determination by the Nominating and Corporate Governance Committee shall select candidates from this list in additionNasdaq staff to candidates drawn from any search firma Hearings Panel.
Reducing the number of outstanding shares of common stock should, absent other factors, generally increase the per share market price of the common stock. Although the intent of the Reverse Stock Split is to increase the price of the common stock, there can be no assurance, however, that even if the Reverse Stock Split is effected, that the NominatingCompany’s bid price of the Company’s common stock will be sufficient, over time, for the Company to regain or maintain compliance with the Nasdaq minimum bid price requirement.
In addition, the Company believes the Reverse Stock Split will make its common stock more attractive to a broader range of investors, as it believes that the current market price of the common stock may prevent certain institutional investors, professional investors and Corporate Governance Committee deems necessaryother members of the investing public from purchasing stock. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to retain for this purpose.
The criteria used in selecting Board candidates include the candidate’s integrity, business acumen, commitment, reputation among our various constituenciesdiscourage individual brokers from recommending low-priced stocks to their customers. Furthermore, some of those policies and communities, abilitypractices may function to make independent analytical inquiries, understandingthe processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were higher. The Company believes that the Reverse Stock Split will make our common stock a more attractive and cost effective investment for many investors, which in turn would enhance the liquidity of the holders of our common stock.
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. However, other factors, such as our financial results, market conditions and the market perception of our business environment, and willingness to devote adequate time to Board duties. The Board has also determinedmay adversely affect the market price of our common stock. As a result, there can be no assurance that gender and ethnic diversitythe Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split, that as a result of the BoardReverse Stock Split we will be an important factor in its evaluationable to meet or maintain a bid price over the minimum bid price requirement of candidates for director nominations. There are no other pre-established qualifications, qualitiesNasdaq or skills at this time that any particular director nominee must possess and nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law. The Nominating and Corporate Governance Committee does not assign specific weights to any particular criteria, nor has it adopted specific requirements. Rather, the Board believes that the backgrounds and qualificationsmarket price of the directors, considered as a group, should provide a composite mix of experience, knowledge and abilities thatour common stock will allow the Board to fulfill its responsibilities. The goal of the Nominating and Corporate Governance Committee is to assemble a Board that brings a variety of skills derived from high quality businesses and professional experience. The Nominating and Corporate Governance Committee seeks to ensure that at least a majority of the directors are independent under Nasdaq rules, that members of the Company’s audit committee meet the financial literacy and sophistication requirements under the Nasdaq rules, and at least one of them qualifies as an “audit committee financial expert” under the rules of the SEC, and that members of the compensation and Nominating and Corporate Governance Committee meet applicable independence and other requirements under the Nasdaq rules and rules of the SEC.
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Stockholder Recommendations
The Nominating and Corporate Governance Committee is responsible for the consideration of any written stockholder recommendations for candidates for the Board, which recommendations should be delivered or mailed, postage prepaid, to:
Nominating and Corporate Governance Committee
Kiromic BioPharma, Inc.
7707 Fannin Street, Suite 140
Houston, TX 77054
CC: Chief Financial Officer
Stockholder recommendations must include the following information to be considered by our governance and nominating committee: (a) all information relating to such recommended candidate as would be required to be disclosed for a director nominee pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being namednot decrease in the proxy statement as a nominee and to serving as a director if elected) and as required for stockholder nominationsfuture. Additionally, we cannot assure you that the market price per share of director candidates pursuantour common stock after the Reverse Stock Split will increase in proportion to the Company’s Second Amended and Restated Bylaws (“Bylaws”); (b) the names and addresses of the stockholders making the recommendation andreduction in the number of shares of the Company’sour common stock which are owned beneficially andoutstanding before the Reverse Stock Split. Accordingly, the total market capitalization of record by such stockholders; and (c) other appropriate biographical information and a statement asour common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
In evaluating whether to seek stockholder approval for the qualification of the nominee. There are no pre-established qualifications, qualities or skills at this time that any particular director nominee must possess and nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.
Any recommendations received from our security holders will be evaluated in the same manner that potential nominees suggested by Board members, management or other parties are evaluated.
Communications withReverse Stock Split, our Board took into consideration negative factors associated with reverse stock splits. These factors include: the negative perception of Directors
Stockholders seeking to communicate with our Board should submitreverse stock splits that investors, analysts and other stock market participants may hold; the fact that the stock prices of some companies that have effected reverse stock splits have subsequently declined, sometimes significantly, following their written comments to our Interim Chief Executive Officer, Mr. Pietro Bersani, at Kiromic BioPharma, Inc., 7707 Fannin Street, Suite 140, Houston, TX 77054. Mr. Bersani will forward such communications to each member of our Board; provided that, if in the opinion of Mr. Bersani it would be inappropriate to send a particular stockholder communication to a specific director, such communication will only be sent to the remaining directors (subject to the remaining directors concurring with such opinion).
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics to ensure that our business is conducted in a consistently legal and ethical manner. All of our employees, including our executive officers and directors, are required to comply with our Code of Business Conduct and Ethics.
The full text of the Code of Business Conduct and Ethics is posted on our website at https://ir.kiromic.com/. Any waiver of the Code of Business Conduct and Ethics for directors or executive officers must be approved by our Audit Committee. We will disclose future amendments to our Code of Business Conduct and Ethics, or waivers from our Code of Business Conduct and Ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website within four business days following the date of the amendment or waiver. In addition, we will disclose any waiver from our Code of Business Conduct and Ethics for our other executive officers and our directors on our website. A copy of our Code of Business Conduct and Ethics will also be provided free of charge upon request to: Secretary, Kiromic BioPharma, Inc. 7707 Fannin Street, Suite 140, Houston, TX 77054.
Hedging and Pledging Prohibition
Under our Insider Trading Policy, our directors, officers, employees, consultants and contractors (and each such individual’s family members, other members of a person’s household and entities controlled by a person covered by this policy, as described in the policy) are prohibited from engaging the following transactions at any time: (i) engaging inreverse stock splits;
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short sales
the possible adverse effect on liquidity that a reduced number of outstanding shares could cause; and the costs associated with implementing a reverse stock split.
Even if our securities; (ii) trading in put options, call options or other derivative securities on an exchange or in any other organized market; (iii) engaging in hedging or monetization transactions, including throughstockholders approve the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds; and (iv) holding our securities in a margin account or otherwise pledging our securities as collateral for loan.
Director Compensation
Generally,Reverse Stock Split, our Board believes thatreserves the level of director compensation should be based on time spent carrying out Board and committee responsibilities and be competitive with comparable companies. In addition,right not to effect the Board believes that a significant portion of director compensation should align director interests with the long-term interests of stockholders. The Board allows changesReverse Stock Split if in its director compensation practices based on recommendations and approvals of the compensation committee.
Our compensation committee approved the compensation of our non-employee directors, as described below. For 2022, our payment structures are in the list below.
The cash component of our non-employee director compensation is as follows:
Each current and new director is also eligible for an option grant, upon commencement of services, with a fair value of $57,000, vesting over one year in equal, quarterly installments as measured from the grant date.
The compensation of our other non-employee directors remains the same as in 2021. The compensation committee believes that our non-employee director compensation remains aligned with director compensation practices at our peer companies while considering the ongoing cash constraints of the Company.
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2021 Director Compensation
During year ended December 31, 2021, our non-employee directors received the following compensation for their services on the Board and its committees:
| | | | | | |
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| Cash Fees |
| Total | ||
Pietro Bersani | | $ | 167,756 | | $ | 167,756 |
Americo Cicchetti |
| $ | 42,000 | | $ | 42,000 |
Michael Nagel | | $ | 38,971 | | $ | 38,971 |
Jerry Schneider |
| $ | 37,750 | | $ | 37,750 |
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PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING
DECEMBER 31, 2022
The Audit Committee has selected Whitley Penn LLP (“Whitley Penn”) as the Company’s independent registered public accounting firm, to audit the consolidated financial statements of the Company for the fiscal year ending December 31, 2022. A representative of Whitley Penn is expected to be present at the Annual Meeting and will have the opportunity to make a statement at the Annual Meeting if they desire to do so. Further, such representative is expected to be available to respond to appropriate questions at the Annual Meeting.
Although ratification isBoard’s opinion it would not required by our Bylaws or otherwise, we are asking our stockholders to ratify this appointment as a matter of good corporate practice. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent accounting firm. Even if the selection is ratified, the Audit Committee may select a different independent accounting firm at any time during the year if it determines that this would be in the best interests of the Company and its stockholders.
Deloitte’s audit reports on the financial statements of the Company for the years ended December 31, 2020 and 2021, and the 2022 transition period did not contain any adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles except that Deloitte’s reports for the years ended December 31, 2021 and 2020 contained an explanatory note indicating that there was substantial doubt about the ability of the Company to continue as a going concern.
During the fiscal years ended December 31, 2021 and 2020, there were (i) no disagreements between the Company and Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which, if not resolved to Deloitte’s satisfaction, would have caused Deloitte to make reference thereto in their reports, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K, except for certain material weaknesses in internal control over financial reporting as of December 31, 2021. As further described in Part II, Item 9A, “Controls and Procedures,” of our Annual Report on Form 10-K for the fiscal year ended December 30, 2021, the material weaknesses relate to (i) the Company’s failure to implement formal processes for period end financial closing and reporting; (ii) the lack of resources to conduct an effective monitoring and oversight function independent from our operations; and (iii) the Company’s failure to implement controls to appropriately communicate relevant information from the FDA to appropriate parties on a timely basis (collectively, the “Material Weaknesses”).
Our Audit Committee has discussed the subject matter of each Material Weakness with Deloitte and has authorized Deloitte to respond fully to the inquiries of Whitley Penn concerning the subject matter of the Material Weaknesses. We believe that we are addressing the Material Weaknesses through measures including:
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Principal Accountant Fees and Services
The aggregate fees billed to the Company by Deloitte, the Company’s independent registered public accounting firm for the audit during the years ended December 31, 2021 and 2020, for the indicated services for each of the last two fiscal years were as follows:
| | | | | | |
| | Year Ended | ||||
| | December 31, | ||||
|
| 2021 |
| 2020 | ||
Audit Fees |
| $ | 1,339,799 | | $ | 721,600 |
Audit-Related Fees |
|
| 322,613 | |
| 530,400 |
Tax Fees |
|
| 123,500 | |
| — |
All Other Fees |
|
| — | |
| — |
Total |
| $ | 1,785,912 | | $ | 1,252,000 |
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Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Consistent with SEC policies and guidelines regarding auditor independence, the Audit Committee is responsible for the pre-approval of all audit and permissible non-audit services provided by our independent registered public accounting firm on a case-by-case basis. Our Audit Committee has established a policy regarding approval of all audit and permissible non-audit services provided by our principal accountants. Our Audit Committee pre-approves these services by category and service. Our Audit Committee has pre-approved all of the services provided by our independent registered public accounting firm.
Vote Required
The selection of our independent registered public accounting firm is not required to be submitted to a vote of our stockholders for ratification. However, we are submitting this matter to the stockholders as a matter of good corporate governance. Even if the appointment is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if it determines thateffect such a change would be in the best interests of us and our stockholders. If the appointment is not ratified, the Audit Committee will reconsider whether or not to retain Whitley Penn.
The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at the meeting by the holders entitled to vote thereon is required to approve the ratification of the appointment of Whitley Penn as our independent registered public accounting firm for the fiscal year ending December 31, 2022.
Board Recommendation
THE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF WHITLEY PENN LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022.
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AUDIT COMMITTEE REPORT
The following Audit Committee Report shall not be deemed to be “soliciting material,” deemed “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act. Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act that might incorporate by reference future filings, including this Proxy Statement, in whole or in part, the following Audit Committee Report shall not be incorporated by reference into any such filings.
The audit committee is a committee of the Board comprised solely of independent directors as required by the listing standards of Nasdaq and rules and regulations of the SEC. The audit committee provides assistance to the Board in fulfilling its legal and fiduciary obligations in matters involving the Company’s accounting, auditing, financial reporting, internal control and legal compliance functions by approving the services performed by the Company’s independent registered public accountants and reviewing their reports regarding the Company’s accounting practices and systems of internal accounting controls as set forth in a written charter adopted by the Board, which is available on the Company’s website at www.ir.kiromic.com. The composition and responsibilities of the audit committee, as reflected in its charter, are intended to be in accordance with applicable requirements. The audit committee reviews and assesses the adequacy of its charter and the audit committee’s performance on an annual basis.
The Company’s management is responsible for preparing the Company’s financial statements and the independent registered public accountants are responsible for auditing those financial statements. The audit committee is responsible for overseeing the conduct of these activities by the Company’s management and the independent registered public accountants. In this context, the audit committee has met and held discussions with management and the independent registered public accountants. Management represented to the audit committee that the Company’s consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, and the audit committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accountants.
The audit committee has discussed with the independent registered public accountants matters required to be discussed by Auditing Standard No. 1301, as adopted by the Public Company Accounting Oversight Board (“PCAOB”) and approved by the SEC. In addition, the independent registered public accountants provided to the audit committee the written disclosures and letter from the independent registered public accountants as required by applicable requirements of the PCAOB regarding the independent registered public accountants’ communications with the audit committee concerning independence and the audit committee has discussed with such accountants such accountants’ independence from the Company and its management. The audit committee has discussed with management and the independent registered public accounts the procedures for selection of consultants, fully considered whether those services provided by the independent registered public accountants are compatible with maintaining such accountants’ independence and has determined that the non-audit services performed by the independent registered public accountant are compatible with maintaining their independence.
The audit committee has discussed with the Company’s management and its independent registered public accountants, with and without management present, their evaluations of the Company’s internal accounting controls and the overall quality of the Company’s financial reporting. In reliance on the reviews and discussions with management and the independent registered public accountants referred to above, the audit committee recommended to the Board, and the Board has approved, the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the SEC.
In addition, the audit committee has selected Whitley Penn LLP as independent registered public accountants to audit the books, records and accounts of the Company and its subsidiaries for the fiscal year ending December 31, 2022.
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Reverse Stock Split.
PROPOSAL 3
AMENDMENT OF THE COMPANY’S 2021 PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE 2021 PLAN BY 1,000,000 SHARES OF COMMON STOCKPotential Effects of the Proposed Amendment
Summary
We are askingIf our stockholders to approve an amendment to our 2021 Plan to increasethe Reverse Stock Split and the board of directors effects it, the number of shares of common stock reserved for issuance thereunder from 880,785issued and outstanding will be reduced, depending upon the ratio determined by the board of directors. The Reverse Stock Split will affect all holders of our common stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company, except that as described below in “Fractional Shares,” record holders of common stock otherwise entitled to 1,880,785. a fractional share as a result of the Reverse Stock Split because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In addition, the Reverse Stock Split will not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares).
The Reverse Stock Split will not change the terms of the common stock. Additionally, the Reverse Stock Split will have no effect on the number of common stock that we are authorized to issue. After the Reverse Stock Split, the shares of common stock currently reservedwill have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the common stock now authorized. The common stock will remain fully paid and non-assessable.
After the effective time of the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act.
Registered “Book-Entry” Holders of Common Stock
Our registered holders of common stock hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not have stock certificates evidencing their ownership of the common stock. They are, however, provided with statements reflecting the number of shares registered in their accounts.
Stockholders who hold shares electronically in book-entry form with the transfer agent will not need to take action to receive evidence of their shares of post-Reverse Stock Split common stock.
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 will automatically be entitled to receive an additional fraction of a share of common stock to round up to the next whole share. In any event, cash will not be paid for issuance include 200,000fractional shares.
Effect of the Reverse Stock Split on Outstanding Stock Options and Warrants
Based upon the Reverse Stock Split ratio, proportionate adjustments are generally required to be made to the per share exercise price and the number of shares plusissuable upon the numberexercise of all outstanding options and warrants. This would result in approximately the same aggregate price being required to be paid under such options or warrants upon exercise, and approximately the same value of shares of common stock being delivered upon such exercise immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split. The number of shares reserved but unissued,for issuance pursuant to these securities will be reduced proportionately based upon the Reverse Stock Split ratio.
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Accounting Matters
The proposed amendment to our Certificate of Incorporation will not affect the par value of our common stock. As a result, at the effective time of the Reverse Stock Split, the stated capital on our balance sheet attributable to the common stock will be reduced in the same proportion as the Reverse Stock Split ratio, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. The per share net income or loss will be restated for prior periods to conform to the post-Reverse Stock Split presentation.
Certain Federal Income Tax Consequences of the Reverse Stock Split
The following summary describes, as of the date of this proxy statement, certain U.S. federal income tax consequences of the Reverse Stock Split to holders of our common stock. This summary addresses the tax consequences only to a U.S. holder, which is a beneficial owner of our common stock that is either:
● | an individual citizen or resident of the United States; |
● | a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia; |
● | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
● | a trust, if: (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons has the authority to control all of its substantial decisions or (ii) it was in existence before August 20, 1996 and a valid election is in place under applicable Treasury regulations to treat such trust as a U.S. person for U.S. federal income tax purposes |
This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations, administrative rulings and judicial authority, all as in effect as of the date of this proxy statement. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of the Reverse Stock Split.
This summary does not address all of the tax consequences that may be relevant to any particular investor, including tax considerations that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors. This summary also does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, persons whose functional currency is not the U.S. dollar, partnerships or other pass-through entities, traders in securities that elect to mark to market and dealers in securities or currencies, (ii) persons that hold our common stock as part of a position in a “straddle” or as part of a “hedging transaction,” “conversion transaction” or other integrated investment transaction for federal income tax purposes or (iii) persons that do not hold our common stock as “capital assets” (generally, property held for investment). This summary does not address backup withholding and information reporting. This summary does not address U.S. holders who beneficially own common stock through a “foreign financial institution” (as defined in Code Section 1471(d)(4)) or certain other non-U.S. entities specified in Code Section 1472. This summary does not address tax considerations arising under any state, local or foreign laws, or under federal estate or gift tax laws.
If a partnership (or other entity classified 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. Partnerships that hold our common stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Stock Split.
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Each holder should consult his, her or its own tax advisors concerning the particular U.S. federal tax consequences of the Reverse Stock Split, as well as the consequences arising under the Prior Plan when the 2021 Plan was established, pluslaws of any shares from the Prior Plan that have been terminatedother taxing jurisdiction, including any foreign, state, or cancelled after the Plan’s effective date. We intend to apply for listinglocal income tax consequences.
General Tax Treatment of the additionalReverse Stock Split
The Reverse Stock Split is intended to qualify as a “reorganization” under Section 368 of the Code that should constitute a “recapitalization” for U.S. federal income tax purposes. Assuming the Reverse Stock Split qualifies as a reorganization, a U.S. holder generally will not recognize gain or loss upon the exchange of our ordinary shares for a lesser number of ordinary shares, based upon the Reverse Stock Split ratio. A U.S. holder’s aggregate tax basis in the lesser number of ordinary shares received in the Reverse Stock Split will be the same such U.S. holder’s aggregate tax basis in the shares of our common stock that such U.S. holder owned immediately prior to the Reverse Stock Split. The holding period for the ordinary shares received in the Reverse Stock Split will include the period during which a U.S. holder held the shares of our common stock that were surrendered in the Reverse Stock Split. The United States Treasury regulations provide detailed rules for allocating the tax basis and holding period of the shares of our common stock surrendered to the shares of our common stock received pursuant to the Reverse Stock Split. U.S. holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the Nasdaq Capital Markets exchange.allocation of the tax basis and holding period of such shares.
On April 28, 2021, our boardTHE FOREGOING IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, AND DOES NOT CONSTITUTE A TAX OPINION. EACH HOLDER OF OUR COMMON SHARES SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO THEM AND FOR REFERENCE TO APPLICABLE PROVISIONS OF THE CODE.
Interests of directors adopted our 2021 Omnibus Equity Incentive Plan (the “2021 Plan”). The 2021 Plan became effective, on June 25, 2021, the date that it was approved by the our stockholders (the “Effective Date”).
Officers and Directors in this Proposal
Our administrator may grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock unitsofficers and other stock-based awards to participants to acquire shares of Company common stock under the 2021 Plan. The Plan is administered by the Compensation Committee. The closing price per-share of Company common stock on April 28, 2022 was $0.62. The following table sets forth, as of April 28, 2022, the approximate number of each class of participants eligible to participatedirectors do not have any substantial interest, direct or indirect, in the 2021 Plan and the basis of such participation.this proposal.
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Required Vote of Stockholders
The affirmative vote of the holders of a majority inof the voting power of the votes cast affirmatively or negatively (excluding abstentions) at the meeting by the holders entitled to vote thereon is required to approve the amendment of the 2021 Plan to increase the number of shares reserved for issuance thereunder from 880,785 shares of common stock to 1,880,785 shares of common stock.
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Dilution, Stock Available and Historical Stock Usage
Dilution. Subject to stockholder approval of the amendment to the 2021 Plan, 1,880,785 shares of Company common stock will be reserved for issuance under the 2021 Plan, which represents approximately 10.67% of our issued and outstanding shares of Company’s common stock, not including shares subject to outstanding awards under the Prior Plan. The Board believes that this number of shares of Company’s common stock constitutes reasonable potential equity dilution and provides a significant incentive for employees to increase the value of the Company for all stockholders.
As of the Record Date, we had: (i) 15,751,701 shares of Company common stock outstanding; (ii) 332,872 stock options outstanding (vested and unvested), with a weighted average exercise price of $8.49 per share; and (iii) 398,087 shares of unvested restricted stock outstanding. The new shares of Company’s common stock available under the 2021 Plan would represent an additional potential equity dilution of approximately 5.44%. Including the proposed additional shares of Company’s common stock under the 2021 Plan, the potential equity dilution from all equity incentive awards outstanding and available for grant under all of our equity plans would result in a maximum potential equity dilution of approximately 14.25%.
Shares Available; Certain Limitations. The maximum number of shares of common stock reserved and available for issuance under the 2021 Plan will be equal to 1,880,785 shares of common stock. We use the term “Exempt Award” to mean (i) an award granted in the assumption of, or in substitution for, outstanding awards previously granted by another business entity acquired by us or any of our subsidiaries or with which we or any of our subsidiaries merges, or (ii) an award that a participant purchases at fair market value.
New shares reserved for issuance under the 2021 Plan may be authorized but unissued shares of Company’s common stock or shares of Company’s common stock that will have been or may be reacquired by us in the open market, in private transactions or otherwise. If any shares of Company’s common stock subject to an award are forfeited, cancelled, exchanged or surrendered or if an award terminates or expires without a distribution of shares to the participant, the shares of Company common stock with respect to such award will, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for awards under the Plan except that any shares of Company common stock surrendered or withheld as payment of either the exercise price of an award and/or withholding taxes in respect of an award will not again be available for awards under the Plan. If an award is denominated in shares of Company’s common stock, but settled in cash, the number of shares of common stock previously subject to the award will again be available for grants under the 2021 Plan. If an award can only be settled in cash, it will not be counted against the total number of shares of common stock available for grant under the 2021 Plan. However, upon the exercise of any award granted in tandem with any other awards, such related awards will be cancelled as to the number of shares as to which the award is exercised and such number of shares of Company’s common stock will no longer be available for grant under the 2021 Plan.
As exhibited by the our responsible use of equity over the past several years and good corporate governance practices associated with equity and executive compensation practices in general, the stock reserved under the 2021 Plan will provide us with the platform needed for continued our growth, while managing program costs and share utilization levels within acceptable industry standards.
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Share Usage. In determining the requested number of shares of Company’s common stock reserved for issuance under the 2021 Plan, we evaluated the dilution and historic share usage, burn rate and the existing terms of outstanding awards under the Prior Plan. The annual share usage under our equity plans for the last three fiscal years was as follows:
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| | | | Fiscal Year | | Fiscal Year | | Fiscal Year | | | |
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| 2021 |
| 2020 |
| 2019 |
| Average | |
A | | Total Shares Granted During Fiscal Year(1) | | 416,310 | | 1,742,115 | | 209,505 | | 789,310 | |
B | | Basic Weighted Average Common Stock Outstanding |
| 11,417,083 | | 4,505,867 | | 2,862,809 | | 6,261,920 | |
C | | Burn Rate (A/B) |
| 3.65% | | 38.66% | | 7.32% | | 12.60% | |
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| | | | | | | | |
(1) Includes the number of options and full value awards (restricted shares of common stock) granted for such year. | |
Description of 2021 Plan
The following is a summary of the material features of the 2021 Plan. This summary is qualified in its entirety by the full text of the 2021 Plan, a copy of which is attached to this Proxy Statement as Appendix A.
Types of Awards. The 2021 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards. Items described above in the Section called “Shares Available” are incorporated herein by reference.
Administration. The 2021 Plan will be administered by our board of directors, or if our board of directors does not administer the 2021 Plan, a committee or subcommittee of our board of directors that complies with the applicable requirements of Section 16 of the Exchange Act and any other applicable legal or stock exchange listing requirements (each of our board of directors or such committee or subcommittee, the “plan administrator”). The plan administrator may interpret the 2021 Plan and may prescribe, amend and rescind rules and make all other determinations necessary or desirable for the administration of the 2021 Plan, provided that, subject to the equitable adjustment provisions described below, the plan administrator will not have the authority to reprice or cancel and re-grant any award at a lower exercise, base or purchase price or cancel any award with an exercise, base or purchase price in exchange for cash, property or other awards without first obtaining the approval of our stockholders.
The 2021 Plan permits the plan administrator to select the eligible recipients who will receive awards, to determine the terms and conditions of those awards, including but not limited to the exercise price or other purchase price of an award, the number of shares of common stock or cash or other property subject to an award, the term of an award and the vesting schedule applicable to an award, and to amend the terms and conditions of outstanding awards.
Restricted Stock and Restricted Stock Units. Restricted stock and RSUs may be granted under the 2021 Plan. The plan administrator will determine the purchase price, vesting schedule and performance goals, if any, and any other conditions that apply to a grant of restricted stock and RSUs. If the restrictions, performance goals or other conditions determined by the plan administrator are not satisfied, the restricted stock and RSUs will be forfeited. Subject to the provisions of the 2021 Plan and the applicable award agreement, the plan administrator has the sole discretion to provide for the lapse of restrictions in installments.
Unless the applicable award agreement provides otherwise, participants with restricted stock will generally have all of the rights of a stockholder; provided that dividends will only be paid if and when the underlying restricted stock vests. RSUs will not be entitled to dividends prior to vesting, but may be entitled to receive dividend equivalents if the award agreement provides for them. The rights of participants granted restricted stock or RSUs upon the termination of employment or service to us will be set forth in the award agreement.
Options. Incentive stock options and non-qualified stock options may be granted under the 2021 Plan. An “incentive stock option” means an option intended to qualify for tax treatment applicable to incentive stock options under Section 422 of the Internal Revenue Code (the “Code). A “non-qualified stock option” is an option that is not subject to
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statutory requirements and limitations required for certain tax advantages that are allowed under specific provisions of the Code. Each option granted under the Plan will be designated as a non-qualified stock option or an incentive stock option. At the discretion of the administrator, incentive stock options may be granted only to our employees, employees of our “parent corporation” (as such term is defined in Section 424(e) of the Code) or employees of our subsidiaries.
The exercise period of an option may not exceed ten years from the date of grant (five years from the date of grant in the case of incentive stock options granted to ten percent stockholders) and the exercise price may not be less than 100% of the fair market value of a share of common stock on the date the option is granted (110% of fair market value in the case of incentive stock options granted to ten percent stockholders). The exercise price for shares of common stock subject to an option may be paid in cash, or as determined by the administrator in its sole discretion, (i) through any cashless exercise procedure approved by the administrator (including the withholding of shares of common stock otherwise issuable upon exercise), (ii) by tendering unrestricted shares of common stock owned by the participant, (iii) with any other form of consideration approved by the administrator and permitted by applicable law or (iv) by any combination of these methods. The option holder will have no rights to dividends or distributions or other rights of a stockholder with respect to the shares of Common Stock subjectof the Company entitled to an option until the option holder has given written notice of exercise and paid the exercise price and applicable withholding taxes.
In the event of an participant’s termination of employment or service, the participant may exercise his or her option (to the extent vestedvote, voting together as of such date of termination) for such period of time as specified in his or her option agreement.
Stock Appreciation Rights. SARs may be granted either alone (a “free-standing SAR”) or in conjunction with all or part of any option granted under the 2021 Plan (a “tandem SAR”). A free-standing SAR will entitle its holder to receive,a single class, on this item at the timeSpecial Meeting is required for approval of exercise, an amount per share up to the excessthis Proposal 1. Proxies solicited by our Board of the fair market value (at the date of exercise) of a share of common stock over the base price of the free-standing SAR (which shall be no less than 100% of the fair market value of the related shares of common stock on the date of grant) multiplied by the number of shares in respect of which the SAR is being exercised. A tandem SAR will entitle its holder to receive, at the time of exercise of the SAR and surrender of the applicable portion of the related option, an amount per share up to the excess of the fair market value (at the date of exercise) of a share of common stock over the exercise price of the related option multiplied by the number of shares in respect of which the SAR is being exercised. The exercise period of a free-standing SAR may not exceed ten years from the date of grant. The exercise period of a tandem SAR will also expire upon the expiration of its related option.
The holder of a SAR will have no rights to dividends or any other rights of a stockholder with respect to the shares of Common Stock subject to the SAR until the holder has given written notice of exercise and paid the exercise price and applicable withholding taxes.
In the event of an participant’s termination of employment or service, the holder of a SAR may exercise his or her SAR (to the extent vested as of such date of termination) for such period of time as specified in his or her SAR agreement.
Other Stock-Based Awards. The administrator may grant other stock-based awards under the 2021 Plan, valued in whole or in part by reference to, or otherwise based on, shares of common stock. The administrator will determine the terms and conditions of these awards, including the number of shares of common stock to be granted pursuant to each award, the manner in which the awardDirectors will be settled, and the conditions to the vesting and paymentvoted for approval of the award (including the achievement of performance goals). The rights of participants granted other stock-based awards upon the termination of employment or service to us will be set forth in the applicable award agreement. In the event that a bonus is granted in the form of shares of common stock, the shares of common stock constituting such bonus shall, as determined by the administrator, be evidenced in uncertificated form or by a book entry record or a certificate issued in the name of the participant to whom such grant was made and delivered to such participant as soon as practicable after the date on which such bonus is payable. Any dividend or dividend equivalent award issued hereunder shall be subject to the same restrictions, conditions and risks of forfeiture as apply to the underlying award.
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Equitable Adjustment and Treatment of Outstanding Awards Upon a Change in Control
Equitable Adjustments. In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase, reorganization, special or extraordinary dividend or other extraordinary distribution (whether in the form of common shares, cash or other property), combination, exchange of shares, or other change in corporate structure affecting our common stock, an equitable substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities reserved for issuance under the 2021 Plan, (ii) the kind and number of securities subject to, and the exercise price of, any outstanding options and SARs granted under the 2021 Plan, (iii) the kind, number and purchase price of shares of common stock, or the amount of cash or amount or type of property, subject to outstanding restricted stock, RSUs and other stock-based awards granted under the 2021 Plan and (iv) the terms and conditions of any outstanding awards (including any applicable performance targets). Equitable substitutions or adjustments other than those listed above may also be made as determined by the plan administrator. In addition, the plan administrator may terminate all outstanding awards for the payment of cash or in-kind consideration having an aggregate fair market value equal to the excess of the fair market value of the shares of common stock, cash or other property covered by such awards over the aggregate exercise price, if any, of such awards, but if the exercise price of any outstanding award is equal to or greater than the fair market value of the shares of common stock, cash or other property covered by such award, the plan administrator may cancel the award without the payment of any consideration to the participant. With respect to awards subject to foreign laws, adjustments will be made in compliance with applicable requirements. Except to the extent determined by the plan administrator, adjustments to incentive stock options will be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code.
Change in Control. The 2021 Plan provides that,this Proposal 1 unless otherwise determined by the plan administrator and evidenced in an award agreement, if a “change in control” (as defined below) occurs and a participant is employed by us or any of our affiliates immediately prior to the consummation of the change in control, then the plan administrator, in its sole and absolute discretion, may (i) provide that any unvested or unexercisable portion of an award carrying a right to exercise will become fully vested and exercisable; and (ii) cause the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to any award granted under the 2021 Plan to lapse, and the awards will be deemed fully vested and any performance conditions imposed with respect to such awards will be deemed to be fully achieved at target performance levels. The administrator shall have discretion in connection with such change in control to provide that all outstanding and unexercised options and SARs shall expire upon the consummation of such change in control.specified.
For purposes of the 2021 Plan, a “change in control” means, in summary, the first to occur of the following events: (i) a person or entity becomes the beneficial owner of more than 50% of our voting power; (ii) an unapproved change in the majority membership of our board of directors; (iii) a merger or consolidation of us or any of our subsidiaries, other than (A) a merger or consolidation that results in our voting securities continuing to represent 50% or more of the combined voting power of the surviving entity or its parent and our board of directors immediately prior to the merger or consolidation continuing to represent at least a majority of the board of directors of the surviving entity or its parent or (B) a merger or consolidation effected to implement a recapitalization in which no person is or becomes the beneficial owner of our voting securities representing more than 50% of our combined voting power; or (iv) stockholder approval of a plan of our complete liquidation or dissolution or the consummation of an agreement for the sale or disposition of substantially all of our assets, other than (A) a sale or disposition to an entity, more than 50% of the combined voting power of which is owned by our stockholders in substantially the same proportions as their ownership of us immediately prior to such sale or (B) a sale or disposition to an entity controlled by our board of directors. However, a change in control will not be deemed to have occurred as a result of any transaction or series of integrated transactions following which our stockholders, immediately prior thereto, hold immediately afterward the same proportionate equity interests in the entity that owns all or substantially all of our assets.
Tax Withholding
Each participant will be required to make arrangements satisfactory to the plan administrator regarding payment of up to the maximum statutory tax rates in the participant’s applicable jurisdiction with respect to any award granted under the 2021 Plan, as determined by us. We have the right, to the extent permitted by applicable law, to deduct any such taxes from any payment of any kind otherwise due to the participant. With the approval of the plan administrator, the participant may satisfy the foregoing requirement by either electing to have us withhold from delivery of shares of common stock, cash or other property, as applicable, or by delivering already owned unrestricted shares of common stock, in each
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case, having a value not exceeding the applicable taxes to be withheld and applied to the tax obligations. We may also use any other method of obtaining the necessary payment or proceeds, as permitted by applicable law, to satisfy our withholding obligation with respect to any award.
Amendment and Termination of the 2021 Plan
The 2021 Plan provides our board of directors with authority to amend, alter or terminate the 2021 Plan, but no such action impair the rights of any participant with respect to outstanding awards without the participant’s consent. The plan administrator may amend an award, prospectively or retroactively, but no such amendment may materially impair the rights of any participant without the participant’s consent. Stockholder approval of any such action will be obtained if required to comply with applicable law. The 2021 Plan will terminate on the tenth anniversary of the Effective Date (although awards granted before that time will remain outstanding in accordance with their terms). Incentive stock options may not be granted under the 2021 Plan after the tenth anniversary of the date of its original adoption by the Board.
Clawback. If we are required to prepare a financial restatement due to the material non-compliance with any financial reporting requirement, then the plan administrator may require any Section 16 officer to repay or forfeit to us that part of the cash or equity incentive compensation received by that Section 16 officer during the preceding three years that the plan administrator determines was in excess of the amount that such Section 16 officer would have received had such cash or equity incentive compensation been calculated based on the financial results reported in the restated financial statement. The plan administrator may take into account any factors it deems reasonable in determining whether to seek recoupment of previously paid cash or equity incentive compensation and how much of such compensation to recoup from each Section 16 officer (which need not be the same amount or proportion for each Section 16 officer). The amount and form of the incentive compensation to be recouped shall be determined by the administrator in its sole and absolute discretion
US Federal Income Tax Consequences
The following is a summary of certain United States federal income tax consequences of awards under the 2021 Plan as of the date of this proxy statement. It does not purport to be a complete description of all applicable rules, and those rules (including those summarized here) are subject to change.
Non-Qualified Stock Options. A participant who has been granted a non-qualified stock option will not recognize taxable income upon the grant of a non-qualified stock option. Rather, at the time of exercise of such non-qualified stock option, the participant will recognize ordinary income for income tax purposes in an amount equal to the excess of the fair market value of the shares of common stock purchased over the exercise price. Subject to the limitations of Section 162(m) of the Code, we generally will be entitled to a tax deduction at such time and in the same amount that the participant recognizes ordinary income. If shares of common stock acquired upon exercise of a non-qualified stock option are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of such exercise will generally be taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the participant) depending upon the length of time such shares were held by the participant.
Incentive Stock Options. In general, no taxable income is realized by a participant upon the grant of an ISO. If shares of common stock are purchased by a participant pursuant to the exercise of an ISO granted under the 2021 Plan and the participant does not dispose of the option shares within the two-year period after the date of grant or within one year after the receipt of such option shares by the participant (a “qualifying disposition), then, generally (1) the participant will not realize ordinary income upon exercise and (2) upon sale of such option shares, any amount realized in excess of the exercise price paid for the option shares will be taxed to such participant as capital gain (or loss). The amount by which the fair market value of the common stock on the exercise date of an ISO exceeds the purchase price generally will constitute an item which increases the participant’s “alternative minimum taxable income.” If option shares acquired upon the exercise of an ISO are disposed of within either of the one-year and two year periods noted above (a “disqualifying disposition”), the participant generally would include in ordinary income in the year of disposition an amount equal to the excess of the fair market value of the option shares at the time of exercise, over the exercise price paid for the option shares (or, if less, the amount realized on the disposition of the option shares). Any additional gain would be treated as a as long-term or short-term capital gain (if the shares are a capital asset of the participant) depending upon the length of time such shares were held by the participant. Subject to certain exceptions, an option generally will not be treated as an ISO if it
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is exercised more than three months following termination of employment. If an ISO is exercised at a time when it no longer qualifies as an ISO, such option will be treated as a nonqualified stock option as discussed above. In general, subject to the limitations of Section 162(m) of the Code, we will receive an income tax deduction at the same time and in the same amount as the participant recognizes ordinary income.
Stock Appreciation Rights. A participant who is granted an SAR generally will not recognize ordinary income upon receipt of the SAR. Rather, at the time of exercise of such SAR, the participant will recognize ordinary income for income tax purposes in an amount equal to the value of any cash received and the fair market value on the date of exercise of any shares of common stock received. Subject to the limitations of Section 162(m) of the Code, we generally will be entitled to a tax deduction at such time and in the same amount, if any, that the participant recognizes as ordinary income. The participant’s tax basis in any shares of common stock received upon exercise of an SAR will be the fair market value of the shares of common stock on the date of exercise, and if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the participant) depending upon the length of time such shares were held by the participant.
Restricted Stock. A participant generally will not be taxed upon the grant of restricted stock, but rather will recognize ordinary income in an amount equal to the fair market value of the shares of common stock at the earlier of the time the shares become transferable or are no longer subject to a substantial risk of forfeiture (within the meaning of the Code), minus any purchase price paid for the shares. Subject to the limitations of Section 162(m) of the Code, we generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions. A participant’s tax basis in the shares of common stock will equal their fair market value at the time the restrictions lapse, and the participant’s holding period for capital gains purposes will begin at that time. Any cash dividends paid on the shares of common stock before the restrictions lapse will be taxable to the participant as additional compensation and not as dividend income, unless the individual has made an election under Section 83(b) of the Code. Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the restricted shares are awarded in an amount equal to their fair market value at that time, minus any purchase price paid for the shares, notwithstanding the fact that such stock is subject to restrictions or transfer and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the shares of common stock equal to their fair market value on the date of their award, and the participant’s holding period for capital gains purposes will begin at that time. Subject to the limitations of Section 162(m) of the Code, we generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income is recognized by such participant.
Restricted Stock Units. In general, the grant of RSUs will not result in income for the participant or in a tax deduction for us. Upon the settlement of such an award in cash or shares of common stock, the participant will recognize ordinary income equal to the aggregate value of the payment received and, subject to the limitations of Section 162(m) of the Code, we generally will be entitled to a tax deduction at the same time and in the same amount.
Other Awards. With respect to other stock-based awards, generally when the participant receives payment in respect of the award, the amount of cash and/or the fair market value of any shares of common stock or other property received will be ordinary income to the participant and subject to the limitations of Section 162(m) of the Code, we generally will be entitled to a tax deduction at the same time and in the same amount.
New Plan Benefits
Future grants under the 2021 Plan will be made at the discretion of the plan administrator and, accordingly, are not yet determinable. In addition, benefits under the 2021 Plan will depend on a number of factors, including the fair market value of our common stock on future dates and the exercise decisions made by participants. Consequently, at this time, it is not possible to determine the future benefits that might be received by participants receiving discretionary grants under the 2021 Plan.
Board Recommendation
The board of directors unanimously recommends a vote “FOR” Proposal 3.1.
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EXECUTIVE OFFICERS
PROPOSAL 2
APPROVAL, IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(D), OF THE ISSUANCE OF OUR COMMON STOCK TO YORKVILLE IN EXCESS OF THE EXCHANGE CAP OF THE STANDBY EQUITY PURCHASE AGREEMENT DATED OCTOBER 13, 2022, BY AND BETWEEN THE COMPANY AND YORKVILLE (THE “EXCHANGE CAP PROPOSAL”)
The biographical profiles
Background
As previously disclosed, on October 13, 2022, we entered into a Standby Equity Purchase Agreement (the “SEPA,” included as Appendix B to this Proxy Statement) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to the Investor up to $5,000,000 (the “Commitment Amount”) of its shares of common stock, par value $0.001 per share (“Common Stock”), subject to increase by an additional $3,000,000 of Common Stock at the Company’s election (the “Commitment Increase”), at the Company’s request any time during the commitment period commencing on October 13, 2022 and terminating on the earliest of (i) the first day of the month following pages contain certain information with respectthe 24-month anniversary of the SEPA and (ii) the date on which the Investor shall have made payment of any advances requested pursuant to our Executive Officers.
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For information regarding Mr. Bersani, please referthe SEPA for shares of the Common Stock equal to "Proposal 1- Election of Directors," above.
Daniel Clark. Daniel Clark has served as our as Interim Chief Financial Officer since September 2021. Mr. Clark, joinedthe Commitment Amount. Each sale the Company requests under the SEPA (an “Advance”) may be for the greater of (i) an amount of shares of Common Stock equal to the average of the daily traded amount of the Common Stock during the five trading days immediately preceding the notice of an Advance or (ii) $1,000,000. The shares would be purchased at 95.0% of the Market Price (as defined below) and would be subject to certain limitations, including that the Investor could not purchase any shares that would result in February 2020 and servedit owning more than 9.99% of the outstanding Common Stock after such purchase (the "Ownership Limitation") or an aggregate of 19.99% of the outstanding Common Stock as of the date of the SEPA (the "Exchange Cap"). The Exchange Cap will not apply under certain circumstances, including to any sales of Common Stock under the SEPA that equal or exceed $0.3111, representing the lower of (i) the closing price of the Common Stock as reflected on Nasdaq.com immediately preceding the date of the SEPA, or (ii) the average closing price of the Common Stock for the five trading days immediately preceding the date of the SEPA. “Market Price” is defined in the SEPA as the Company’s Corporate Controller until September 2021, when he was promoted to Vice President – Finance Operations prior to his appointment as interim Chief Financial Officer. Before joining the Company, Mr. Clark was a Manager with The Siegfried Group, a national accounting services firm, from June 2018 to February 2020. Prior to his employment with The Siegfried Group, Mr. Clark served as Senior Consultant - Officelowest of the CFO Solutions for FTI Consulting, a global financial consulting firm, from January 2017daily VWAPs (as defined below) of the Common Stock during each of the three consecutive trading days commencing on the day of the Company’s submission of an Advance notice to May 2018. Prior to that, Mr. Clark was Senior Associate - Audit at KPMG US, a member of Big Four global accounting firm KPMG, from August 2011 to June 2015. Mr. Clark holds a Master of Business Administration from Texas A&M University, Mays School of Business, and a Bachelor of Science in Business Administration with a major in Accounting from the University of Richmond, Robins School of Business. Mr. ClarkInvestor. “VWAP” is a licensed Certified Public Accountantdefined in the stateSEPA to mean, for any trading day, the daily volume weighted average price of Texas.
Scott Dahlbeck, MD, PharmD.the Common Stock for such date on the Nasdaq Capital Market as reported by Bloomberg L.P. during regular trading hours. Dr. Dahlbeck has served as our Chief of Staff since February 2020. Prior to that, he served as the Company’s Chief Medical Officer from October 2019 to February 2020. He also previously served as our President from January 2013 to October 2019. Dr. Dahlbeck is an expert in prostate cancer research and treatment and has served as a Radiation Oncologist for several cancer centers, including as an Adjunct Assistant Professor in Internal Medicine, Pathology, and Urology at the Texas Tech University Health Sciences Center. Dr. Dahlbeck has also patented, manufactured, and commercialized IP and has more than a decade of experience in medical and oncology commerce. Dr. Dahlbeck earned an MD from the University of Texas Health Science Center at Houston, completed residencies in family practice and radiation oncology, and earned a PharmD degree from the University of Nebraska Medical Center, College of Pharmacy.
Michael Ryan, PhD. Dr. Ryan has served as the Chief BioInformatics Research Computing Officer as of July 2021 after his bioinformatics services company, InSilico Solutions, LLC (“InSilico”), was acquired by Kiromic. He has worked with Kiromic for the past two years as an external consultant leading the team that developed Kiromic’s revolutionary target discovery system, Diamond.
Dr. Ryan first workedAs of the date of the SEPA, there were 16,466,718 shares of the Company’s common stock issued and outstanding. Accordingly, the Exchange Cap is 3,291,696 shares. The SEPA provides that (a) the Exchange Cap will not apply if the Company’s stockholders have approved issuances in excess of the Exchange Cap in accordance with the rules of The Nasdaq Capital Market, and (b) as to any Advance, if the purchase price of shares in respect of such Advance equals or exceeds $0.3111 per share (which represents the lower of (i) the closing price of common stock as reported on the “Historical NOCP” section of the web site Nasdaq.com for AMS as a software consultant where he gained a reputationthe ticker symbol “KRBP.” (the “Nasdaq Official Closing Price”) on the trading day immediately preceding the date of the SEPA; or (ii) the average Nasdaq Official Closing Price for designing effective architectures for complex, large-data systems and for leading development teams that consistently delivered excellent software on aggressive timelines. He then founded his first software company, Tiger Team Consulting, which he grew into a 40+ person consulting firm. During his tenure at Tiger Team he lead multi-million dollar software development projects for telecommunications firms, stock brokerages, Customs and Border Patrol, and the US Patent Office.five trading days immediately preceding the date of the SEPA).
WhilePursuant to the SEPA, we will use the proceeds from the sale of SEPA Shares for working Dr. Ryan earnedcapital and other general corporate purposes or, if different, in a PhD in Bioinformatics from George Mason Universitymanner consistent with John Weinstein of NIH (now chair of BCB at MD Anderson) as his dissertation advisor. He sold his interest in Tiger Team in 2009 and founded his next software company, InSilico, focused on genomics analysis and bioinformatics. InSilico quickly gained a reputationthe application thereof described in the cancer research community for developing analysis tools and visualizations that made large, complex genomics datasets accessibleregistration statement pursuant to researchers. In long-term collaborationswhich such shares are registered with the National Cancer Institute, Johns Hopkins SchoolSEC. There are no other restrictions in the SEPA on future financing transactions, provided such use of Medicine,proceeds also does not violate the laws and MD Anderson Cancer Center he and his team have developed numerous published, open-source bioinformatics and AI applications that are in widespread useregulations set forth by cancer researchers.
-29-the U.S. Office of Foreign Assets Control.
EXECUTIVE COMPENSATIONReasons for Seeking Stockholder Approval
Our named executive officers (“NEOs”common stock is currently listed on The Nasdaq Capital Market and, as such, we are subject to Nasdaq Marketplace Rules (the “Nasdaq Rules”),. Nasdaq Listing Rule 5635(d) requires us to obtain stockholder approval prior to the sale, issuance or potential issuance of common stock (or securities convertible into or exercisable for fiscal year 2021 are:
Investors are encouraged to readcommon stock) in connection with a transaction other than a public offering at a price less than the compensation discussion below in conjunction with the compensation tables and related notes,“Minimum Price” which include more detailed information about the 2021 and 2020 compensation of our NEOs.either alone
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Summary Compensation Table
The following table contains compensation information for our former Chief Executive Officer and certain other executives who were the most highly compensated executive officers for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
Name & Principal Position |
| Year |
| Salary | |
| Bonus |
| Stock In Lieu of Cash Bonus(1) |
| Equity incentive plan grants(2) |
| Other (3) |
| Total | |||||
Maurizio Chiriva Internati, | | 2021 | | $ | 504,000 | | $ | 52,769 | | $ | — | | $ | — | | $ | 21,913 | | $ | 578,682 |
Former Chief Executive Officer (4) |
| 2020 | | $ | 437,900 | | $ | — | | $ | — | | $ | 6,535,000 | | $ | — | | $ | 6,972,900 |
| | | | | | | | | | | | | | | | | | | | |
Tony Tontat, |
| 2021 | | $ | 225,000 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 225,000 |
Former Chief Operating Officer and Chief Financial Officer (5) |
| 2020 | | $ | 75,000 | | $ | — | | $ | 5,226,000 | | $ | 2,654,800 | | $ | 90,000 | | $ | 8,045,800 |
| | | | | | | | | | | | | | | | | | | | |
Gianluca Rotino, |
| 2021 | | $ | 300,000 | | $ | — | | $ | — | | $ | 609,713 | | $ | — | | $ | 909,713 |
Former Chief Strategy and Innovation Officer (6) |
| 2020 | | $ | 75,000 | | $ | — | | $ | 4,160,000 | | $ | 2,665,600 | | $ | 579,700 | | $ | 7,480,300 |
| | | | | | | | | | | | | | | | | | | | |
Scott Dahlbeck |
| 2021 | | $ | 365,000 | | $ | — | | $ | — | | $ | — | | $ | 77,123 | | $ | 442,123 |
Chief of Staff (7) |
| 2020 | | $ | 120,000 | | $ | — | | $ | 40,378 | | $ | 220,300 | | $ | — | | $ | 380,678 |
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Narrativeor together with sales by officers, directors or substantial stockholders of the company equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. For Nasdaq purposes, “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. Stockholder approval of this proposal will constitute stockholder approval for purposes of Nasdaq Listing Rule 5635(d). Our Board has determined that the SEPA and our ability to Summary Compensation Table
We review compensation annually for all employees, including our NEOs. In setting our NEOs’ base salaries and bonuses and granting equity incentive awards, we consider compensation for comparable positionsissue the SEPA Shares thereunder in excess of the market, the historical compensation levels of our named executive officers, individual performance as compared to our expectations and objectives, our desire to motivate our named executive officers to achieve short- and long-term results that areExchange Cap is in the best interests of ourthe Company and its stockholders because the ability to sell the SEPA Shares to Yorkville provides us with a reliable source of capital for working capital and a long-term commitment to our company.general corporate purposes.
Base Salaries
In 2021, base salary was set at a level that was commensurate with each named executive officer’s respective duties and authorities, contributions, prior experience and sustained performance.
Equity Incentive Award
Our equity incentive awards are designed to align our interests with those of our employees, including our named executive officers. Stock options and RSUs may be granted to our employees, including our named executive officers, underWe cannot predict the 2021 Plan.
Options are granted with an exercise price not less than the fair market value of sharesMarket Price (as defined above) of our common stock onat any future date, and therefore cannot predict the datenumber of grant and generally become vested and exercisable within four years afterSEPA Shares to be issued under the dateSEPA or whether the Market Price for any Advance will be greater than the Minimum Price (as defined above) under the Nasdaq Rules. Under certain circumstances, it is possible that we may need to issue shares of grant, subjectcommon stock to accelerated vestingYorkville at a price that is less than the Minimum Price in certain circumstances. Options generally expire ten years from the date of grant. The 2021 Plan provides for the grant of incentive stock options (“ISOs”), which qualify for favorable tax treatment to recipients under Section 422excess of the Internal Revenue Code (the “Code”), and nonstatutoryExchange Cap, which would require stockholder approval pursuant to Nasdaq Listing Rule 5635(d).
Therefore, we are seeking stockholder approval under this Proposal No. 2 to issue shares of common stock options (“NSOs”). Such awards may be granted to our employees, including officers, and to non-employee directors and consultants.
Employment Agreements
Gianluca Rotino
On February 10, 2022, we entered into Transition and Consulting Agreement, dated as of February 9, 2022, with Mr. Rotino (the “Rotino Agreement”). Pursuant to the termsin excess of the Rotino Agreement, Mr. Rotino’s employment as the Company’s Chief Strategy and Innovation Officer terminated and the Company retained Mr. RotinoExchange Cap, if necessary, to provide consulting services to the Company for a period of nine months (or until November 9, 2022). Notwithstanding the foregoing, the Rotino Agreement may be terminated by either the Company or Mr. Rotino upon 30 days’ prior written notice, except no such prior notice shall be required in the event the Company terminates the Rotino Agreement for cause. Under the terms of the Rotino Agreement, Mr. Rotino will be compensation $25,000 per month. In addition, the Company agreed that Mr. Rotino’s service under the Rotino Agreement shall constitute continued service to the CompanyYorkville under the terms of the award agreements governing certain restrictedSEPA. The failure of the Company’s stockholders to approve this Proposal No. 2 will make it impossible for the Company to sell, at less than the Minimum Price, shares of common stock units (“RSUs”) that were previously issued to Mr. Rotino and that Mr. Rotino’s previously issued RSUs will continueYorkville in excess of the Exchange Cap. However, it would be possible to vest.
Scott Dahlbeck
On January 1, 2020, we entered into an employment agreement with Dr. Scott Dahlbeck (the “Dahlbeck Agreement”) that set forthsell shares to Yorkville in excess of the terms and conditions his employment with us. The employment agreement establishes an annual base salaryExchange Cap if the sale of $120,000, whichshares covered by any Advance is subjectequal to our discretionary review and adjustment in accordance with our policies, procedures and practices as they may exist from time to time. Underor greater than the Dahlbeck Agreement, Dr. Dahlbeck is
-31-Minimum Price for such Advance.
also entitled to annual stock compensation with a fair market value totaling $245,000 based on stock grants approved by the BoardConsequences of Directors and received an initial grant of 14,311 stock options on June 8, 2020.
On February 10, 2022, the Company entered into a Modification to Employment Agreement which amended the Dahlbeck Agreement to provide that we may terminate Dr. Dahlbeck’s employment at any time for any reason and that Dr. Dahlbeck may terminate his employment with the Company at any time with 30 days’ prior written notice.
Potential Payments Upon Termination or Change in ControlNon-Approval
The Dahlbeck Agreement provides that if the Company terminates Dr. Dahlbeck’s employment “without cause” (as defined in the Dahlbeck Agreement), the Company shall pay Dr. Dahlbeck an amount equal to his base salary on the date of termination for a period of nine (9) months, paid on a monthly basis.
Outstanding Equity AwardsAs previously disclosed, as of December 31, 2021,
| | | | | | | | | | | | | | | | | |
| | Number of Securities | | | | | | | Number of Securities | | | ||||||
| | Underlying Unexercised Options | | Option | | Option | | Underlying RSU Grants | | RSU | |||||||
|
| Exercisable |
| Unexercisable |
| Exercise Price |
| Expiration Date |
| Vested |
| Unvested | | Expiration Date | |||
Maurizio Chiriva Internati, | | — | | | — | | | | | |
| 175,877 | | | 334,271 | | 8/19/2030 |
Former Chief Executive Officer |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Gianluca Rotino, |
| 147,806 | | | — | | $ | 6.64 | | 11/09/27 |
| 144,258 | |
| 135,818 | | 8/19/2030 |
Former Chief Strategy and Innovation Officer |
| | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | |
Tony Tontat, |
| — | | | — | | | | | | | — | | | — | | |
Former Chief Operating Officer and Chief Financial Officer |
| | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | |
Scott Dahlbeck, |
| 14,311 | | | — | | $ | 24.25 | | 6/8/2030 |
| 17,240 | |
| — | | 8/19/2030 |
Chief Medical Officer |
| | | | | | | | | | | | | | | | |
the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of its consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to access additional funding from current or new investors. If the Company is unable to raise additional capital, the Company may have to significantly delay, scale back or discontinue the development or commercialization of its products and/or consider a sale or other strategic transaction. Accordingly, our Board believes that providing the Company the flexibility to issue shares of common stock in excess of the Exchange Cap is advisable and in the best interests of the Company and our stockholders.
Securities authorized for issuance under equity compensation plansEffect on Current Stockholders
The following table provides information relatingissuance of shares of common stock under the SEPA, including any shares that may be issued in excess of the Exchange Cap (including any such shares issued below the Minimum Price that are the subject of this Proposal No. 2), would result in an increase in the number of shares of common stock outstanding, and our stockholders will incur dilution of their percentage ownership. Because the number of SEPA Shares that may be issued to Yorkville pursuant to the SEPA is determined based on the Market Price at the time of issuance, the exact magnitude of the dilutive effect cannot be conclusively determined. However, the dilutive effect may be material to our equity compensation plans ascurrent stockholders.
Required Vote of December 31, 2021. AsStockholders
The affirmative vote of December 31, 2021, we had our 2021 Plan, which was approveda majority of the votes cast on the proposal. Abstentions and “broker non-votes,” if any, will have no effect on the outcome of this vote. Proxies solicited by our Board of Directors will be voted for approval of this Proposal 2 unless otherwise specified.
Board Recommendation
The board of directors unanimously recommends a vote “FOR” Proposal 2.
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PROPOSAL 3
APPROVAL, IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(D), THE ISSUANCE OF OUR COMMON STOCK TO THE HOLDER OF THE 25% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE (“THE HOLDER”) IN EXCESS OF THE SHARE CAP OF THE AMENDED AND RESTATED 25% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE AND SECURITY AGREEMENT DATED DECEMBER 12, 2022, BY AND BETWEEN THE COMPANY AND THE HOLDER (INCLUDED IN APPENDIX C TO THIS PROXY STATEMENT) (THE “SHARE CAP PROPOSAL”)
Background
As previously disclosed, on December 12, 2022 , Kiromic BioPharma Inc. (the “Company”) amended and restated the 25% Senior Secured Convertible Promissory Note (the “Original Note”) dated October 21, 2022 (the “Amended and Restated Note”), included as Appendix C to this Proxy Statement. The Original Note was amended to increase the aggregate principal amount to $4,000,000 from $2,000,000. The interest rate of 25% per annum (the “Stated Rate”) remained unchanged. The maturity rate was amended to December 12, 2023 from October 21, 2023 (the “Amended and Restated Maturity Date”), on which the principal balance and accrued but unpaid interest under the Amended and Restated Note shall be due and payable. The Stated Rate will increase to 27% per annum or the highest rate then allowed under applicable law (whichever is lower) upon occurrence of an event of default, including the failure by the Company to make payment of principal or interest due under the Amended and Restated Note on the Amended and Restated Maturity Date, and any commencement by the Company of a case under any applicable bankruptcy or insolvency laws.
The Note is convertible into shares (the “Conversion Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at an initial conversion price of $0.35 per share (the “Conversion Price”), subject to a beneficial ownership limitation equivalent to 9.99% (the “Beneficial Ownership Limitation”) and a share cap of 3,287,699 shares (the “Share Cap”), representing 19.99% of the total issued and outstanding shares of Common Stock as of October 20, 2022, in the event that the Conversion Price is lower than $0.3268 per share, representing the lower of the closing price immediately preceding the Issuance Date or the average closing price of the Common Stock for the five trading days immediately preceding the Issuance Date.
The unpaid principal of and interest on the Note constitute unsubordinated obligations of the Company and are senior and preferred in right of payment to all subordinated indebtedness and equity securities of the Company outstanding as of the Issuance Date; provided, however, that the Company may incur or guarantee additional indebtedness after the Issuance Date, whether such indebtedness are senior, pari passu or junior to the obligations under the Note, which are secured by all of the Company’s right, title and interest, in and to, (i) all fixtures (as defined in the Uniform Commercial Code, the “UCC”) and equipment (as defined in the UCC), and (ii) all of the Company’s intellectual property as specified in the Note, subject to certain exclusions as described in the Note.
Pursuant to the Note, the Company is required to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) to register the Conversion Shares within 30 days after the Conversion Share Delivery Date (as defined in the Note) and shall use its commercially reasonable efforts to have the Registration Statement declared effective by the SEC.
Accordingly, the Share Cap share count will be assessed when a notice of conversion is delivered to the Company. The Amended and Restated Note provides that (a) the Share Cap will not apply if the Company’s stockholders have approved issuances in excess of the Share Cap in accordance with the rules of The Nasdaq Capital Market.
Reasons for Seeking Stockholder Approval
Our common stock is currently listed on The Nasdaq Capital Market and, as such, we are subject to Nasdaq Marketplace Rules (the “Nasdaq Rules”). Nasdaq Listing Rule 5635(d) requires us to obtain stockholder approval prior to the sale, issuance or potential issuance of common stock (or securities convertible into or exercisable for common stock) in connection with a transaction other than a public offering at a price less than the “Minimum Price” which either alone
- 14 -
or together with sales by officers, directors or substantial stockholders of the company equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. For Nasdaq purposes, “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. Stockholder approval of this proposal will constitute stockholder approval for purposes of Nasdaq Listing Rule 5635(d). Our Board has determined that the Amended and Restated Note and our stockholders.ability to issue the shares of common stock thereunder in excess of the Share Cap is in the best interests of the Company and its stockholders because the Amended and Restated Note allowed us to have a reliable source of capital for working capital and general corporate purposes.
| | | | | | |
| | Equity Compensation Plans | ||||
| | Number of securities to be issued upon exercise of | | Weighted average | | Number of securities |
Equity compensation plans approved by security holders | | 1,309,916(1) | | $8.57(2) | | 598,699(3) |
Equity compensation plans not approved by security holders |
| | | | | |
Total |
| 1,309,916 | | $8.57 | | 598,699 |
|
| | | | | |
(1) Includes 929,007 restricted stock units that were outstanding on December 31, 2021 under the Company’s 2021 Plan. Restricted stock unit awards may be settled only for shares of common stock on a one-for-one basis. | ||||||
(2) Only option awards were used in computing the weighted-average exercise price. | ||||||
(3) This amount represents shares of common stock available for issuance under the Company’s 2021 Plan. Awards available for grant under the Company’s 2021 Plan include stock options, stock appreciation rights, restricted stock, restricted stock units, other stock awards, performance awards, and any combination of the foregoing awards. |
Therefore, we are seeking stockholder approval under this Proposal No. 3 to issue shares of common stock in excess of the Share Cap, if necessary, to the Holder under the terms of the Amended and Restated Note. The failure of the Company’s stockholders to approve this Proposal No. 3 will make it impossible for the Company to consummate certain components of the Amended and Restated Note.
Effect on Current Stockholders
The issuance of shares of common stock under the Amended and Restated Note, including any shares that may be issued in excess of the Share Cap would result in an increase in the number of shares of common stock outstanding, and our stockholders will incur dilution of their percentage ownership. Because the number of common shares that may be issued to the Holder pursuant to the Amended and Restated Note is determined based on a conversion price of $0.35 per share at the time of issuance, the exact magnitude of the dilutive effect cannot be conclusively determined at this time. The Amended and Restated Note restricts “Excess Shares” means those Conversion Shares then beneficially owned by the Voting Group on the date of registration, that when aggregated with such other shares of Common Stock beneficially owned by the Voting Group exceed thirty percent (30%) of the then outstanding shares of Common Stock. The dilutive effect may be material to our current stockholders.
Required Vote of Stockholders
The affirmative vote of a majority of the votes cast on the proposal. Abstentions and “broker non-votes,” if any, will have no effect on the outcome of this vote. Proxies solicited by our Board of Directors will be voted for approval of this Proposal 3 unless otherwise specified.
Board Recommendation
The board of directors unanimously recommends a vote “FOR” Proposal 3.
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- 15 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial ownership of shares of our common stock as of April 25, 2022January 18, 2023 by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all of our directors and executive officers as a group. Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws, where applicable.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of April 25, 2022,January 18, 2023, pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 15,751,70120,504,701 shares of common stock outstanding on April 25, 2022.January 18, 2023. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options or other convertible securities held by that person or entity that are currently exercisable or releasable or that will become exercisable or releasable within 60 days of April 25, 2022.January 18, 2023. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer listed is: c/o Kiromic BioPharma, Inc., 7707 Fannin Street, Suite 140, Houston, TX 77008.
| | | | | |
| | | | | |
| | Number of shares | | Percentage of shares | |
Beneficial Owner |
| beneficially owned |
| beneficially owned |
|
Directors and Executive Officers | | | | | |
Pietro Bersani(1) | | 5,278 | | * | |
Daniel Clark(2) |
| 18,168 | | * | |
Scott Dahlbeck(3) |
| 461,068 | | 2.92% | |
Michael Ryan(4) | | 53,052 | | * | |
Americo Cicchetti(5) | | 5,278 | | * | |
Michael Nagel(6) | | 5,278 | | * | |
Karen Reeves | | — | | * | |
Frank Tirelli | | — | | * | |
All current directors and executive officers as a group (8 persons) | | 548,122 | | 3.47% | |
Other 5% Stockholders | | | | | |
Maurizio Chiriva Internati (7) |
| 1,474,588 | | 9.36% | |
| | | | | |
| | | | | |
| | | | | |
| | Number of shares | | Percentage of shares | |
Beneficial Owner |
| beneficially owned |
| beneficially owned |
|
Directors and Executive Officers | | | | | |
Pietro Bersani(1) | | 643,576 | | 3.14% | |
Scott Dahlbeck(2) |
| 511,068 | | 2.49% | |
Americo Cicchetti(3) | | 188,878 | | * | |
Michael Nagel(4) | | 188,878 | | * | |
All current directors and executive officers as a group (4 persons) | | 1,532,400 | | 7.33% | |
Other 5% Stockholders | | | | | |
Empery Asset Management, LP (5) |
| 5,389,598 | | 9.99% | |
Sabby Volatility Warrant Master Fund, Ltd. (6) | | 1,822,847 | | 8.89% | |
YA II PN, Ltd. (7) | | 1,690,985 | | 7.83% | |
| | | | | |
* Represents beneficial ownership of less than 1%. | |||||
(1) Includes options to purchase 5,278 shares of common stock that are exerciseable within 60 days of January 18, 2023, and 638,298 shares of common stock. | |||||
(2) Includes (i) 496,757 shares of common stock, and (ii) options to purchase 14,311 shares of common stock that are exerciseable within 60 days of January 18, 2023. | |||||
(3) Includes options to purchase 188,878 shares of common stock that are exerciseable within 60 days of January 18, 2023. | |||||
(4) Includes options to purchase 188,878 shares of common stock that are exerciseable within 60 days of January 18, 2023. | |||||
(5) Consists of 491,554 shares of Common Stock and 4,898,044 shares of Common Stock issuable upon conversion of Notes of the Company. Pursuant to the terms of the Notes, Empery Asset Management, LP (“Empery”) cannot convert the Notes to the extent Empery would beneficially own, after any such conversion, more than 9.99% of the outstanding shares of Common Stock (the "Blockers"), and the percentage set forth herein gives effect to the Blockers. Empery Asset Management, LP which serves as the Investment Manager to the Empery Funds, may be deemed to be the beneficial owner of all shares of Common Stock held by, and underlying the Notes held by, the Empery Funds. Each of Ryan M. Lane and Martin D. Hoe, as Managing Members of Empery AM GP, LLC, the General Partner of the Investment Manager, with the power to exercise investment discretion, may be deemed to be the beneficial owner of all shares of Common Stock held by, and underlying the Notes held |
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* Represents beneficial ownership of less than 1%.
by, the Empery Funds. Each of the Empery Funds and Ryan M. Lane and Martin D. Hoe hereby disclaims any beneficial ownership of any such shares of | ||||||
(6) Sabby Volatility Warrant Master Fund, Ltd. beneficially owns the Common Stock, and (ii) Sabby Management, LLC and Hal Mintz each beneficially own the Common Stock. Sabby Management, LLC and Hal Mintz do not directly own any shares of Common Stock, but each indirectly owns the Common Stock. Sabby Management, LLC, a Delaware limited liability company, indirectly owns the Common Stock because it serves as the investment manager of Sabby Volatility Warrant Master Fund, Ltd. Mr. Mintz indirectly owns the Common Stock in his capacity as manager of Sabby Management, LLC. | ||||||
(7) Consists of the direct ownership of 603,318 shares of Common Stock plus the deemed ownership of 1,087,667 shares of Common Stock that |
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a description of transactions or series of transactions since January 1, 2021 or any currently proposed transaction, to which we were or are to be a participant and in which the amount involved in the transaction or series of transactions exceeds $120,000, and in which any of our directors, executive officers or persons who we know hold more than five percent of any class of our capital stock, including their immediate family members, had or will have a direct or indirect material interest, other than compensation arrangements with our directors and executive officers.
Employment Agreements
We have entered into employment agreements and offer letter agreements with certain of our executive officers. See “Executive Compensation—Employment Agreements” and “Executive Compensation—Potential Payments Upon Termination or Change in Control.”
Indemnification Agreements
We have entered, and intend to continue to enter, into separate indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our amended and restated certificate of incorporation and our Bylaws. These agreements, among other things, require us to indemnify our directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of our directors or executive officers or as a director or executive officer of any other company or enterprise to which the person provides services at our request. We believe that these charter and bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.
Policies and Procedures for Transactions with Related Persons
We have adopted a written Related Person Transactions Policy that sets forth our policies and procedures regarding the identification, review, consideration, and oversight of “related person transactions.” For purposes of our policy only, a “related person transaction” is a transaction, arrangement, or relationship (or any series of similar transactions, arrangements or relationships, including any indebtedness or guarantee of indebtedness) in which we or any of our subsidiaries are participants, in which any “related person” has a material interest.
Transactions involving compensation for services provided to us as an employee, consultant, or director are not considered related person transactions under this policy. A related person is any executive officer, director, nominee to become a director, or a holder of more than 5% of any class of our voting securities (including our common stock), including any of their immediate family members and affiliates, including entities owned or controlled by such persons.
Under the policy, the related person in question or, in the case of transactions with a holder of more than 5% of any class of our voting securities, an executive officer with knowledge of the proposed transaction, must present information regarding the proposed related person transaction to our audit committee (or, where review by our audit committee would be inappropriate, to another independent body of our board of directors) for review. To identify related person transactions in advance, we rely on information supplied by our executive officers, directors, and certain significant stockholders. In considering related person transactions, our audit committee takes into account the relevant available facts and circumstances, which may include, but are not limited to:
● | the risks, costs, and benefits to us; |
● | the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated; |
● | the terms of the transaction; |
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● | the availability of other sources for comparable services or products; and |
● | the terms available to or from, as the case may be, unrelated third parties. |
Our audit committee will approve only those transactions that it determines are fair to us and in our best interests.
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OTHER MATTERS
Other Business
We have no knowledge of any other matters that may come before the AnnualSpecial Meeting and do not intend to present any other matters. However, if any other matters shall properly come before the AnnualSpecial Meeting or any adjournment or postponement thereof, the persons soliciting proxies will have the discretion to vote as they see fit unless directed otherwise.
We will bear the cost of soliciting proxies in the accompanying form. In addition to the use of the mailings, proxies may also be solicited by our directors, officers or other employees, personally or by telephone, facsimile or email, none of whom will be compensated separately for these solicitation activities.
If you do not plan to attend the AnnualSpecial Meeting, in order that your shares may be represented and in order to assure the required quorum, please sign, date and return your proxy promptly. In the event you are able to attend the AnnualSpecial Meeting, at your request, we will cancel your previously submitted proxy.
Householding
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Proxy Availability Notice or other AnnualSpecial Meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice or other AnnualSpecial 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. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate Notice or proxy materials, please notify your broker or call our Secretary at (832) 968-4888, or submit a request in writing to our Secretary, c/o Kiromic BioPharma, Inc., 7707 Fannin Street, Suite 140, Houston, TX 77054. Stockholders who currently receive multiple copies of the Notice or proxy materials at their address and would like to request householding of their communications should contact their broker. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the Notice or proxy materials to a stockholder at a shared address to which a single copy of the documents was delivered.
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Annual Reports and Form 10-K
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, is being mailed with this Proxy Statement to those stockholders that receive this Proxy Statement in the mail.
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 has also been filed with the SEC. It is available free of charge at the SEC’s website at www.sec.gov.
Additional copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 may be obtained without charge by writing to the Secretary, Kiromic BioPharma, Inc., 7707 Fannin Street, Suite 140, Houston, TX 77054.
April 29, 2022January 26, 2023
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| |
By Order of the Board of Directors | |
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| /s/ Michael Nagel |
| Michael Nagel |
| Chairperson of the Board of Directors |
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APPENDIX A
CERTIFICATE OF AMENDMENT
to the
CERTIFICATE OF INCORPORATION
of
KIROMIC BIOPHARMA, INC.
KIROMIC BIOPHARMA, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify as follows:
FIRST: The name of the Corporation is Kiromic BioPharma, Inc. The Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the “Secretary of State”) on May 27, 2015, as amended on December 20, 2018; September 13, 2019; December 16, 2019 and June 8, 2020 ( the “Certificate of Incorporation”). Certificates of Correction were filed on October 15, 2019, October 18, 2019, October 29, 2019 and October 29, 2019.
SECOND: ARTICLE IV, SECTION I of the Corporation’s Certificate of Incorporation shall be amended by inserting the following language at the end of such section which shall read as follows:
“Reverse Stock Split. Upon the filing (the “Effective Time”) of this Certificate of Amendment pursuant to the Section 242 of the General Corporation Law of the State of Delaware, each ( ) shares of the Corporation’s Common Stock, issued and outstanding immediately prior to the Effective Time (the “Old Common Stock”) shall automatically without further action on the part of the Corporation or any holder of Old Common Stock, be reclassified, combined, converted and changed into ( ) fully paid and nonassessable shares of common stock, par value of $0.001 per share (the “New Common Stock”), subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”). The conversion of the Old Common Stock into New Common Stock will be deemed to occur at the Effective Time. From and after the Effective Time, certificates representing the Old Common Stock shall represent the number of shares of New Common Stock into which such Old Common Stock shall have been converted pursuant to this Certificate of Amendment. Holders who otherwise would be entitled to receive fractional share interests of New Common Stock upon the effectiveness of the reverse stock split shall be entitled to receive a whole share of New Common Stock in lieu of any fractional share created as a result of such Reverse Stock Split.”
THIRD: The stockholders of the Corporation have duly approved the foregoing amendment in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly adopted and executed in its corporate name and on its behalf by its duly authorized officer as of the day of , 2023.
KIROMIC BIOPHARMA, INC | | |
| | |
By: | ||
Name: | ||
Title: |
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Appendix AAPPENDIX B
STANDBY EQUITY PURCHASE AGREEMENT
THIS STANDBY EQUITY PURCHASE AGREEMENT (this “Agreement”) dated as of October 13, 2022 is made by and between YA II PN, LTD., a Cayman Islands exempt limited partnership (the “Investor”), andKIROMIC BIOPHARMA, INC.2021 OMNIBUS EQUITY INCENTIVE PLAN, a company incorporated under the laws of the State of Delaware (the “Company”).
(WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall have the right to issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company, up to $5 million of the Company’s shares of common stock, par value $0.001 per share (the “Common Shares”), plus, at the Company’s election, an additional $3 million of Common Shares, for an aggregate of $8 million of Common Shares; and
WHEREAS, the Common Shares are listed for trading on the Nasdaq Stock Market under the symbol “KRBP;” and
WHEREAS, the offer and sale of the Common Shares issuable hereunder will be made in reliance upon Section 4(a)(2) under the Securities Act of 1933, as amended, through June 2022)and the rules and regulations promulgated thereunder (the “Securities Act”), or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the transactions to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
Certain Definitions
“Additional Shares” shall have the meaning set forth in Section 1.01(d)(ii).
“Adjusted Advance Amount” shall have the meaning set forth in Section 1.01(d)(i).
“Advance” shall mean any issuance and sale of Advance Shares from the Company to the Investor pursuant to Article I hereof.
“Advance Date” shall mean the 1st Trading Day after expiration of the applicable Pricing Period for each Advance.
“Advance Notice” shall mean a written notice in the form of Exhibit A attached hereto to the Investor executed by an officer of the Company and setting forth the amount of an Advance the Company desires to issue and sell to the Investor.
“Advance Notice Date” shall mean each date the Company is deemed to have delivered (in accordance with Section 1.01(b) of this Agreement) an Advance Notice to the Investor, subject to the terms of this Agreement.
“Advance Shares” shall mean the Common Shares that the Company shall issue and sell to the Investor.
“Affiliate” shall have the meaning set forth in Section 2.07.
“Agreement” shall have the meaning set forth in the preamble of this Agreement.
“Applicable Laws” shall mean all applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines and codes having the force of law, whether local, national, or international, as amended from time to time, including without limitation (i) all applicable laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable laws that relate to anti-bribery, anti-corruption, books and records and internal controls, including the United States Foreign Corrupt Practices Act of 1977, and (iii) any Sanctions laws.
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“Black Out Period” shall have the meaning set forth in Section 5.01(e).
“Closing” shall have the meaning set forth in Section 2.02.
“Commitment Amount” shall mean $5,000,000 of Common Shares, subject to increase by the Commitment Increase at the Company’s election pursuant to the terms of this Agreement, provided that, the Company shall not affect any sales under this Agreement and the Investor shall not have the obligation to purchase Common Shares under this Agreement to the extent (but only to the extent) that after giving effect to such purchase and sale the aggregate number of Common Shares issued under this Agreement would exceed 19.99% of the outstanding Common Shares as of the date of this Agreement (the “Exchange Cap”) provided further that, the Exchange Cap will not apply if (a) the Company’s stockholders have approved issuances in excess of the Exchange Cap in accordance with the rules of the Principal Market or (b) the average price of all applicable sales of Common Shares hereunder (including any Commitment Shares in the number of shares sold for these purposes and sales covered by an Advance Notice that has been delivered prior to the determination of whether this clause (b) applies) equals or exceeds $0.3111 per share (which represents the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the date of this Agreement; or (ii) the average Nasdaq Official Closing Price for the five Trading Days immediately preceding the date of this Agreement).
“Commitment Increase” shall mean $3,000,000 of Common Shares.
“Commitment Shares” shall have the meaning set forth in Section 11.04
“Commitment Period” shall mean the period commencing on the date hereof and expiring upon the date of termination of this Agreement in accordance with Section 9.01.
“Common Shares” shall have the meaning set forth in the recitals of this Agreement.
“Company” shall have the meaning set forth in the preamble of this Agreement.
“Company Indemnitees” shall have the meaning set forth in Section 4.02.
“Condition Satisfaction Date” shall have the meaning set forth in Section 6.01.
“Daily Traded Amount” shall mean the product obtained by multiplying the daily trading volume of the Company’s Common Shares on the Principal Market during regular trading hours as reported by Bloomberg L.P., by the VWAP for such Trading Day.
“Environmental Laws” shall have the meaning set forth in Section 3.13.
“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Cap” shall have the meaning set forth in Section 1.
“Excluded Day” shall have the meaning set forth in Section 1.01(d)(i).
“Hazardous Materials” shall have the meaning set forth in Section 3.13.
“Indemnified Liabilities” shall have the meaning set forth in Section 4.01.
“Investor” shall have the meaning set forth in the preamble of this Agreement.
“Investor Indemnitees” shall have the meaning set forth in Section 4.01.
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“Market Price” shall mean the lowest of the daily VWAPs of the Common Shares during the relevant Pricing Period, other than the daily VWAP on any Excluded Days.
“Material Adverse Effect” shall mean any event, occurrence or condition that has had or would reasonably be expected to have (i) a material adverse effect on the legality, validity or enforceability of this Agreement or the transactions contemplated herein, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement.
“Material Outside Event” shall have the meaning set forth in Section 5.08.
“Maximum Advance Amount” in respect of each Advance Notice means the greater of: (i) an amount equal to 100% of the average of the Daily Traded Amount during each of the 5 Trading Days immediately preceding an Advance Notice, or (ii) $1,000,000.
“Minimum Acceptable Price” or “MAP” shall mean the minimum price notified by the Company to the Investor in each Advance Notice, if applicable.
“OFAC” shall have the meaning set forth in Section 3.30.
“Ownership Limitation” shall have the meaning set forth in Section 1.01(c)(i).
“Person” shall mean an individual, a corporation, a partnership, a limited liability company, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Plan of Distribution” shall mean the section of a Registration Statement disclosing the plan of distribution of the Shares.
“Pricing Period” shall mean the three (3) consecutive Trading Days commencing on the Advance Notice Date.
“Principal Market” shall mean the Nasdaq Stock Market; provided however, that in the event the Company’s Common Shares are ever listed or traded on the New York Stock Exchange, or the NYSE American, then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Shares are then listed or traded to the extent such other market or exchange is the principal trading market or exchange for the Common Shares.
“Prospectus” shall mean any prospectus (including, without limitation, all amendments and supplements thereto) used by the Company in connection with a Registration Statement.
“Prospectus Supplement” shall mean any prospectus supplement to a Prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act, including, without limitation, any prospectus supplement to be filed in accordance with Section 5.01 hereof.
“Purchase Price” shall mean the price per Advance Share obtained by multiplying the Market Price by 95%.
“Registrable Securities” shall mean (i) the Shares issuable pursuant to this Agreement, and (ii) any securities issued or issuable with respect to any of the foregoing by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.
“Registration Limitation” shall have the meaning set forth in Section 1.01(c)(ii).
“Registration Statement” shall mean a registration statement on Form S-1 or Form S-3 or on such other form promulgated by the SEC for which the Company then qualifies and which counsel for the Company shall deem appropriate,
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and which form shall be available for the registration of the resale by the Investor of the Registrable Securities under the Securities Act, which registration statement provides for the resale from time to time of the Shares as provided herein.
“Regulation D” shall mean the provisions of Regulation D promulgated under the Securities Act.
“Sanctions” shall have the meaning set forth in Section 3.30.
“Sanctioned Countries” shall have the meaning set forth in Section 3.30.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“SEC Documents” shall have the meaning set forth in Section 3.05.
“Securities Act” shall have the meaning set forth in the recitals of this Agreement.
“Settlement Document” shall have the meaning set forth in Section 1.02(a).
“Shares” shall mean the Commitment Shares and the Common Shares to be issued from time to time hereunder pursuant to an Advance.
“Subsidiaries” shall mean any Person in which the Company, directly or indirectly, (x) owns a majority of the outstanding capital stock or holds a majority of the equity or similar interest of such Person or (y) controls or operates all or substantially all of the business, operations or administration of such Person, and the foregoing are collectively referred to herein as “Subsidiaries.”
“Trading Day” shall mean any day during which the Principal Market shall be open for business.
“Transaction Documents” shall have the meaning set forth in Section 3.02.
“VWAP” shall mean for any Trading Day, the daily volume weighted average price of the Common Shares for such Trading Day on the Principal Market during regular trading hours as reported by Bloomberg L.P.
(i) | The Company shall, in its sole discretion, select the amount of the Advance, not to exceed the Maximum Advance Amount, it desires to issue and sell to the Investor in each Advance Notice and the time it desires to deliver each Advance Notice. |
(ii) | There shall be no mandatory minimum Advances and no non-usages fee for not utilizing the Commitment Amount or any part thereof. |
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is received by the Investor if such notice is received by email prior at or before 8:30 a.m. Eastern Time (or later if waived by the Investor in its sole discretion), or (ii) the immediately succeeding day if it is received by email after 8:30 a.m. Eastern Time. |
(d) | Minimum Acceptable Price. |
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such Excluded Day, if any, and the price paid per share for each Additional Share shall be equal to the MAP in effect with respect to such Advance Notice (without any further discount), provided that this increase shall not cause the total Advance to exceed the amount set forth in the original Advance Notice or any limitations set forth in Section 2.01(c).
(c) | On or prior to the Advance Date, each of the Company and the Investor shall deliver to the other all documents, instruments and writings expressly required to be delivered by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein. |
(d) | Notwithstanding anything to the contrary in this Agreement, if on any day during the Pricing Period (i) the Company notifies Investor that a Material Outside Event has occurred, or (ii) the Company notifies the Investor of a Black Out Period, the parties agree that the pending Advance shall end and the final number of Advance Shares to be purchased by the Investor at the Closing for such Advance shall be equal to the number of Common |
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Shares sold by the Investor during the applicable Pricing Period prior to the notification from the Company of a Material Outside Event or Black Out Period. |
(a) | In the event the Investor sells Common Shares after receipt of an Advance Notice and the Company fails to perform its obligations as mandated in Section 1.02, the Company agrees that in addition to and in no way limiting the rights and obligations set forth in Article IV hereto and in addition to any other remedy to which the Investor is entitled at law or in equity, including, without limitation, specific performance, it will hold the Investor harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and acknowledges that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Investor shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to specifically enforce (subject to Applicable Laws and other rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement. |
(b) | In the event the Company provides an Advance Notice and the Investor fails to perform its obligations as mandated in Section 2.02, the Investor agrees that in addition to and in no way limiting the rights and obligations set forth in Article V hereto and in addition to any other remedy to which the Company is entitled at law or in equity, including, without limitation, specific performance, it will hold the Company harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Investor and acknowledges that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Company shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to specifically enforce (subject to the Securities Act and other rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement. |
The Investor represents and warrants to the Company, as of the date hereof, as of each Advance Notice Date and each Advance Date that:
Organization and Authorization. The nameInvestor is duly organized, validly existing and in good standing under the laws of the Plan isCayman Islands and has the Kiromic BioPharma, Inc. 2021 Omnibus Equity Incentive Plan.requisite corporate power and authority to enter into and perform its obligations under this Agreement and to purchase or acquire Shares in accordance with the terms hereof. The purposesdecision to invest and the execution and delivery of this Agreement by the Investor, the performance by the Investor of its obligations hereunder and the consummation by the Investor of the Plan aretransactions contemplated hereby have been duly authorized and require no other proceedings on the part of the Investor. The undersigned has the right, power and authority to execute and deliver this Agreement and all other instruments on behalf of the Investor or its shareholders. This Agreement has been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance thereof by the Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with its terms.
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Except as set forth in the SEC Documents and the disclosure schedules attached hereto, the Company represents and warrants to selected employees,the Investor that, as of the date hereof, each Advance Notice Date and each Advance Date (other than representations and warranties which address matters only as of a certain date, which shall be true and correct as written as of such certain date):
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The Common Shares are registered pursuant to Section 12(b) of the Exchange Act and is currently listed on a Principal Market under the trading symbol “KRBP.” The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Shares under the Exchange Act, delisting the Common Shares from the Principal Market, nor has the Company received any notification that the Commission or the Principal Market is contemplating terminating such registration or listing. To the Company’s knowledge, it is in compliance with all applicable listing requirements of the Principal Market.
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to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. The Company has not received written notification of any unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim where failure to pay would cause a Material Adverse Effect.
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The Investor and the Company represent to the other the following with respect to itself:
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For purposesIndemnification by the Investor. In consideration of the Plan,Company’s execution and delivery of this Agreement, and in addition to all of the following termsInvestor’s other obligations under this Agreement, the Investor shall defend, protect, indemnify and hold harmless the Company and all of its officers, directors, shareholders, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each person who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities incurred by the Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be definedstated therein or necessary to make the statements therein not misleading; provided, however, that the Investor will only be liable for written information relating to the Investor furnished to the Company by or on behalf of the Investor specifically for inclusion in the documents referred to in the foregoing indemnity, and will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Investor by or on behalf of the Company specifically for inclusion therein; (b) any misrepresentation or breach of any representation or warranty made by the Investor in this Agreement or any instrument or document contemplated hereby or thereby executed by the Investor; or (c) any breach of any covenant, agreement or obligation of the Investor contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby executed by the Investor. To the extent that the foregoing undertaking by the Investor may be unenforceable under Applicable Laws, the Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Laws.
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The Company covenants with the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Commitment Period:
(b) | Maintaining a Registration Statement. The Company shall maintain the effectiveness of any Registration Statement that has been declared effective at all times during the Commitment Period, provided, however, that if the Company has received notification pursuant to Section 2.04 that the Investor has completed resales pursuant to the Registration Statement for the full Commitment Amount, then the Company shall be under no further obligation to maintain the effectiveness of the Registration Statement. Notwithstanding anything to the contrary contained in this Agreement, the Company shall ensure that, when filed, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading. During the Commitment Period, the Company shall notify the Investor promptly if (i) the Registration Statement shall cease to be effective under the Securities Act, (ii) the Common Shares shall cease to be authorized for listing on the Principal Market, (iii) the Common Shares cease to be registered under Section 12(b) or Section 12(g) of the Exchange Act or (iv) the Company fails to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act. |
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(a) | Establishment of a Black Out Period. During the Commitment Period, the Company from time to time may suspend the use of the Registration Statement by written notice to the Investor in the event that the Company determines in its sole discretion in good faith that such suspension is necessary to (A) delay the disclosure of material nonpublic information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the Registration Statement or Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (a “Black Out Period”). |
(b) | No Sales by Investor During the Black Out Period. During such Black Out Period, the Investor agrees not to sell any Common Shares of the Company pursuant to such Registration Statement, but may sell shares pursuant to an exemption from registration, if available, subject to the Investor’s compliance with Applicable Laws. |
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(c) | Limitations on the Black Out Period. The Company shall not impose any Black Out Period that is longer than 30 days or in a manner that is more restrictive (including, without limitation, as to duration) than the comparable restrictions that the Company may impose on transfers of the Company’s equity securities by its directors and senior executive officers. In addition, the Company shall not deliver any Advance Notice during any Black Out Period. If the public announcement of such material, nonpublic information is made during a Black Out Period, the Black Out Period shall terminate immediately after such announcement, and the Company shall immediately notify the Investor of the termination of the Black Out Period. |
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(b) | Registration of the Common Shares with the SEC. There is an effective Registration Statement pursuant to which the Investor is permitted to utilize the prospectus thereunder to resell all of the Common Shares issuable pursuant to such Advance Notice. |
(c) | Authority. The Company shall have obtained all permits and qualifications required by any applicable state for the offer and sale of all the Common Shares issuable pursuant to such Advance Notice, or shall have the availability of exemptions therefrom. The sale and issuance of such Common Shares shall be legally permitted by all laws and regulations to which the Company is subject. |
(d) | No Material Outside Event. No Material Outside Event shall have occurred and be continuing. |
(e) | Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior the applicable Condition Satisfaction Date. |
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(f) | No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly, materially and adversely affects any of the transactions contemplated by this Agreement. |
(g) | No Suspension of Trading in or Delisting of Common Shares. The Common Shares are quoted for trading on the Principal Market and all of the Shares issuable pursuant to such Advance Notice will be listed or quoted for trading on the Principal Market. The issuance of Common Shares with respect to the applicable Advance Notice will not violate the shareholder approval requirements of the Principal Market. The Company shall not have received any written notice that is then still pending threatening the continued quotation of the Common Shares on the Principal Market. |
(h) | Authorized. There shall be a sufficient number of authorized but unissued and otherwise unreserved Common Shares for the issuance of all of the Shares issuable pursuant to such Advance Notice. |
(i) | Executed Advance Notice. The representations contained in the applicable Advance Notice shall be true and correct in all material respects as of the applicable Condition Satisfaction Date. |
(j) | Consecutive Advance Notices. Except with respect to the first Advance Notice, the Company shall have delivered all Shares relating to all prior Advances, and at least 5 Trading Days shall have elapsed from the immediately preceding Advance Date. |
Notwithstanding anything contained herein, this Agreement and the rights awarded to the Investor hereunder are non-exclusive, and the Company may, at any time throughout the term of this Agreement and thereafter, issue and allot, or undertake to issue and allot, any shares and/or securities and/or convertible notes, bonds, debentures, options to acquire shares or other securities and/or other facilities which may be converted into or replaced by Common Shares or other securities of the Company, and to extend, renew and/or recycle any bonds and/or debentures, and/or grant any rights with respect to its existing and/or future share capital.
This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in New York County, New York, and expressly consent to the jurisdiction and venue of the Supreme Court of New York, sitting in New York County, New York and the United States District Court of the Southern District of New York, sitting in New York, New York, for the adjudication of any civil action asserted pursuant to this Agreement.
(a) | Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earliest of (i) the first day of the month next following the 24-month anniversary of the date hereof or (ii) the date on which the Investor shall have made payment of Advances pursuant to this Agreement for Common Shares equal to the Commitment Amount. |
(b) | The Company may terminate this Agreement effective upon five Trading Days’ prior written notice to the Investor; provided that (i) there are no outstanding Advance Notices, the Common Shares under which have yet to be issued, and (ii) the Company has paid all amounts owed to the Investor pursuant to this Agreement. This |
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Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent. |
(c) | Nothing in this Section 9.01 shall be deemed to release the Company or the Investor from any liability for any breach under this Agreement, or to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement. The indemnification provisions contained in Article IV shall survive termination hereunder. |
Other than with respect to Advance Notices, which must be in writing and will be deemed delivered on the day set forth in Section 2.01(b), any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by e-mail if sent on a Trading Day, or, if not sent on a Trading Day, on the immediately following Trading Day; (iii) 5 days after being sent by U.S. certified mail, return receipt requested, (iv) 1 day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications (except for Advance Notices which shall be delivered in accordance with Exhibit A hereof) shall be:
If to the Company, to: | Kiromic BioPharma, Inc. |
Telephone: 832-968-4888
Email:
With a copy to (which shall not constitute notice or delivery of process) to:
Hogan Lovells US LLP
609 Main St Suite 4200
Houston, TX 77002
Attention:Andrew L. Strong, Esq.
William I. Intner, Esq.
Telephone:(713) 632-1456
Email:andrew.strong@hoganlovells.com
william.intner@hoganlovells.com
If to the Investor(s): | YA II PN, Ltd. |
1012 Springfield Avenue
Mountainside, NJ 07092
Attention: | Mark Angelo |
Portfolio Manager
Telephone: | (201) 985-8300 |
Email:mangelo@yorkvilleadvisors.com
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With a Copy (which shall not constitute notice or delivery of process) to:
David Fine, Esq.
1012 Springfield Avenue
Mountainside, NJ 07092
Telephone: | (201) 985-8300 |
Email:legal@yorkvilleadvisors.com
or at such other address and/or e-mail and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender’s email service provider containing the time, date, recipient email address or (iii) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service in accordance with clause (i), (ii) or (iii) above, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Standby Equity Purchase Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above.
| | ||
| COMPANY: | ||
| Kiromic BioPharma, Inc. | ||
| | ||
| By: | /s/ Pietro Bersani | |
| Name: | Pietro Bersani | |
| Title: | CEO | |
| | ||
| | ||
| INVESTOR: | ||
| YA II PN, Ltd. | ||
| | ||
| By: | Yorkville Advisors Global, LP | |
| Its: | Investment Manager | |
| | | |
| By: | Yorkville Advisors Global II, LLC | |
| Its: | General Partner | |
| | ||
| By: | /s/ Matt Beckman | |
| Name: | Matt Beckman | |
| Title: | Member |
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EXHIBIT A
ADVANCE NOTICE
KIROMIC BIOPHARMA, INC.
Dated: ______________Advance Notice Number: ____
The undersigned, _______________________, hereby certifies, with respect to the sale of Common Shares of KIROMIC BIOPHARMA, INC. (the “Company”) issuable in connection with this Advance Notice, delivered pursuant to that certain Standby Equity Purchase Agreement, dated as of October ____, 2022 (the “Agreement”), as follows (with capitalized terms used herein without definition having the same meanings as given to them in the Agreement):
1.The undersigned is the duly elected ______________ of the Company.
2.There are no fundamental changes to the information set forth in the Registration Statement which would require the Company to file a post-effective amendment to the Registration Statement.
3. The Company has performed in all material respects all covenants and agreements to be performed by the Company contained in this Agreement on or prior to the Advance Notice Date. All conditions to the delivery of this Advance Notice are satisfied as of the date hereof.
4.The amount of the Advance the Company is requesting is $_____________________.
5.The Minimum Acceptable Price with respect to this Advance Notice is _________ (if left blank then no Minimum Acceptable Price will be applicable to this Advance).
6.The number of Common Shares of the Company outstanding as of the date hereof is ___________.
The undersigned has executed this Advance Notice as of the date first set forth above.
| | |
| KIROMIC BIOPHARMA, INC. | |
| | |
| By: | |
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EXHIBIT B
FORM OF SETTLEMENT DOCUMENT
VIA EMAIL
KIROMIC BIOPHARMA, INC.
Attn:
Email:
Below please find the settlement information with respect to the Advance Notice Date of: | ||
1. | Amount of Advance requested in the Advance Notice | |
2. | Minimum Acceptable Price for this Advance (if any) | |
3. | Number of Excluded Days (if any) | |
4. | Adjusted Advance Amount (after taking into account any adjustments pursuant to Section 2.01): | |
5. | Market Price | |
6. | Purchase Price (Market Price x 95%) per share | |
7. | Number of Advance Shares due to Investor | |
If there were any Excluded Days then add the following (see Section 2.01(d)): | ||
8. | Number of Additional Shares to be issued to Investor | |
9. | Additional amount to be paid to the Company by the Investor (Additional Shares in number 8 x Minimum Acceptable Price) | |
10. | Total Amount to be paid to Company (Adjusted Advance Amount in number 4 + Additional amount in number 9): | |
11. | Total Shares to be issued to Investor (Shares due to Investor in number 7 + Additional Shares in number 8): |
Please issue the number of Advance Shares due to the Investor to the account of the Investor as follows:
Investor’s DTC participant #:
ACCOUNT NAME:
ACCOUNT NUMBER:
ADDRESS:
CITY:
COUNTRY:
Contact person:
Number and/or email:
| | |
| Sincerely, | |
| YA II PN, LTD. |
Agreed and approved By KIROMIC BIOPHARMA, INC.:
| | |
| | |
Name: | | |
Title: | |
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APPENDIX C
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF OR UPON THE CONVERSION OF ACCRUED INTEREST AS FURTHER DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATIONORPURSUANTTOANEXEMPTIONFROMREGISTRATIONUNDERTHE ACT AND SUCH STATE SECURITIES LAWS.
KIROMICBIOPHARMA,INC.
25%SENIORSECUREDCONVERTIBLEPROMISSORYNOTEANDSECURITYAGREEMENT
$4,000,000Dated: December 12, 2022
THIS AMENDED AND RESTATED 25% SENIOR SECURED CONVERTIBLE PROMISSORY
NOTE (this “Note”), is made as of December 12, 2022, by and between Kiromic BioPharma, Inc., a Delaware corporation (the “Company”), and the initial registered holder hereof, or its permitted assigns (the “Holder”).
WITNESSETH:
WHEREAS, on October 21, 2022 (the “Original Issuance Date”), the Company issued to the initial registered holder hereof (the “OriginalHolder”) a 25% Senior Secured Convertible Promissory Note in the principal amount of two million dollars ($2,000,000) (the “Original Note”);
WHEREAS, the Original Holder assigned the Original Note in whole to the Holder, including all the right, title and interest thereunder; and
WHEREAS, the Company and the Holder intend to increase the principal amount of the Original Note of two million dollars ($2,000,000) (the “Original Principal”) by an additional two million dollars ($2,000,000) (the “Additional Principal”) to four million dollars ($4,000,000).
NOW, THEREFORE, in consideration of the premises, the agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows, effective as of the date first above written:
A. | The Company’s indebtedness as evidenced by this Note is four million dollars ($4,000,000), together with interest thereon as hereinafter provided. |
B. | This Note does notextinguish the outstanding indebtedness evidenced by the Original Notethat was assigned to the Holder and is not intended to be a substitution or novation of the original indebtedness or instruments evidencing the same, all of which shall continue in full force and effect except as specifically amended and restated hereby. |
C. | The Company and the Holder hereby agree that the Original Note is hereby amended, restated and replaced in its entirety with respect to the principal indebtedness evidenced by this Note to read as follows: |
FOR VALUE RECEIVED, Kiromic BioPharma, Inc., a Delaware corporation, promises to pay to the order of the Holder, the initial registered holder hereof, or its permitted assigns, upon the terms set forth below, the principal sum of FOUR MILLION DOLLARS ($4,000,000), plus interest on the unpaid principal balance hereof at the rate of twenty-five percent (25%) per annum (the “Stated Rate”).
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The term “Note” and all references thereto, as used throughout this instrument, shall mean this 25% Senior Secured Convertible Promissory Note as originally executed, or if later amended or supplemented, then as so amended or supplemented.
The aggregate purchase price for the Original Note pursuant to the terms thereof was two million dollars ($2,000,000).TheHolderpaid$1.00foreach$1.00ofthe Original Principal.Upon theexecutionand delivery of the Original Note by the Holder to the Company, the Original Principal under the Original Note was made in United States Dollars in immediately available funds by wire transfer of funds to the Company’s account, instructions for which were set forth on Exhibit A to the Original Note.
The aggregate purchase price for the Additional Principal evidenced by this Note pursuant to the terms hereof shall be two million dollars ($2,000,000). The Holder shall pay $1.00 for each $1.00 of Additional Principal. Upon execution and delivery of this Note by the Holder to the Company, the Additional Principal under this Note shall be made in United States Dollars in immediately available funds by wire transfer of funds to the Company’s account, instructions for which are set forth on Exhibit A.
DEFINITIONS
In addition to the terms defined elsewhere in this Note, the following terms have the meanings indicated in this section of definitions:
“Affiliate” means aany Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Person specified as ofSecurities Act.
“BidPrice” means, for any date, the price determined by the first of determination.
(a) if the Code, any stock exchangeCommon Stock is then listed or quotation systemquoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the applicable lawsCommon Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of anyreporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other country or jurisdiction where Awards are granted undercases, the Plan,fair market value of a share of Common Stock as aredetermined by an independent appraiser selected in effect from timegood faith by the Holders of a majority in interest of the Notes then outstanding and reasonably acceptable to time.
“AwardBusinessDay” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Other Stock-Based Award granted under the Plan.
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“Change in Capitalization” means any (i) merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase or other reorganization or corporate transaction or event, (ii) special or extraordinary dividend or other extraordinary distribution (whether in the form of cash, Common Stock or other property), stock split, reverse stock split, share subdivision or consolidation, (iii) combination or exchange of shares or (iv) other change in corporate structure, which, in any such case, the Administrator determines, in its sole discretion, affects the Shares such that an adjustment pursuant to Section 5 hereof is appropriate.
“Collateral” shall mean all of the following paragraphs followingCompany’s right, title and interest, in and to, (i) all fixtures (as defined in the Effective Date:
“CommonStock” means the Common Stock of the Company, (not including in the securities Beneficially Owned by such Person which were acquired directly from the Company or any Affiliate thereof) representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (3) below; or
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“CommonStockEquivalents” means any reason to constitute a majority of the number of directors serving on the Board; or
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Notwithstanding the foregoing, (i) a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the holders oftime Common Stock, immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions and (ii) to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, a Change in Control shall be deemed to have occurred under the Plan with respect toincluding, without limitation, any Award that constitutes deferred compensation under Section 409A of the Code only if a change in the ownership or effective control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A of the Code. For purposes of this definition of Change in Control, the term “Person” shall not include (i) the Company or any Subsidiary thereof, (ii) a trusteedebt, preferred stock, right, option, warrant or other fiduciary holding securities under an employee benefit plan ofinstrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the Company or any Subsidiaryholder thereof (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know- how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation),
(g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium), including, but not limited to, all the intellectually property described under “BUSINESS – Our Intellectual Property” in the registration statement on Form S-1 filed by the Company with the Securities and Exchange Commission (the “SEC”) on July 13, 2022 and other intellectual property of the Company that may be disclosed from time to time.
“Exempt AwardMinimumPrice” means $0.3268 per share.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Requisite Stockholder Approval” means the approval by the holders of Common Stock of the Company for the issuance of shares of Common Stock in excess of the Share Cap in accordance with the rules of The Nasdaq Stock Market LLC.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share Cap” means a number of shares (subject to adjustment in the event of a stock split, stock dividend, combination or other proportionate adjustment) of Common Stock equal to the product of (i) 0.1999 and (ii) 16,446,718, and less that number of shares beneficially owned by the Holder as of the issuance date of this Note, where beneficial ownership is calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder shall meannot include the following:
“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.
“TradingDay” means a day on which the Common Stock is traded on a Trading Market.
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“TradingMarket” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).
“Transfer Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place, Woodmere, New York 11598, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Notes then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
1. | PrincipalandCalculationofInterest. |
2. | Events of Default. |
(i)the failure by the Company to make payment of principal or interest due under this Note at the Maturity Date; and
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(ii)any commencement by the Company of a case under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company; or any commencement against the Company of any bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty (60) days; or the adjudication of the Company as insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the appointment of any custodian, receiver or the like for the Company or any substantial part of the Company’s property which continues undischarged or unstayed for a period of sixty (60) days; or any general assignment by the Company for the benefit of its creditors; or any statement in writing by the Company indicating an inability to pay its debts generally as they become due.
Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder.
3. | Seniority;Security. |
(ii) to enter in any intercreditor agreement or subordination agreement reasonably requested by the Company to evidence such priority of payment and/or liens contemplated by such indebtedness incurred pursuant to the preceding clause (i) (each, an “Intercreditor Agreement”).
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the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies); providedfurther, that “Collateral” shall not include any Excluded Property and if and when any property shall cease to be Excluded Property, such property shall be deemed at all times from and after the date hereof to constitute Collateral.
As used herein, “ExcludedProperty” shall mean (i) any permit, lease, license, contract, instrument or other agreement held by the Company, including any property subject thereof, that prohibits or requires the consent of any person other than its Affiliates as a condition to the creation by the Company of a lien thereon, or any permit, lease, license contract or other agreement or property held by the Company to the extent that any requirement of law applicable thereto prohibits the creation of a lien thereon, but only, in each case, to the extent, and for so long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC (as defined below) or any other requirement of law and (ii) any United States “intent-to-use” trademark or service mark application filed pursuant to Section 1(b) of the Lanham Act prior to the filing of an “Amendment to Allege Use” or a “Statement of Use” pursuant to Sections 1(c) or 1(d) of the Lanham Act, solely to the extent that, and only for so long as, the grant of such security interest therein would impair the validity or enforceability of, render void or voidable, or result in the cancellation of, such “intent-to-use” trademark or service mark application under federal law.
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the number of Conversion Shares dividend equivalents or performance units, eachconverted and the date of whichsuch conversion. The Company shall deliver any objection to the Notice of Conversion within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following the conversion of a portion of the Note, the number of Conversion Shares available for conversion hereunder at any given time may be less than the amount stated on the face hereof.
(i)“Conversion Amount” means the entire outstanding and unpaid principal balance of this Note that may be converted hereunder, subject to the Beneficial Ownership Limitation, and shall excludetheaccruedandunpaidinterestwithrespecttosuchprincipalbalanceandtheDefaultBalance, if any, and as between the Original Principal and the Additional Principal, conversions shall be calculated as if the entire amount of the Original Principal is converted prior to any conversion of the Additional Principal. In addition to the Beneficial Ownership Limitation, in the event that the Conversion Price (as defined below) is lower than the Minimum Price, the Conversion Amount shall also be subject to the attainmentShare Cap; provided, however, in the event that the Share Cap is applicable, the Company shall use its best efforts to obtain the Requisite Stockholder Approval within seventy (70) days after the Conversion Share Delivery Date (as defined below).
(ii)“ConversionPrice” means, as of performance goals or a period of continued provision of service or employmentany Conversion Share Delivery Date (as defined below) or other terms or conditionsdate of determination, $0.35, subject to adjustment as permitted underprovided herein.
(c) | MechanicsofConversion. |
(2) Trading Days after the delivery to the Company of the Notice of Conversion and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Conversion (such date, the "Conversion Share Delivery Date"). Upon delivery of the Notice of Conversion, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Conversion Shares with respect to which this Note has been converted, irrespective of the date of delivery of the Conversion Shares. If the Company fails for any reason to deliver to the Holder the Conversion Shares subject to the Notice of Conversion by the Conversion Share Delivery Date, the Company shall pay to the Holder, in Section 3 below,cash, as liquidated damages and not as a penalty, for each $1,000 of the Conversion Shares subject to receive grantssuch conversion (based on the VWAP of Awards,the Common Stock on the date of the applicable Notice of Conversion), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Conversion Share Delivery Date) for each Trading Day after such Conversion Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Note remains outstanding and convertible. As used herein, "Standard Settlement Period" means the standard settlement period, expressed in a number of Trading Days, on the Company's primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.
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(d) | CertainAdjustments. |
(i) | Stock Dividends and Splits. If the Company, at any time while this Note is outstanding: |
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(i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued under the Plan with respect to an Exempt Award shall not count against such share limit. Following the Effective Date, no further awards shall be issued under the Prior Plan, but all awards under the Prior Plan which are outstanding as of the Effective Date (including any Grandfathered Arrangement) shall continue to be governed by the terms, conditions and procedures set forth in the Prior Plan and any applicable Award Agreement.
In the event of any Change in Capitalization, an equitable substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities reserved for issuance under the Plan pursuant to Section 4, (ii) the kind, number of securities subject to, and the Exercise Price subject to outstanding Options and Stock Appreciation Rights granted under the Plan, (iii) the kind, number and purchase price of Shares or other securities or the amount of cash or amount or type of other property subject to outstanding Restricted Stock, Restricted Stock Units or Other Stock-Based Awards granted under the Plan; and/or (iv) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); provided, however, that any fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall be made as may be determined by the Administrator, in its sole discretion. Without limiting the generality of the foregoing, in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, but subject in all events to the requirements of Section 409A of the Code, for the cancellation of any outstanding Award granted hereunder in exchange for payment in cash or other property having an aggregate Fair Market Value equal to the Fair Market Value of the Shares, cash or other property covered by such Award, reduced by the aggregate Exercise Price or purchase price thereof, if any; provided, however, that if the Exercise Price or purchase price of any outstanding Award is equal to or greater than the Fair Market Value of the shares of Common Stock, cash or other property covered by such Award, the Administrator may cancel such Award without the payment of any consideration to the Participant. Further, without limiting the generality of the foregoing, with respect to Awards subject to foreign laws, adjustments made hereunder shall be made in compliance with applicable requirements. Except to the extent determined by the Administrator, any adjustments to ISOs under this Section 5 shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code. The Administrator’s determinations pursuant to this Section 5 shall be final, binding and conclusive.
The Participants in the Plan shall be selected from time to time by the Administrator, in its sole discretion, from those individuals that qualify as Eligible Recipients.
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(ii)Subsequent Rights Offerings. In addition to any additional restrictions or conditions as determined by the Administrator at the time of grant or, subjectadjustments pursuant to Section 409A4(d)(i) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all of the Code where applicable, thereafter:
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Other Stock-Based Awards may be issued under the Plan. Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the individuals to whom and the time or times at which such Other Stock-Based Awards shall be granted. Each Participant who is granted an Other Stock-Based Award shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, including, among other things,Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to be granted pursuant toany limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Other Stock-Based Awards,Purchase Rights, or, if no such record is taken, the manner indate as of which such Other Stock-Based Awards shall be settled (e.g., inthe record holders of shares of Common Stock cashare to be determined for the grant, issue or other property), or the conditionssale of such Purchase Rights (provided, however, that, to the vesting and/or payment or settlementextent that the Holder's right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Other Stock-Based Awards (which may include, but not be limited to, achievementshares of performance criteria) and all other terms and conditionsCommon Stock as a result of such Other Stock-Based Awards. InPurchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the event that the Administrator grants a bonusHolder until such time, if ever, as its right thereto would not result in the form of Shares,Holder exceeding the Shares constitutingBeneficial Ownership Limitation).
(iii)ProRataDistributions. During such bonustime as this Note is outstanding, if the Company shall as determined by the Administrator, be evidenced in uncertificated formdeclare or by a book entry record or a certificate issued in the name of the Participant to whom such grant was made and delivered to such Participant as soon as practicable after the date on which such bonus is payable. Notwithstanding anything set forth in the Plan to the contrary,make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, equivalent Award issued hereunderspin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Note, then, in each such case, the Holder shall be subjectentitled to participate in such Distribution to the same restrictions, conditions and risksextent that the Holder would have participated therein if the Holder had held the number of forfeitureshares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as applyof which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the underlying Award.
Unless otherwise determined byany such Distribution would result in the AdministratorHolder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and evidencedthe portion of such Distribution shall be held in an Award Agreement, notwithstanding Section 4(d)abeyance for the benefit of the Plan,Holder until such time, if ever, as its right thereto would not result in the event that (a)Holder exceeding the Beneficial Ownership Limitation).
(iv)Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
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substantially all of its assets in one or a Change in Control occurs, and (b) the Participant is employedseries of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity of the Company (each a "Fundamental Transaction"), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 4(h) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the "AlternateConsideration") receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(h) on the conversion of this Note). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the "Successor Entity") to assume in writing all of the obligations of the Company under this Note in accordance with the provisions of this Section 4(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its Affiliatesparent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with an conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such ChangeFundamental Transaction), and which is reasonably satisfactory in Control then uponform and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term "Company" under this Note (so that from and after the occurrence or consummation of such ChangeFundamental Transaction, each and every provision of this Note and the other Transaction Documents referring to the "Company" shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities,
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jointly and severally with the Company, may conversion every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Note and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein.
(v)Calculations. All calculations under this Section 4(d) shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 4(d), the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(vi) | Notice to Holder. |
i. | Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuanttoanyprovisionofthisSection4(d),theCompanyshallpromptlydeliver to the Holder by email a notice setting forth the Conversion Price after such adjustment and any resulting adjustment to the number of the Conversion Shares and setting forth a brief statement of the facts requiring such adjustment. |
ii. | Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) theCompanyshalldeclareaspecialnonrecurringcashdividendonoraredemption oftheCommonStock,(C)theCompanyshallauthorizethegrantingtoallholders of the Common Stock rights or notes to subscribe for or purchase any shares of capitalstockofanyclass orof anyrights,(D)the approvalof anystockholdersof the Company shall be required in connection with any reclassification of the CommonStock,anyconsolidationormergertowhichthe Company(oranyofits Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stockis converted into othersecurities,cashorproperty,or(E)theCompanyshallauthorizethevoluntary orinvoluntarydissolution,liquidationorwindingupoftheaffairsoftheCompany, then,ineachcase,theCompanyshallcausetobedeliveredbyemailtotheHolder atitslastemail addressasit shallappearupontheNote Registerof the Company, atleast20calendardayspriortotheapplicablerecordoreffectivedatehereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or Notes, or if a record is notto betaken,thedateasofwhichtheholdersoftheCommonStockofrecord to beentitledtosuchdividend,distributions,redemption,rightsorNotesaretobe determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverableupon such reclassification,consolidation,merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defectthereinorinthedeliverythereofshallnotaffectthevalidityofthecorporate action required to be specified in such notice.To the extent that any notice provided in this Note constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneouslyfilesuchnoticewiththeCommissionpursuanttoaCurrentReport onForm 8-K.TheHoldershallremainentitledtoconversionthisNoteduringthe |
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period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
(f) | RegistrationofConversionShares. |
(i)The Company agrees that, no later than thirty (30) calendar days after the Administrator,Conversion Share Delivery Date (the “Filing Date”), the Company will file with the SEC (at the Company’s sole cost and expense) a registration statement registering the resale of the Conversion Shares (the “Registration Statement”) and the Company shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof (and in any event, no later than seventy (70) calendar days following the Conversion Share Delivery Date) (the “EffectivenessDeadline”); provided that the Effectiveness Deadline shall be extended if the Registration Statement is reviewed by, and comments thereto are provided from, the SEC, or the Company encounters other delays associated with third parties, including delays in receiving any applicable reviews or consents of the Company’s independent public accounting firm. The Company will use its commercially reasonable efforts to provide a draft of the Registration Statement to the Holder for review (but not comment other than with respect to the accuracy of the information concerning the Holder included therein) at least two (2) Business Days in advance of filing the Registration Statement; provided that, for the avoidance of doubt, in no event shall the Company be required to delay or postpone the filing of such Registration Statement as a result of or in connection with Investor’s review. In no event shall the undersigned be identified as a statutory underwriter in the Registration Statement unless requested by the SEC; provided, that if the SEC requests that the Holder be identified as a statutory underwriter in the Registration Statement, Investor will have the option, in its sole and absolute discretion, may:to either (i) have the opportunity to withdraw from the Registration Statement upon its prompt written request to the Company, in which case the Company’s obligation to register the Conversion Shares will be deemed satisfied or (ii) be included as such in the Registration Statement. Notwithstanding the foregoing, if the SEC prevents the Company from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Conversion Shares, such Registration Statement shall register for resale such number of Conversion Shares which is equal to the maximum number of Conversion Shares as is permitted by the SEC.
(ii)The Company agrees that, except for such times as the Company is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, the Company will use commercially reasonable efforts to cause such Registration Statement to remain effective with respect to Investor until the earlier of (i) one (1) year from the issuance of the Conversion Shares, (ii) the date on which all of the Conversion Shares shall have been sold, or (iii) on the first date on which the Holder can sell all of its Conversion Shares under Rule 144 of the Securities Act without limitation as to the manner of sale or the amount of such securities that may be sold. For as long as the Registration Statement shall remain effective pursuant to the immediately preceding sentence, the Company will use commercially reasonable efforts to file all reports, and provide all customary and reasonable cooperation, necessary to enable the undersigned to resell the Conversion Shares pursuant to the Registration Statement or Rule 144 of the Securities Act, as applicable, qualify the Conversion Shares for listing on the applicable stock exchange on which the Company’s shares of common stock are then listed, and update or amend the Registration Statement as necessary to include the Conversion Shares. For as long as the Holder holds the Conversion Shares, the Company will use commercially reasonable efforts to file all reports, and provide all customary and reasonable cooperation, necessary to enable the undersigned to resell the Conversion Shares pursuant to Rule 144 of the Securities Act. The Holder agrees to disclose its beneficial ownership, as determined in
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accordance with Rule 13d-3 of the Exchange Act, of Conversion Shares to the Company (or its successor) upon request to assist the Company in making the determination described above. The Company’s obligations to include the Conversion Shares in the Registration Statement are contingent upon the Holder furnishing in writing to the Company such information regarding Investor, the securities of the Company held by Investor and the intended method of disposition of the Conversion Shares as shall be reasonably requested by the Company to effect the registration of the Conversion Shares, and the Holder shall execute such documents for such registration as the Company may reasonably request that are customary of a selling stockholder in similar situations, including providing that the Company shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement during any customary blackout or similar period or as permitted hereunder.
If the Administrator determinesHolder's determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Note is convertible, in its discretion pursuant to Section 3(b)(4) hereof to accelerate the vesting of Options and/or Share Appreciation Rights in connection with a Change in Control, the Administrator shall also have discretion in connection with such action to provide that all Options and/or Stock Appreciation Rights outstanding immediately prior to such Change in Control shall expire on the effective date of such Change in Control.
The Board may amend, alter or terminate the Plan at any time, but no amendment, alteration or termination shall be made that would impair the rights of a Participant under any Award theretofore granted without such Participant’s consent. The Board shall obtain approval of the Company’s stockholders for any amendment that would require such approval in order to satisfy the requirements of any rules of the stock exchange on which the Common Stock is traded or other Applicable Law. Subject to Section 3(c), the Administrator may amend the terms of any Award theretofore granted, prospectively or retroactively, but,each case subject to Section 5 of the Plan and the immediately preceding sentence, no such amendment shall materially impair the rights of any Participant without his or her consent.
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The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.
Each Participant shall, no later than the date as of which the value of an Award first becomes includible in the gross income of such Participant for purposes of applicable taxes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of an amount up to the maximum statutory tax rates in the Participant’s applicable jurisdiction with respect to the Award, as determined by the Company. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements,Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the extent permittedaccuracy of such determination and shall have no liability for conversion of this Note that are not in compliance with the Beneficial Ownership Limitation, provided this limitation of liability shall not apply if the Holder has detrimentally relied on outstanding share information provided by Applicable Laws, have the right to deduct any such taxes from any payment of any kind otherwise due to such Participant. Whenever cash is to be paid pursuant to an Award, the Company or the Transfer Agent. In addition, a determination as to any group status as contemplated above shall have the right to deduct therefrom an amount sufficient to satisfy any applicable withholding tax requirements related thereto. Whenever Shares or property other than cash are to be delivered pursuant to an Award, the Company shall have the right to require the Participant to remit to the Companydetermined in cash an amount sufficient to satisfy any related taxes to be withheld and applied to the tax obligations; provided, that,accordance with the approvalSection 13(d) of the Administrator, a Participant may satisfyExchange Act and the foregoing requirement by either (i) electing to haverules and regulations promulgated thereunder. For purposes of this Section 4(h), in determining the Company withhold from deliverynumber of Shares or other property, as applicable, or (ii) delivering already owned unrestrictedoutstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common
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Stock as reflected in each(A) the Company's most recent periodic or annual report filed with the Commission, as the case havingmay be, (B) a value not exceedingmore recent public announcement by the applicable taxes to be withheldCompany or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and appliedin writing to the tax obligations. Such already owned and unrestrictedHolder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be valued at their Fair Market Value ondetermined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates or Attribution Parties since the date onas of which the amountsuch number of tax to be withheld is determined and any fractional share amounts resulting therefromoutstanding shares of Common Stock was reported. The "BeneficialOwnershipLimitation" shall be settled19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(h), provided that the Beneficial Ownership Limitation in cash. Such an electionno event exceeds 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the provisions of this Section 4(h) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(h) to correct this paragraph (or any portion hereof) which may be madedefective or inconsistent with respectthe intended Beneficial Ownership Limitation herein contained or to allmake changes or any portionsupplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note. Notwithstanding the foregoing, in addition to the Beneficial Ownership Limitation, in the event that the Conversion Price is lower than the Minimum Price, the Conversion Amount shall also be subject to the Share Cap.
Untilshares of Common Stock other than the Voting Group vote in respect of such time asmatter. For purposes of this paragraph, “Excess Shares” means those Conversion Shares then beneficially owned by the Awards are fully vested and/or exercisable in accordanceVoting Group that when aggregated with such other shares of Common Stock beneficially owned by the Plan or an Award Agreement, no purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any Award or any agreement or commitment to do anyVoting Group exceed thirty percent (30%) of the foregoing (each, a “Transfer”) by any holder thereof in violationthen outstanding shares of the provisionsCommon Stock. For purposes of the Plan or an Award Agreementthis paragraph, beneficial ownership will be valid, except withcalculated as defined in Rule 13d-3 under the prior written consentExchange Act.
Neither the adoption of the Plan nor the grant of an Award shall confer upon any Eligible Recipient any right to continued employment or service with the Company or any Affiliate thereof, as the case may be, nor shall it interfere in any way with the rightprincipal office of the Company or any Affiliate thereof to terminateits designated agent, together with a written assignment of this Note substantially in the employment or service of any of its Eligible Recipients at any time.
The Plan was approvedform attached hereto duly executed by the Board on April 28, 2021Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Note or Notes in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall be adopted and become effective on the date that it is approved by the Company’s stockholders (the “Effective Date”).
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Participant’s electronic signature of an Award Agreement shall have the same validity and effect as a signature affixed by hand.
No Award shall be granted pursuantissue to the Plan on or afterassignor a new Note evidencing the tenth anniversaryportion of the Effective Date, but Awards theretofore granted may extend beyond that date.
(b) pursuant to an exemption from registration under Rule 144 promulgated under the Plan,Securities Act, if available, or (c) pursuant to any other available exemption from the registration requirements of the
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Securities Act, and in each case in accordance with any applicable securities laws of any state or any other jurisdiction. The Holder agrees that if any transfer of this Note or any interest herein is proposed to be made, as a condition precedent to receipt ofany such Common Stock,transfer, it may be required to representdeliver to the Company an opinion of counsel satisfactory to the Company.
10. | Representations,WarrantiesandCovenantsofHolder. |
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If any Participant shall, in connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify the Company of such election within ten (10) days after filing notice of the election with the Internal Revenue Service.
No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Administrator shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
A Participant may file with the Administrator a written designation of a beneficiary on such form as may be prescribed by the Administrator and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participant’s estate shall be deemed to be the Participant’s beneficiary.
In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system.
If any provision of the Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in the Plan.
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The PlanLaw. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware,New York, without giving effectregard to the principles of conflicts of law of such state.
Tothereof. Each party agrees that all legal proceedings concerning the extent allowable pursuant to applicable law, each memberinterpretations, enforcement and defense of the Boardtransactions contemplated by this Note (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the Administrator and any officer or other employeeCity of New York. Each party hereby irrevocably submits to whom authority to administer any componentthe exclusive jurisdiction of the Planstate and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is designatednot personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be indemnified and held harmlessdeemed to limit in any way any right to serve process in any other manner permitted by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim,law. If either party shall commence an action, suit or proceeding to which he or she may be aenforce any provisions of this Note, the prevailing party or in which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit or proceeding against himshall be reimbursed by the other party for their reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or her; provided, however, that heproceeding.
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any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
The obligations of the Company under the Planfor cancellation and shall not be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.
No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare, or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
SignaturePageFollows
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IN WITNESS WHEREOF, the undersigned has signed this Note on behalf of the “Company” and not as a surety or guarantor or in any other capacity.
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| KIROMICBIOPHARMA,INC. | |
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| | By: |
| | Name: |
| | Title: |
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Accepted and Acknowledged: | | |
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| Holder | |
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| | By: |
| | Name: |
| | Title: |
| | Date: |
SignaturePagetoConvertibleNote
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EXHIBIT A WIREINSTRUCTIONS
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EXHIBIT B
NOTICEOFCONVERSION
Reference is made to the Convertible Note (the “Note”) issued to the undersigned by Kiromic BioPharma, Inc. (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, par value $0.001 per share, (the “Common Stock”) of the Company, as of the date specified below.
Date of Conversion:
Aggregate Conversion Amount to be converted:
Pleaseconfirmthefollowinginformation
A. | ConversionPrice: |
B. | NumberofsharesofCommonStocktobeissued: |
C. | PleaseDWACtheCommonStockintowhichtheNoteisbeingconvertedinthefollowingnameandto the following account: |
Broker no:
Account no:
D. | Ifin Certificated Form, deliver to: |
E. | Facsimile Number: |
F. | E-mail Address: |
Authorization
By:
Name:
Title:
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ASSIGNMENTFORM
(ToassigntheforegoingNote,executethisformandsupplyrequiredinformation.Donotuse this form to convert shares.)
FOR VALUE RECEIVED, the foregoing Note and all rights evidenced thereby are hereby assigned to
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Name: | |
| (Please Print) |
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Address: | |
| (Please Print) |
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Phone Number: | |
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Email Address: | |
Dated: ,
Holder's Signature:
Holder's Address:
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KIROMIC BIOPHARMA, INC. SPECIAL MEETING OF STOCKHOLDERS PROXY FOR The undersigned hereby appoints Pietro Bersani and THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS. TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. (Continued and to be signed on the reverse side) PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. Important Notice Regarding the Availability of Proxy Materials for the The Proxy Statement |
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Please mark your votes like this x FOR AGAINST ABSTAIN 1.To oo 2.To approve, in accordance with Nasdaq Marketplace Rule 5635(d), the issuance of 3.
o ooo NOTE: To conduct any other business properly brought before the meeting or any adjournment thereof. Please indicate if you plan to attend this meeting. Yes o No o Date:
Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) o CONTROL NUMBER Signature Signature (if held jointly) Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. CONTROL NUMBER PROXY VOTING INSTRUCTIONS Please have your 11-digit control number ready when voting by Internet or Telephone |
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