Plan for Employee Inducement Stock Options adopted July 6, 2021 with Form of Stock Option Agreement

 

2.1 (b)            Compliance with NASDAQ Exemption from Shareholder Approval. The Company may award Inducement Options to a New Employee under this Plan pursuant to the exception from NASDAQ shareholder approval requirements for the issuance of such securities as set forth in NASDAQ Listing Rule 5635(c))(4). A New Employee who receives an Award under this Plan must have no relationship with the Company (or its Affiliates or Subsidiaries) prior to his or her employment with the Company either as a current or former employee or consultant to the Company (or its Affiliates or Subsidiaries), including without limitation as a member of the Board of Directors of the Company, its Affiliates or its Subsidiaries. This restriction is to ensure that Awards made pursuant to this Plan are “arms-length” between the Company and all New Employees and are made in accordance with NASDAQ Listing Rule 5635(c))(4). The Company’s Compensation Committee must approve any Awards under this Plan. In addition, the Company must disclose in a press release the material terms of any Award, including but not limited to a New Employee’s name, title, and the number of Shares underlying any Award, and file a Listing of Additional Shares Notification Form with NASDAQ regarding the Shares underlying any Award.

2.2 “Affiliate” shall mean any corporation or other entity (including, but not limited to, a partnership or a limited liability company) that is affiliated with the Company through stock or equity ownership or otherwise, and is designated as an Affiliate for purposes of this Plan by the Compensation Committee.

 

2.3 “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in Section 4.3.

 

 

2.4 “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options and Incentive Stock Options, in each case subject to the terms of this Plan.

 

2.5 “Award Agreement” means either: (a) a written agreement entered into by the Company and a New Employee setting forth the terms and provisions applicable to an Award granted under this Plan, or (b) a written or electronic statement issued by the Company to a New Employee describing the terms and provisions of such Award, including any amendment or modification thereof. The Compensation Committee may provide for the use of electronic, Internet, or other nonpaper Award Agreements, and the use of electronic, Internet, or other nonpaper means for the acceptance thereof and actions thereunder by a New Employee.

 

2.6 “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such terms in Rule 13d-3 promulgated under the Exchange Act.

 

2.7 “Board” or “Board of Directors” means the Board of Directors of the Company.

 

2.8  “Cause” shall have the meaning ascribed thereto in any employment agreement between the Company or any of its subsidiaries and a New Employee, or, if there is no employment agreement or if any such employment agreement does not contain a definition of “cause”, then Cause shall mean a finding by the Compensation Committee that a New Employee has (i) been charged with a felony or a crime involving moral turpitude, (ii) committed an act of fraud or embezzlement against the Company or its subsidiaries, (iii) materially violated any policy of the Company or its subsidiaries, (iv) failed, refused or neglected to substantially perform their duties (other than by reason of a physical or mental impairment) or to implement the directives of the Company, or (v) willfully engaged in conduct that is materially injurious to the Company, monetarily or otherwise.

 

2.9 “Change in Control” for purposes of this Plan means the happening of any of the following:

 

 

 

 

 

 

2.10 “Change in Control Price” means the price per Share paid in conjunction with any transaction resulting in a Change in Control (as determined in good faith by the Compensation Committee if any part of the offered price is payable other than in cash) or, in the case of a Change in Control occurring solely by reason of events not related to a transfer of Shares, the highest Fair Market Value of a Share on any of the thirty (30) consecutive trading days ending on the last trading day before the Change in Control occurs.

 

2.11 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

 

2.12  “Company” means Tenax Therapeutics, Inc., a Delaware corporation, and any successor thereto as provided in Article 14 herein.

 

2.13 “Compensation Committee” means the Compensation Committee of the Board, composed of independent members of the Board of Directors in compliance with NASDAQ Listing Rule 5605(d)(2).

 

2.14  “Director” means any individual who is a member of the Board of Directors of the Company.

 

2.15 “Effective Date” has the meaning set forth in Section 1.1.

 

2.16  “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

 

2.17 “Fair Market Value” or “FMV” means the closing price of a Share reported on an established stock exchange on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Compensation Committee in its discretion. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made in good faith by the Compensation Committee, taking into account such factors as the Compensation Committee deems appropriate.

 

2.18  “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 to a New Employee, that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422 or any successor provision.

 

2.19 “Inducement Options” mean any Nonqualified Stock Options and Incentive Stock Options awarded by the Compensation Committee pursuant to this Plan as an inducement material to a New Employee entering into initial employment with the Company and made in accordance with NASDAQ Listing Rule 5635(c)(4).

 

2.20 “Insider” shall mean an individual who is, on the relevant date, an officer or Director of the Company, or a more than ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board or Committee in accordance with Section 16 of the Exchange Act.

 

2.21  “New Employee(s)” means a participant eligible to receive an Award under this Plan at the time of his or her initial employment with the Company who has no relationship with the Company (or its Affiliates or Subsidiaries) prior to his or her employment with the Company either as a current or former employee or consultant to the Company (or its Affiliates or Subsidiaries), including without limitation as a member of the Board of Directors of the Company, its Affiliates or its Subsidiaries. This restriction is to ensure that Awards made pursuant to this Plan are “arms-length” between the Company and all New Employees and are made in accordance with NASDAQ Listing Rule 5635(c))(4).

 

 

2.22 “Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet the requirements of Code Section 422 or that otherwise does not meet such requirements.

 

2.23 “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.

 

2.24 “Option Price” means the price at which a Share may be purchased by a New Employee pursuant to an Option.

 

2.25  “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

 

2.26  “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.27 “Plan” means this Plan for Employee Inducement Stock Option Grants.

 

2.28 “Plan Year” means the calendar year.

 

2.29 “Share” means a share of common stock of the Company, par value $0.0001 per share.

 

2.30  “Subsidiary” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.

 

2.31  “Termination” or “Terminate” means cessation of the employee-employer relationship between a New Employee and the Company and all Affiliates and Subsidiaries for any reason. Notwithstanding the foregoing, with respect to any Award subject to Code Section 409A, any such cessation or termination also must constitute a “separation from service” as defined under Treasury Regulation Section 1.409A-1(h).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Breach of a Restrictive Covenant. All outstanding Awards and Shares issued pursuant to an Award held by an New Employee will be forfeited in their entirety (including as to any portion of an Award or Shares subject thereto that are vested or as to which any repurchase or resale rights or forfeiture restrictions in favor of the Company or its designee with respect to such Shares have previously lapsed) if a New Employee breaches any noncompetition, confidentiality or other restrictive covenant that may apply to a New Employee, as determined by the Compensation Committee in its sole discretion; provided, that if a New Employee has sold Shares issued upon exercise or settlement of an Award within six (6) months prior to the date on which a New Employee would otherwise have been required to forfeit such Shares or the Option under this subsection (a) as a result of a New Employee’s breach, then the Company will be entitled to recover any and all profits realized by a New Employee in connection with such sale.

 

(b) Termination for Cause. All outstanding Awards and Shares issued pursuant to an Award held by a New Employee will be forfeited in their entirety (including as to any portion of an Award or Shares subject thereto that are vested or as to which any repurchase or resale rights or forfeiture restrictions in favor of the Company or its designee have previously lapsed) if a New Employee’s employment or service is terminated by the Company for Cause; provided, however, that if a New Employee has sold Shares issued upon exercise or settlement of an Award within six (6) months prior to the date on which a New Employee would otherwise have been required to forfeit such Shares under this subsection (b) as a result of termination of a New Employee’s employment or service for Cause, then the Company will be entitled to recover any and all profits realized by a New Employee in connection with such sale; and provided further, that in the event the Compensation Committee determines that it is necessary to establish whether grounds exist for termination for Cause, the Award will be suspended during any period required to conduct such determination, meaning that the vesting, exercisability and/or lapse of restrictions otherwise applicable to the Award will be tolled and if grounds for such termination are determined to exist, the forfeiture specified by this subsection (b) will apply as of the date of suspension, and if no such grounds are determined to exist, the Award will be reinstated on its original terms.

 

 

 

 

 

 

 

 

(a) Any and all Options granted hereunder shall become exercisable, and shall remain exercisable in accordance with their terms;

 

(b) For Plan purposes, an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its parent, the Compensation Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option, for each Share subject to such Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

 

(c) Awards shall be considered assumed or substituted if, upon the occurrence of a Change in Control after which there will be a generally recognized U.S. public market for (1) the Company’s Stock, (2) common stock for which the Company’s Stock is exchanged, or (3) the common stock of a successor or acquirer entity (such publicly traded stock, “Public Shares”), the then outstanding Awards are assumed, exchanged or substituted for by a successor or acquirer entity such that following the Change in Control, the Awards relate to such Public Shares and, except as otherwise provided by this Section 10.1, remain subject to such terms and conditions that were applicable to the Awards prior to the Change in Control.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

(b) Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Grant of Option. Effective as of [DATE OF GRANT] (the “Date of Grant”), the Company hereby grants to the Optionee an option (the “Option”) to purchase up to [NUMBER OF SHARES] Shares (“Optioned Shares”) at the Option Price per Share of [OPTION PRICE] (the “Option Price”), subject to the terms and conditions of the Plan and this Agreement, in accordance with the employment inducement grant exception to the shareholder approval requirements of the NASDAQ Stock Market LLC (“NASDAQ”) set forth in NASDAQ Listing Rule 5635(c)(4). The future value of such Shares is unknown and cannot be predicted with certainty. If such Shares do not increase in value, the Option will have no value.

 

2. Term of Option. Subject to earlier termination under Section 4 hereof, the term of the Option shall be ten (10) years (the “Term”).

 

3. Vesting Schedule. The Option shall vest and become exercisable for purchase of the Optioned Stock on the following schedule:  [VESTING DETAILS].  The Option shall not vest for any Optioned Stock that has not vested prior to the date the Optionee’s Continuous Status as an Employee or Consultant (as defined in the Plan) terminates.

 

 

4. Termination of Option. Except as otherwise provided herein, the Option shall terminate on the earliest to occur of the following:

 

 

 

 

5. Exercise of Option. The vested portion of the Option may be exercised in whole or in part by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the Option and set forth the number of Shares with respect to which the Option is being exercised. The Exercise Notice shall be accompanied by payment of an amount equal to the aggregate Option Price as to all exercised Shares. Payment of such amount shall be by any of the following methods, or combination thereof, at the election of the Optionee: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price; (c) by a cashless (broker-assisted) exercise; or (d) any other method approved or accepted by the Committee in its sole discretion. The Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Option Price.

 

6. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or the laws of descent and distribution and, during the Optionee’s lifetime, may only be exercised by the Optionee.

 

7. Restrictions on Shares. This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchange as may be required. The Optionee agrees to take all steps the Committee determines are necessary to comply with all applicable provisions of federal and state securities law in exercising his or her rights under this Agreement. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of this Option as it deems advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws as may be applicable to such Shares.

 

8. Forfeiture. Where an Optionee engages in certain competitive activity or is terminated by the Company for Cause, his or her Option and Shares are subject to forfeiture conditions under Section 7.3 of the Plan. Upon the occurrence of any of the events set forth in Section 7.3 of the Plan, in addition to the remedies provided in Section 7.3, the Company shall be entitled to issue a stop transfer order and other documents implementing the forfeiture to its transfer agent, the depository or any of its nominees, and any other person with respect to this Option and the Shares.

 

9. Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, the terms and conditions of the Plan and this Agreement shall be binding upon the Optionee and his or her heirs, executors, administrators, successors and assigns.

 

10. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Optionee or by the Company forthwith to the Committee, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Committee shall be final and binding on all parties.

 

11. Tax Consequences. The exercise of this Option and the subsequent disposition of the Shares may cause the Optionee to be subject to federal, state and/or foreign taxation. The Optionee should consult a tax advisor before exercising this Option or disposing of the Shares purchased hereunder.

 

12. Acknowledgement. The Optionee acknowledges and agrees: (i) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) that the grant of the Option does not create any contractual or other right to receive future grants of options or any right to continue the Optionee’s service relationship with the Company (for the vesting period or otherwise); (iii) that the Optionee remains subject to discharge from such relationship to the same extent as if the Option had not been granted; (iv) that all determinations with respect to any such future grants, including, but not limited to, when and on what terms they shall be made, will be at the sole discretion of the Committee; (v) that participation in the Plan is voluntary; (vi) that the value of the Option is an extraordinary item of compensation that is outside the scope of the Optionee’s employment contract if any; and (vii) that the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar benefits.

 

 

13. Optionee Data Privacy. As a condition of the grant of this Option, the Optionee consents to the collection, use and transfer of personal data as described in this paragraph. The Optionee understands that the Company and its Affiliates hold certain personal information about the Optionee, including but not limited to the Optionee’s name, home address and telephone number, date of birth, social security number, salary, nationality, job title, shares of common stock or directorships held in the Company, details of all Options or other entitlement to shares of common stock awarded, cancelled, exercised, vested, unvested or outstanding in the Optionee’s favor for the purpose of managing and administering the Plan (“Data”). The Optionee further understands that the Company and/or its Affiliates will transfer Data amongst themselves as necessary for the purposes of implementation, administration and management of the Optionee’s participation in the Plan, and that the Company and/or any of its Affiliates may each further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plans. The Optionee understands that these recipients may be located in the Optionee’s country of residence or elsewhere. The Optionee authorizes them to receive, possess, use, retain and transfer Data in electronic or other form, for the purposes of implementing, administering and managing the Optionee’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding shares of common stock on the Optionee’s behalf to a broker or other third party with whom the shares acquired on exercise may be deposited. The Optionee understands that the Optionee may, at any time, view the Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the local human resources representative.

 

14. Confidentiality. The Optionee agrees not to disclose the terms of this offer to anyone other than the members of the Optionee’s immediately family or the Optionee’s counsel or financial advisors and agrees to advise such persons of the confidential nature of this offer.

 

15. Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This Agreement is governed by the internal substantive laws but not the choice of law rules of Delaware.

OPTIONEE						TENAX THERAPEUTICS, INC.
						By:
Signature:						Name:		[NAME OF OFFICER]
Name:		[OPTIONEE]				Title:		[TITLE OF OFFICER]

1. Exercise of Option. Effective as of today,                     , 20    , the undersigned (the “Optionee”) hereby elects to exercise the Optionee’s option (the “Option”) to purchase                      shares of the Common Stock (the “Shares”) of Tenax Therapeutics, Inc. (the “Company”) under and pursuant to the Tenax Therapeutics, Inc. Plan for Employee Inducement Stock Option Grants (the “Plan”) and the Award Agreement with a grant date of                     , 20     (the “Award”). The Grant Number of the Option is                     , and the per share exercise price is $            .

 

2. Delivery of Payment. The Optionee herewith delivers to the Company the aggregate exercise price of the Option, as set forth in the Award, by means of (check one):

 

3. Representations of Optionee. The Optionee acknowledges that the Optionee has received, read and understood the Plan and the Award and agrees to abide by and be bound by their terms and conditions. In making the decision to exercise the option(s) the Optionee has relied upon his or her own independent investigations or those made by his or her representatives, if any (including professional, financial, tax, legal and other advisors). The Optionee (and his or her representatives, if any) has had an opportunity to review information with respect to the Company, desires no further additional information concerning the Company or its operations, and deems such information reviewed adequate to evaluate the merits and risks of the Optionee’s investment in the Company. The Optionee understands that the Option has been granted in accordance with the employment inducement grant exception to the shareholder approval requirements of the NASDAQ Stock Market LLC (the “NASDAQ”) set forth in NASDAQ Listing Rule 5635(c)(4).

 

 

4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in the Plan.

 

 

 

5. Tax Consultation and Withholding. The Optionee understands that the Optionee may suffer adverse tax consequences as a result of the Optionee’s purchase or disposition of the Shares. The Optionee represents that the Optionee has consulted with any tax consultants the Optionee deems advisable in connection with the purchase or disposition of the Shares and that the Optionee is not relying on the Company for any tax advice.

 

6. Restrictive Legends. The Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:

 

7. Governing Law. This Agreement shall be governed by the internal substantive laws but not the choice of law rules of Delaware.

 

8. Entire Agreement. The Plan and Award are incorporated herein by reference. This Agreement, the Plan, and the Award constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee.

Submitted by:						Accepted by:
OPTIONEE						TENAX THERAPEUTICS, INC.
						By:
Signature:						Name:
Name:						Title:
						Date: