EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EXECUTIVE EMPLOYMENT AGREEMENT
(this “Agreement”), is made as of the
Effective Date (as defined below) by and between Tenax
Therapeutics, Inc., a Delaware corporation, with its principal
place of business in North Carolina (the “Company”), and Xxxxxx Xxxx, MD
(the “Executive”).
W I T N E S S E T H:
WHEREAS, the Executive was formerly an
owner and founder of PH Precision Med. (“PHPM”);
WHEREAS, the Company is entering into
that certain Agreement and Plan of Merger (the “Transaction Agreement”) with PHPM
through which the Company will enter into a merger agreement with
PHPM (the “Transaction”);
WHEREAS, in connection with the
Transaction, the Company desires to employ the Executive as its
Chief Medical Officer and provide adequate assurances to the
Executive and the Executive desires to accept such employment on
the terms set forth below;
WHEREAS, this Agreement is conditioned
upon the closing of the Transaction, and in the event the
Transaction does not close, this Agreement shall be void ab initio and of no
effect;
WHEREAS, the terms of this Agreement
supersede and replace any prior agreements, representations,
arrangements or understandings (whether written, oral, implied or
otherwise) between the Executive and the Company or PHPM regarding
the subject matter set forth herein; provided that the Transaction
Agreement is expressly preserved; and
WHEREAS, this Agreement shall be
effective as of the Closing Date of the Merger (as defined in the
Transaction Agreement) (the “Effective Date”).
NOW, THEREFORE, in consideration of the
foregoing, of the mutual promises herein, and of other good and
valuable consideration, the receipt and sufficiency of which the
parties acknowledge, the Company and the Executive agree as
follows:
1. Employment. Effective as of the
Effective Date, the
Company hereby employs the Executive and the Executive hereby
accepts employment as Chief Medical Officer of the Company upon the
terms and conditions of this Agreement. The position is a remote
position.
2. Duties. The Executive will have
such authority, and will faithfully perform all of the duties,
normally associated with the position of Chief Medical Officer,
including but not limited to all duties set forth in this
Agreement, and all additional duties consistent with such position
that are reasonably prescribed from time to time by the Chief
Executive Officer of the Company. The Executive shall devote such
business time and attention as reasonably necessary to perform his
duties and responsibilities on behalf of the Company and in
furtherance of its best interests; provided, however, that he,
subject to his obligations hereunder, shall be permitted to make
personal investments, perform reasonable volunteer services, serve
on the board of one or more charitable organizations, and serve on
the board of one for profit, publicly traded company so long as it
is not in competition with the Company. The Executive shall comply
with all Company policies, standards, rules and regulations (the
“Company Policies”) as may exist from
time-to-time and all applicable government laws, rules and
regulations that are now or hereafter in effect.
3. Term. Unless earlier terminated
as provided herein, the initial term of this Agreement shall
commence on the Effective Date and shall continue until the one-year
anniversary of the Effective Date (the “Initial Term”). After the Initial
Term, this Agreement shall automatically renew for successive
one-year terms on the same terms and conditions set forth herein
unless: (a) earlier terminated or amended as provided herein; or
(b) either party gives the other written notice of non-renewal at
least ninety (90) days prior to the end of the Initial Term or any
renewal term of this Agreement, in which case, this Agreement shall
terminate on the expiration of the then-current Term. The Initial
Term of this Agreement and all applicable renewals thereof are
referred to herein as the “Term.”
4. Compensation. During the Term,
as compensation for the services rendered by the Executive under
this Agreement, the Executive shall be entitled to receive the
following (all payments are subject to applicable
withholdings):
(a) Base
Salary. The Executive shall receive an annual salary of
Three Hundred Thousand Dollars and 00/100 Dollars ($300,000.00)
(less applicable withholdings) (“Base Salary”) payable
in accordance with the payroll policies of the Company as set forth
in the Company Policies. The Chief Executive Officer of the Company
shall review, on an annual basis, the Executive’s salary and
may increase or decrease such salary as the Chief Executive Officer
deems appropriate; provided, however, that any decrease shall only
be effective if it is a result of an across-the-board decrease
affecting all senior executives as a group.
(b) Bonuses. Each fiscal year
during the Term, the Executive shall be entitled to an annual bonus
the amount of which is based on percentage achievement of annual
goals set by the Company, after consultation with the Executive, at
the beginning of each fiscal year for such fiscal year
(“Annual
Bonus”), which achievement shall be determined as of
the last day of such fiscal year. If the Executive achieves one
hundred percent (100%) of the annual goals, the Annual Bonus shall
be forty percent (40%) of his Base Salary (“Target Bonus”). There is no cap on
the Annual Bonus for exceeding one hundred percent (100%) of annual
goals; for example, an achievement of two hundred percent (200%) of
annual goals would result in an Annual Bonus equal to eighty
percent (80%) of his Base Salary. The Annual Bonus shall be paid in
accordance with the Company’s regular bonus payment
procedures, and, in all events, will be paid no later than
seventy-five (75) days following the end of the fiscal year in
which the Annual Bonus was earned. Except as otherwise set forth in
Section 5(d)(ii)(C), in order to be eligible to receive the Annual
Bonus, the Executive must be employed by the Company on the last
day of the fiscal year in which the Annual Bonus was
earned.
(c) Benefits. The Executive shall
be entitled to receive those benefits provided from time to time to
other executive employees of the Company, in accordance with the terms and
conditions of the applicable plan documents, provided that the
Executive meets the eligibility requirements thereof. All such
benefits are subject to amendment or termination from time to time
by the Company without the consent of the Executive or any other
employee of the Company.
(d) Business Expenses. The Company
shall pay, or reimburse the Executive for, all reasonable expenses
incurred by the Executive directly related to conduct of the
business of the Company; provided that the Executive complies with
the Company’s Policies for the reimbursement or advancement
of business expenses that are now or hereafter in effect. The
Company shall provide such payments or reimbursements within thirty
(30) days following the Executive’s incurrence of the
expense.
(e) Option Award. The Board of
Directors of the Company (the “Board”) has approved a
nonstatutory stock option entitling the Executive to purchase up to
250,000 shares of Company Common Stock (the “Option”) at the fair market value
as of the date of grant as determined by the Board in its sole
discretion. The terms and conditions, including vesting, for the
Option will be set forth in a Nonstatutory Stock Option Agreement
between the Executive and the Company in the form set forth on
Exhibit A.
5. Termination
and Obligations of the Company upon Termination. This
Agreement and the Executive’s employment by the Company shall
or may be terminated, as the case may be, as set forth
below.
(a) Termination upon Expiration of the
Term. This Agreement and the Executive’s employment by
the Company shall terminate upon the expiration of the Term in the
event either party gives the other party timely written notice of
non-renewal in accordance with Section 3 of this
Agreement.
(b) Termination by the Executive.
The Executive may terminate this Agreement and his employment with
the Company as follows:
(i) Voluntary Resignation. For any
reason other than Good Reason (as defined below), thirty (30) days
after written notice of the Executive’s resignation is
received by the Company (“Voluntary
Resignation”).
(ii) For
Good Reason. For purposes of this Agreement, the
Executive’s termination of his employment will be deemed to
have been for “Good
Reason” if the Executive resigns within six (6) months
after any of the following conditions having arisen without his
prior written consent and after having given the Company written
notice of the existence of such condition within ninety (90) days
of the Executive’s knowledge of the existence of the
condition and providing the Company with thirty (30) days to remedy
the condition:
(A)
a material
diminution in the Executive’s Base Salary;
(B)
a material
diminution in the Executive’s authority, duties, or
responsibility by the assignment to him of authority, duties, or
responsibilities materially inconsistent with his position as Chief
Medical Officer;
(C)
any breach by the
Company of any material provision of this Agreement or any other
written agreement with the Executive.
(c) Termination by the Company. The
Company may terminate this Agreement and the Executive’s
employment by the Company immediately upon written notice to the
Executive (or his personal representative):
(i) Without Cause. At any time and
for any reason other than reasons set forth in Sections 5(c)(ii)
(Death), (iii) (Disability) or (iv) (Cause) (“Without Cause”);
(ii) Death.
Upon the death of the Executive, in which case this Agreement shall
terminate immediately; provided that, such termination shall not
prejudice any benefits payable to the Executive’s spouse or
beneficiaries which are fully vested as of the date of death
(“Death”);
(iii) Disability.
If the Executive is permanently disabled (as defined herein), in
which case this Agreement shall terminate immediately; provided
that, such termination shall not prejudice any benefits payable to
the Executive, the Executive’s spouse or beneficiaries which
are fully vested as of the date of the termination of this
Agreement. For purposes of this Agreement, the Executive shall be
considered “permanently
disabled” when a qualified medical doctor mutually
acceptable to the Company and the Executive or the
Executive’s personal representative shall have certified in
writing that the Executive has been unable, because of a medically
determinable physical or mental disability, to perform
substantially all of the Executive’s duties, with or without
a reasonable accommodation, for more than one hundred eighty (180)
calendar days measured from the last full day of work
(“Disability”);
(iv) For
Cause. The term “Cause”, as used herein, shall
mean:
(A)
Any willful
material breach of the terms of this Agreement, or of any other
written agreement with the Executive, by the Executive, which
breach is not cured by the Executive within thirty (30) days after
the Company provides the Executive with written notice specifying
the nature of such breach;
(B)
The
Executive’s material misappropriation of the Company’s
tangible or intangible property, or material and intentional breach
of the Confidentiality Agreement (as defined below) (provided,
however, that for this purpose, the Executive will not be deemed to
have breached the Confidentiality Agreement in connection with any
disclosure made pursuant to a court order, subpoena or other legal
obligation);
(C)
The
Executive’s material failure to comply with the Company
Policies or any other reasonable policies and/or directives of the
Board, which failure is not cured by the Executive within thirty
(30) days after the Company provides the Executive with written
notice specifying the nature of such failure;
(D)
The
Executive’s abuse of illegal drugs or any illegal substance,
or the Executive’s abuse of alcohol in any manner that
materially interferes with the performance of the Executive’s
duties under this Agreement;
(E)
Any dishonest or
illegal action (including, without limitation, embezzlement) by the
Executive which is detrimental to the interest and well-being of
the Company, including, without limitation, harm to its reputation;
or
(F)
The
Executive’s failure to disclose any conflict of interest
known to the Executive that the Executive may have with the Company
in a transaction between the Company and any third party which
failure is detrimental to the interest and well-being of the
Company.
(d) Obligations upon
Termination.
(i) Upon the
termination of this Agreement and the Executive’s employment
with the Company pursuant to the expiration of the Term following
the Executive’s notice of non-renewal pursuant to Section 3,
by the Executive pursuant to Section 5(b)(i) (Voluntary
Resignation), or by the Company pursuant to Section 5(c)(ii)
(Death), (iii) (Disability) or (iv) (Cause), the Company shall have
no further obligations hereunder other than the payment of all
compensation and other benefits payable to the Executive (or his
estate or heirs) through the date of such termination in accordance
with the Company’s normal payroll cycle and terms of the
applicable benefit plans and programs in existence at the time the
Executive’s employment is terminated.
(ii) Upon
termination of this Agreement and the Executive’s employment
with the Company by the Company pursuant to Section 5(c)(i)
(Without Cause), upon expiration of the Term following the
Company’s notice of non-renewal pursuant to Section 3, or by
the Executive pursuant to Section 5(b)(ii) (Good Reason), the
Executive shall be entitled to the following, with those benefits
described in Sections 5(d)(ii)(B), (C) and (D) specifically
conditioned upon Executive’s execution and nonrevocation of a
valid release under Section 6 and compliance with his obligations
under Section 7:
(A)
payment of all
compensation and other benefits payable to the Executive through
the date of such termination in accordance with the Company’s
normal payroll cycle and terms of the applicable benefit plans and
programs in existence at the time the Executive’s employment
is terminated;
(B)
payment of an
amount equal to twelve (12) months of his then current Base
Salary (less applicable withholdings), payable in a lump sum on the
sixtieth (60th) day following the
date of the Executive’s separation from service (the
“Severance Payment
Date”);
(C)
a lump sum payment
in an amount equal to the Target Bonus for the fiscal year in which
such termination occurred, multiplied by a fraction, the numerator
of which is the number of days during which the Executive was
employed by the Company in the fiscal year of his termination and
the denominator of which is 365 (less applicable withholdings),
with such payment to be made on the Severance Payment
Date;
(D)
all outstanding
equity-based compensation awards shall become fully vested and the
restrictions thereon shall lapse; provided that, any delays in the
settlement or payment of such awards that are set forth in the
applicable award agreement and that are required under Section 409A
("Section 409A") of the
Internal Revenue Code of 1986, as amended (the "Code") shall remain in effect;
and
(E)
reimbursement for
premium payments the Executive makes under the Consolidated Budget
Reconciliation Act (“COBRA”) to continue the Executive
and, if applicable, the Executive’s family’s health
insurance coverage under the Company’s group health insurance
plan for twelve (12) months from the date of termination.
Reimbursements for COBRA premium payments shall begin on the
Severance Payment Date and shall be made as soon as possible
following the Executive’s submission to the Company of proof
of timely payments, but not later than thirty (30) days after the
Executive’s submission of proof of timely payments; provided,
however, all such claims for reimbursement shall be submitted by
the Executive and paid by the Company no later than fifteen (15)
months following the termination of the Executive’s
employment. Any obligation for the Company to make payments for
COBRA reimbursement under this Agreement shall immediately cease
when the Executive becomes eligible for health insurance from a
subsequent employer, and the Executive shall promptly notify the
Company of such subsequent eligibility. If the Executive desires
COBRA coverage, the Executive shall bear full responsibility for
applying for COBRA coverage and nothing herein shall constitute a
guarantee of COBRA benefits. Under no circumstances will the
Executive be entitled to a cash payment or other benefit in lieu of
reimbursements for the actual costs of premiums for COBRA
continuation hereunder. The amount of expenses eligible for
reimbursement during any calendar year shall not be affected by the
amount of expenses eligible for reimbursement in any other calendar
year.
6. Release of Claims.
Notwithstanding any provision of this Agreement to the contrary
(other than the last sentence of this Section 6), the
Company’s obligation to provide the payments and benefits
under Section 5(d)(ii)(B), (C) and (D) of this Agreement is
conditioned upon the Executive’s timely execution and
non-revocation of an enforceable release of claims and his
compliance with his obligations under Section 7 of this Agreement.
If the Executive chooses not to execute such a release, timely
revokes his execution of the release, or fails to comply with his
obligations under Section 7 of this Agreement, then the
Company’s obligation to compensate him ceases upon the
termination of his employment except as to amounts due at the time
pursuant to Section 5(d)(ii)(A). The Company shall provide the
release of claims to the Executive within seven (7) days of his
separation from service, and the Executive must execute it within
the time period specified in the release (which shall not be longer
than forty five (45) days from the date of receipt). Such release
shall not be effective until any applicable revocation period has
expired.
7. Confidential Information and
Competitive Business Activities. The Executive acknowledges
that by virtue of his employment and position with the Company, he
has or will have access to confidential information of the Company,
including valuable information about its business operations and
entities with which it does business in various locations, and has
developed or will develop relationships with parties with whom it
does business in various locations. The Executive also acknowledges
that the confidential information and competitive business
activities provisions set forth in the Employee Non-Disclosure,
Invention Assignment, and Competitive Business Activities Agreement
effective as of the Effective Date hereof (the “Confidentiality Agreement”), are
reasonably necessary to protect the Company’s legitimate
business interests, are reasonable as to the time, territory and
scope of activities which are restricted, do not interfere with
public policy or public interest and are described with sufficient
accuracy and definiteness to enable him to understand the scope of
the restrictions imposed on him. The Executive acknowledges that
his failure to abide by the provisions set forth in Section 3 of
the Confidentiality Agreement would cause irreparable harm to the
Company for which legal remedies would be inadequate. Therefore, in
addition to any legal or other relief to which the Company may be
entitled by virtue of the Executive’s failure to abide by the
provisions set forth in Section 3 of the Confidentiality Agreement:
(i) the Company will be released of its obligations under this
Agreement to make any post-termination payments; (ii) the Company
may seek legal and equitable relief, including but not limited to
preliminary and permanent injunctive relief, for the
Executive’s actual or threatened failure to abide by these
provisions; (iii) the Executive will return all post-termination
payments received pursuant to this Agreement; and (iv) the
Executive will indemnify the Company for all reasonable and
documented expenses, including attorneys’ fees, incurred by
it in successfully enforcing these provisions. In the event that
the Company exercises its right to discontinue payments under this
provision and/or the Executive returns all post-termination
payments received pursuant to this Agreement, the Executive shall
remain obligated to abide by the provisions set forth in Section 3
in the Confidentiality Agreement.
8. Representations and
Warranties.
(a) The Executive
represents and warrants to the Company that the Executive’s
performance of this Agreement and as an employee of the Company
does not and will not breach any noncompetition agreement or any
agreement to keep in confidence proprietary information acquired by
the Executive in confidence or in trust prior to the
Executive’s employment by the Company. The Executive
represents and warrants to the Company that the Executive has not
entered into, and agrees not to enter into, any agreement that
conflicts with or violates this Agreement.
(b) The Executive
represents and warrants to the Company that the Executive has not
brought and shall not bring with the Executive to the Company, or
use in the performance of the Executive’s responsibilities
for the Company, any materials or documents of a former employer
which are not generally available to the public or which did not
belong to the Executive prior to the Executive’s employment
with the Company, unless the Executive has obtained written
authorization from the former employer or other owner for their
possession and use and provided the Company with a copy
thereof.
9. Notices. All notices, requests,
consents, approvals, and other communications to, upon, and between
the parties shall be in writing and shall be deemed to have been
given, delivered, made, and received when: (a) personally
delivered; (b) deposited for next day delivery by Federal Express,
or other similar overnight courier services; (c) transmitted via
telefacsimile or other similar device to the attention of the
Company’s Chief Financial Officer with receipt acknowledged;
or (d) three (3) days after being sent or mailed by certified mail,
postage prepaid and return receipt requested, addressed as
follows:
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If to
the Company:
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Attn:
Chief Financial Officer
Xxx
Xxxxxx Xxxxxxx
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Xxxxx
000
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Xxxxxxxxxxx,
XX 00000
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If to
the Executive:
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Xxxxxx
Xxxx
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0000
Xxxxx Xxxxxx
Xxxxxx,
XX 00000
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10. Choice of Law/Choice of
Venue/Effect/Assignment. This Agreement shall be interpreted
and governed under the laws of the State of North Carolina, without
regard to its choice of law rules, and shall be binding on and
inure to the respective benefit of the Company and its successors
and assigns and the Executive and his personal representatives. The
exclusive jurisdiction for any dispute arising under or relating to
this Agreement shall be the state or federal courts sitting in Wake
County, North Carolina, and each party hereby irrevocably consents
to the personal jurisdiction of such courts. The Company shall
require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, within
fifteen (15) days of such succession, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession
had taken place. The Executive may not assign this Agreement or
delegate his obligations hereunder. As used in this Agreement,
“Company” shall
mean the Company and any such successor which assumes and agrees to
perform the duties and obligations of the Company under this
Agreement by operation of law or otherwise.
11. Entire Agreement. Except as
expressly provided in this Agreement and except for the
Confidentiality Agreement, this Agreement: (i) supersedes all other
understandings and agreements, oral or written, between the parties
with respect to the subject matter of this Agreement; and (ii)
constitutes the sole agreement between the parties with respect to
this subject matter; provided that the Transaction Agreement is
expressly preserved. Each party acknowledges that: (A) no
representations, inducements, promises or agreements, oral or
written, have been made by any party or by anyone acting on behalf
of any party, which are not embodied in this Agreement; and (B) no
agreement, statement or promise not contained in this Agreement
shall be valid. No change or modification of this Agreement shall
be valid or binding upon the parties unless such change or
modification is in writing and is signed by the
parties.
12. Severability. If a court of
competent jurisdiction holds that any provision or sub-part thereof
contained in this Agreement is invalid, illegal or unenforceable,
that invalidity, illegality or unenforceability shall not affect
any other provision in this Agreement.
13. Amendment and Waiver. No
provision of this Agreement, including the provisions of this
Section, may be amended, modified, deleted, or waived in any manner
except by a written agreement executed by the parties. Further, the
Company’s or the Executive’s waiver of any breach of a
provision of this Agreement shall not waive any subsequent breach
by the other party.
14. Counterparts. This Agreement
may be executed in more than one counterpart, each of which shall
be deemed an original, and all of which shall be deemed a single
agreement.
15. Headings. The headings herein
are for convenience only and shall not affect the interpretation of
this Agreement.
16. Taxes.
(a) Section 409A of the Internal Revenue
Code.
(i) Parties’
Intent. The
parties intend that the provisions of this Agreement comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and the
regulations thereunder (collectively, “Section 409A”), or an exemption,
and all provisions of this Agreement shall be construed in a manner
consistent with the requirements for avoiding taxes or penalties
under Section 409A. If any provision of this Agreement (or of any
award of compensation, including equity compensation or benefits)
would cause the Executive to incur any additional tax or interest
under Section 409A, the Company shall, upon the specific
request of the Executive, use its reasonable business efforts to in
good faith reform such provision to comply with Code
Section 409A; provided, that to the maximum
extent practicable, the original intent and economic benefit to the
Executive and the Company of the applicable provision shall be
maintained. The Company shall timely use its reasonable business
efforts to amend any plan or program in which the Executive
participates to bring it in compliance with Section
409A.
(ii) Separation
from Service. A termination of employment shall not be
deemed to have occurred for purposes of any provision of this
Agreement relating to the payment of any amounts or benefits upon
or following a termination of employment unless such termination
also constitutes a “Separation from Service” within the
meaning of Section 409A and, for purposes of any such provision of
this Agreement, references to a “termination,”
“termination of employment,” “separation from
service” or like terms shall mean Separation from
Service.
(iii) Separate
Payments. Each installment payment required under this
Agreement shall be considered a separate payment for purposes of
Section 409A.
(iv) Delayed
Distribution to Specified Employees. If the Company
determines in accordance with Sections 409A and 416(i) of the Code
and the regulations promulgated thereunder, in the Company’s
sole discretion, that the Executive is a specified employee of the
Company, determined in accordance with Section 409A, any payments
and/or benefits provided under this Agreement that constitute
“nonqualified deferred compensation” subject to Section
409A that are provided to Executive on account of his Separation
from Service shall not be provided until the day after the
six-month anniversary of Executive’s termination date
(“Specified
Employee Payment Date”). The aggregate amount of any
payments that would otherwise have been made to Executive during
such six-month period shall be paid in a lump sum to Executive on
the Specified Employee Payment Date without interest and,
thereafter, any remaining reimbursements shall be paid without delay in
accordance with their original schedule.
(b) Withholdings. The Company shall
withhold any amounts required from any payment due the Executive
hereunder in accordance with state and federal tax law
requirements.
[Signatures on following page]
IN WITNESS WHEREOF, the parties have
executed this Employment Agreement as of the day and year first
above written.
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By:___/s/
Xxxxxxx DiTonno___________
Name:
Xxxxxxx XxXxxxx
Title:
Chief Executive Officer
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Xxxxxx Xxxx, MD
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___/s/
Stuart Rich_____________________
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Exhibit A
Nonstatutory Stock Option Agreement
TENAX THERAPEUTICS INC.
2016 STOCK INCENTIVE PLAN
AWARD AGREEMENT
THIS
AWARD AGREEMENT (this “Agreement”) is made by and
between Tenax Therapeutics, Inc., a Delaware corporation (the
“Company”), and Xxxxxx Xxxx, M.D. (the
“Optionee”) 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). Capitalized terms not defined in this Agreement
shall have the meanings given to them in the Tenax Therapeutics,
Inc. 2016 Stock Incentive Plan (the
“Plan”).
WITNESSETH:
WHEREAS, the
Optionee is providing, or has agreed to provide, services to the
Company, or Affiliate or a Subsidiary of the Company, as an
Employee or Third Party Service Provider;
WHEREAS, the
Company considers it desirable and in its best interests that the
Optionee be given a personal stake in the Company’s growth,
development and financial success through the grant of an option to
purchase shares of the $0.0001 par value common stock of the
Company (the “Shares”); and
WHEREAS, the
Compensation Committee of the Company’s Board of Directors
desires to award a stock option to Optionee as an employment
inducement grant (within the meaning of Nasdaq Listing Rule
5635(c)(4)).
NOW,
THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties agree as
follows:
1. Grant of Option. Effective as
of January 15, 2021 (the “Date of Grant”), the
Company hereby grants to the Optionee, an option (the
“Option”) to purchase Two Hundred Fifty Thousand
(250,000) Shares at the
Option Price per Share of $1.78 (the “Option Price”),
subject to the terms and conditions of this Agreement and
in
accordance with the employment inducement grant exception to the
shareholder approval requirements set forth in NASDAQ Listing Rule
5635(c)(4). It is understood
that the grant of such Option is not made pursuant to the Plan or
any other equity-based incentive plan of the Company; provided,
however, that, unless inconsistent with the express terms of this
Agreement, this Agreement shall be interpreted, and the Option
shall be administered, consistent with the provisions of the Plan,
the terms of which are herein incorporated by
reference. 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 as to:
(a)
Sixty-Two Thousand
Five Hundred (62,500) Shares from and after the start of a Phase 3
clinical trial (the “Trial”);
(b)
Sixty-Two Thousand
Five Hundred (62,500) Shares from and after the database lock with
respect to the Trial;
(c)
Sixty-Two Thousand
Five Hundred (62,500) Shares from and after the opening of an
Investigational New Drug Application with the U.S. Food and Drug
Administration (the “FDA”);
(d)
Sixty-Two Thousand
Five Hundred (62,500) Shares from and after the approval from the
FDA.
In no
event will any portion of the Option that is not vested and
exercisable at the time of the termination of the Optionee’s
service relationship become vested and exercisable following such
termination. Further, notwithstanding any provision of the Plan or
this Agreement to the contrary, in no event will any portion of the
Option that is not vested and exercisable immediately prior to the
time of a Sale of the Company become vested and exercisable because
of such event.
4. Termination of Option. Except
as otherwise provided herein, the Option shall terminate on the
earliest to occur of the following:
(e)
The expiration of
the Term of the Option.
(f)
The 91st day after
termination of the Optionee’s service relationship for any
reason other than one specified in (c) or
(d) below.
(g)
The 366th day after
termination of the Optionee’s service relationship as a
result of the Optionee’s death, or a disability, retirement
or redundancy that is approved by the Committee for this
purpose.
(h)
Termination of the
Optionee’s employment relationship by the Company for Cause,
or of the Optionee’s service relationship by the Company for
reasons that would constitute Cause if the Optionee were an
employee.
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.
In
connection with such exercise, the Company shall have the right to
require that the Optionee make such provision, or furnish the
Company such authorization, as may be necessary or desirable so
that the Company may satisfy any obligation it has under applicable
income tax laws to withhold for income or other taxes due upon or
incident to such exercise. The Committee may, in its discretion,
permit such withholding obligation to be satisfied through the
withholding of Shares that would otherwise be delivered upon
exercise of the Option.
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 11.3 of the Plan. Upon the occurrence of any of the
events set forth in Section 11.3 of the Plan, in addition to the
remedies provided in Section 11.3, 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 an employment or other 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. Employee 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.
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OPTIONEE
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By:
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Signature
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Name:
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Title:
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Exhibit A
FORM OF
EXERCISE NOTICE FOR 2016 STOCK INCENTIVE PLAN
Xxx
Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attention: Stock
Plan Administrator
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. 2016 Stock Incentive Plan (the
“Plan”) and the Award Agreement with a grant date
of [ ],
2020 (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):
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a check
in U.S. dollars made payable to Tenax Therapeutics, Inc. or bank
transfer;
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or
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(i) a
share certificate (or certificates) representing previously
acquired shares and (ii) a check in U.S. Dollars made payable to
Tenax Therapeutics, Inc. or bank transfer that, in combination,
have an aggregate value (the Fair Market Value of the shares
delivered plus the check or bank transfer amount) equal to the
aggregate exercise price of the Option.
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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 acknowledges that the Company is relying upon each of the
above representations in connection with the exercise of the option
and the issuance of the underlying Shares.
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. The Optionee further understands that the
Optionee’s purchase of the Shares may give rise to an
obligation on the part of the Company to withhold for income or
other taxes due and agrees to make a payment to the Company in the
amount necessary to allow the Company to satisfy any withholding
obligations.
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:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TENAX
THERAPEUTICS, INC. 2016 STOCK INCENTIVE PLAN, AS SUCH PLAN MAY BE
ALTERED, AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME, AND ANY
TRANSFEREE OF THESE SECURITIES SHALL BE SUBJECT TO THE TERMS OF
SUCH PLAN. COPIES OF THE FOREGOING PLAN ARE MAINTAINED WITH THE
CORPORATE RECORDS OF THE ISSUER AND ARE AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICES OF THE ISSUER.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AN
AWARD AGREEMENT BETWEEN THE ISSUER AND THE HOLDER, AS SUCH
AGREEMENT MAY BE AMENDED, RESTATED OR MODIFIED FROM TIME TO TIME,
AND ANY TRANSFEREE OF THESE SECURITIES SHALL BE SUBJECT TO THE
TERMS OF SUCH AGREEMENT. COPIES OF THE FOREGOING AGREEMENT ARE
MAINTAINED WITH THE CORPORATE RECORDS OF THE ISSUER AND ARE
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICES OF THE
ISSUER.
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.
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Submitted
by:
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Accepted
by:
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OPTIONEE
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TENAX THERAPEUTICS, INC.
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By:
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Signature
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Name:
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Name:
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Title:
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Date:
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