2007 STOCK OPTION PLAN
OF
TETRAGENEX PHARMACEUTICALS, INC.
1. PURPOSES OF THE PLAN
1.1. The purposes of the 2007 Stock Option Plan (the "Plan") of
Tetragenex Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), are to:
1.2. Encourage selected employees, directors and consultants to
improve operations and increase profits of the Company;
1.3. Encourage selected employees, directors and consultants to
accept or continue employment or association with the Company or its
Affiliates; and
1.4. Increase the interest of selected employees, directors and
consultants in the Company's welfare through participation in the
growth in value of the common stock of the Company (the "Shares").
1.5. Options granted under this Plan ("Options") may be "incentive
stock options" ("ISOs") intended to satisfy the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder (the "Code"), or "non-qualified stock
options" ("NQSOs").
2. ELIGIBLE PERSONS
2.1. Every person who at the date of grant of an Option is an
employee of the Company or of any Affiliate (as defined below) of
the Company is eligible to receive NQSOs or ISOs under this Plan.
Every person who at the date of grant is a consultant to or
non-employee director of, the Company or any Affiliate (as defined
below) of the Company is eligible to receive NQSOs under this Plan.
The term "Affiliate" as used in the Plan means a parent or
subsidiary corporation as defined in the applicable provisions
(currently Sections 424(e) and (f), respectively) of the Code. The
term "employee" includes an officer or director who is an employee
of the Company. The term "consultant" includes persons employed by,
or otherwise affiliated with, a consultant.
3. STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS
Subject to the provisions of Section 6.1.1 of the Plan, the total
number of Shares, which may be issued under Options granted pursuant
to this Plan, shall not exceed seven million sixty eight thousand
four hundred and twenty (7,068,420)Shares. The Shares covered by the
portion of any grant under the Plan which expires unexercised shall
become available again for grants under the Plan.
4. ADMINISTRATION
4.1. The Plan shall be administered by either the Board of Directors
of the Company (the "Board") or by a committee (the "Committee") to
which administration of the Plan, or of part of the Plan, may be
delegated by the Board (in either case, the "Administrator"). The
Board shall appoint and remove members of such Committee, if any, in
its discretion in accordance with applicable laws. If necessary in
order to comply with Rule 16b-3 under the Exchange Act and
Section 162(m) of the Code, the Committee shall, in the Board's
discretion, be comprised solely of "non-employee directors" within
the meaning of said Rule 16b-3 and "outside directors" within the
meaning of Section 162(m) of the Code. The foregoing
notwithstanding, the Administrator may delegate nondiscretionary
administrative duties to such employees of the Company as it deems
proper and the Board, in its absolute discretion, may at any time
and from time to time exercise any and all rights and duties of the
Administrator under the Plan.
4.2. Subject to the other provisions of this Plan, the Administrator
shall have the authority, in its discretion: (a) to grant Options;
(b) to determine the fair market value of the Shares subject to
Options; (c) to determine the exercise price of Options granted; (d)
to determine the persons to whom, and the time or times at which,
Options shall be granted, and the number of shares subject to each
Option; (e) to interpret this Plan; (f) to prescribe, amend, and
rescind rules and regulations relating to this Plan; (g) to
determine the terms and provisions of each Option granted (which
need not be identical), including but not limited to, the time or
times at which Options shall be exercisable; (h) with the consent of
the optionee, to modify or amend any Option; (i) to defer (with the
consent of the optionee) the exercise date of any Option; (j) to
authorize any person to execute on behalf of the Company any
instrument evidencing the grant of an Option; and (k) to make all
other determinations deemed necessary or advisable for the
administration of this Plan. The Administrator may delegate
nondiscretionary administrative duties to such employees of the
Company as it deems proper.
4.3. All questions of interpretation, implementation, and
application of this Plan shall be determined by the Administrator.
Such determinations shall be final and binding on all persons.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
5.1. No Options shall be granted under this Plan after 10 years from
the date of adoption of this Plan by the Board.
5.2. Each Option shall be evidenced by a written stock option
agreement, in form satisfactory to the Administrator, executed by
the Company and the person to whom such Option is granted.
5.3. The stock option agreement shall specify whether each Option it
evidences is an NQSO or an ISO.
5.4. Subject to Section 6.3.3 with respect to ISOs, the
Administrator may approve the grant of Options under this Plan to
persons who are expected to become employees, directors or
consultants of the Company, but are not employees, directors or
consultants at the date of approval, and the date of approval shall
be deemed to be the date of grant unless otherwise specified by the
Administrator.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to
the terms and conditions set forth in Section 6.1. NQSOs shall also
be subject to the terms and conditions set forth in Section 6.2, but
not those set forth in Section 6.3. ISOs shall also be subject to
the terms and conditions set forth in Section 6.3, but not those set
forth in Section 6.2.
6.1. Terms and Conditions to Which All Options Are Subject. All
Options granted under this Plan shall be subject to the following
terms and conditions:
6.1.1. Changes in Capital Structure. Subject to Section 6.2.2, if
the stock of the Company is changed by reason of a stock split,
reverse stock split, stock dividend, or recapitalization,
combination or reclassification, appropriate adjustments shall be
made by the Board in (a) the number and class of shares of stock
subject to this Plan and each Option outstanding under this Plan,
and (b) the exercise price of each outstanding Option; provided,
however, that the Company shall not be required to issue fractional
shares as a result of any such adjustments. Each such adjustment
shall be subject to approval by the Board in its sole discretion.
6.1.2. Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall
notify each optionee at least 30 days prior to such proposed action.
To the extent not previously exercised, all Options will terminate
immediately prior to the consummation of such proposed action;
provided, however, that the Administrator, in the exercise of its
sole discretion, may permit exercise of any Options prior to their
termination, even if such Options were not otherwise exercisable. In
the event of a merger or consolidation of the Company with or into
another corporation or entity in which the Company does not survive,
or in the event of a sale of all or substantially all of the assets
of the Company in which the shareholders of the Company receive
securities of the acquiring entity or an affiliate thereof, all
Options shall be assumed or equivalent options shall be substituted
by the successor corporation (or other entity) or a parent or
subsidiary of such successor corporation (or other entity);
provided, however, that if such successor does not agree to assume
the Options or to substitute equivalent options therefor, the
Administrator, in the exercise of its sole discretion, may permit
the exercise of any of the Options prior to consummation of such
event, even if such Options were not otherwise exercisable.
6.1.3. Time of Option Exercise. Subject to Section 5 and Section
6.3.4, Options granted under this Plan shall be exercisable (a)
immediately as of the effective date of the stock option agreement
granting the Option, or (b) in accordance with a schedule as may be
set by the Administrator (each such date on such schedule, the
"Vesting Base Date") and specified in the written stock option
agreement relating to such Option. In any case, no Option shall be
exercisable until a written stock option agreement in form
satisfactory to the Company is executed by the Company and the
optionee.
6.1.4. Option Grant Date. The date of grant of an Option under this
Plan shall be the date as of which the Administrator approves the
grant.
6.1.5. Nontransferability of Option Rights. Except with the express
written approval of the Administrator which approval the
Administrator is authorized to give only with respect to NQSOs, no
Option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will, by the laws of descent
and distribution or pursuant to a qualified domestic relations
order. During the life of the optionee, an Option shall be
exercisable only by the optionee.
6.1.6. Payment. All options issued under this plan are deemed to be
cashless. Options may be exercised using the intrinsic value of the
options.
(a) Subject to the discretion of the Administrator and
the terms of the stock option agreement granting the Option,
delivery by the optionee of Shares already owned by the optionee for
all or part of the Option price, provided the fair market value
(determined as set forth in Section 6.1.10) of such Shares being
delivered is equal on the date of
exercise to the Option price, or such portion thereof as the
optionee is authorized to pay by delivery of such stock; and
(b) Subject to the discretion of the Administrator,
through the surrender of Shares then issuable upon exercise of the
Option, provided the fair market value (determined as set forth in
Section 6.1.10) of such Shares is equal on the date of exercise to
the Option price, or such portion thereof as the optionee is
authorized to pay by surrender of such stock.
6.1.7. Termination of Employment. All options issued under this plan
are to be vested immediately unless stipulated otherwise by the plan
administrators at the time of issuance.
6.1.8. Withholding and Employment Taxes. At the time of exercise of
an Option and as a condition thereto, or at such other time as the
amount of such obligations becomes determinable (the "Tax Date"),
the optionee shall remit to the Company in cash all applicable
federal and state withholding and employment taxes. Such obligation
to remit may be satisfied, if authorized by the Administrator in its
sole discretion, after considering any tax, accounting and financial
consequences, by the optionee's (a) delivery of a promissory note in
the required amount on such terms as the Administrator deems
appropriate, (b) tendering to the Company previously owned Shares or
other securities of the Company with a fair market value equal to
the required amount, or (c) agreeing to have Shares (with a fair
market value equal to the required amount) which are acquired upon
exercise of the Option withheld by the Company.
6.1.9. Other Provisions. Each Option granted under this Plan may
contain such other terms, provisions, and conditions not
inconsistent with this Plan as may be determined by the
Administrator, and each ISO granted under this Plan shall include
such provisions and conditions as are necessary to qualify the
Option as an "incentive stock option" within the meaning of Section
422 of the Code.
6.1.10. Determination of Value. For purposes of the Plan, the fair
market value of Shares or other securities of the Company shall be
determined as follows:
(a) Fair market value shall be the closing price of such
stock on the date before the date the value is to be determined on
the principal recognized securities exchange or recognized
securities market on which such stock is reported, but if selling
prices are not reported, its fair market value shall be the mean
between the high bid and low asked prices for such stock on the date
before the date the value is to be determined (or if there are no
quoted prices for such date, then for the last preceding business
day on which there were quoted prices).
(b) In the absence of an established market for the
stock, the fair market value thereof shall be determined in good
faith by the Administrator, with reference to the Company's net
worth, prospective earning power, dividend-paying capacity, and
other relevant factors, including the goodwill of the Company, the
economic outlook in the Company's industry, the Company's position
in the industry, the Company's management, and the values of stock
of other corporations in the same or similar line of business.
6.1.11 Option Term. Subject to Section 6.3.4, no Option shall be
exercisable more than 10 years after the date of grant, or such
lesser period of time as is set forth in the stock option agreement
(the end of the maximum exercise period stated in the stock option
agreement is referred to in this Plan as the "Expiration Date").
6.2. Terms and Conditions to Which Only NQSOs Are Subject. Options
granted under this Plan which are designated as NQSOs shall be
subject to the following terms and conditions:
6.2.1. Exercise Price.
(a) Except as set forth in Section 6.2.1(b), the
exercise price of an NQSO shall be not less than 85% of the fair
market value (determined in accordance with Section 6.1.10) of the
stock subject to the Option on the date of grant.
(b) To the extent required by applicable laws, rules and
regulations, the exercise price of a NQSO granted to any person who
owns, directly or by attribution under the Code (currently Section
424(d)), stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of
any Affiliate (a "Ten Percent Shareholder") shall in no event be
less than 110% of the fair market value (determined in accordance
with Section 6.1.10) of the stock covered by the Option at the time
the Option is granted.
6.3. Terms and Conditions to Which Only ISOs Are Subject. Options
granted under this Plan which are designated as ISOs shall be
subject to the following terms and conditions:
6.3.1. Exercise Price.
(a) Except as set forth in Section 6.3.1(b), the
exercise price of an ISO shall be determined in accordance with the
applicable provisions of the Code and shall in no event be less than
the fair market value (determined in accordance with Section 6.1.10)
of the stock covered by the Option at the time the Option is
granted.
(b) The exercise price of an ISO granted to any Ten
Percent Shareholder shall in no event be less than 110% of the fair
market value (determined in accordance with Section 6.1.10) of the
stock covered by the Option at the time the Option is granted.
6.3.2. Disqualifying Dispositions. If stock acquired by exercise of
an ISO granted pursuant to this Plan is disposed of in a
"disqualifying disposition" within the meaning of Section 422 of the
Code (a disposition within two years from the date of grant of the
Option or within one year after the transfer such stock on exercise
of the Option), the holder of the stock immediately before the
disposition shall promptly notify the Company in writing of the date
and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably
require.
6.3.3. Grant Date. If an ISO is granted in anticipation of
employment as provided in Section 5.1, the Option shall be deemed
granted, without further approval, on the date the grantee assumes
the employment relationship forming the basis for such grant, and,
in addition, satisfies all requirements of this Plan for Options
granted on that date.
6.3.4. Term. Notwithstanding Section 6.1.11, no ISO granted to any
Ten Percent Shareholder shall be exercisable more than five years
after the date of grant.
7. MANNER OF EXERCISE
7.1. An optionee wishing to exercise an Option shall give written
notice to the Company at its principal executive office, to the
attention of the officer of the Company designated by the
Administrator, accompanied by payment of the exercise price and
withholding taxes as provided in Sections 6.1.6 and 6.1.8. The date
the Company receives written notice of an exercise hereunder
accompanied by payment of the exercise price will be considered as
the date such Option was exercised.
7.2. Promptly after receipt of written notice of exercise of an
Option and the payments called for by Section 7.1, the Company
shall, without stock issue or transfer taxes to the optionee or
other person entitled to exercise the Option, deliver to the
optionee or such other person a certificate or certificates for the
requisite number of shares of stock. An optionee or permitted
transferee of the Option shall not have any privileges as a
shareholder with respect to any shares of stock covered by the
Option until the date of issuance (as evidenced by the appropriate
entry on the books of the Company or a duly authorized transfer
agent) of such shares.
8. EMPLOYMENT OR CONSULTING RELATIONSHIP
Nothing in this Plan or any Option granted hereunder
shall interfere with or limit in any way the right of the Company or
of any of its Affiliates to terminate any optionee's employment or
consulting at any time, nor confer upon any optionee any right to
continue in the employ of, or consult with, the Company or any of
its Affiliates.
9. CONDITIONS UPON ISSUANCE OF SHARES
Shares shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and
delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended (the "Securities Act").
10. NON-EXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as
creating any limitations on the power of the Company to adopt such
other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options other than under
the Plan.
11. AMENDMENTS TO PLAN
The Board may at any time amend, alter, suspend or
discontinue this Plan. Without the consent of an optionee, no
amendment, alteration, suspension or discontinuance may adversely
affect outstanding Options except to conform this Plan and ISOs
granted under this Plan to the requirements of federal or other tax
laws relating to incentive stock options. No amendment, alteration,
suspension or discontinuance shall require shareholder approval
unless (a) shareholder approval is required to preserve incentive
stock option treatment for federal income tax purposes or (b) the
Board otherwise concludes that shareholder approval is advisable.
12. EFFECTIVE DATE OF PLAN; TERMINATION
This Plan shall become effective upon adoption by the
Board; provided, however, that no Option shall be exercisable unless
and until written consent of the shareholders of the Company, or
approval of shareholders of the Company voting at a validly called
shareholders' meeting, is obtained within twelve months after
adoption by the Board. If such shareholder approval is not obtained
within such time, Options granted hereunder shall be of the same
force and effect as if such approval was obtained except that all
ISOs granted hereunder shall be treated as NQSOs. Options may be
granted and exercised under this Plan only after there has been
compliance with all applicable federal and state securities laws.
This Plan shall terminate within ten years from the date of its
adoption by the Board.