Attached files
file | filename |
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10-K - FORM 10-K - CurAegis Technologies, Inc. | c14707e10vk.htm |
EX-32 - EXHIBIT 32 - CurAegis Technologies, Inc. | c14707exv32.htm |
EX-23.1 - EXHIBIT 23.1 - CurAegis Technologies, Inc. | c14707exv23w1.htm |
EX-31.1 - EXHIBIT 31.1 - CurAegis Technologies, Inc. | c14707exv31w1.htm |
EX-31.2 - EXHIBIT 31.2 - CurAegis Technologies, Inc. | c14707exv31w2.htm |
EX-10.73 - EXHIBIT 10.73 - CurAegis Technologies, Inc. | c14707exv10w73.htm |
EXHIBIT 10.72
Torvec, Inc., 2011 Stock Option Plan
Article 1.
Establishment; Purpose; Shareholder Approval;
Effective Date; and Duration
Establishment; Purpose; Shareholder Approval;
Effective Date; and Duration
1.1 Establishment. Torvec, Inc., a New York corporation, hereby establishes the Torvec,
Inc. 2011 Stock Option Plan (the Plan) as set forth in this document.
1.2 Purpose of the Plan. The purpose of this Plan is to attract, retain and motivate officers,
employees, directors and consultants providing services to the Company, any of its Subsidiaries, or
Affiliates and to promote the success of the Companys business by providing the participants of
the Plan with equity incentives in the form of stock options.
1.3 Approval of Plan by Shareholders. The Plan will be submitted for the approval of the
Companys shareholders at the Companys Annual Meeting of Shareholders to be held January 27, 2011,
but in any event, not later than November 3, 2011. If the Plan is not approved by November 3, 2011,
the Plan shall terminate and any Options granted pursuant to the Plan shall also be terminated
concurrently therewith and shall thereafter be null and void.
1.4 Effective Date. The Plan shall be effective as of January 27, 2011, the date the Plan was
approved by the Companys shareholders (the Effective Date).
1.5 Duration of the Plan. Unless sooner terminated as provided in Section 10.2, the Plan shall
terminate on the earliest of (a) the tenth (10th) anniversary of the Effective Date; or (b) the
date on which no Shares subject to the Plan remain available to be granted as Options under the
Plan according to its provisions. After this Plan is terminated, no Options maybe granted but
Options previously granted shall remain outstanding in accordance with their applicable terms and
conditions and this Plans terms and conditions.
Article 2.
Definitions
Definitions
Whenever capitalized in the Plan, the following terms shall have the meanings set forth below.
2.1 Affiliate means any entity that the Company, either directly or indirectly, is in common
control with, is controlled by or controls, or any entity in which the Company has a substantial
equity interest, direct or indirect; provided, however, to the extent that Options must cover
service recipient stock in order to comply with Section 409A of the Code, Affiliate shall be
limited to those entities which could qualify as an eligible issuer under Section 409A of the
Code.
2.2 Beneficial Owner or Beneficial Ownership shall have the meaning ascribed to
such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.3 Board means the Board of Directors of the Company.
2.4 Change of Control means, except to the extent the applicable Option Agreement provides
otherwise or incorporates a different definition of Change in Control.
(a) A transaction or series of transactions (other than an offering of Shares to the general
public through a registration statement filed with the Securities and Exchange Commission) whereby
any person or related group of persons (as such terms are used in Sections 13(d) and 14(d)(2)
of the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a person that, prior to such transaction,
directly or indirectly controls, is controlled by, or is under common control with, the Company)
directly or indirectly acquires Beneficial Ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company possessing more than a majority of the total combined
voting power of the Companys securities outstanding immediately after such acquisition; or
(b) During any period of 12 consecutive months, individuals who, at the beginning of such
period, constitute the Board together with any new director(s) (other than a director designated by
a person who shall have entered into an agreement with the Company to effect a transaction
described in Section 245(a) or Section 2.4(c)) whose election by the Board or nomination for
election by the Companys shareholders was approved by a vote of a majority of the directors then
still in office who either were directors at the beginning of the two-year period or whose election
or nomination for election was previously so approved, cease for any reason to constitute a
majority thereof; or
(c) The consummation by the Company (whether directly involving the Company or indirectly
involving the Company through one or more intermediaries) of (x) a merger, consolidation,
reorganization, or business combination or (y) a sale or other disposition of all or substantially
all of the Companys assets in any single transaction or series of related transactions or (z) the
acquisition of assets or stock of another entity, in each case other than a transaction:
(i) Which results in the Companys voting securities outstanding immediately before the transaction
continuing to represent (either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction, controls, directly or
indirectly, the Company or owns, directly or indirectly, all or substantially all of the Companys
assets or otherwise succeeds to the business of the Company (the Company or such person, the
Successor Entity )) directly or indirectly, at least a majority of the combined voting power of
the Successor Entitys outstanding voting securities immediately after the transaction, and
(ii) After which no person or group beneficially owns voting securities representing a
majority or more of the combined voting power of the Successor Entity; provided however, that no
person or group shall be treated for purposes of this Section 2.4(c)(ii) as having Beneficially
Ownership of a majority or more of combined voting power of the Successor Entity solely as a
result of the voting power held in the Company prior to the consummation of the transaction; or
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(d) The Companys stockholders approve a liquidation or dissolution of the Company.
In addition, if a Change in Control constitutes a payment event with respect to any Option
which provides for the deferral of compensation and is subject to Section 409A of the Code, the
transaction or event described in subsection (a), (b), (c) or (d) of this Section 2.4 with respect
to such Option must also constitute a change in control event, as defined in Section 409A of the
Code.
The Committee shall have full and final authority, which shall be exercised in its discretion, to
determine conclusively whether a Change in Control of the Company has occurred pursuant to the
above definition, and the date of the occurrence of such Change in Control and any incidental
matters relating thereto.
2.5 Code means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any
successor act thereto. Reference to any section of the Code shall be deemed to include reference to
applicable regulations or other authoritative guidance thereunder, and any amendments or successor
provisions to such section, regulations or guidance.
2.6 Committee means (a) the committee of Directors appointed by the Board to administer the
Plan or (b) in the absence of such appointment, the Board itself. Notwithstanding the foregoing, to
the extent required for Options to be exempt from Section 16 of the Exchange Act pursuant to Rule
16b-3, the Committee shall consist of two or more Directors who are Non-Employee Directors, and to
the extent required for Options to satisfy the requirements for performance-based compensation
within the meaning of Section 162(m) of the Code, the Committee shall consist of two or more
Directors who are Outside Directors. Prior to November 3, 2010, the Board constituted the
Committee. Effective as of November 3, 2010, the Governance and Compensation Committee of the Board
of Directors shall constitute the Committee until otherwise determined by the Board.
2.7 Company means Torvec, Inc., a New York corporation, and any successor thereto.
2.8 Consultant means any natural person (other than an Employee or a Director, solely with
respect to rendering Services in such persons capacity as a Director) who either (a) is engaged
by, and provides to, the Company or any Affiliate bona fide consulting or advisory services,
provided that such services are not in connection with the offer or sale of securities in a capital
raising transaction for the benefit of the Company or its Affiliates, and do not directly or
indirectly promote or maintain a market for the Companys or its Affiliates securities or (b)
otherwise meets the definition of a consultant or advisor within the meaning Form S-8
promulgated under the Securities Act.
2.9 Covered Employee means for any Plan Year, a Participant designated by the Company as a
potential covered employee as such term is defined in Section 162(m)(4) of the Code and its
accompanying Treasury Regulations.
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2.19 Director means a member of the Board of Directors of the Company.
2.11 Effective Date means the date set forth in Section 1.5.
2.12 Employee means any individual performing services for the Company, an Affiliate or a
Subsidiary and designated as an employee of the Company, the Affiliate or the Subsidiary on its
payroll records. An Employee shall not include any individual during any period he or she is
classified or treated by the Company, Affiliate or Subsidiary as an independent contractor, a
consultant or an employee of an employment, consulting or temporary agency or any other entity
other than the Company, Affiliate or Subsidiary, without regard to whether such individual is
subsequently determined to have been, or is subsequently retroactively reclassified, as a
common-law employee of the Company, Affiliate or Subsidiary during such period.
2.13 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time,
and any successor statute. Reference in the Plan to any section of the Exchange Act shall be deemed
to include any amendments or successor provisions to such section and any rules and regulations
relating to such section.
2.14 Fair Market Value means, as of any date, the per Share value determined as follows:
(a) The closing price of a Share on a recognized national exchange or any established
over-the-counter trading system on which dealings take place, or if no trades were made on any such
day, the immediately preceding day on which trades were made; or
(b) In the absence of an established market for the Shares of the type described in (a) above,
the per Share Fair Market Value thereof shall be determined by the Committee in good faith and in
accordance with applicable provisions of Section 409A of the Code.
2.15 Incentive Stock Option means an Option intended to meet the requirements of an
incentive stock option as defined in Section 422 of the Code and designated as an Incentive Stock
Option.
2.16 Non-Employee Director means a Director of the Company who either (a) is not an Employee
or Officer, does not receive compensation (directly or indirectly) from the Company or an Affiliate
in any capacity other than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and is not
engaged in a business relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K or (b) is otherwise considered a non-employee director for purposes of Rule
16b-3(b)(3) promulgated by the Securities and Exchange Commission under the Exchange Act, or any
successor definition adopted by the Securities and Exchange Commission.
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2.17 Nonqualified Stock Option means an Option that is not an Incentive Stock Option.
2.18 Option means any stock option granted in accordance with Article 6 of the Plan.
2.19 Option Agreement means a written agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Option granted under this Plan
and any amendments thereto that are made in accordance with the terms of the Plan.
2.20 Option Price means the purchase price per Share subject to an Option, as determined
pursuant to Section 6.3 of the Plan.
2.21 Outside Director means a Director of the Company who either (a) is not a current
employee of the Company or an affiliated corporation (within the meaning of the Treasury
regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company
or an affiliated corporation receiving compensation for prior services (other than benefits under
a tax qualified pension plan), has not been an officer of the Company or an affiliated
corporation at any time and is not currently receiving (within the meaning of the Treasury
regulations promulgated under Section 162(m) of the Code) direct or indirect remuneration from the
Company or an affiliated corporation for services in any capacity other than as a Director, or
(b) is otherwise considered an outside director for purposes of Section 162(m) of the Code. and
the regulations promulgated thereunder.
2.22 Participant means any eligible person as set forth in Section 4.1 to whom an Option is
granted.
2.23 Performance-Based Compensation means compensation under an Option that is intended to
constitute qualified performance-based compensation paid to Covered Employees within the meaning
of the regulations promulgated under Section 162(m) of Code or any successor provision.
Notwithstanding the foregoing, nothing in this Plan shall be construed to mean that an Option that
does not satisfy the requirements for performance-based compensation under Code Section 162(m) does
not constitute performance-based compensation for other
purposes, including Code Section 409A.
2.24 Performance Measures means measures, as described in Section 7.2, upon which
performance goals are based and that are approved by the Companys shareholders pursuant to this
Plan in order to qualify Options as Performance-Based Compensation.
2.25 Performance Period means the period of time during which the performance goals must be
met in order to determine the degree of vesting with respect to an Option.
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.
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2.27 Plan means the Torvec, Inc. 2011 Stock Option Plan.
2.28 Plan Year means the applicable fiscal year of the Company.
2.29 Regulation S-K means Regulation S-K promulgated under the Securities Act, as it may be
amended from time to time, and successor to Regulation S-K. Reference in the Plan to any item of
Regulation S-K shall be deemed to include any amendments or successor provisions to such item.
2.30 Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act, as it may be amended
from time to time, and any successor to Rule 16b-3.
2.31 Section means a section of the Plan unless otherwise stated or the context otherwise
requires.
2.32 Securities Act means the Securities Act of 1933, as amended, and any successor statute
2.33 Service means service as an Employee, Director or Consultant.
2.34 Share means a share of common stock of the Company, par value $0.01 per share, or such
other class or kind of shares or other securities resulting from the application of Article 9
hereof.
2.35 Subsidiary means any corporation, partnership, limited liability company or other legal
entity of which the Company, directly or indirectly, owns stock or other equity interests
possessing fifty percent (50%) or more of the total combined voting power of all classes of stock
or other equity interests (as determined in a manner consistent with Section 409A of the Code).
2.36 Ten Percent Shareholder means a person who on any given date owns, either directly or
indirectly (taking into account the attribution rules contained in Section 424(d) of the Code),
stock possessing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or a Subsidiary or Affiliate.
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Article 3.
Administration
Administration
3.1 Authority of the Committee.
(a) The Plan shall be administered by the Committee, which shall have full power to interpret
and administer the Plan and Option Agreements and full authority to recommend to the Board for its
final approval, the Employees, Directors and Consultants to whom Options will be granted, and to
determine the type and amount of Options to be granted to each such Employee Director or
Consultant, the terms and conditions of Options and Option Agreements and all other determinations
that are required or may be made by the Committee pursuant to this Plan and any Options. In each
case, the determination of the Committee shall be conclusive and binding on Participants under the
Plan.
(b) Without limiting the generality of the foregoing, the Committee may, in its sole
discretion but subject to the limitations in Article 10, clarify, construe or resolve any ambiguity
in any provision of the Plan or any Option Agreement, extend the term or period of exercisability
of any Options, or waive any terms or conditions applicable to any Option. Options may, in the
discretion of the Committee, be made under the Plan in assumption of, or in substitution for,
outstanding Options previously granted by the Company or any of its Subsidiaries or Affiliates or a
corporation acquired by the Company or with which the Company combines. The Committee shall have
full and exclusive discretionary power to adopt rules, forms, instruments, and guidelines for
administering the Plan as the Committee deems necessary or proper. All actions taken and all
interpretations and determinations made by the Committee (or any other committee or sub-committee
thereof), as applicable, shall be final and binding upon the Participants, the Company, and all
other interested individuals.
3.2 Delegation. The Committee may delegate to one or more of its members or one or more
executive officers of the Company such administrative duties or powers as it may deem advisable;
provided that no delegation shall be permitted under the Plan that is prohibited by applicable law.
Article 4.
Eligibility and Participation
Eligibility and Participation
4.1 Eligibility. Participants will consist of such Employees, Directors and Consultants as the
Committee in its sole discretion determines and whom the Committee may designate from time to time
to receive Options. A Participant may be granted more than one Option under the Plan, and Options
may be granted at any time or times during the term of the Plan. The grant of an Option to a
Participant shall not be deemed either to entitle that individual to, or to disqualify that
individual from, participation in any other grant of Options under the Plan.
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4.2 Type of Options.
(a) Options under the Plan may be either (i) Non-Qualified Stock Options, or
(ii) Incentive Stock Options. Non-Qualified Stock Options may be granted to Employees, Officers,
Directors, and Consultants. Incentive Stock Options may be granted only to Employees (including
Officers and Directors who are also Employees), provided, that no person who qualifies as a Ten
Percent Shareholder may be granted an Incentive Stock Option unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.
(b) The Plan sets forth the types of performance goals and sets forth procedural requirements
to permit the Company to design Options that qualify as Performance-Based Compensation, as
described in Article 7 hereof. Subject to the provisions of Section 9.1 hereof, the maximum number
of Shares that may be subject to Options granted to any one person under the Plan shall not exceed
1,000,000 Shares. The limitation set forth in the preceding sentence shall be applied in a manner
which will permit compensation generated under the Plan to constitute performance-based
compensation for purposes of Section 162(m) of the Code, including counting against such maximum
number of Shares, to the extent required under Section 162(m) of the Code and applicable
interpretive authority thereunder, any Shares subject to Options that are canceled or re-priced.
Article 5.
Shares Subject to the Plan
Shares Subject to the Plan
5.1 General. Subject to adjustment as provided in Article 9 hereof, the maximum number of
Shares available for issuance to Participants pursuant to Options under the Plan shall be 3,000,000
Shares. Of this number, the maximum number of Shares available for granting Incentive Stock Options
under the Plan shall not exceed 1,000,000 Shares, subject to Article 9 hereof and the provisions of
Sections 422 or 424 of the Code and any successor provisions. The Shares available for issuance
under the Plan may consist, in whole or in part, of authorized and unissued Shares or treasury
Shares, in each case as the Committee may determine from time to time in its sole discretion.
5.2 Additional Shares. Any Shares covered by an Option (or a portion of an Option) that is
forfeited or canceled, or that expires shall be deemed not to have been issued for purposes of
determining the maximum aggregate number of Shares which may be issued under the Plan and shall
again be available for Options under the Plan. Notwithstanding this provision, Shares issued by the
Company upon the exercise of Options shall not be replenished and/or replaced for purposes of
calculating the aggregate number of Shares reserved for issuance under the Plan. Further,
recycling is not permitted with to common stock transferred as consideration for the purchase of
Shares underlying an Option, common stock retained to satisfy tax withholding obligations or common
stock repurchased by the Company in open market transactions.
5.3 Reservation of Shares. At all times during the term of the Plan, the Company shall
reserve and keep available such number of Shares as will be required to satisfy the requirements of
outstanding Options under the Plan.
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5.4 Other. Nothing in this Article 5 shall impair the right of the Company to reduce the
number of outstanding Shares pursuant to repurchases, redemptions, or otherwise; provided, however,
that no reduction in the number of outstanding Shares shall (a) impair the validity of
any outstanding Option, whether or not that Option is fully exercisable, or (b) impair the status
of any Shares previously issued pursuant to an Option as duly authorized, validly issued, fully
paid, and non-assessable. If the Committee authorizes the assumption under this Plan, in connection
with any merger, consolidation, acquisition of property or stock, or reorganization, of Options
granted under another plan, such assumption shall not reduce the maximum number of Shares available
for issuance under this Plan.
Article 6.
Terms and Conditions of Options
Terms and Conditions of Options
The Committee is hereby authorized to recommend to the Board for its final approval, the grant
of all Options to Participants. The Committee shall determine whether each Option shall be granted
as an Incentive Stock Option or a Non-Qualified Stock Option and the provisions, terms and
conditions of each Option, including, but not limited to, the vesting schedule, the number of
Shares subject to the Option, the Option Price, the period during which the Option may be
exercised, repurchase provisions, forfeiture provisions, methods of payment, and all other terms
and conditions of the Option, subject to the following:
6.1 Form of Option Grant. Each Option granted under the Plan shall be evidenced by a written
Option Agreement in such form (which need not be the same for each Optionee) as the Committee, or
if applicable its designee, from time to time approves, but which is not inconsistent with the
Plan, including any provisions that may be necessary to assure that any Option that is intended to
be an Incentive Stock Option will comply with Section 422 of the Code.
6.2 Date of Grant. The date of grant of an Option will be the date on which the Board finally
approves the grant of Options as recommended by the Committee. The Option Agreement evidencing the
Option will be delivered to the Optionee with a copy of the Plan and other relevant Option
documents, within a reasonable time after the date of grant.
6.3 Option Price. The Option Price shall be not less than 100% of the Fair Market Value of
the Shares on the date of grant of the Option, provided that the Committee may set an Option Price
at less than said amount if such Option would be permitted under the exemptions provided pursuant
to Section 409A of the Code, including the short term deferral rules set forth therein. In the
case of any Incentive Stock Option granted to a Ten Percent Shareholder, the Option Price shall not
be less than one-hundred-ten percent (110%) of the Fair Market Value of a Share on the date of
grant. Once set, the Option Price is not subject to repricing, either directly (lowering the
exercise price of an outstanding Option) or indirectly (canceling an outstanding Option and
granting a replacement Option with a lower exercise price).
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6.4 Method of Exercise. Except as otherwise provided in the Plan or in an Option Agreement, an
Option may be exercised for all, or from time to time any part, of the Shares for which it is then
exercisable. For purposes of this Article 6, the exercise date of an Option shall be the later of
the date a notice of exercise is received by the Company and, if applicable, the date payment is
received by the Company pursuant to clauses (i), (ii), (iii) or (iv) of the
following sentence (including the applicable tax withholding pursuant to Section 11.3 of the Plan).
The aggregate Option Price for the Shares as to which an Option is exercised shall be paid to the
Company in full at the time of exercise at the election of the Participant (i) in cash or its
equivalent (e.g., by cashiers check), (ii) to the extent permitted by the Committee, in Shares
previously owned by the Participant having a Fair Market Value equal to the aggregate Option Price
for the Shares being purchased and satisfying such other requirements as may be imposed by the
Committee, (iii) partly in cash and, to the extent permitted by the Committee, partly in such
Shares (as described in (ii) above) or (iv) if there is a public market for the Shares at such
time, subject to such requirements as may be imposed by the Committee, through the delivery of
irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to
deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate
Option Price for the Shares being purchased. The Committee may prescribe any other method of
payment that it determines to be consistent with applicable law and the purpose of the Plan,
including but not limited to, payment in accordance with a cashless exercise feature.
6.5 Option Period. Options shall be exercisable within the time or times or upon the event or
events determined by the Committee and set forth in the Option Agreement; provided, however, that
no Option shall be exercisable later than the expiration of ten (10) years from the date of grant
of the Option, and provided further, that no Incentive Stock Option granted to a Ten Percent
Shareholder shall be exercisable after the expiration of five (5) years from the date of grant of
the Option.
6.6 Transferability of Options. Options granted under the Plan, and any interest therein, shall not
be transferable or assignable by the Optionee, and may not be made subject to execution, attachment
or similar process, otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the Optionee only by the Optionee; provided, that the Optionee
may, however, designate persons who or which may exercise his Options following his death.
6.7 Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to
Employees of the Company or of a parent corporation or subsidiary corporation (as such terms
are defined in Section 424 of the Code) at the date of grant. The aggregate Fair Market Value
(generally determined as of the time the Option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by a Participant during any calendar
year under all plans of the Company and of any parent corporation or subsidiary corporation
shall not exceed one hundred thousand dollars ($100,000), or the Option shall be treated as a
Nonqualified Stock Option. For purposes of the preceding sentence, Incentive Stock Options will be
taken into account generally in the order in which they are granted. Each provision of the Plan and
each Option Agreement relating to an Incentive Stock Option shall be construed so that each
Incentive Stock Option shall be an incentive stock option as defined in Section 422 of the Code,
and any provisions of the Option Agreement thereof that cannot be so construed shall be
disregarded.
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6.8 Performance Goals. The Committee may condition the grant of Options or the vesting of Options
upon the Participants achievement of one or more performance goal(s) (including the Participants
provision of Services for a designated time period), as specified in the Option Agreement. If the
Participant fails to achieve the specified performance goal(s), the Committee shall not grant the
Option to such Participant or the Option shall not vest, as applicable.
Article 7.
Performance-Based Compensation
Performance-Based Compensation
7.1 Grant of Performance-Based Compensation. To the extent permitted by Section 162(m) of the
Code, the Committee is authorized to design any Option so that the amounts or Shares payable or
distributed pursuant to such Option are treated as qualified performance-based compensation
within the meaning of Section 162(m) of the Code and related regulations.
7.2 Performance Measures.
(a) The vesting of Performance-Based Compensation shall be based on the achievement of
objective performance goals based on any of the following Performance Measures, either alone or in
any combination, on either a consolidated or business unit or divisional level, as the Committee
may determine: (i) sales or revenue; (ii) earnings per share; (iii) measurable achievement in
quality, operation and compliance initiatives; (iv) objectively determinable measure of
non-financial operating and management performance objectives; (v) net earnings (either before or
after interest, taxes, depreciation and amortization); (vi) economic value-added (as determined by
the Committee); (vii) net income (either before or after taxes); (viii) operating earnings; (ix)
cash flow (including, but not limited to, operating cash flow and free cash flow); (x) cash flow
return on capital; (xi) return on net assets; (xii) return on shareholders equity; (xiii) return
on assets; (xiv) return on capital; (xv) shareholder returns, dividends and/or other distributions;
(xvi) return on sales; (xvii) gross or net profit margin; (xviii) productivity; (xix) expenses;
(xx) margins; (xxi) operating efficiency; (xxii) customer satisfaction; (xxiii) working capital;
(xxiv) debt; (xxv) debt reduction; (xxvi) price per share of stock; (xxvii) market share; (xxviii)
completion of acquisitions; (xxix) business expansion; (xxx) product diversification; (xxxi) new or
expanded market penetration; (xxxii) book value; and (xxxiii) the Per Fair Market Value on any day
in the future. The foregoing criteria shall have any reasonable definitions that the Committee may
specify, which may include or exclude any or all of the following items, as the Committee may
specify: (A) extraordinary, unusual or non-recurring items; (B) effects of changes in tax law,
accounting principles or other such laws or provisions affecting reported results; (C) effects of
currency fluctuations; (D) effects of financing activities (e.g., effect on earnings per share of
issuing convertible debt securities); (E) expenses for restructuring, productivity initiatives or
new business initiatives; (F) impairment of tangible or intangible assets; (G) litigation or claim
judgments or settlements; (H) non-operating items; (I) acquisition expenses; (J) discontinued
operations; and (K) effects of assets sales or divestitures. Any such business criterion or
combination of such criteria may apply to the Covered Employees Option in whole or to any designed
portion thereof, as the Committee may specify.
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(b) Any Performance Measure may be (i) used to measure the performance of the Company and/or
any of its Subsidiaries or Affiliates as a whole, any business unit thereof or any combination
thereof against any goal including past performance or (ii) compared to the performance of a group
of comparable companies, or a published or special index, in each case that the Committee, in its
sole discretion, deems appropriate. Subject to Section 162(m) of the Code, the Committee may adjust
the performance goals (including to prorate goals and payments for a partial Plan Year) in the
event of the following occurrences: (A) non-recurring events, including divestitures, spin-offs, or
changes in accounting standards or policies; (B) mergers and
acquisitions; and (C) financing transactions, including selling accounts receivable.
7.3 Establishment of Performance Goals for Covered Employees. The exercisability of a Covered
Employees Options shall be determined based on the attainment of written performance goals
established by the Committee. The Committee shall identify the Performance Measures to be used to
measure the performance goals in terms of an objective formula or standard and the formula for
determining the portion of the Option that is exercisable if such performance goals are obtained.
The Committee shall establish the performance goals (a) while the outcome for the Performance
Period is substantially uncertain and (b) no later than ninety (90) days after the commencement of
the Performance Period to which the Performance Goal relates (or, if the Performance Period is less
than one (1) year, no later than the number of days which is equal to twenty-five percent (25%) of
such Performance Period). The Performance Goals need not be the same for all Covered Employees and
the Committee shall identify the Participants or class of Participants to which such performance
goals apply.
7.4 Adjustment of Performance-Based Compensation. Options that are designed to qualify as
Performance-Based Compensation may not be adjusted upward. The Committee shall retain the
discretion to adjust such Options downward, either on a formula or discretionary basis or any
combination, as the Committee determines.
7.5 Certification of Performance. No Option designed to qualify as Performance-Based
Compensation shall be vested with respect to any Participant until the Committee certifies in
writing that the performance goals and any other material terms applicable to such Performance
Period have been satisfied.
7.6 Interpretation. Each provision of the Plan and each Option Agreement relating to
Performance-Based Compensation shall be construed so that each such Option shall be qualified
performance-based compensation within the meaning of Section 162(m) of the Code and related
regulations, and any provisions of the Option Agreement thereof that cannot be so construed shall
be disregarded.
12
Article 8.
Compliance with Section 409A of the Code
Compliance with Section 409A of the Code
8.1 General. The Company intends that any Options be structured in compliance with, or to
satisfy an exemption from, Section 409A of the Code and all regulations, guidance, compliance
programs and other interpretative authority thereunder (Section 409A), such that there are no
adverse tax consequences, interest, or penalties as a result of the Options. Notwithstanding the
Companys intention, in the event any Option is subject to Section 409A, the Committee may, in its
sole discretion and without a Participants prior consent, amend the Plan and/or Options, adopt
policies and procedures, or take any other actions (including amendments, policies, procedures and
actions with retroactive effect) as are necessary or appropriate to (i) exempt the Plan and/or any
Option from the application of Section 409A, (ii) preserve the intended tax treatment of any such
Option, or (iii) comply with the requirements of Section 409A, including without limitation any
such regulations guidance, compliance programs and other interpretative authority that may be
issued after the date of grant of an Option.
8.2 Separation from Service. A termination of employment shall not be deemed to have occurred
for purposes of any provision of the Plan or any Option Agreement providing for the exercise of
Options that are considered nonqualified deferred compensation under Section 409A upon or following
a termination of employment, unless such termination is also a separation from service within the
meaning of Section 409A and the payment thereof prior to a separation from service would violate
Section 409A. For purposes of any such provision of the Plan or any Option Agreement relating to
any such payments or benefits, references to a termination, termination of employment or like
terms shall mean separation from service.
Article 9.
Adjustments
Adjustments
9.1 Certain Adjustments Due to Corporate Events. In the event of any corporate event or
transaction involving the Company, a Subsidiary and/or an Affiliate (including, but not limited to,
a change in the Shares or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, extraordinary stock dividend, stock split, reverse
stock split, split up, spin-off, combination of Shares, exchange of Shares, dividend in kind, or
other like change in capital structure (other than regular cash or stock dividends to shareholders
of the Company), or any similar corporate event or transaction, the Committee, to prevent dilution
or enlargement of Participants rights under their Options and the Plan, shall substitute or
adjust, in its sole discretion, the number and kind of Shares or other property that may be issued
under the Plan or under Options, the number and kind of Shares or other property subject to
outstanding Options, or the Option Price of outstanding Options, and the Committee, in its sole
discretion, shall determine the methodology or manner of making such substitution or adjustment.
13
9.2 Change of Control Upon the occurrence of a Change of Control, unless otherwise
specifically prohibited under applicable laws or by the applicable rules and regulations of any
governmental agencies or national securities exchanges, or unless the Committee shall determine
otherwise in the Option Agreement, the Committee shall make one or more of the following
adjustments to the terms and conditions of outstanding Options: (a) continuation or assumption of
such outstanding Options under the Plan by the Company (if it is the surviving company or
corporation) or by the surviving company or corporation or its parent; (b) substitution by the
surviving company or corporation or its parent of Options with substantially the same terms for
such outstanding Options; (c) accelerated vesting of outstanding Options to the extent unvested
immediately prior to the occurrence of such event; (d) upon written notice, provide that any
outstanding Options must be exercised, to the extent then exercisable, during a reasonable period
of time immediately prior to the scheduled consummation of the event, or such other period as
determined by the Committee (contingent upon the consummation of the event), and at the end of such
period, such Options shall terminate to the extent not so exercised within the relevant period; and
(e) cancellation of all or any portion of outstanding Options for fair value (as determined in the
sole discretion of the Committee and which may be zero) which, in the case of Options if the
Committee so determines, may equal the excess, if any, of the value of the consideration to be paid
in the Change of Control transaction to holders of the same number
of Shares subject to such Options (or, if no such consideration is paid, Fair Market Value of the
Shares subject to such outstanding Options or portion thereof being canceled) over the aggregate
Option Price, as applicable, with respect to such Options or portion thereof being canceled (which
may be zero).
Article 10.
Amendment, Modification, Suspension and Termination
Amendment, Modification, Suspension and Termination
10.1 Amendment, Modification, Suspension and Termination of Plan. Subject to Section 10.2,
the Committee may amend, alter, suspend, discontinue, or terminate (for purposes of this Section
10.1, an Action) the Plan or any portion thereof or any Option (or Option Agreement) thereunder
at any time; provided that no such Action shall be made, other than as permitted under Article 9 or
this Article 10:
10.2 Required Approvals
(a) Notwithstanding the foregoing, the Committee may not take any Action without approval of
the Companys shareholders by a vote of the majority of Shares cast at a duly held meeting of
shareholders (or if permitted by a written consent of the holders of a majority of the outstanding
Shares):
(i) if such approval is necessary to comply with any tax, statutory or regulatory requirement
applicable to the Plan,
(ii) if such Action increases the number of Shares available under the Plan (other than an
increase permitted under Article 5 absent shareholder approval),
(iii) if such Action results in a material increase in benefits permitted under the Plan (but
excluding increases that are immaterial or that are minor and to benefit the administration of the
Plan, to take account of any changes in applicable law, or to obtain or maintain favorable tax,
exchange, or regulatory treatment for the Company, a Subsidiary, and/or an Affiliate) or a change
in eligibility requirements under the Plan, or
(iv) for any Action that results in a reduction of the Option Price of any outstanding Options
or cancellation of any outstanding Options in exchange for cash, or for other Options with an
Option Price that is less than the Option Price of the original Options, and
14
(b) Notwithstanding the foregoing, the Committee may not take any Action without the written
approval of the affected Participant, if such Action would materially diminish the rights of any
Participant under any Option theretofore granted to such Participant under the Plan; provided,
further, that the Committee may amend the Plan, or any Option Agreement without such consent of the
Participant in such manner as it deems necessary to comply with applicable laws, including without
limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act.
10.2 Conditional Options. Notwithstanding the above, the Committee may issue
conditional Options subject to approval of the shareholders of the Company in the manner and to the
extent required by applicable law.
Article 11.
General Provisions
General Provisions
11.1 Forfeiture Events.
(a) The Committee may specify in an Option Agreement that the Participants rights, payments
and benefits with respect to an Option shall be subject to reduction, cancellation, forfeiture or
recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable
vesting of an Option. Such events may include, but shall not be limited to, termination of
employment for cause (as defined in the Option Agreement) termination of the Participants
provision of services to the Company, Affiliate or Subsidiary, violation of material Company,
Affiliate or Subsidiary policies, breach of noncompetition, confidentiality or other restrictive
covenants that may apply to the Participant, or other conduct by the Participant that is
detrimental to the business or reputation of the Company, any Affiliate or Subsidiary.
(b) If any of the Companys financial statements are required to be restated resulting
from errors, omissions, or fraud, the Committee may (in its sole discretion, but acting in good
faith), but shall not be obligated to, direct that the Company recover all or a portion of any
Option granted with respect to any fiscal year of the Company the financial results of which are
negatively affected by such restatement. The amount to be recovered from the Participant shall be
the amount by which the Option exceeded the amount that would have been payable to the Participant
had the financial statements been initially filed as restated, or any greater or lesser amount
(including, but not limited to, the entire Award) that the Committee shall determine. In no event
shall the amount to be recovered by the Company be less than the amount required to be repaid or
recovered as a matter of law (including but not limited to amounts that are required to be
recovered or forfeited under Section 304 of the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall
Street Reform and Consumer Protection Act and the rules and regulations promulgated or to be
promulgated thereunder, or policies the Company may adopt pursuant thereto). The Committee shall
determine whether the Company shall effect any such recovery: (i) by seeking repayment from the
Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the
applicable plan, program or arrangement) the amount that would otherwise be payable to the
Participant under any compensatory plan, program or arrangement maintained by the Company, an
Affiliate or any Subsidiary, (iii) by withholding payment of future increases in compensation
(including the payment of any discretionary bonus amount) or grants of compensatory awards that
would otherwise have been made in accordance with the Companys otherwise applicable compensation
practices or (iv) by any combination of the foregoing.
15
11.2 No Right to Service. The granting of an Option under the Plan shall impose no obligation
on the Company, any Subsidiary or any Affiliate to continue the Service of a Participant and shall
not lessen or affect any right that the Company, any Subsidiary or any Affiliate may have to
terminate the Service of such Participant. No Participant or other Person shall have any claim to
be granted any Option, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Options. The terms and conditions of
Options and the Committees determinations and interpretations with respect thereto need not be the
same with respect to each Participant (whether or not such Participants are similarly situated).
11.3 Tax Withholding. The Company shall have the power and the right to deduct or withhold
automatically from any amount deliverable under the Option or otherwise, or require a Participant
to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan. With respect to required withholding, Participants may elect
(subject to the Companys automatic withholding right set out above), subject to the approval of
the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax that could be imposed on the transaction.
11.4 No Guarantees Regarding Tax Treatment. Participants (or their beneficiaries) shall be
responsible for all taxes with respect to any Options issued under the Plan. The Committee and the
Company make no guarantees to any Person regarding the tax treatment of Options or payments made
under the Plan. Neither the Committee nor the Company has any obligation to take any action to
prevent the assessment of any tax on any Person with respect to any Option under Section 409A of
the Code or otherwise and none of the Company, any of its Subsidiaries or Affiliates, or any of
their employees or representatives shall have any liability to a Participant with respect thereto.
11.5 Conditions and Restrictions on Shares. The Committee may impose such other conditions or
restrictions on any Shares received in connection with an Option as it may deem advisable or
desirable. These restrictions may include, but shall not be limited to, a requirement that the
Participant hold the Shares received for a specified period of time or a requirement that a
Participant represent and warrant in writing that the Participant is acquiring the Shares for
investment and without any present intention to sell or distribute such Shares. The certificates
for Shares may include any legend which the Committee deems appropriate to reflect any conditions
and restrictions applicable to such Shares.
16
11.6 Compliance with Law. The granting of Options and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies, or any stock exchanges on which the Shares are admitted to trading or
listed, as may be required. The Company shall have no obligation to issue or deliver evidence of
title for Shares issued under the Plan prior to:
(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, state or foreign law or ruling of any governmental body that the Company determines to be
necessary or advisable.
The restrictions contained in this Section 11.6 shall be in addition to any conditions or
restrictions that the Committee may impose pursuant to Section 11.5. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the
Companys counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company, its Subsidiaries and Affiliates, and all of their employees and
representatives of any liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
11.7 No Shareholder Rights. A Participant shall have none of the rights of a shareholder with
respect to Shares covered by any Option until the Participant becomes the record holder of such
Shares.
11.8 Severability. If any provision of the Plan or any Option is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Option, or would
disqualify the Plan or any Option under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially altering the intent of
the Plan or the Option, such provision shall be stricken as to such jurisdiction, Person, or
Option, and the remainder of the Plan and any such Option shall remain in full force and effect.
11.9 No Constraint on Corporate Action. Nothing in the Plan shall be construed to (a) limit,
impair, or otherwise affect the Companys right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or consolidate, or
dissolve, liquidate, sell, or transfer all or any part of its business or assets, or (b) limit the
right or power of the Company to take any action which such entity deems to be necessary or
appropriate.
11.10 Successors. All obligations of the Company under the Plan with respect to Options
granted hereunder shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business or assets of the Company.
17
11.11 New York Law. The Plan and each Option Agreement shall be governed by the laws of the
State of New York, excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Plan to the substantive law of another jurisdiction.
Unless otherwise provided in the Option Agreement, recipients of an Option under
this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state
courts located in Monroe County, New York to resolve any and all issues that may arise out of or
relate to this Plan or any related Option Agreement.
11.12 Delivery of Electronic Documents. To the extent permitted by applicable law, the
Company may (a) deliver by email or other electronic means (including posting on a web site
maintained by the Company or by a third party under contract with the Company) all documents
relating to the Plan or any Option issued hereunder (including without limitation, prospectuses
required by the Securities & Exchange Commission) and all other documents that the Company
is required to deliver to its security holders (including without limitation, annual reports and
proxy statements) and (b) permit Participants to electronically execute applicable Plan documents
(including, but not limited to, Option Agreements) in a manner prescribed to the Committee.
11.13 Indemnification.
(a) Subject to requirements of New York law, each individual who is or shall have been a
member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom
authority was delegated in accordance with Article 3, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any claim, action, suit or
proceeding to which he or she may be a party or in which he or she may be involved by reason of any
action taken or failure to act under this Plan and against and from any and all amounts paid by him
or her in settlement thereof, with the Companys approval, or paid by him or her in satisfaction of
any judgment in any such action, suit, or proceeding against him or her, provided he or she shall
give the Company an opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability or
expense is a result of his/her own willful misconduct or except as expressly provided by statute.
(b) The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such individuals may be entitled under the Companys Certificate of
Incorporation or Bylaws, as a matter of law or otherwise, or any power that the Company may have to
indemnify them or hold them harmless
11.14 Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as
creating any limitations on the power of the Board or Committee to adopt such other compensation
arrangements as it may deem desirable for any Participant.
18
NONQUALIFIED STOCK OPTION AGREEMENT
[For Directors]
[For Directors]
This NONQUALIFIED STOCK OPTION AGREEMENT (this Option Agreement) is made effective
as of the
_____
day of
_____
(the Date of Grant), between Torvec, Inc., a New York
corporation (the Company), and
_____
(the Participant).
R E C I T A L S:
WHEREAS, on November 3, 2010, the Companys Board of Directors (the Board) adopted
the Torvec, Inc. 2011 Stock Option Plan (the Plan) which provides for the grant of
options to purchase shares of the Companys common stock, par value $.01 per share (Shares) to
employees, directors, officers and consultants;
WHEREAS, on January 27, 2011, the Companys shareholders approved the Plan; and
WHEREAS, as an inducement for the Participant to join the Board and become a director of the
Company, the Board has approved the grant to the Participant of the Option provided for herein
which is subject to the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:
1. Option Grant.
(a) The Company hereby grants to the Participant the right and option (the Option)
to purchase
_____
Shares (Optioned Shares), on the terms and conditions herein.
(b) The Option is intended to be a Nonqualified Stock Option and is intended to be exempt from
Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) and the
accompanying Treasury Regulations under the short-term deferral exception. The Option shall be
administered and interpreted in a manner that is consistent with Section 409As short-term deferral
exception and the regulations thereunder. Notwithstanding the preceding sentence, neither the
Company, nor the Committee, nor any person acting on behalf of any of them, shall be liable to the
Participant by reason of any acceleration of income, or any tax or additional tax, asserted by
reason of any failure of the Option or any portion thereof or this Option Agreement to satisfy the
requirements for exemption from, or compliance with, Section 409A. Without limiting the foregoing,
the Company makes no guarantees regarding the tax treatment of the Option or this Option Agreement.
(c) Neither the Company, nor the Committee, nor any person acting on behalf of any of them,
shall be liable to the Participant by reason of any tax asserted under Section 4999 of the Code.
19
2. Option Price. The exercise price of the Optioned Shares subject to the Option shall
be
_____
($_____) per Share (the Option Price).
3. Option Term. The term of the Option shall, commence on the Date of Grant and unless
earlier terminated pursuant to Sections 4(b) and 6 below, shall continue until 5:00 p.m., est. on
_____
(the Option Term).
4. Option Plan.
(a) This Option is granted pursuant to the Plan which is incorporated herein by reference.
The terms and provisions of the Plan may be amended from time to time as provided therein. In the
event of a conflict between any term or provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will govern and prevail. All capitalized
terms used herein and not otherwise defined shall have the meaning given thereto in the Plan.
(b) Notwithstanding anything to the contrary, the Option shall not be exercisable until the
time that all legal requirements in connection with the Plan have been fully complied with,
including approval of the Plan by the Companys shareholders. The Company will exercise its
commercially reasonable efforts to present the Plan for consideration and a vote at the 2011 Annual
Meeting. If the Plan is not approved by the Companys shareholders as required by the Plan, then
this Option shall automatically terminate and be of no further force or effect as provided in the
Plan.
5. Vesting of the Option and Exercise Period.
(a) The Option shall vest in equal installments of the Optioned Shares on
_____
in each of
the following calendar years set forth below (each, a Vesting Date) so long as the
Participant has served as a director of the Company from the Date of Grant and continuing through
the Vesting Date. At any time, the portion of the Option which has become vested in accordance
with the terms hereof shall be called the Vested Portion.
Vested Portion | ||||||||
Vested | of Options | |||||||
Year | Percentage | Shares | ||||||
2012 |
||||||||
2013 |
||||||||
2014 |
||||||||
2015 |
(b) The Vested Portion will be forfeited if not otherwise exercised by the Participant by
March 15th following the end of the Companys taxable year in which the Vesting Date
occurs.
20
6. Termination of Service as a Director of the Company.
(a) Upon a termination of the Participants service as a director of the Company for any
reason (including resignation, removal, failure to be elected as a director of the Company at any
Annual Meeting of Shareholders) other than death, then any unvested portion of the Option shall
immediately terminate and be forfeited without consideration and the Vested Portion shall continue
to be exercisable for the earlier to occur of (i) the ninetieth (90th) day following
such termination of service or (ii) the March 15th following the end of the Companys taxable year
in which the Vesting Date occurred with respect to such Vested Portion.
(b) Upon a termination of the Participants service as a director of the Company due to death,
then any unvested portion of the Option shall immediately terminate and be forfeited without
consideration and the Vested Portion shall continue to be exercisable until March 15th following
the end of the Companys taxable year in which the Vesting Date occurred with respect to such
Vested Portion.
7. Exercise Procedures.
(a) Notice of Exercise. To the extent exercisable, the Participant or the Participants legal
representative may exercise the Vested Portion or any part thereof prior to the expiration of the
applicable Option Term corresponding to the Vested Portion by giving written notice to the Company
in the form attached hereto as Exhibit A (the Notice of Exercise). The Notice of
Exercise shall be signed by the person exercising such Option. In the event that such Option is
being exercised by the Participants legal representative, the Notice of Exercise shall be
accompanied by proof (satisfactory to the Company) of such legal representatives right to exercise
such Option on behalf of the Participants estate.
(b) Method of Exercise. The Participant or the Participants legal representative shall
deliver to the Company at the time the Notice of Exercise is delivered, payment of the aggregate
Option Price due with respect to the Optioned Shares being purchased by payment in cash, cashiers
check or certified check or other appropriate form approved by the Committee.
(c) Issuance of Optioned Shares. Provided the Company receives a properly completed and
executed Notice of Exercise and payment for the full amount of the aggregate Option Price, the
Company shall promptly cause the Optioned Shares underlying the exercised Option to be issued in
the name of the Person exercising the Option. Until certificates for the Optioned Shares have
actually been issued and registered in such Persons name on the books of the Company or its
registrar upon the due exercise of the Option, such Person shall not have any of the rights of a
shareholder with respect to the Optioned Shares being purchased. The Company shall be allowed a
reasonable time following delivery of a properly executed Notice of Exercise and payment of the
Option Price in which to accomplish the issuance and registration.
21
8. Electronic Delivery of Documents. The Participant agrees that the Company may
deliver by e-mail all documents relating to the Plan or this Option (including, without limitation,
prospectuses required by the Securities and Exchange Commission) and all other documents that the
Company is required to deliver to its security holders (including, without
limitation, annual reports and proxy statements). The Participant also agrees that the Company may
deliver these documents by posting them on a web site maintained by the Company or by a third party
under contract with the Company. If the Company posts these documents on a web site, it will notify
the Participant by e-mail.
9. Securities Trading Policy. The Participant agrees to comply with the Companys
Securities Trading Policy when selling Optioned Shares.
10. Adjustment of Optioned Shares. In the event of any corporate event or transaction
(as described in Article 12 of the Plan), the terms of this Option Agreement (including, without
limitation, the number and kind of Optioned Shares subject to this Option Agreement and the Option
Price) may be adjusted as set forth in Article 12 of the Plan.
11. No Right to Continued Service as Director of Company. The granting of the Option
evidenced hereby and this Option Agreement shall impose no obligation on the Company or any
Affiliate to continue the Participant as a director of the Company and shall not lessen or affect
any right that the Company may have to remove him as a director.
12. Securities Laws/Legend on Certificates.
(a) The issuance and delivery of Optioned Shares shall comply with all applicable requirements
of law, including, without limitation, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, state securities laws and regulations, and the regulations of
any stock exchange or other securities market on which the Optioned Shares may then be listed
and/or traded. If the Company deems it necessary to ensure that the issuance of Optioned Shares
under the Plan is not required to be registered under any applicable securities laws, the
Participant shall deliver to the Company an agreement or certificate containing such
representations, warranties and covenants as the Company may deem necessary to satisfy such
requirements. The exercise of the Option may be temporarily suspended by the Company without
liability to the Company during times when no registration statement with respect to the Optioned
Shares to be acquired pursuant to the Option is currently effective, or during times when, in the
reasonable opinion of the Committee, such suspension is necessary to preclude violation of any
requirements of applicable law or regulatory bodies having jurisdiction over the Company. If the
Option would expire for any reason except the end of the Option Term during such a suspension, then
if exercise of the Option is duly tendered before its expiration, the Option shall be exercisable
and exercised (unless the attempted exercise is withdrawn) as of the first day after the end of
such suspension. The Company shall have no obligation to file any registration statement covering
resales of Optioned Shares acquired pursuant to the exercise of the Option.
22
(b) The Participant will furnish to the Company a copy of each Form 4 or Form 5 filed by him
pursuant to Section 16(a) of the Securities Exchange Act of 1934 and will timely file all reports
required under federal securities laws with respect to the Optioned Shares he acquires pursuant to
the exercise of the Option. The Participant will report all sales of Optioned Shares to the
Company in writing on the form prescribed from time to time by the Company. The certificates
representing the Optioned Shares shall be subject to such stop transfer orders and
other restrictions as the Company may deem reasonably advisable, and the Company may cause a legend
or legends to be put on any such certificates to make appropriate reference to such restrictions.
13. Transferability. Unless otherwise permitted in accordance with the terms of the
Plan, the Option may not be assigned, alienated, pledged, attached, sold or otherwise transferred
or encumbered by the Participant other than by will or by the laws of descent and distribution, and
any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate; provided, that, the designation of
a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance. No such permitted transfer of the Option to heirs or legatees of the Participant
shall be effective to bind the Company unless permitted in accordance with the terms of the Plan.
During the Participants lifetime, the Option is exercisable only by the Participant.
14. Taxation upon Exercise. The Participant agrees to report income from this Option
in accordance with then applicable law and to cooperate with Company in establishing the amount of
such income and corresponding deduction to the Company for its income tax purposes. The Participant
agrees that the Company may elect (but it shall not be obligated to) withhold Optioned Shares
issuable upon exercise of the Option or require the Participant to pay to the Company, upon demand,
when due a cash payment for the withholding for federal or state income and employment tax purposes
associated with this Option.
15. Relationship. The Option shall not be deemed to be salary or other compensation
to the Participant for purposes of any pension, thrift, profit sharing, stock purchase or other
employee benefit plan now maintained or hereafter adopted by the Company.
16. Notices. Any notification required by the terms of this Option Agreement shall be
given in writing and shall be deemed effective upon personal delivery or within three (3) days of
deposit with the United States Postal Service, by registered or certified mail, with postage and
fees prepaid. A notice shall be addressed to the Company, Attention: General Counsel, at its
principal executive office and to the Participant at the address that he or she most recently
provided to the Company.
17. Entire Agreement. This Option Agreement and the Plan constitute the entire
contract between the parties hereto with regard to the subject matter hereof. They supersede any
other agreements, representations or understandings (whether oral or written and whether express or
implied) which relate to the subject matter hereof.
18. Waiver. No waiver of any breach or condition of this Option Agreement shall be
deemed to be a waiver of any other or subsequent breach or condition whether of like or different
nature.
23
19. Successors and Assigns. The provisions of this Option Agreement shall inure to
the benefit of, and be binding upon, the Company and its successors and assigns and upon the
Participant, the Participants assigns and the legal representatives, heirs and legatees of the
Participants estate, whether or not any such person shall have become a party to this Option
Agreement and have agreed in writing to be joined herein and be bound by the terms hereof.
20. Choice of Law. This Option Agreement shall be governed by the law of the State of
New York (regardless of the laws that might otherwise govern under applicable New York principles
of conflicts of law) as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
21. Amendment. This Option Agreement and the Option granted hereunder may be amended
at any time as permitted by the terms of the Plan.
22. Severability. The provisions of this Option Agreement are severable and if any
one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in
part, the remaining provisions shall nevertheless be binding and enforceable.
23. Signature in Counterparts. This Option Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have entered into this Option Agreement.
TORVEC, INC. |
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By: | ||||
Name: | ||||
Title: | ||||
Acknowledged as of the
date first written above:
date first written above:
PARTICIPANT: |
||
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EXHIBIT A
NOTICE OF EXERCISE
NOTICE OF EXERCISE
Torvec, Inc. |
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1999 Mt. Read Blvd., Building #3 |
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Rochester, NY 14615 |
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Attn:
|
Date of Exercise: |
Gentlemen:
1. Exercise of Option. This constitutes notice to Torvec, Inc. (the
Company) that pursuant to my Nonqualified Stock Option Agreement (the Option
Agreement) under the Companys 2011 Stock Option Plan (the Plan) I elect to purchase
the number of Optioned Shares of Company common stock set forth below and for the price set forth
below. By signing and delivering this notice to the Company, I hereby acknowledge that I am the
holder of the stock option (the Option) exercised by this notice and have full power and
authority to exercise the same.
Date of Grant: |
||||
Number of Optioned Shares as to which the Option is exercised: |
||||
Shares to be issued in name of: |
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Total exercise price: |
$ | |||
Cash Exercise |
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Cash payment delivered herewith: |
$ |
2. Form of Payment. Forms of payment other than cash or its equivalent (e.g. by
cashiers check) are limited by the Plan and are permissible only to the extent approved by the
compensation committee of the Board of Directors of the Company (the Committee) or any committee
designated thereby, in its sole discretion.
3. Delivery of Payment. With this notice, I hereby deliver to the Company the full
purchase price of the Optioned Shares and any and all withholding taxes due in connection with the
exercise of my Option.
4. Rights as Shareholder. While the Company will endeavor to process this notice in a
timely manner, I acknowledge that until the issuance of the shares underlying the Optioned 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 stockholder
shall exist with respect to such shares, notwithstanding the exercise of my option(s). No
adjustment shall be made for a dividend or other right for which the record date is prior to the
date of issuance of the optioned stock.
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5. Interpretation. Any dispute regarding the interpretation of this notice shall be
submitted promptly by me or by the Company to the Committee, which shall review such dispute at its
next regular meeting. The resolution of such a dispute by such administrator of the Plan shall be
final and binding on all parties.
6. Governing Law; Severability. This notice is governed by the internal substantive
laws but not the choice of law rules, of New York. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this
notice will continue in full force and effect without said provision.
7. Entire Agreement. The Plan and the Option Agreement under which the Optioned
Shares were granted are incorporated herein by reference, and together with this notice constitute
the entire agreement of the parties with respect to the subject matter hereof.
Very truly yours, |
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Name: | ||||
(social security number) |
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