Company: LNAI
Filing Date: 2025-10-15
Form Type: DEF 14A
Source: 0001731122-25-001378
Chunk: 59

Company: Lunai Bioworks Inc.
Filing Date: 2025-10-15
Form: DEF 14A
Chunk 59
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ferred to as the “”). If a participant disposes of shares acquired by exercise of an ISO after the expiration of the Holding Period, any
amount received in excess of the participant’s tax basis for such shares will be treated as a short-term or long-term capital gain,
depending upon how long the participant has held the shares. If the amount received is less than the participant’s tax basis for
such shares, the loss will be treated as a short-term or long-term capital loss, depending upon how long the participant has held the
shares. If the participant disposes of shares acquired by exercise of an ISO prior to the expiration of the Holding Period, the disposition
will be considered a “disqualifying disposition.” If the amount received for the shares is greater than the fair market value
of the shares on the exercise date, then the difference between the ISO’s exercise price and the fair market value of the shares
at the time of exercise will be treated as ordinary income for the tax year in which the “disqualifying disposition” occurs.
The participant’s basis in the shares will be increased by an amount equal to the amount treated as ordinary income due to such
“disqualifying disposition.” In addition, the amount received in such “disqualifying disposition” over the participant’s
increased basis in the shares will be treated as capital gain. However, if the price received for shares acquired by exercise of an ISO
is less than the fair market value of the shares on the exercise date and the disposition is a transaction in which the participant sustains
a loss which otherwise would be recognizable under the Code, then the amount of ordinary income that the participant will recognize is
the excess, if any, of the amount realized on the “disqualifying disposition” over the basis of the shares.

Nonqualified Stock Options.
A participant generally will not recognize income at the time a nonqualified stock option is granted. When a participant exercises a nonqualified
stock option, the difference between the option price and any higher market value of the shares of Common Stock on the date of exercise
will be treated as compensation taxable as ordinary income to the participant. The participant’s tax basis for the shares acquired
under a nonqualified stock option will be equal to the option price paid for such shares, plus any amounts included in the participant’s
income as compensation. When a participant disposes of shares acquired by exercise of a nonqualified stock option, any amount received
in excess of the participant’s tax basis for such shares will be treated