[Employee – Time-Based Vesting]

 

NOTICE OF OPTION GRANT UNDER THE

XTANT MEDICAL HOLDINGS, INC. 2018 equity INCENTIVE PLAN

 

Xtant Medical Holdings, Inc., a Delaware corporation (the “Company”), pursuant
to the Xtant Medical Holdings, Inc. 2018 Equity Incentive Plan (as may be
amended from time to time, the “Plan”), hereby grants to the individual named
below (the “Participant”) a Non-Statutory Stock Option (the “Option”) to
purchase from the Company that number of shares of Common Stock (the “Shares”),
as indicated below at an exercise price per Share equal to the amount as
indicated below (the “Exercise Price”). The Option is subject to all of the
terms and conditions set forth in this Notice of Option Grant (this “Grant
Notice”), in the Option Award Agreement attached hereto (the “Award Agreement”),
and in the Plan, all of which are incorporated herein in their entirety.
Capitalized terms not otherwise defined herein will have the meaning set forth
in the Plan. This Option grant has been made as of the grant date indicated
below, which shall be referred to as the “Grant Date.”

 

Grant ID:   [Insert Grant ID number]       Participant:   [Insert Participant
Name]       Grant Date:   [Insert Grant Date]       Total Number of Shares    
Subject to Option:   [Insert Number of underlying Shares], subject to adjustment
as provided in the Plan.       Exercise Price Per Share:   $[Insert Exercise
Price], subject to adjustment as provided in the Plan.       Expiration Date:  
[Insert Expiration Date], but no later than the ten (10) year anniversary of the
Grant Date, as provided in Section 3.2 of the Award Agreement.       Type of
Option:   [  ] Incentive Stock Option       [X] Non-Statutory Stock Option      
Vesting Schedule:   Except as otherwise provided in Section 3 of the Award
Agreement, the Participant’s right to exercise the Option shall vest:          
[on a cumulative basis, over a four-year period and as follows: (i) on the
one-year anniversary of the Grant Date with respect to one-fourth of the number
of shares subject thereto on the Grant Date, (ii) on the two-year anniversary of
the Grant Date with respect to an additional one-fourth of the number of shares
subject thereto on the Grant Date, (iii) on the three-year anniversary of the
Grant Date with respect to an additional one fourth of the number of shares
subject thereto on the Grant Date; and (iv) on the four-year anniversary of the
Grant Date with respect to the remaining shares subject thereto on the Grant
Date];           OR           [in full on [_________]/the
[one/two/three/four]-year anniversary of the Grant Date];           Provided,
however, that the Participant remains continuously employed by or provides
services to the Company or any Subsidiary through the applicable vesting date.

 

* * *

   

 

 

The Participant must accept the grant by executing this Grant Notice in the
space provided below and returning the original execution copy to the Company or
otherwise indicating affirmative acceptance of this grant electronically
pursuant to procedures established by the Company and/or its third party
administrator. The undersigned Participant acknowledges that he or she has
received a copy of this Grant Notice, the Award Agreement, the Plan and the Plan
Prospectus. As an express condition to this grant, the Participant agrees to be
bound by the terms of this Grant Notice, the Award Agreement and the Plan. The
Participant has read carefully and in its entirety the Award Agreement and
specifically the acknowledgements in Section 7.9 thereof. This Grant Notice, the
Award Agreement and the Plan set forth the entire agreement and understanding of
the Company and the Participant with respect to the grant, vesting and
administration of the Option award and supersede all prior agreements,
arrangements, plans and understandings. This Grant Notice (which includes the
attached Award Agreement) may be executed in two counterparts each of which will
be deemed an original and both of which together will constitute one and the
same instrument.

 

XTANT MEDICAL HOLDINGS, INC.   Participant               By: [Name of Officer]  
[Name of Participant] Title: [Title of Officer]    

 

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OPTION AWARD AGREEMENT

 

Pursuant to the Notice of Option Grant (the “Grant Notice”) to which this Option
Award Agreement (this “Agreement”) is attached and which Grant Notice is
included in and part of this Agreement, and subject to the terms of this
Agreement and the Xtant Medical Holdings, Inc. 2018 Equity Incentive Plan (as
may be amended from time to time, the “Plan”), Xtant Medical Holdings, Inc., a
Delaware corporation (the “Company”), and the Participant named in the Grant
Notice (the “Participant”) agree as follows:

 

1. Incorporation of Plan; Definitions. The provisions of the Plan are hereby
incorporated herein by reference. Except as otherwise expressly set forth
herein, this Agreement will be construed in accordance with the provisions of
the Plan and any capitalized terms not otherwise defined in this Agreement or in
the Grant Notice will have the same meanings as set forth in the Plan. The
provisions of this Agreement will be interpreted as to be consistent with the
Plan and any ambiguities in this Agreement will be interpreted by reference to
the Plan. In the event that any provision of this Agreement is not authorized by
or is inconsistent with the terms of the Plan, the terms of the Plan will
prevail. Pursuant to and in accordance with the terms of the Plan, the Committee
will have final authority to interpret and construe the Plan and this Agreement
and to make any and all determinations thereunder, and its decision will be
final, binding and conclusive upon the Participant and his or her legal
representatives in respect of any questions arising under the Plan or this
Agreement. A copy of the Plan and the Plan Prospectus have been delivered to the
Participant together with this Agreement.

 

2. Grant of Option. The Company hereby grants to the Participant a Non-Statutory
Stock Option (the “Option”) to purchase from the Company that number of shares
of Common Stock (collectively, the “Shares”), and at an exercise price per Share
equal to the amount as indicated in the Grant Notice (the “Exercise Price”), all
subject to adjustment as provided in the Plan, and subject to the terms,
conditions and restrictions set forth herein and in the Plan. The Option is not
intended to satisfy the requirements of Section 422 of the Code and thus shall
be a Non-Statutory Stock Option as that term is defined in the Plan.

 

3. Vesting and Exercisability of Option; Expiration of Option; Forfeiture.

 

3.1 Vesting and Exercisability of Option. Except as otherwise provided under
this Agreement, the Participant’s right to exercise the Option shall vest in
accordance with the Vesting Schedule set forth in the Grant Notice (each, a
“Vesting Date”); provided, however, that the Participant remains continuously
employed by or provides services to the Company or any Subsidiary through the
applicable Vesting Date.

 

3.2 Duration of Exercisability. Any installments provided for in the Vesting
Schedule set forth in the Grant Notice are cumulative. Each such installment
which becomes vested and exercisable pursuant to the Vesting Schedule set forth
in the Grant Notice shall remain vested and exercisable until the Expiration
Date of the Option set forth in the Grant Notice (the “Expiration Date”) or
until the Option becomes unexercisable under Section 3.4 of this Agreement;
provided, however, that if the exercise of the vested portion of the Option is
prevented by the provisions of Section 17 of the Plan, the vested portion of the
Option will remain exercisable until thirty (30) days after the date such
exercise first would no longer be prevented by such provisions, but in any event
no later than the Expiration Date of such Option.

 

3.3 Change in Control. [Except as otherwise provided in an Individual Agreement
between the Company and the Participant, upon a Change in Control, the Option
will be subject to Section 15 of the Plan.]

 

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OR

 

[Except as otherwise provided in an Individual Agreement between the Company and
the Participant, upon a Change in Control (as defined in an Individual Agreement
between the Participant and the Company or if there is no such Individual
Agreement or if it does not define Change in Control, then as defined in the
Plan), the Option will be subject to the provisions below.

 

a. In the event of such a Change in Control, the surviving or successor
organization (or a parent or subsidiary thereof) (the “Successor”) may continue,
assume or substitute equivalent awards (with such adjustments as may be required
or permitted by Section 4.4 of the Plan). A substitute equivalent award must (i)
have a value at least equal to the value of the Option being substituted; (ii)
be the same type of award as the Option being substituted; (iii) be vested to
the extent vested at the time of and as a result of the Change in Control and
(iv) have other terms and conditions (including vesting, exercisability and
effect of termination within one (1) year following a Change in Control) that
are not less favorable to the Participant than the terms and conditions of the
Option being substituted, in each case, as determined by the Committee (as
constituted prior to the Change in Control) in its sole discretion. If the
Option is continued, assumed or substituted by the Successor and within one (1)
year following a Change in Control the Participant (i) is terminated by the
Successor (or an Affiliate thereof) without Cause or (ii) the Participant
resigns for Good Reason (as defined below), the Option will vest and become
immediately exercisable as of the termination or resignation and will remain
exercisable until the earlier of the expiration of its full specified term or
the first anniversary of the date of such termination or resignation. For
purposes of this Section 3.3(a), “Good Reason” means as defined in an Individual
Agreement between the Participant and the Company or if there is no such
Individual Agreement or if it does not define Good Reason, Good Reason means the
assignment to the Participant of any duties materially inconsistent in any
respect with the Participant’s position (including a material negative change
regarding the Participant’s status, offices, titles or reporting requirements),
authority, duties or responsibilities, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities (but not occurring solely as a result of the Company’s ceasing
to be a publicly traded entity) existing immediately prior to the date of the
Change in Control, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Participant; provided,
however, “Good Reason” will not be deemed to exist unless (a) written notice of
termination on account thereof is given by the Participant to the Company no
later than sixty (60) days after the time at which the event or condition
purportedly giving rise to Good Reason first occurs or arises; (b) if there
exists (without regard to this clause (b)) an event or condition that
constitutes Good Reason, the Company will have thirty (30) days from the date
notice of such a termination is given to cure such event or condition and, if
the Company does so, such event or condition will not constitute Good Reason
hereunder and (c) if not cured, the Participant must resign from employment for
a Good Reason event or condition within sixty (60) days following the last day
of the Company’s cure period. Any good faith determination of “Good Reason” made
by the Committee will be conclusive. The Participant’s mental or physical
incapacity following the occurrence of an event described in above clauses will
not affect the Participant’s ability to terminate employment for Good Reason.

 

b. In the event of such a Change in Control, any outstanding Option that is not
continued, assumed or substituted with equivalent awards by the Successor
pursuant to Section 3.3(a) above, the Option, effective immediately prior to
such Change in Control but conditioned upon the completion of such Change in
Control, will be fully vested and exercisable and the Committee will either (1)
give a Participant a reasonable opportunity to exercise the Option before the
transaction resulting in the Change in Control or (2) pay the Participant the
difference between the exercise price for such Option and the per Share
consideration provided to other similarly situated stockholders in such Change
in Control; provided, however, that if the exercise price of such Option exceeds
the aforementioned consideration provided, then the Option will be canceled and
terminated without any payment. In either case, such Option will be cancelled.]

 

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3.4 Effect of Termination of Employment or Other Service. Except as otherwise
provided in Section 13.4 or 13.5 of the Plan or an Individual Agreement between
the Company or any Subsidiary and the Participant: (a) if the Participant’s
employment or service with the Company and all Subsidiaries is terminated by
reason of the Participant’s death, then the Option will vest and become
exercisable immediately as to a pro rata percentage of the unvested portion of
the Option scheduled to vest on the next applicable Vesting Date, with such
proration based on the number of days during which the Participant was
continuously employed by the Company or provided services to the Company or a
Subsidiary beginning on the Grant Date, or if a Vesting Date has occurred, the
most recent Vesting Date, and ending on the next applicable Vesting Date,
multiplied by the number of Shares subject to the Option which were scheduled to
vest on the next applicable Vesting Date, and the vested portion of the Option
will remain exercisable for a period of one (1) year after the date of such
termination (but in no event after the Expiration Date); (b) if the
Participant’s employment or service with the Company and all Subsidiaries is
terminated by reason of the Participant’s Disability, then the Option will, to
the extent exercisable as of the date of such termination, remain exercisable
for a period of one (1) year after the date of such termination (but in no event
after the Expiration Date); and (c) if the Participant’s employment or service
with the Company and all Subsidiaries is terminated for any reason other than
death or Disability, then the Option will, to the extent exercisable as of the
date of such termination, remain exercisable for a period of ninety (90) days
after the date of such termination (but in no event after the Expiration Date).

 

3.5 Effect of Actions Constituting Cause or Adverse Action; Forfeiture or
Clawback. The Option is subject to the forfeiture provisions set forth in
Section 13.5 of the Plan, including those applicable if the Participant is
determined by the Committee to have taken any action that would constitute Cause
or an Adverse Action and any forfeiture or clawback requirement under Applicable
Law or any policy adopted from time to time by the Company.

 

4. Method of Exercise.

 

4.1 Notice. The Option may be exercised by the Participant in whole or in part
from time to time, subject to the vesting and other conditions contained in the
Plan and in this Agreement, by delivery, in person, by facsimile or electronic
transmission (if confirmed) or through the mail, to the Company at its principal
executive office in Montana (Attention: Chief Financial Officer), of a written
notice of exercise. Such notice must be in a form satisfactory to the Committee,
must identify the Option, must specify the number of Shares with respect to
which the Option is being exercised, and must be signed by the person or persons
so exercising the Option. Such notice must be accompanied by payment in full of
the total purchase price of the Shares purchased. If the Option is being
exercised, as provided by the Plan, by any person or persons other than the
Participant, the notice must be accompanied by appropriate proof of right of
such person or persons to exercise the Option. As soon as practicable after the
effective exercise of the Option, the Participant will be recorded on the books
of the Company as the owner of the Shares purchased, and the Company will
deliver to the Participant one or more duly issued stock certificates or
book-entry notations evidencing such ownership.

 

4.2 Payment. The total purchase price of the Shares to be purchased upon
exercise of the Option must be paid entirely in cash or cash equivalent
(including check, bank draft or money order); provided, however, that the
Committee, in its sole discretion, may allow such payments to be made, in whole
or in part, by: (i) tender, or attestation as to ownership, of Previously
Acquired Shares; (ii) a Broker Exercise Notice; (iii) a “net exercise” pursuant
to Section 6.5(b) of the Plan; (iv) a promissory note (on terms acceptable to
the Committee in its sole discretion); (v) such other consideration as may be
approved by the Committee from time to time; or (vi) a combination of such
methods.

 

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5. Rights of Participant.

 

5.1 Employment or Other Service. Nothing in this Agreement will interfere with
or limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of the Participant at any time, nor confer upon the
Participant any right to continue employment or service with the Company or any
Subsidiary.

 

5.2 Rights as a Stockholder. The Participant will have no rights as, or
privileges of, a stockholder of the Company, including, without limitation,
voting rights and rights to dividends, with respect to Shares of Common Stock
issuable upon exercise of the Option unless and until the Participant exercises
the Option and becomes the holder of record of such Shares of Common Stock (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 4.4 of the Plan.

 

5.3 Restrictions on Transfer. Except pursuant to testamentary will or the laws
of descent and distribution or as otherwise expressly permitted by the Plan, no
right or interest of the Participant in the Option prior to exercise of the
Option will be assignable or transferable, or subjected to any lien, during the
lifetime of the Participant, either voluntarily or involuntarily, directly or
indirectly, by operation of law or otherwise. Any attempt to transfer, assign or
encumber the Option other than in accordance with this Agreement and the Plan
will be null and void and the Option will be forfeited and immediately returned
to the Company.

 

6. Withholding Taxes. The Company is entitled to (a) withhold and deduct from
future wages of the Participant (or from other amounts that may be due and owing
to the Participant from the Company or a Subsidiary), or make other arrangements
for the collection of, all amounts the Company reasonably determines are
necessary to satisfy any and all federal, foreign, state and local withholding
and employment related tax requirements attributable to the Option, including
the grant, vesting or exercise of, the Option, or (b) require the Participant
promptly to remit the amount of such withholding to the Company before taking
any action, including issuing any Shares upon exercise of the Option. The
Committee may, in its sole discretion and upon terms and conditions established
by the Committee, permit or require the Participant to satisfy, in whole or in
part, any withholding or employment related tax obligation in connection with
the Option by withholding Shares issuable upon exercise of the Option. When
withholding Shares for taxes is effected under this Agreement and the Plan, it
will be withheld only up to an amount based on the maximum statutory tax rates
in the Participant’s applicable tax jurisdiction or such other rate that will
not trigger a negative accounting impact on the Company.

 

7. Miscellaneous.

 

7.1 Governing Law. The validity, construction, interpretation, administration
and effect of this Agreement and any rules, regulations and actions relating to
this Agreement will be governed by and construed exclusively in accordance with
the laws of the State of Delaware, notwithstanding the conflicts of laws
principles of any jurisdictions.

 

7.2 Interpretation. Any dispute regarding the interpretation of this Agreement
will be submitted by the Participant or by the Company forthwith to the
Committee for review. The resolution of such a dispute by the Committee will be
final and binding on all parties.

 

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

 

7.4 Notices. All notices, requests or other communications provided for in this
Agreement must be made, if to the Company, to Xtant Medical Holdings, Inc.,
Attn: Chief Financial Officer, 664 Cruiser Lane, Belgrade, MT 59714, and if to
the Participant, to the last known mailing address of the Participant contained
in the records of the Company. All notices, requests or other communications
provided for in this Agreement must be made in writing either (a) by personal
delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c)
by mailing in the United States mails or (d) by express courier service. The
notice, request or other communication will be deemed to be received upon
personal delivery, upon confirmation of receipt of facsimile or electronic mail
transmission or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication sent to the Company is not received during regular business
hours, it will be deemed to be received on the next succeeding business day of
the Company.

 

7.5 Electronic Delivery and Acceptance. The Company may, in its sole discretion,
deliver any documents related to the Option by electronic means or request the
Participant’s consent to participate in the Plan by electronic means. The
Participant hereby consents to receive all applicable documentation by
electronic delivery and to participate in the Plan through an on-line system
established and maintained by the Company or a third party vendor designated by
the Company.

 

7.6 Other Laws. The Company will have the right to refuse to issue to the
Participant Shares upon exercise of the Option if the Company acting in its
absolute discretion determines that the issuance or transfer of such Shares
might violate any Applicable Law.

 

7.7 Investment Representation. The Participant hereby represents and covenants
that (a) any Share acquired upon exercise of the Option will be acquired for
investment and not with a view to the distribution thereof within the meaning of
the Securities Act of 1933, as amended (the “Securities Act”), unless such
acquisition has been registered under the Securities Act and any applicable
state securities laws; (b) any subsequent sale of any such Shares will be made
either pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to an exemption from
registration under the Securities Act and such state securities laws; and (c) if
requested by the Company, the Participant will submit a written statement, in
form satisfactory to the Company, to the effect that such representation (x) is
true and correct as of the date of vesting of any Shares hereunder or (y) is
true and correct as of the date of any sale of any such Share, as applicable. As
a further condition precedent to the delivery to the Participant of any Shares
upon exercise of the Option, the Participant will comply with all regulations
and requirements of any regulatory authority having control of or supervision
over the issuance or delivery of the Shares and, in connection therewith, will
execute any documents which the Company will in its sole discretion deem
necessary or advisable.

 

7.8 Non-Negotiable Terms. The terms of this Agreement and the Option are not
negotiable, but the Participant may refuse to accept the Option by notifying the
Company’s Chief Financial Officer in writing within thirty (30) day after the
Grant Date set forth in the Grant Notice.

 

7.9 Acknowledgement by the Participant. In accepting the Option, the Participant
hereby acknowledges that:

 

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(a) The Plan is established voluntarily by the Company, it is discretionary in
nature, and it may be modified, amended, suspended or terminated by the Company
at any time, unless otherwise provided in the Plan.

 

(b) The grant of the Option is voluntary and occasional and does not create any
contractual or other right to receive future Option grants, or benefits in lieu
of Options, even if Options have been granted repeatedly in the past.

 

(c) All decisions with respect to future Option grants, if any, will be at the
sole discretion of the Company.

 

(d) The Participant is voluntarily participating in the Plan.

 

(e) The award of Options is an extraordinary item that does not constitute
compensation of any kind for services of any kind rendered to the Company, and
which is outside the scope of the Participant’s employment contract, if any.

 

(f) The award of Options is not part of normal or expected compensation or
salary for any purposes, including, but not limited to, calculating any
severance, resignation, termination, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar payments
and in no event should be considered as compensation for, or relating in any way
to, past services for the Company or any Subsidiary.

 

(g) The award of Options or this Agreement will not be interpreted to form an
employment contract with the Company or any Subsidiary.

 

(h) The future value of the Shares issuable upon exercise of the Option is
unknown and cannot be predicted with certainty and if the Option vest and is
exercised by the Participant, the value of those Shares may increase or
decrease.

 

(i) In consideration of the grant of the Option, no claim or entitlement to
compensation or damages shall arise from termination of the Option or diminution
in value of the Shares acquired upon exercise of the Option resulting from
termination of employment by the Company (for any reason whatsoever and whether
or not in breach of applicable labor laws) and the Participant hereby
irrevocably releases the Company and its Subsidiaries from any such claim that
may arise; if, notwithstanding the foregoing, any such claim is found by a court
of competent jurisdiction to have arisen, then, by acceptance of the Option, the
Participant shall be deemed irrevocably to have waived his or her entitlement to
pursue such claim.

 

(j) In the event of termination of the Participant’s employment with the Company
(whether or not in breach of local labor laws), the Participant’s right to
receive the Option and vest in the Option under the Plan, if any, will terminate
effective as of the date of termination of his or her active employment as
determined in the sole discretion of the Committee and will not be extended by
any notice of termination of employment or severance period provided to the
Participant by contract or practice of the Company or any Subsidiary or mandated
under local law and the Committee will have the sole discretion to determine the
date of termination of the Participant’s active employment for purposes of the
Option.

 

(k) Neither the Company nor any Subsidiary is providing any tax, legal or
financial advice, nor is the Company or any Subsidiary making any
recommendations regarding the Participant’s participation in the Plan,
acceptance of the Option, acquisition of Shares upon vesting and exercise of the
Option or any sale of such Shares.

 

(l) The Participant has been advised to consult with his or her own personal
tax, legal and financial advisors regarding his or her participation in the Plan
before taking any action related to the Plan.

 

* * * * *

 

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