Exhibit 10.2

 

Xenetic Biosciences, Inc.
Stock Option Grant Notice

(Inducement Award)

 

Xenetic Biosciences, Inc. (the “Company”), pursuant to the attached Nonstatutory
Stock Option Agreement (the “Option Agreement”), hereby grants to Optionholder
an option to purchase the number of shares of the Company’s Common Stock set
forth below. The option is subject to all of the terms and conditions as set
forth in this notice, the Option Agreement, and the Notice of Exercise, all of
which are attached hereto and incorporated herein in their entirety. Capitalized
terms not explicitly defined herein but defined in the Option Agreement will
have the same definitions as in the Option Agreement. If there is any conflict
between the terms in this notice and the Option Agreement, the terms of the
Option Agreement will control. This option is intended to be an award described
in NASDAQ Listing Rule 5635(c)(4) and is being made to the Optionholder as an
inducement material to the Optionholder’s entering into employment with the
Company.

 

Optionholder:

James F. Parslow

Date of Grant:

April 3, 2017

Vesting Commencement Date:

Date of Grant

Number of Shares Subject to Option:

175,000

Exercise Price (Per Share):

$4.57

Total Exercise Price:

$799,750

Expiration Date:

April 3, 2027

 

Type of Grant:   Nonstatutory Stock Option       Exercise Schedule:   Same as
Vesting Schedule       Vesting Schedule:   One-third (1/3) of the shares subject
to this option vest on each of the first three anniversaries of Vesting
Commencement Date, subject to Optionholder’s Continuous Service as of each such
date. In the event of a Change in Control, any then unvested and outstanding
shares subject to this option shall vest effective immediately prior to, but
subject to the occurrence of such Change in Control and subject to the
Optionholder’s Continuous Service through such Change in Control.       Payment:
  By one or a combination of the following items (described in the Option
Agreement):           x     By cash, check, bank draft or money order payable to
the Company     x     Pursuant to a Regulation T Program if the shares are
publicly traded     x     By delivery of already-owned shares if the shares are
publicly traded

 

Additional Terms/Acknowledgements: Optionholder acknowledges receipt of, and
understands and agrees to, this Stock Option Grant Notice and the Option
Agreement. Optionholder acknowledges and agrees that this Stock Option Grant
Notice and the Option Agreement may not be modified, amended or revised except
as provided in the Option Agreement. Optionholder further acknowledges that as
of the Date of Grant, this Stock Option Grant Notice and the Option Agreement
set forth the entire understanding between Optionholder and the Company
regarding this option award and supersede all prior oral and written agreements,
promises and/or representations on that subject with the exception of (i)
options previously granted and delivered to Optionholder, (ii) any compensation
recovery policy that is adopted by the Company or is otherwise required by
applicable law and (iii) any written employment or severance arrangement that
would provide for vesting acceleration of this option upon the terms and
conditions set forth therein.

 

 

 

 

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By accepting this option, Optionholder consents to receive such documents by
electronic delivery and to participate through an on-line or electronic system
established and maintained by the Company or another third party designated by
the Company.

 

 

      Xenetic Biosciences, Inc.   Optionholder:                   By: /s/
Jeffrey F. Eisenberg                                 /s/ James F.
Parslow                                                Signature  
                        Signature       Title: Chief Operating Officer   Date:
April 3, 2017 Date: April 3, 2017    

 

Attachments: Option Agreement and Notice of Exercise

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Attachment I

 

Xenetic Biosciences, Inc.
Nonstatutory Stock Option Agreement

 

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this
Nonstatutory Stock Option Agreement (the “Option Agreement”), Xenetic
Biosciences, Inc. (the “Company”) has granted you a nonstatutory stock option to
purchase the number of shares of the Company’s Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice (your
“option”). Your option is granted to you effective as of the date of grant set
forth in the Grant Notice (the “Date of Grant”). The option is granted in
compliance with NASDAQ Listing Rule 5635(c)(4) as a material inducement to you
entering into employment with the Company.

 

The details of your option, in addition to those set forth in the Grant Notice,
are as follows:

 

1.                  Vesting. Your option will vest as provided in your Grant
Notice. Vesting will cease upon the termination of your Continuous Service.

 

2.                  Number of Shares and Exercise Price. The number of shares of
Common Stock subject to your option and your exercise price per share in your
Grant Notice will be adjusted for Capitalization Adjustments.

 

3.                  Exercise Restriction for Non-Exempt Employees. If you are an
Employee eligible for overtime compensation under the Fair Labor Standards Act
of 1938, as amended (that is, a “Non-Exempt Employee”), you may not exercise
your option until you have completed at least six (6) months of Continuous
Service measured from the Date of Grant, even if you have already been an
employee for more than six (6) months. Consistent with the provisions of the
Worker Economic Opportunity Act, you may exercise your option as to any vested
portion prior to such six (6) month anniversary in the case of (i) your death or
Disability, (ii) a Change in Control in which your option is not assumed,
continued or substituted, or (iii) your termination of Continuous Service on
your “retirement” (as defined in the Company’s benefit plans).

 

4.                  Method of Payment. You must pay the full amount of the
exercise price for the shares you wish to exercise. You may pay the exercise
price in cash or by check, bank draft or money order payable to the Company or
in any other manner permitted by your Grant Notice, which may include one or
more of the following:

 

(a)               Provided that at the time of exercise the Common Stock is
publicly traded, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds. This manner of payment is also known as a
“broker-assisted exercise”, “same day sale”, or “sell to cover”.

 

(b)              Provided that at the time of exercise the Common Stock is
publicly traded, by delivery to the Company (either by actual delivery or
attestation) of already-owned shares of Common Stock that are owned free and
clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. “Delivery” for these
purposes, in the sole discretion of the Company at the time you exercise your
option, will include delivery to the Company of your attestation of ownership of
such shares of Common Stock in a form approved by the Company. You may not
exercise your option by delivery to the Company of Common Stock if doing so
would violate the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.

 

 

 

 

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5.                  Whole Shares. You may exercise your option only for whole
shares of Common Stock.

 

6.                  Securities Law Compliance. In no event may you exercise your
option unless the shares of Common Stock issuable upon exercise are then
registered under the Securities Act or, if not registered, the Company has
determined that your exercise and the issuance of the shares would be exempt
from the registration requirements of the Securities Act. The exercise of your
option also must comply with all other applicable laws and regulations governing
your option, and you may not exercise your option if the Company determines that
such exercise would not be in material compliance with such laws and regulations
(including any restrictions on exercise required for compliance with Treas. Reg.
1.401(k)-1(d)(3), if applicable).

 

7.                  Term. You may not exercise your option before the Date of
Grant or after the expiration of your option’s term. The term of your option
expires upon the earliest of the following:

 

(a)               immediately upon the termination of your Continuous Service
for Cause;

 

(b)              three (3) months after the termination of your Continuous
Service for any reason other than Cause, your Disability or your death (except
as otherwise provided in Section 7(d) below); provided, however, that if during
any part of such three (3) month period your option is not exercisable solely
because of the condition set forth in the section above relating to “Securities
Law Compliance,” your option will not expire until the earlier of the Expiration
Date or until it has been exercisable for an aggregate period of three (3)
months after the termination of your Continuous Service;

 

(c)               twelve (12) months after the termination of your Continuous
Service due to your Disability (except as otherwise provided in Section 7(d))
below;

 

(d)              eighteen (18) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates for any reason other than Cause;

 

(e)               the Expiration Date indicated in your Grant Notice; or

 

(f)                the day before the tenth (10th) anniversary of the Date of
Grant.

 

8.                  Exercise.

 

(a)               You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by (i) delivering a Notice of Exercise (in a form designated by the Company) or
completing such other documents and/or procedures designated by the Company for
exercise and (ii) paying the exercise price and any applicable withholding taxes
to the Company’s Secretary, stock plan administrator, or such other person as
the Company may designate, together with such additional documents as the
Company may then require.

 

(b)              By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (i) the exercise of
your option, (ii) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (iii) the
disposition of shares of Common Stock acquired upon such exercise.

 

 

 

 

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9.                  Transferability. Except as otherwise provided in this
Section 9, your option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.

 

(a)               Certain Trusts. Upon receiving written permission from the
Board or its duly authorized designee, you may transfer your option to a trust
if you are considered to be the sole beneficial owner (determined under Section
671 of the Code and applicable state law) while your option is held in the
trust. You and the trustee must enter into transfer and other agreements
required by the Company.

 

(b)              Domestic Relations Orders. Upon receiving written permission
from the Board or its duly authorized designee, and provided that you and the
designated transferee enter into transfer and other agreements required by the
Company, you may transfer your option pursuant to the terms of a domestic
relations order, official marital settlement agreement or other divorce or
separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that
contains the information required by the Company to effectuate the transfer. You
are encouraged to discuss the proposed terms of any division of your option with
the Company prior to finalizing the domestic relations order or marital
settlement agreement to help ensure the required information is contained within
the domestic relations order or marital settlement agreement.

 

(c)               Beneficiary Designation. Upon receiving written permission
from the Board or its duly authorized designee, you may, by delivering written
notice to the Company, in a form approved by the Company and any broker
designated by the Company to handle option exercises, designate a third party
who, on your death, will thereafter be entitled to exercise your option and
receive the Common Stock or other consideration resulting from such exercise. In
the absence of such a designation, your executor or administrator of your estate
will be entitled to exercise your option and receive, on behalf of your estate,
the Common Stock or other consideration resulting from such exercise.

 

10.              Option not a Service Contract. Your option is not an employment
or service contract, and nothing in your option will be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option will obligate the Company or an
Affiliate, their respective stockholders, boards of directors, officers or
employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.

 

11.              Withholding Obligations.

 

(a)               At the time you exercise your option, in whole or in part, and
at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a “same day sale”
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board to the extent permitted by the Company), any sums required to
satisfy the federal, state, local and foreign tax withholding obligations of the
Company or an Affiliate, if any, which arise in connection with the exercise of
your option.

 

 

 

 

 

 

 

 

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(b)              Upon your request and subject to approval by the Company, and
compliance with any applicable legal conditions or restrictions, the Company may
withhold from fully vested shares of Common Stock otherwise issuable to you upon
the exercise of your option a number of whole shares of Common Stock having a
Fair Market Value, determined by the Company as of the date of exercise, not in
excess of the minimum amount of tax required to be withheld by law (or such
lower amount as may be necessary to avoid classification of your option as a
liability for financial accounting purposes). If the date of determination of
any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence
shall not be permitted unless you make a proper and timely election under
Section 83(b) of the Code, covering the aggregate number of shares of Common
Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of
such election, shares of Common Stock shall be withheld solely from fully vested
shares of Common Stock determined as of the date of exercise of your option that
are otherwise issuable to you upon such exercise. Any adverse consequences to
you arising in connection with such share withholding procedure shall be your
sole responsibility.

 

(c)               You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company will have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein, if applicable, unless such obligations are satisfied.

 

12.              Tax Consequences. You hereby agree that the Company does not
have a duty to design or administer the Option Agreement or its other
compensation programs in a manner that minimizes your tax liabilities. You will
not make any claim against the Company, or any of its officers, Directors,
Employees or Affiliates related to tax liabilities arising from your option or
your other compensation. In particular, you acknowledge that your option is
exempt from Section 409A of the Code only if the exercise price per share
specified in the Grant Notice is at least equal to the “fair market value” per
share of the Common Stock on the Date of Grant and there is no other
impermissible deferral of compensation associated with your option.

 

13.              Notices. Any notices provided for in your option will be given
in writing (including electronically) and will be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to you, five
(5) days after deposit in the United States mail, postage prepaid, addressed to
you at the last address you provided to the Company. The Company may, in its
sole discretion, decide to deliver any documents related to your option by
electronic means. By accepting your option, you consent to receive such
documents by electronic delivery and to participate through an on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

 

14.              Administration.

 

(a)               Administration by Board. The Board will administer your
option. The Board may delegate administration of your option to a Committee or
Committees, as provided in Section 14(c).

 

(b)              Powers of Board. The Board will have the power, subject to, and
within the limitations of, the express provisions of your option:

 

(i)                 To construe and interpret your option, and to establish,
amend and revoke rules and regulations for administration of your option. The
Board, in the exercise of these powers, may correct any defect, omission or
inconsistency in the Grant Notice, Option Agreement and Notice of Exercise, in a
manner and to the extent it will deem necessary or expedient to make your option
fully effective.

 

 

 

 

 

 

 

 

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(ii)              To settle all controversies regarding your option.

 

(iii)            To accelerate, in whole or in part, the time at which your
option may be exercised or vest (or at which cash or shares of Common Stock may
be issued).

 

(iv)             To amend the terms of your option, including, but not limited
to, amendments to provide terms more favorable to you than previously provided
in the Grant Notice, Option Agreement or Notice of Exercise; provided however,
that your rights under the Grant Notice, Option Agreement and Notice of Exercise
will not be impaired by any such amendment unless the Company obtains your
written consent. Notwithstanding the foregoing, (1) your rights will not be
deemed to have been impaired by any such amendment if the Board, in its sole
discretion, determines that the amendment, taken as a whole, does not materially
impair your rights, and (2) subject to the limitations of applicable law, if
any, the Board may amend the terms of your option without your consent to
clarify the manner of exemption from, or to bring your option into compliance
with, Section 409A of the Code; or to comply with other applicable laws.

 

(v)               Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and that are not in conflict with the provisions of the Grant Notice,
Option Agreement or Notice of Exercise.

 

(c)               Delegation to Committee. The Board may delegate some or all of
the administration of your option to a Committee or Committees. If
administration of your option is delegated to a Committee, the Committee will
have, in connection with the administration of your option, the powers
theretofore possessed by the Board that have been delegated to the Committee,
including the power to delegate to a subcommittee of the Committee any of the
administrative powers the Committee is authorized to exercise (and references in
your Option Agreement to the Board will thereafter be to the Committee or
subcommittee). Any delegation of administrative powers will be reflected in
resolutions, not inconsistent with the provisions of your option, adopted from
time to time by the Board or Committee (as applicable). The Committee may, at
any time, abolish the subcommittee and/or revest in the Committee any powers
delegated to the subcommittee. The Board may retain the authority to
concurrently administer your option with the Committee and may, at any time,
revest in the Board some or all of the powers previously delegated.

 

(d)              Effect of Board’s Decision. All determinations, interpretations
and constructions made by the Board in good faith will not be subject to review
by any person and will be final, binding and conclusive on all persons.

 

15.              Adjustments upon Changes in Common Stock; Other Corporate
Events.

 

(a)               Capitalization Adjustments. In the event of a Capitalization
Adjustment, the Board will appropriately and proportionately adjust the
class(es) and maximum number of securities that may be issued pursuant to the
exercise of your option and the exercise price per-share of your option, and its
determination will be final, binding and conclusive.

 

(b)              Change in Control. The following provisions will apply to your
option in the event of a Change in Control unless otherwise provided in any
other written agreement between the Company or any Affiliate and you. In the
event of a Change in Control, then, notwithstanding any other provision of the
Option Agreement, the Board may take one or more of the following actions with
respect to your option, contingent upon the closing or completion of the Change
in Control:

 

 

 

 

 

 

 

 

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(i)                 arrange for the surviving corporation or acquiring
corporation (or the surviving or acquiring corporation’s parent company) to
assume or continue your option or to substitute a similar stock award for your
option (including, but not limited to, an award to acquire the same
consideration paid to the stockholders of the Company pursuant to the Change in
Control);

 

(ii)              arrange for the assignment of any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued pursuant to your
option to the surviving corporation or acquiring corporation (or the surviving
or acquiring corporation’s parent company);

 

(iii)            accelerate the vesting, in whole or in part, of your option
(and, if applicable, the time at which your option may be exercised) to a date
prior to the effective time of such Change in Control as the Board determines
(or, if the Board does not determine such a date, to the date that is
five (5) days prior to the effective date of the Change in Control), with such
option terminating if not exercised (if applicable) at or prior to the effective
time of the Change in Control; provided, however, that the Board may require you
to complete and deliver to the Company a notice of exercise before the effective
date of a Change in Control, which exercise is contingent upon the effectiveness
of such Change in Control;

 

(iv)             arrange for the lapse, in whole or in part, of any
reacquisition or repurchase rights held by the Company with respect to your
option;

 

(v)               cancel or arrange for the cancellation of your option, to the
extent not vested or not exercised prior to the effective time of the Change in
Control, in exchange for such cash consideration, if any, as the Board, in its
sole discretion, may consider appropriate; and

 

(vi)             make a payment, in such form as may be determined by the Board
equal to the excess, if any, of (A) the value of the property you would have
received upon the exercise of your option immediately prior to the effective
time of the Change in Control, over (B) any exercise price payable by such
holder in connection with such exercise. For clarity, this payment may be zero
($0) if the value of the property is equal to or less than the exercise price.
Payments under this provision may be delayed to the same extent that payment of
consideration to the holders of the Company’s Common Stock in connection with
the Change in Control is delayed as a result of escrows, earn outs, holdbacks or
any other contingencies.

 

The Board need not take the same action or actions with respect to all portions
of your option or with respect to all equity awards granted to you and/or other
service providers of the Company. Your option may be subject to additional
acceleration of vesting and exercisability as may be provided in the Grant
Notice or as may be provided in any other written agreement between the Company
or any Affiliate and you, but in the absence of such provision, no such
acceleration will occur.

 

(c)               Dissolution of Liquidation. In the event of a dissolution or
liquidation of the Company, your option will terminate immediately prior to the
completion of such dissolution or liquidation, and the shares of Common Stock
subject to the Company’s repurchase rights or subject to a forfeiture condition
may be repurchased or reacquired by the Company notwithstanding the fact that
you may be providing Continuous Service, provided, however, that the Board may,
in its sole discretion, cause your option to become fully vested, exercisable
and/or no longer subject to repurchase or forfeiture (to the extent your option
has not previously expired or terminated) before the dissolution or liquidation
is completed but contingent on its completion.

 

 

 

 

 

 

 

 

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16.              Miscellaneous.

 

(a)               Use of Proceeds from Sales of Common Stock. Proceeds from the
sale of shares of Common Stock pursuant to your options will constitute general
funds of the Company.

 

(b)              Corporate Action Constituting Grant of Options. Corporate
action constituting a grant by the Company of your option will be deemed
completed as of the date of such corporate action, unless otherwise determined
by the Board, regardless of when the instrument, certificate, or letter
evidencing your option is communicated to, or actually received or accepted by,
you. In the event that the corporate records (e.g., Board consents, resolutions
or minutes) documenting the corporate action constituting the grant contain
terms (e.g., exercise price, vesting schedule or number of shares) that are
inconsistent with those in the Option Agreement as a result of a clerical error
in the papering of the Option Agreement, the corporate records will control and
you will have no legally binding right to the incorrect term in the Option
Agreement.

 

(c)               Stockholder Rights. You will not be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to your option unless and until (i) you have satisfied all
requirements for exercise of, or the issuance of shares of Common Stock under,
your option pursuant to its terms, and (ii) the issuance of the Common Stock
subject to your option has been entered into the books and records of the
Company.

 

(d)              Change in Time Commitment. In the event your regular level of
time commitment in the performance of your services for the Company and any
Affiliates is reduced (for example, and without limitation, if you are an
Employee of the Company and you have a change in status from a full-time
Employee to a part-time Employee) after the Date of Grant, the Board has the
right in its sole discretion to (x) make a corresponding reduction in the number
of shares subject to any portion of such option that is scheduled to vest or
become payable after the date of such change in time commitment, and (y) in lieu
of or in combination with such a reduction, extend the vesting or payment
schedule applicable to such option. In the event of any such reduction, you will
have no right with respect to any portion of your option that is so reduced or
extended.

 

(e)               Investment Assurances. The Company may require you, as a
condition of exercising your option, (i) to give written assurances satisfactory
to the Company as to your knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising your option; and
(ii) to give written assurances satisfactory to the Company stating that you are
acquiring Common Stock subject to your option for your own account and not with
any present intention of selling or otherwise distributing the Common Stock. The
foregoing requirements, and any assurances given pursuant to such requirements,
will be inoperative if (A) the issuance of the shares upon the exercise or
acquisition of Common Stock under your option has been registered under a then
currently effective registration statement under the Securities Act, or (B) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Option Agreement
as such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends restricting
the transfer of the Common Stock.

 

 

 

 

 

 

 

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(f)                Clawback/Recovery. This option will be subject to recoupment
in accordance with any clawback policy that the Company is required to adopt
pursuant to the listing standards of any national securities exchange or
association on which the Company’s securities are listed or as is otherwise
required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or
other applicable law. No recovery of compensation under such a clawback policy
will be an event giving rise to a right to resign for “good reason” or
“constructive termination” (or similar term) under any agreement with the
Company.

 

17.              Choice of Law. The laws of the Company’s state of incorporation
will govern all questions concerning the construction, validity and
interpretation of your option, without regard to that state’s conflict of laws
rules.

 

18.              Definitions. As used in the Option Agreement, the following
definitions will apply to the capitalized terms indicated below:

 

(a)               “Affiliate” means, at the time of determination, any “parent”
or “majority-owned subsidiary” of the Company, as such terms are defined in
Rule 405 promulgated under the Securities Act. The Board will have the authority
to determine the time or times at which “parent” or “majority-owned subsidiary”
status is determined within the foregoing definition.

 

(b)              “Board” means the Board of Directors of the Company.

 

(c)               “Capitalization Adjustment” means any change that is made in,
or other events that occur with respect to, the Common Stock subject to your
option after the Date of Grant without the receipt of consideration by the
Company through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, large
nonrecurring cash dividend, stock split, reverse stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure, or any similar equity restructuring transaction, as that term is used
in Statement of Financial Accounting Standards Board Accounting Standards
Codification Topic 718 (or any successor thereto). Notwithstanding the
foregoing, the conversion of any convertible securities of the Company will not
be treated as a Capitalization Adjustment.

 

(d)              “Cause” will have the meaning ascribed to such term in any
written agreement between you and the Company defining such term and, in the
absence of such agreement, such term means, with respect to you, the occurrence
of any of the following events: (i) your commission of any felony or any crime
involving fraud, dishonesty or moral turpitude under the laws of the United
States or any state thereof; (ii) your attempted commission of, or participation
in, a fraud or act of dishonesty against the Company; (iii) your intentional,
material violation of any contract or agreement between you and the Company or
of any statutory duty owed to the Company; (iv) your unauthorized use or
disclosure of the Company’s confidential information or trade secrets; or
(v) your gross misconduct. The determination that a termination of your
Continuous Service is either for Cause or without Cause will be made by the
Company, in its sole discretion. Any determination by the Company that your
Continuous Service was terminated with or without Cause for the purposes of your
option will have no effect upon any determination of the rights or obligations
of the Company or you for any other purpose.

 

(e)               “Code” means the Internal Revenue Code of 1986, as amended,
including any applicable regulations and guidance thereunder.

 

(f)                “Committee” means a committee of one or more Directors to
whom authority has been delegated by the Board in accordance with Section 14(c).

 

(g)               “Common Stock” means the common stock of the Company.

 

(h)              “Company” means Xenetic Biosciences, Inc., a Nevada
corporation.

 

 

 

 

 

 

 

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(i)                 “Consultant” means any person, including an advisor, who is
(i) engaged by the Company or an Affiliate to render consulting or advisory
services and is compensated for such services, or (ii) serving as a member of
the board of directors of an Affiliate and is compensated for such services.
However, service solely as a Director, or payment of a fee for such service,
will not cause a Director to be considered a “Consultant” for purposes of your
option.

 

(j)                “Continuous Service” means that your service with the Company
or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which you render service
to the Company or an Affiliate as an Employee, Director or Consultant or a
change in the entity for which you render such service, provided that there is
no interruption or termination of your service with the Company or an Affiliate,
will not terminate your Continuous Service; provided, however, that if the
entity for which you are rendering services ceases to qualify as an Affiliate,
as determined by the Board in its sole discretion, your Continuous Service will
be considered to have terminated on the date such entity ceases to qualify as an
Affiliate. For example, a change in status from an Employee of the Company to a
Consultant of an Affiliate or to a Director will not constitute an interruption
of Continuous Service. To the extent permitted by law, the Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service will be considered interrupted in the case of (i) any
leave of absence approved by the Board or chief executive officer, including
sick leave, military leave or any other personal leave, or (ii) transfers
between the Company, an Affiliate, or their successors. Notwithstanding the
foregoing, a leave of absence will be treated as Continuous Service for purposes
of vesting in your option only to such extent as may be provided in the
Company’s leave of absence policy, in the written terms of any leave of absence
agreement or policy applicable to you, or as otherwise required by law.

 

(k)              “Change in Control” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

 

(i)                 any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then outstanding securities
other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
(A) on account of the acquisition of securities of the Company by an investor,
any affiliate thereof or any other Exchange Act Person from the Company in a
transaction or series of related transactions the primary purpose of which is to
obtain financing for the Company through the issuance of equity securities or
(B) solely because the level of Ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;

 

(ii)              there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such
transaction;

 

 

 

 11 

 

(iii)            there is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company immediately prior
to such sale, lease, license or other disposition; or

 

(iv)             individuals who, on the Date of Grant, are members of the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the members of the Board; provided, however, that if the appointment or
election (or nomination for election) of any new Board member was approved or
recommended by a majority vote of the members of the Incumbent Board then still
in office, such new member shall, for purposes of this definition, be considered
as a member of the Incumbent Board.

 

For clarity, the term Change in Control shall not include a sale of assets,
merger or other transaction effected exclusively for the purpose of changing the
domicile of the Company.

 

(l)                 “Director” means a member of the Board.

 

(m)            “Disability” means, your inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve (12) months as
provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be
determined by the Board on the basis of such medical evidence as the Board deems
warranted under the circumstances.

 

(n)              “Employee” means any person employed by the Company or an
Affiliate. However, service solely as a Director, or payment of a fee for such
services, will not cause a Director to be considered an “Employee” for purposes
of your option.

 

(o)               “Entity” means a corporation, partnership, limited liability
company or other entity.

 

(p)              “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(q)              “Exchange Act Person” means any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act),
except that “Exchange Act Person” shall not include (i) the Company or any
Subsidiary of the Company, (ii) any employee benefit plan of the Company or any
Subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary of the Company,
(iii) an underwriter temporarily holding securities pursuant to an offering of
such securities, (iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company; or (v) any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of
the Date of Grant, is the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company’s then outstanding securities.

 

(r)               “Fair Market Value” means, as of any date, the value of the
Common Stock determined by the Board in compliance with Section 409A of the
Code.

 

 

 

 

 

 

 

 

 12 

 

 

(s)                “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall
be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

 

(t)                “Securities Act” means the Securities Act of 1933, as
amended.

 

(u)              “Subsidiary” means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, stock of any other
class or classes of such corporation will have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned by the Company, and (ii) any partnership, limited liability
company or other entity in which the Company has a direct or indirect interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 13 

 

 

Attachment II

 

Notice of Exercise

 

Xenetic Biosciences, Inc.     [Address]     [City and State]   Date of Exercise:
_______________

 

This constitutes notice to Xenetic Biosciences, Inc. (the “Company”) under my
stock option that I elect to purchase the below number of shares of Common Stock
of the Company (the “Shares”) for the price set forth below.

 

  Type of option (check one): Nonstatutory         Stock option dated:
_______________         Number of Shares as
to which option is
exercised: _______________         Certificates to be
issued in name of: _______________         Total exercise price: $______________
        Cash payment delivered
herewith: $______________         Value of ________ Shares delivered herewith:
$______________         Regulation T Program (cashless exercise):
$______________

 

By this exercise, I agree (i) to provide such additional documents as you may
require pursuant to the terms of the Notice of Grant and Option Agreement and
(ii) to provide for the payment by me to you (in the manner designated by you)
of your withholding obligation, if any, relating to the exercise of this option.

 

Very truly yours,

 

____________________________________

Signature

 

____________________________________

Print Name

 

 

 

 

 

 

 

 

 

 

 

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