Document:

EX-10.5

 Exhibit 10.05 

DATED 18th JULY 2000 

 
  

RULES OF THE 
 LIPOXEN
PLC 
 UNAPPROVED SHARE OPTION PLAN 

(as amended by a resolution of the board of directors of 

Lipoxen PLC passed on 14 March 2006) 
  

 
 17 Hanover
Square London W1R 9AJ 
 Tel: 020 7917 8500 Fax: 020 7917 8555 

 Unapproved Share Option 

Scheme 
 RULES OF 

THE LIPOXEN PLC 
 UNAPPROVED SHARE
OPTION PLAN 
  

			
	INDEX
		
	Rule	 	
		
	  1	 	 Interpretation

	  2	 	 Eligibility

	  3	 	 Grant of Options

	  4	 	 Relationship with Contract of Employment

	  5	 	 Non-transferability of Options

	  6	 	 Exercise Price

	  7	 	 Performance-Related Conditions of Exercise

	  8	 	 Exercise of Options

	  9	 	 Manner of Exercise of Options

	10	 	 Overall Limits on the Granting of Options

	11	 	 Demerger, Reconstruction or Winding-up

	12	 	 Take-over

	13	 	 Variation of Share Capital

	14	 	 Legal and Tax Obligations

	15	 	 Alteration of Plan

	16	 	 Service of Documents

	17	 	 Miscellaneous

	
	Option Certificate
	Notice of Exercise

	1	INTERPRETATION 

  

	1.1	In this Plan (unless the context otherwise requires) the following words and phrases have the meanings given below: 

  

			
	“Acquiring Company”	    	a company which has obtained control of the Company or has become bound or entitled to acquire shares;
		
	“AIM”	    	the Alternative Investment Market of the London Stock Exchange;
		
	“Associated Company”	    	has the meaning given for the purposes of section 521(3) of ITEPA by paragraph 35(1) of Schedule 4 to ITEPA;
		
	“the Auditors”	    	the auditors of the Company for the time being;
		
	“the Committee”	    	the Remuneration Committee of the Directors or such other committee comprising a majority of non-executive directors of the Company to which the Directors may delegate responsibility for the operation of this Plan;
		
	“the Company”	    	Lipoxen PLC (registered number 3213174);
		
	“control”	    	has the meaning given in section 840 of the Taxes Act;
		
	“the Date of Grant”	    	in relation to any Option, the date on which that Option is granted;

  
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	“Dealing Day”	    	a day on which the London Stock Exchange is open for business;
		
	“the Directors”	    	the board of directors of the Company from time to time or a duly constituted committee of such directors;
		
	“Eligible Person”	    	any person who is a bona fide employee (including executive directors);
		
	“Exercise Price”	    	in relation to an Option, the price per Share payable upon the exercise of that Option;
		
	“the Group”	    	the Company and each and every company which is for the time being a Subsidiary;
		
	“ITEPA”	    	the Income Tax (Earnings and Pensions) Act 2003;
		
	“the London Stock Exchange”	    	London Stock Exchange Limited;
		
	“Market Value”	    	when the Shares are traded on the London Stock Exchange, the middle market quotation of a Share as derived from the Official List for the immediately preceding Dealing Day; or in any other case, on any day the amount determined by
the Directors to be the market value of a Share in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act, 1992;

  
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	“the Model Code”	    	the Model Code for Securities Transactions by Directors of Listed Companies or AIM Companies (as the case may require) issued by the UK Listing Authority from time to time;
		
	“New Option”	    	the right to subscribe for shares in the Acquiring Company or in a company which has control of an Acquiring Company granted or to be granted to Optionholders by an Acquiring Company in exchange for an Option pursuant to Rule
12.4;
		
	“New Shares”	    	the Shares over which a New Option is granted pursuant to Rule 12.4;
		
	“the Official List”	    	the daily Official List published by The London Stock Exchange;
		
	“Option”	    	right to subscribe for Shares granted in accordance with and subject to the rules of this Plan;
		
	“Optionholder”	    	a person who has been granted an Option or if that person has died, his Personal Representatives;
		
	“Option Tax Liability”	    	in relation to any Optionholder, any liability of the Company, and/or any company in the Group to account for any amount of income tax or other tax arising in relation to his Option or its exercise to the extent permitted by
law;

  
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	“Ordinary Share Capital”	    	issued share capital of the Company;
		
	“Personal Representatives”	    	in relation to an Optionholder, the legal personal representatives of the Optionholder (being either the executors of his will to whom a valid grant of probate has been made or if he dies intestate the duly appointed
administrator(s) of his estate) who have provided to the Directors evidence of their appointment as such;
		
	“this Plan”	    	The Lipoxen PLC Unapproved Share Option Plan as set out in these rules and amended from time to time;
		
	“Shares”	    	fully-paid ordinary shares in the capital of the Company;
		
	“Subsidiary”	    	any company which is for the time being both a subsidiary (as defined in section 736 of the Companies Act 1985) of the Company and under the control of the Company;
		
	“the Taxes Act”	    	the Income and Corporation Taxes Act 1988.
		
	“the UK Listing Authority”	    	the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000.

  
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	1.2	References to an Option vesting or being or becoming vested in respect of any number or proportion of the Shares over which it subsists are to be read as references to the Option becoming capable of being exercised
either immediately or, subject to the Optionholder continuing to hold office or employment within the Group (or with any Associated Company), at some future time. 

 

	1.3	References to Shares in respect of which an Option subsists at any time are to be read and construed as references to the Shares over which the Option is then held (and in respect of which it has not then lapsed and
ceased to be exercisable). 

  

	1.4	Any reference to any enactment includes a reference to that enactment as from time to time modified extended or re-enacted. 

  

	1.5	Words denoting the masculine gender shall include the feminine. 

  

	1.6	Words denoting the singular shall include the plural and vice versa. 

  

	2	ELIGIBILITY 

  

	2.1	Subject to the following provisions of this rule 2, the Directors shall have an absolute discretion as to the selection of persons to whom an Option is granted by the Company. 

 

	2.2	An Option shall not be granted to any person unless he is an Eligible Person. 

  

	2.3	An Option shall not be granted to any person within the period of 2 years ending with the date on which that person is bound to retire in accordance with the terms of his contract of employment. 

 

	2.4	No Option shall be granted to an executive director of the Company unless such grant has been approved by a majority of the non-executive directors. 

  
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	3	GRANT OF OPTIONS 

  

	3.1	An Option may only be granted: 

  

	 	3.1.1	at any time within the period of 42 days beginning with the date on which this Plan is adopted by the Directors; and 

  

	 	3.1.2	thereafter, where the Shares are traded on the London Stock Exchange or AIM, during the period of 42 days following the date of notification to the London Stock Exchange of the annual or half yearly results of the
Company; and 

  

	 	3.1.3	within a period of 14 days immediately after the person to whom it is granted first becomes an Eligible Person; and 

  

	 	3.1.4	at any other time but only if, in the opinion of the Directors, the circumstances are exceptional. 

  

	3.2	In the event of the Company being restricted by statute, order or regulation (including any regulation, order or requirement imposed on the Company by the UK Listing Authority or the London Stock Exchange or any other
regulatory authority) from granting an Option in accordance with rule 3.1, an Option may be granted at any time during the period of 42 days after the removal of all such restrictions on that occasion. 

 

	3.3	No Option may be granted after the tenth anniversary of the adoption of this Plan by the Directors. 

  

	3.4	An Option shall be granted by the Company executing as a deed and issuing to the Optionholder an option certificate which contains an undertaking by the Optionholder (duly executed as a deed) to be bound by the rules of
this Plan and which specifies: 

  

	 	3.4.1	the Date of Grant; 

  

	 	3.4.2	the number of Shares in respect of which the Option is granted; 

  

	 	3.4.3	the Exercise Price; 

  

	 	3.4.4	the earliest date on which the Option may be exercised by reason of rule 8.2; 

  
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	 	3.4.5	that the exercise of the Option may be subject to such performance related conditions determined by the Directors and notified to the Optionholder at the Date of Grant; 

 

	 	3.4.6	that the Optionholder agrees to indemnify the Company and any company in the Group in respect of any Option Tax Liability 

and is otherwise in such form as the Company may from time to time determine. 

 

	3.5	The Optionholder shall be entitled to renounce, surrender or cancel, or agree to the cancellation of, an Option within the period of 30 days immediately following the Date of Grant and if an Option is so renounced,
surrendered or cancelled it shall be deemed for the purposes of rule 10 never to have been granted. 

  

	4	RELATIONSHIP WITH CONTRACT OF EMPLOYMENT 

  

	4.1	The grant of an Option does not form part of the Optionholder’s entitlement to remuneration or benefits pursuant to his contract of employment nor does the existence of a contract of employment between any person
and the Company or any Subsidiary or Associated Company or former Subsidiary or former Associated Company give such person any right or entitlement to have an Option granted to him in respect of any number of Shares or any expectation that an Option
might be granted to him whether subject to any conditions or at all. 

  

	4.2	The rights and obligations of an Optionholder under the terms of his contract of employment with the Company or any Subsidiary or Associated Company or former Subsidiary or former Associated Company shall not be
affected by the grant of an Option. 

  

	4.3	The rights granted to an Optionholder upon the grant of an Option shall not afford the Optionholder any rights or additional rights to compensation or damages in consequence of the loss or termination of his office or
employment with the Company or any Subsidiary or Associated Company or former Subsidiary or former Associated Company for any reason whatsoever. 

  
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	4.4	An Optionholder shall not be entitled to any compensation or damages for any loss or potential loss which he may suffer by reason of being or becoming unable to exercise an Option in consequence of the loss or
termination of his office or employment with the Company or any Subsidiary or Associated Company or former Subsidiary or former Associated Company for any reason (including, without limitation, any breach of contract by his employer) or in any other
circumstances whatsoever. 

  

	5	NON-TRANSFERABILITY OF OPTIONS 

  

	5.1	During his lifetime only the individual to whom an Option is granted may exercise that Option. 

  

	5.2	An Option shall immediately cease to be exercisable if: 

  

	 	5.2.1	it is purported to be transferred or assigned (other than to his Personal Representatives upon the death of the Optionholder), mortgaged, charged or otherwise disposed of by the Optionholder; or 

 

	 	5.2.2	the Optionholder is adjudicated bankrupt or a bankruptcy order is made against the Optionholder pursuant to Chapter 1 of Part IX of the Insolvency Act 1986; or 

 

	 	5.2.3	the Optionholder is otherwise deprived (otherwise than on death) of the legal or beneficial ownership of the Option by operation of law or by the Optionholder doing or omitting to do anything which causes him to be so
deprived. 

  

	6	EXERCISE PRICE 

 The Exercise Price shall be determined by the Directors and shall be the
Market Value of a Share on the day the Option was granted pursuant to Rule 3, provided always that the Exercise Price shall not be less than the nominal value of a Share: 

  
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	7	PERFORMANCE-RELATED CONDITIONS OF EXERCISE 

  

	7.1	The exercise of an Option may be conditional upon the performance of the Company and, if the Directors so determine, upon the performance of a Subsidiary and/or the Optionholder over such period and measured against
such objective criteria as shall be determined by the Directors and notified to the Optionholder when the Option is granted. 

  

	7.2	Any such condition may provide that the Option shall become vested in respect of a given number or proportion of the Shares over which it subsists according to whether, and the extent to which, any given performance
target is met or exceeded. 

  

	7.3	If, in consequence of a performance condition being met, an Option becomes vested in respect of some but not all of the number of Shares over which it subsists it shall thereupon lapse and cease to be exercisable in
respect of the balance of the Shares over which it was held. 

  

	8	EXERCISE OF OPTIONS 

 Latest time for exercise 

 

	8.1	An Option may not in any event be exercised: 

  

	 	8.1.1	later than the tenth anniversary of the Date of Grant or such earlier time as the Company shall determine and notify to the Optionholder when the Option is granted; nor 

 

	 	8.1.2	at any time when to do so would cause either the Optionholder or the Company to contravene the Model Code, where applicable. 

  

	8.2	Save as provided in rules 8.3, 8.4, 8.5, 8.6, 11 and 12 Options granted to any Eligible Person shall be exercisable as to not more than 50% of such Options on or after the first anniversary of the relevant Date of
Grant, 25% of such Options on or after the second anniversary of the relevant Date of Grant; and 25% of such Options on or after the third anniversary of the relevant Date of Grant. 

  
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 Death of Optionholder 
  

	8.3	If an Optionholder dies in service after an Option granted to him has become vested in respect of any number of Shares then such Option may be exercised by his Personal Representatives in respect of such Shares within
the period of 6 months beginning with the date of his death, and if not then exercised shall lapse and cease to be exercisable at the end of that period. 

  

	8.4	If an Optionholder dies in service before an Option granted to him has become vested in respect of any Shares such Option may, within the period of 6 months beginning with the date of death, be exercised by his Personal
Representatives and if not then exercised shall lapse and cease to be exercisable at the end of that period of 6 months. 

  

	8.5	If an Optionholder dies after ceasing to hold office or employment within the Group an Option granted to him may, within the period of 6 months beginning with the date of death, be exercised by his Personal
Representatives in respect of such of the Shares as were vested and in respect of which the Option could have been exercised at the time of death and if not then exercised shall lapse and cease to be exercisable at the end of that period of 6
months. 

 Injury, disability, redundancy, retirement etc 
  

	8.6	If an Optionholder ceases to hold office or employment within the Group by reason of: 

  

	 	8.6.1	injury, ill-health or disability (evidenced to the satisfaction of the Directors); or 

  

	 	8.6.2	dismissal by reason of redundancy (within the meaning of the Employment Rights Act 1996); or 

  

	 	8.6.3	retirement on reaching the age at which he is bound to retire in accordance with the terms of his contract of employment; or 

  

	 	8.6.4	the company with which he holds office or employment by virtue of which he is eligible to participate in this Plan ceasing to be an Associated Company or a member of the Group; or 

  
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	 	8.6.5	the fact that the office or employment by virtue of which he is eligible to participate in this Plan relates to a business or part of a business which is transferred to a company which is neither an Associated Company
nor a member of the Group 

 then, subject to rule 8.5, an Option granted to him may be exercised within the period of 6
months beginning with the date on which the Optionholder so ceases and in respect of any Options held by the Optionholder, whether or not vested at that date 

and if not then exercised in respect of any Shares shall lapse and cease to be exercisable at the end of that period of 6 months. 

Leaving for other reasons 
  

	8.7	If an Optionholder ceases to hold office or employment within the Group for any reason other than those set out in rules 8.3, 8.4 and 8.6 then, subject to rule 8.5, an Option granted to him may only be exercised in
respect of such number of Shares in respect of which it had become vested at that date within a period of 6 months from the date on which the Optionholder so ceases and if not then exercised shall lapse and cease to be exercisable at the end of that
period of 6 months. Any Options granted to him which have not become vested at the date of cessation shall lapse and cease to be exercisable as at the date of cessation. 

 

	8.8	For the purposes of this rule 8 an Optionholder shall not be treated as having ceased to hold office or employment within the Group unless and until he no longer holds any office or employment with any member of the
Group or with any Associated Company. 

  

	8.9	For the purposes of this Rule 8, a female Optionholder whose employment has been terminated in circumstances such that, pursuant to Part VIII of the Employment Rights Act 1996 she has a right to return to work, shall
not be treated as having ceased to hold office or employment within the Group by reason of such termination until such time as such right shall cease to subsist. 

  
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	9	MANNER OF EXERCISE OF OPTIONS 

  

	9.1	An Option shall be exercised only by the Optionholder serving a written notice upon the Company (acting as agent for the Company) which: 

 

	 	9.1.1	specifies the number of Shares in respect of which that Option is exercised which in any event shall not exceed any maximum permitted by these Rules; and 

 

	 	9.1.2	is accompanied by payment of an amount equal to the product of the number of Shares specified in the notice and the Exercise Price; and 

 

	 	9.1.3	unless the Directors otherwise permit, is accompanied by the option certificate in respect of that Option; and 

  

	 	9.1.4	is accompanied by evidence satisfactory to the Committee that such arrangements have been made as the Committee may from time to time reasonably require (and notify to Optionholders on request) to ensure that any Option
Tax Liability will be reimbursed to the person which has accounted for such liability 

 and is otherwise in such form as the Directors may
from time to time determine. 
  

	9.2	Within the period of 30 days beginning with the date on which the requirements of rule 9.1 are satisfied, the Company shall allot to the Optionholder (or such other person as the Optionholder may direct) such number of
Shares as is specified in the notice. 

  

	9.3	As soon as reasonably practicable after the allotment of any Shares pursuant to rule 9.2, the Company shall issue to the Optionholder (or other person as directed by the Optionholder) a definitive share certificate or
such acknowledgement of shareholding as is prescribed from time to time in respect of the Shares so allotted. 

  

	9.4	The allotment of any Shares under this Plan shall be subject to the Memorandum and Articles of Association of the Company and to any necessary consents of any governmental or other authorities under any enactments or
regulations from time to time in force and it shall be the responsibility of the Optionholder to comply with any requirements to be fulfilled in order to obtain or obviate the necessity of any such consent. 

  
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	9.5	All Shares allotted under this Plan shall rank equally in all respects with the Shares for the time being in issue save as regards any rights attaching to such Shares by reference to a record date prior to the date of
such allotment. 

  

	9.6	No Option shall be quoted or dealt in on any stock exchange or other market but upon the allotment of any shares hereunder, the Company shall, where its Shares are traded on the London Stock Exchange, apply to the
London Stock Exchange for the Shares to be admitted to trading on the London Stock Exchange or AIM and/or for listing thereof by the UK Listing Authority (as the case may require). 

 

	10	OVERALL LIMITS ON THE GRANTING OF OPTIONS 

 The number of Shares in respect of which
Options may be granted on a given day in any year, when added to the number of Shares in respect of which Options have previously been granted (and, if not exercised, have not then ceased to be exercisable) in that year and the 9 preceding years,
shall not exceed 15% of the Ordinary Share Capital on that day. 
  

	11	DEMERGER, RECONSTRUCTION OR WINDING-UP 

  

	11.1	Subject to rule 8.1, in the event that notice is given to shareholders of the Company of a proposed demerger of the Company or of any Subsidiary the Company may give notice to Optionholders that Options may then be
exercised in respect of all the Shares over which they subsist (notwithstanding that any performance related condition subject to which any Option may be then exercisable is not then satisfied) within such period (not exceeding 30 days) as the
Company may specify in such notice to Optionholders SAVE THAT: 

  

	 	11.1.1	 no such notice to Optionholders shall be given unless the Auditors have confirmed in writing to the Company that (disregarding any performance-related
condition subject to which any Option may be then exercisable) the interests of Optionholders would or 

  
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might be substantially prejudiced if before the proposed demerger has effect Optionholders could not exercise their Options and be registered as the holders of the Shares thereupon acquired; and

  

	 	11.1.2	in the case of Optionholders who are executive Directors of the Company, a majority of the non-executive Directors consent to such exercise being permitted. 

 

	11.2	Subject to rule 8.1, if the court sanctions a compromise or arrangement proposed for the purposes of or in connection with a plan for the reconstruction of the Company or its amalgamation pursuant to section 425 of the
Companies Act 1985 the Optionholder shall be entitled to exercise his Option during the period of 6 months commencing on the date on which the court sanctions the compromise or arrangement, notwithstanding that any performance-related condition
subject to which such Option may be then exercisable is not then satisfied, and thereafter the Option shall lapse and cease to be exercisable. 

  

	11.3	In the event of notice being given to holders of Shares of a resolution for the voluntary winding-up of the Company, an Option may, subject to rule 8.1, be exercised at any time before the commencement of the
winding-up, notwithstanding that any performance related condition subject to which such Option is then exercisable is not then satisfied, and thereafter the Option shall lapse and cease to be exercisable. 

 

	11.4	All Options shall immediately lapse and cease to be exercisable upon the commencement of a winding-up of the Company. 

  

	12	TAKE-OVER 

  

	12.1	Subject to rule 8.1 and notwithstanding rule 8.2, if, as a result of either: 

  

	 	12.1.1	a general offer to acquire the whole of the Ordinary Share Capital which is made on a condition such that if it is satisfied the person making the offer will have control of the Company; or 

  
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	 	12.1.2	a general offer to acquire all the shares in the Company of the same class as the Shares 

 the
Company shall come under the control of another person or persons, the Optionholder shall, notwithstanding that any performance-related condition or other objective criterion subject to which such Option may be then exercisable is not then
satisfied, be entitled to exercise his Option within the period of 6 months of the date when the person making the offer has obtained control of the Company and any condition subject to which the offer is made has been satisfied or waived and to the
extent that the Option is not then exercised it shall upon the expiration of that period lapse and cease to be exercisable. 
  

	12.2	Subject to rule 8.1 and notwithstanding rule 8.2, if at any time before an Option has lapsed any person becomes entitled or bound to acquire shares in the Company under sections 428 to 430F (inclusive) of the Companies
Act 1985 the Optionholder shall. notwithstanding that any performance-related condition subject to which such Option may be then exercisable is not then satisfied, be entitled to exercise his Option at any time when that person remains so entitled
or bound and to the extent that the Option is not then exercised it shall upon the expiration of that period lapse and cease to be exercisable. 

  

	12.3	For the purposes of this rule 12 a person shall be deemed to have control of a company if he and others acting in concert with him have together obtained control of it. 

 

	12.4	If a company has obtained control of the Company (as mentioned in Rule 12.1) or has become bound or entitled (as mentioned in Rule 12.2), an Optionholder may, at any time during the period of 6 months by agreement with
the Acquiring Company, release to the Acquiring Company his Options in consideration of the grant to him of New Options over New Shares provided that:- 

  

	 	12.4.1	any such New Option shall confer a right to acquire such number of New Shares as have a total Market Value immediately after the grant equal to the total Market Value of the Shares subject to the Option immediately
before the release; 

  
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	 	12.4.2	the total amount payable by an Optionholder under any such New Option shall equal the total amount that would have been payable for the acquisition of all the Shares subject to the Option immediately before the release;

  

	 	12.4.3	Any such New Option shall otherwise be exercisable in the same manner as the corresponding Option released and subject to the Rules of the Scheme as they had effect immediately before the release except that, with
effect from a release pursuant to this paragraph 12.4, references in these Rules to “the Company” and to “Shares” shall in relation to a New Option be construed respectively as references to the Acquiring Company (or, as the case
may be, any other company in respect of whose shares the New Option is granted) and to New Shares; 

  

	 	12.4.4	A New Option shall, for all other purposes of the Plan, be treated as having been granted at the same time as the corresponding Option; and, as soon as practicable after the grant of a New Option, the Acquiring Company
shall issue to the Optionholder an Option Certificate in relation to such New Option referring to this Plan and setting out the name of the Employee, the number and denomination of New Shares comprised in the New Option, the date on which the New
Option shall be deemed to be granted, the price at which the New Shares may be acquired under the New Option and the period during which the New Option may be exercised and shall be otherwise in such form (not inconsistent with the provisions of the
Plan) as the Directors may from time to time determine; and 

  

	 	12.4.5	In any case where agreement is reached with the Acquiring Company for the release of Options in consideration of the grant to the Optionholder of New Options over New Shares, the Optionholder shall not be entitled to
exercise his Options pursuant to Rule 12.1 or 12.2. 

  
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	13	VARIATION OF SHARE CAPITAL 

  

	13.1	In the event of any alteration of the Ordinary Share Capital by way of capitalisation or rights issue, or sub-division, consolidation or reduction or any other variation in the share capital of the Company, the Company
may make such adjustment as it considers appropriate: 

  

	 	13.1.1	to the aggregate number or amount of Shares subject to any Option, and/or 

  

	 	13.1.2	to the Exercise Price payable for each Share under any such Option, and/or 

  

	 	13.1.3	where an Option has been exercised but no Shares have been allotted in accordance with rule 9.2, to the number of Shares which may be so allotted and the Exercise Price payable for each such Share 

PROVIDED THAT: 
  

	 	13.1.3.1	except in the case of a capitalisation issue, any such adjustment is confirmed in writing by the Auditors to be in their opinion fair and reasonable; and 

 

	 	13.1.3.2	except insofar as the Directors (on behalf of the Company) agree to capitalise the Company’s reserves and apply the same at the time of exercise of the Option in paying up the difference between the Exercise Price
and the nominal value of the Shares, the Exercise Price in relation to any Option is not reduced below the nominal value of a Share; and 

  

	 	13.1.3.3	any such adjustment which is to be made to the terms of an Option granted by a person other than the Company shall not have effect unless it is approved by such person. 

 

	13.2	As soon as reasonably practicable after any such adjustment has effect in relation to any Option the relevant Company of the Option shall give notice in writing to the Optionholder. 

  
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	14	LEGAL AND TAX OBLIGATIONS 

  

	14.1	The exercise of Options (and/or the allotment of Shares) will be subject to such additional conditions and procedures as the Company may determine are necessary or desirable for the time being in order to comply with or
take into account any legal or taxation obligations of, or implications for, a company of such exercise. In particular, the Company may require an Optionholder to enter into a voluntary agreement with it or another company to assume all or any part
of any employer’s national insurance liability arising on the exercise of an Option or to make a joint election with it such that the Optionholder is legally liable for all or part of the employer’s national insurance liability. For the
avoidance of doubt, and without limiting any of the foregoing, where a Group Company is obliged to account for any Option Tax Liability (in any jurisdiction) for which the person in question is liable by virtue of exercising the option the exercise
of the Option may be subject to a requirement that the person exercising it has either:- 

  

	 	14.1.1	made a payment to any Group Company of an amount equal to the Option Tax Liability; or 

  

	 	14.1.2	entered into arrangements with that or another Group Company to secure that such a payment is made (whether by authorising that Group Company to procure the sale of some or all of the Shares on his behalf and
authorising the payment to the Group Company of the relevant amount out of the proceeds of sale or otherwise). 

  

	14.2	Where the Company’s Shares are listed on the Stock Exchange or traded on the Alternative Investment Market of the Stock Exchange, then no Option may be exercised in contravention of the terms of such securities
transactions rules of the Stock Exchange and any code applicable to the directors and employees of the Group relating to securities transactions as may from time to time be in force. 

 

	15	ALTERATION OF PLAN 

  

	15.1	The Directors may at any time alter or add to any of the provisions of this Plan in any respect PROVIDED THAT: no amendments may detrimentally affect an Optionholder as regards an Option granted prior to the amendment
being made. 

  

	15.2	As soon as reasonably practicable after making any alteration or addition under this rule 15, the Directors shall give notice in writing thereof to any Optionholder affected. 

  
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	16	SERVICE OF DOCUMENTS 

  

	16.1	Except as otherwise provided in this Plan, any notice or document to be given by, or on behalf of, the Company to any person in accordance or in connection with this Plan shall be duly given: 

 

	 	16.1.1	if he is a director or employee of any member of the Group or any Associated Company by delivering it to him at his place of work; or 

 

	 	16.1.2	by sending it through the post in a pre-paid envelope to the address last known to the Company to be his address and, if so sent, it shall be deemed to have been duly given on the date of posting; or 

 

	 	16.1.3	if he holds office or employment with any member of the Group or any Associated Company, by sending a facsimile transmission or any other electronic communication to a current facsimile or electronic communication
number addressed to him at his place of work or his address last known to the Company and if so sent it shall be deemed to have been duly given at the time of transmission. 

 

	16.2	Any notice or document so sent to an Eligible Person and/or Optionholder shall be deemed to have been duly given notwithstanding that such Optionholder is then deceased (and whether or not the Company has notice of his
death) except where his Personal Representatives have established their title to the satisfaction of the Company and supplied to the Company an address to which documents are to be sent. 

 

	16.3	Any notice in writing or document to be submitted or given to the Directors, the Committee, the Company in accordance or in connection with this Plan may be delivered, sent by post, telex, or facsimile transmission but
shall not in any event be duly given unless it is actually received by the secretary of the Company or such other individual as may from time to time be nominated by the Directors and whose name and address is notified to Optionholders.

  
 19 

	17	MISCELLANEOUS 

  

	17.1	The Company shall at all times keep available sufficient authorised but unissued Shares to satisfy the exercise in full of all Options for the time being remaining capable of being exercised under this Plan.

  

	17.2	Subject to Rule 15.1 the Directors or the Committee may from time to time make and vary such rules and regulations not inconsistent herewith and establish such procedures for the administration and implementation of
this Plan as they think fit and in the event of any dispute or disagreement as to the interpretation of this Plan or of any such rules, regulations or procedures or as to any question or right arising from or related to this Plan, the decision of
the Directors or the Committee shall (except as regards any matter required to be determined by the Auditors hereunder) be final and binding upon all persons. 

  

	17.3	In any matter in which they are required to act hereunder, the Auditors shall be deemed to be acting as experts and not as arbitrators and the Arbitration Acts 1950-1996 shall not apply hereto. 

 

	17.4	Optionholders shall be entitled to receive copies of all accounts circulars and notices (other than proxy or voting forms) sent to holders of Shares but shall have no right to attend general meetings of the Company.

  

	17.5	The costs of the administration and implementation of this Plan shall be borne by the Company. 

  
 20 

 SCHEDULE 1 

THE LIPOXEN PLC UNAPPROVED SHARE OPTION PLAN 

OPTION CERTIFICATE 
 Name of Optionholder:
Address of Optionholder: 
 Date of Grant: 
 Maximum Number of
Shares: 
 Exercise Price: 
 LIPOXEN PLC HEREBY GRANTS to the
Optionholder named above an Option to subscribe for the above number of Shares in the Company at the above Exercise Price. This Option is exercisable subject to and in accordance with the rules of The LIPOXEN PLC Unapproved Share Option Plan as they
are amended from time to time. 
 Exercise of the Option may also subject to the performance-related condition(s) of exercise set out in the Appendix to
this Option Certificate. 
 The Option is not transferable but may be exercised by your personal representatives in the event of your death. 

An Optionholder, whether or not a director of any company, shall not be entitled to exercise an Option at any time when to do so would contravene the
provisions of the Company’s code governing share dealings by directors and employees. 

  
 21 

 EXECUTED AS A DEED by 

LIPOXEN PLC 
 acting by: 

 

							
	Secretary/Director	  	  
	  		  	
				
	Director	  	  
	  	  
	  	  

 I HEREBY AGREE to accept the grant of this Option and agree and undertake: 

 

	(1)	to be bound by the terms and conditions set out in the rules of The LIPOXEN PLC Unapproved Share Option Plan and any performance related condition(s) of exercise which may be set out in the Appendix to this Option
Certificate; 

  

	(2)	that to the extent any Option Tax Liability (as defined in the Plan Rules) has not been paid within 21 days from receipt of notice from the Company, my employing company is authorised to make deductions from subsequent
salary payments and to apply the amounts so deducted in reimbursing the person which has accounted for such liability; 

  

	(3)	to indemnify the Company and each company in the Group and each Associated Company in respect of any Option Tax Liability and to pay such Option Tax Liability within 21 days of receipt of notice from the Company of the
amount of tax payable arising from the exercise of the Option. 

 SIGNED but not delivered until the date hereof 

AS A DEED by                      

                    in the presence of: 

 

									
	Witness signature:	  	  
	  		 		  	
					
	Witness name (print):	  	  
	  		 		  	
					
	Address:	  	  
	  		 		  	
					
	Occupation:	  		  		 		  	

  
 22 

 THE LIPOXEN PLC UNAPPROVED SHARE OPTION PLAN 

NOTICE OF EXERCISE OF OPTION 
 To: Company
Secretary, Lipoxen PLC (print registered address) 
 1
                     
 I hereby exercise the Option
referred to overleaf in respect of all/                      * of the shares over which the Option may be exercised, and request the allotment or
transfer to me of those shares in accordance with the rules of the Plan and the Memorandum and Articles of Association of the Company. 
 I enclose a cheque
made payable to Lipoxen PLC in the sum of £         being the aggregate Exercise Price of such shares. 
 Name
(block letters) 
 Address 
 Signature 

 

			
	Date	 	  

 NOTES: 
  

	1	This form must be accompanied by payment of the Exercise Price for the shares in respect of which the Option is exercised. 

  

	2	Where the Option is exercised by personal representatives, an office copy of the Probate or Letters of Administration should accompany the form. 

  
 23 

	3	The Plan has not been approved by HM Revenue and Customs. There is currently no charge to income tax on the receipt of a right to acquire shares under such a plan. Under current tax law a charge to income or
national insurance tax and employer’s national insurance will arise on the exercise of the Option calculated by reference to the difference between the market value of the shares at the date of exercise and the price paid for them arising on
the exercise of the Option. The Company may require you to pay all or part of its national insurance at its discretion and which is directly attributable to the exercise of the Option either under a voluntary agreement or through a joint election in
either case made with you. 

  

	4	IMPORTANT: The Company does not undertake to advise you on the tax consequences of exercising your Option. If you are unsure of the tax liabilities which may arise, you should take appropriate professional advice before
exercising your Option. 

  

	5	An Optionholder (whether or not a director) shall not be entitled to exercise an Option at any time when to do so would contravene the provisions of the Company’s code governing share dealings by directors and
employees. 

  
 24EX-10.6

 Exhibit 10.06 

XENETIC BIOSCIENCES PLC 

2007 SHARE OPTION SCHEME 

AND US ADDENDUM 
 (AS
ESTABLISHED IN 2007 AND BY RESOLUTION OF 
 SHAREHOLDERS IN 2010 AND AWARDED BY BOARD 

RESOLUTION IN 2012) 

 XENETIC BIOSCIENCES PLC 

2007 SHARE OPTION SCHEME 

THE RULES 
  

	1	These rules (the “Rules”) together with the model form of option agreement attached hereto and marked by the Chairman of the Company for the purposes of identification (“the Agreement”)
(including the Conditions) and Xenetic Biosciences plc US Share Option Addendum to the Rules constitute the Xenetic Biosciences plc 2007 Share Option Scheme (“the Scheme”). The name of the Scheme was changed by board resolution on
[            ] 2012. 

  

	2	Words and expressions defined in the Agreement have the same meaning herein and the following words and expressions shall (except where the context otherwise requires) have the following meanings in these Rules:

 “Announcement Date” 

the date on which the annual or half-year financial results of the Company are announced; 

 

	3	The Scheme was adopted by Lipoxen PLC (registered number 3213174) on 9 August 2007 for the grant of options to: 

  

	3.1	Eligible Employees under the EMI Code; 

  

	3.2	Eligible Employees otherwise than under the EMI Code 

 in each case substantially in accordance
with the Agreement. 
  

	4	Subject to the limitations and conditions of the Scheme and unless prohibited by law, the Board may, in its absolute discretion within a period of 42 days immediately following an Announcement Date approve the grant
without consideration of Options to any number of Eligible Employees provided that in any case: 

  

	4.1	an Option may also be granted within a period of: 

  

	 	4.1.1	42 days after the adoption of the Scheme; or 

  

	 	4.1.2	90 days after the person to whom it is granted became an Eligible Employee 

  

	4.2	an Option may be granted after the expiry of the said period of 42 days in circumstances determined by the Board to be exceptional; and 

 

	4.3	an agreement for the grant of Options shall be executed by the Company and the Option Holder as soon as reasonably practicable and subject thereto, such execution may take place after the expiry of the said 42 day
period. 

  

	5	The Agreement may be amended from time to time in its model form by the Board or specifically in relation to any grant of an Option pursuant to the Scheme. 

 

	6	The Scheme shall be administered by the Board subject, in relation to each specific Option, to the terms applicable to that Option. The Board’s decision on any matter concerning the Scheme or the interpretation of
these Rules shall be final and binding. 

  

	7	No Eligible Employee shall be entitled as of right to the grant of an Option under the Scheme. 

  

	8	No Option may be granted at an Exercise Price that is less than the higher of: 

  

	8.1	the nominal value of a Share; and 

  

	8.2	the Market Value of a Share on the Date of Grant. 

  
 1 

	9	Options granted under the EMI Code shall only be granted to an Eligible Employee employed by a member of the Group which, save in the case of the Company, is also a qualifying subsidiary (as defined in paragraph 11 of
Schedule 5). 

  

	10	The Board may from time to time make amendments to the Scheme provided that any amendment in connection with any subsisting Option may only be made pursuant to Condition 19. 

 

	11	The Company in general meeting, or the Board may at any time resolve to terminate the Scheme in which event no further Options shall be granted but such termination shall not in any way affect any subsisting Options
under the Scheme granted before the date of termination. 

  

	12	No Option may be granted under the Scheme after the date falling on the tenth anniversary of the date of adoption of the Scheme. 

  

	13	The cost of establishing and operating the Scheme shall be borne by the Company and its Subsidiaries in such proportions as the Board shall determine. 

  
 2 

 XENETIC BIOSCIENCES PLC 

US SHARE OPTION ADDENDUM TO 

2007 SHARE OPTION SCHEME RULES 

Approved by Board resolution on: 8 June 2010 

Approved by shareholder resolution on: 30 June 2010 
  

	1	ESTABLISHMENT AND PURPOSE 

  

	1.1	Pursuant to paragraph 5 of the Rules, this Xenetic Biosciences plc US Share Option Addendum (the “US Addendum”) is established effective as of the Effective Date. 

 

	1.2	The purpose of the US Addendum is to allow the Company to issue Options to purchase Shares to Eligible Employees of Xenetic Biosciences plc (the “Company”) and its Subsidiaries that may, to the extent
permitted or desirable, qualify as “incentive stock options” within the meaning of Section 422 of the Code in addition to qualifying as an EMI Option. 

 

	1.3	The US Addendum shall form part of the Scheme and shall not be a separate and independent plan. The terms and conditions of the Scheme apply to Options granted under the US Addendum except that where the Rules and the
US Addendum conflict AND PROVIDED THAT such provision in the Rules is not required to satisfy the provisions of the EMI Code, the rules of the US Addendum will take precedence. Any Rules, terms or conditions specific to Options issued pursuant to
the US Addendum are as set forth in the US Addendum. 

  

	1.4	Defined terms that are set forth in the Rules and the Agreement and used but not expressly defined in the US Addendum shall have the same meaning in the US Addendum as that set forth in the Scheme. 

 

	2	DEFINITIONS 

 “Code” 

means the U.S. Internal Revenue Code of 1986, as amended, as well as any applicable regulations and guidance thereunder. 

“Effective Date” 

means the earlier of (i) the date that this US Addendum is first approved by the Company’s shareholders, or (ii) the date this
US Addendum is adopted by the Board. 
 “Fair Market Value” 

means, as of any date, the value of the [Common Stock/Shares] determined by the Board in compliance with Section 409A of the Code or, in
the case of an Incentive Stock Option, in compliance with Section 422 of the Code. 
 “Incentive Stock Option” 

means an Option that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code. 

“Nonstatutory Stock Option” 

means an Option that does not qualify as an Incentive Stock Option. 

“Securities Act” 

means the U.S. Securities Act of 1933, as amended. 

  
 3 

 “Ten Percent Stockholder” 

means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) Shares possessing more than ten percent (10%) of
the total combined voting power of all classes of shares of the Company or any “parent corporation” or “subsidiary corporation” of the Company as such terms are defined in Section 424 of the Code. 

“U.S.” 
 means
the United States of America. 
  

	3	Incentive Stock Option Limit. Notwithstanding anything to the contrary in the Scheme, subject to the provisions of Condition 9 of the Scheme relating to reorganizations of capital structure, the aggregate
maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options shall be 4,000,000 ordinary shares of the Company. 

  

	4	ELIGIBILITY 

  

	4.1	General Eligibility for Options. Incentive Stock Options may be granted only to Eligible Employees that are employees of the Company or a “parent corporation” or “subsidiary corporation”
thereof (as such terms are defined in Sections 424(e) and (f) of the Code) as of the date of grant. Options other than Incentive Stock Options may be granted to Eligible Employees; provided, however, Nonstatutory Stock Options may not be
granted to Eligible Employees who are providing services only to any “parent” of the Company, as such term is defined in Rule 405 promulgated under the Securities Act, unless the stock underlying such Option is treated as “service
recipient stock” under Section 409A of the Code or unless such Option complies with the distribution requirements of Section 409A of the Code. 

  

	4.2	Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Shares on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant. 

  

	5	Option Terms. All Options issued pursuant to the terms of the US Addendum shall be separately designated Incentive Stock Options or Nonstatutory Stock Options (whether or not they are also granted as EMI Options)
at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for Shares purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, then the
Option shall be a Nonstatutory Stock Option. The provisions of separate Options need not be identical; provided, however, that each Option certificate or other agreement evidencing such award shall conform to (through incorporation of
provisions of this Section 5 of the US Addendum by reference in the applicable Option Agreement or otherwise) the substance of each of the following provisions: 

 

	5.1	Exercise Price. Subject to the provisions of Section 4.2 of this US Addendum regarding Incentive Stock Options granted to Ten Percent Stockholders, the Exercise Price of each Option shall be not less than
one hundred percent (100%) of the Fair Market Value of the Shares subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option may be granted with an Exercise Price lower than one hundred percent
(100%) of the Fair Market Value of the Shares subject to the Option if such Option is granted pursuant to Condition 8.4 of the Scheme in connection with an assumption of or substitution for another option or other stock right by an Acquiring
Company and in a manner consistent with the provisions of Sections 409A or 424(a) of the Code, as applicable. 

  

	5.2	Restrictions on Transfer. An Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Option Holder only by the Option Holder.
Notwithstanding the foregoing, an Option may be transferred pursuant to a domestic relations order; provided, however, that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of
such transfer. 

  

	5.3	 Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Shares with
respect to which Incentive Stock 

  
 4 

	 	
Options are exercisable for the first time by any Option Holder during any calendar year (under any incentive stock option plan of the Company and any parent corporation or subsidiary corporation
of the Company within the meaning of Section 424 of the Code) exceeds US $100,000, the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of the applicable Option Agreement. 

  

	5.4	Manner of Payment of Exercise Price. The aggregate Exercise Price may be paid by any of the methods of payment provided by the Scheme as determined by the Board in its absolute discretion, subject to any
limitations in the Option Agreement and applicable law, and subject to the following additional conditions, as applicable: 

  

	 	5.4.1	With respect to any cashless exercise facility allowed under Condition 10.4 of the Scheme, a “net exercise” arrangement (pursuant to which the Company would reduce the number of shares of Common Stock issuable
upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price) is not available for Incentive Stock Options. 

 

	 	5.4.2	Any loan, deferred payment scheme or similar arrangement with the Option Holder pursuant to Condition 10.8 shall provide that interest shall compound at least annually and shall be charged at the minimum rate of
interest necessary to avoid the imputation of interest income to the Company and compensation income to the Option Holder under any applicable provisions of the Code. 

 

	6	Term. No Options may be granted pursuant to this US Addendum after the day prior to the 10th anniversary of the Effective Date. No Option shall in any event be
exercisable on or after the 10th anniversary of the date of its grant under any circumstances whatsoever and every Option shall, unless an earlier lapse occurs, lapse on the 10th anniversary of the date of its grant. 

  
 5 

 INDEX 

(for reference purposes only) 
  

							
	 SHARE OPTION SCHEME
	  	 	1	  
	 MODEL FORM OF AGREEMENT
	  	 	7	  
	 SCHEDULE 1 - The Conditions
	  	 	10	  
	    1	    	 DEFINITIONS AND INTERPRETATION
	  	 	10	  
	    2	    	 VESTING
	  	 	14	  
	    3	    	 PERFORMANCE AND NON-TRANSFERABILITY CONDITIONS
	  	 	14	  
	    4	    	 OPTION HOLDER’S WARRANTY AND UNDERTAKING
	  	 	14	  
	    5	    	 PERSONAL LIMITS
	  	 	14	  
	    6	    	 SCHEME LIMITS
	  	 	15	  
	    7	    	 EXERCISE AND LAPSE OF OPTION
	  	 	15	  
	    8	    	 TAKEOVERS AND LIQUIDATIONS
	  	 	17	  
	    9	    	 VARIATION OF SHARE CAPITAL
	  	 	18	  
	    10	    	 MANNER OF EXERCISE OF OPTION
	  	 	19	  
	    11	    	 TAXATION
	  	 	20	  
	    12	    	 EMI CODE COMPLIANCE
	  	 	20	  
	    13	    	 COSTS
	  	 	21	  
	    14	    	 ASSIGNMENT
	  	 	21	  
	    15	    	 TIME FOR PERFORMANCE
	  	 	21	  
	    16	    	 NOTICES
	  	 	22	  
	    17	    	 GOVERNING LAW
	  	 	22	  
	    18	    	 COUNTERPARTS
	  	 	22	  
	    19	    	 VARIATIONS
	  	 	22	  
	 SCHEDULE 2 - Performance Conditions
	  	 	23	  
	 SCHEDULE 3 - Exercise Notice [US Incentive Stock Option Form]
	  	 	24	  

  
 6 

 MODEL FORM OF AGREEMENT 

FOR XENETIC BIOSCIENCES PLC 

2007 SHARE OPTION SCHEME 

[FOR GRANT OF US INCENTIVE STOCK OPTION] 

THIS AGREEMENT is made
                                         20[***]

 BETWEEN: 
  

	(1)	XENETIC BIOSCIENCES PLC (registered number 3213174) whose registered office is at [***] (“the Company”); and 

 

	(2)	[***] of [***] (“the Option Holder”). 

  

	WHEREAS:	

 The Company has agreed to grant [an/two] option(s) to the Option Holder to acquire the Shares (as hereinafter
defined) under the Xenetic Biosciences plc 2007 Share Option Scheme adopted by a resolution of the board of directors of the Company on 9 August 2007 on the terms and conditions set out below and, save as otherwise specified below, in Schedule
1 (“the Conditions”) [and the US Addendum]. [The Option(s) [is/are] hereby granted for commercial reasons in order to [recruit/retain] the Option Holder as a employee of the relevant Group Member and not as part of a scheme or
arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax.] 
 IT IS HEREBY AGREED: 

 

	1	Words and expressions used in this Agreement have the meanings ascribed thereto in Condition 1 of Schedule 1 [and the US Addendum]. 

  

	2	The Schedules to this Agreement form part of the Agreement and references to any Schedules (unless the context otherwise requires) are references to Schedules to this Agreement. 

 

	3	OPTION GRANT 

  

	3.1	The Company hereby grants to the Option Holder: 

  

	 	3.1.1	[an/[number/[two]]] option[s] over [***] Shares [each] under the provisions of the EMI Code [which [is/are] also intended to be [an] Incentive Stock Option[s]] over [    ] Shares at the
Exercise Price of [    ] per Share subject to the Conditions and the US Addendum [and such options shall be designated as the “First Option” and the “Second Option” respectively] ; and

  

	 	3.1.2	[an/[number]] option[s] over [***] Shares [each] otherwise than under the EMI Code (“the Unapproved Option[s]”) 

in each case] at the Exercise Price of [***] per Share subject to the Conditions. 

 

	4	SPECIAL CONDITIONS 

  

	4.1	The Option[s] may be exercised [at any time on or after [                    ]]/[and shall vest as follows, namely:

  

	 	4.1.1	the First Option shall vest on the expiry of eighteen (18) months after the Date of Grant (and may be exercised subject to the Conditions at any time after it vests); and 

 

	 	4.1.2	the Second Option shall vest on the expiry of thirty six (36) months after the Date of Grant (and may be exercised subject to the Conditions at any time after it vests); 

  
 7 

	4.2	[Specify any other vesting conditions that are to apply if the choices in clause 4.1 are not adopted.] 

  

	4.3	[“Tax Liability” shall not include Employer’s NIC.] 

  

	4.4	[Condition 12.1, 12.2, the opening paragraph of Condition 12.3 and the provisions referred to in Conditions 12.3.1 to 12.3.8 (other than Condition 12.3.7) shall not apply and Condition 12.3.7 shall apply to [this
Agreement]/[the Unapproved Option[s].] 

  

	4.5	[Save as specified in these Special Conditions or the context otherwise requires, all references to “Option” shall include references to the EMI Option and the Unapproved Option except in Conditions 5 and 6.2
where all references to “Option” shall be construed as references to the EMI Option.] 

  

	4.6	[The Option(s) [is/are] [not] subject to any Performance Conditions.] 

  

	4.7	[Conditions [                    ] shall not apply to the Option.] 

 

	4.8	[Conditions [                    ] shall apply to the Option as varied as
follows:[            ].] 

  

	4.9	[To the extent that the aggregate Fair Market Value (determined at the time of grant) of the Shares, plus all other Incentive Stock Options held by Option Holder, are exercisable for the first time by Option Holder
during any calendar year (under all plans of the Company and the Group) exceeds U.S. one hundred thousand dollars ($100,000), such option(s) or portions thereof that exceed such limit (according to the order in which they were granted) shall be
treated, for US tax purposes, as Nonstatutory Stock Options.] 

  

	4.10	[In order to obtain the U.S. federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the date of grant of the Option and ending on the day three
(3) months before the date of exercise of the Option, Option Holder must be an employee of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and
(f) of the Code), except in the event of Option Holder’s death or permanent and total disability, as defined in Section 22(e)(3) of the Code. The Company has provided for extended exercisability of the Option under certain
circumstances for the benefit of the Option Holder but cannot guarantee that the Option will necessarily be treated as an Incentive Stock Option if Option Holder continues to provide services to the Company or the Group as a consultant or
[non-executive] director after the Option Holder’s employment terminates or if Option Holder otherwise exercises the Option more than three (3) months after the date Option Holder’s employment with the Company or the Group
terminates.].] 

 THIS DEED has been duly executed by the parties or their duly authorised representatives 

 

			
	EXECUTED (but not delivered until the date	 	)
	hereof) as a deed by XENETIC BIOSCIENCES	 	)
	PLC acting by:	 	)

  

	
	  

	Director
	
	  

	Director/Secretary

  
 8 

							
	EXECUTED (but not delivered until the date	 	)	 		 	
	hereof) as a deed by the said [***]	 	)	 		 	
	[***] In the presence of:	 		 		 	  

		 		 		 	[Signature of party]
				
	Witness	 		 		 	  

				
	Name:	 		 		 	  

				
	Address	 		 		 	  

				
	Occupation	 		 		 	  

  
 9 

 SCHEDULE 1 

The Conditions 
  

	1	DEFINITIONS AND INTERPRETATION 

  

	1.1	The following words and expressions shall (except where the context otherwise requires) have the following meanings in the Agreement of which this Schedule 1 forms part and words and expressions defined in the Agreement
shall have the same meaning herein: 

 “Act” 

the Companies Act 1985; 

“AIM” 
 the
market provided by the London Stock Exchange for transactions in securities admitted to trading on that market and known as “AIM Securities”; 

“Appropriate Period” 
  

	 	(a)	if the circumstances in Condition 8.1 apply the period of 40 days beginning with the date on which the person making the offer has obtained Control of the Company and any condition subject to which the offer is made has
been satisfied; 

  

	 	(b)	if the circumstances in Condition 8.2 apply the period of 40 days beginning with the date on which the Reconstruction Scheme is sanctioned by the Court; 

 

	 	(c)	if the circumstances in Condition 8.3 apply the period during which the person remains bound or entitled to acquire any shares in the Company to the extent that it does not exceed 40 days after the date on which there
was a change of Control of the Company which is connected with the circumstances mentioned in Condition 8.3; 

“Articles” 
 the
Articles of Association of the Company as amended from time to time; 
 “Auditors” 

the auditors for the time being of the Company appointed pursuant to Section 384 of the Act; 

“Board” 
 the
Board of directors for the time being of the Company or a duly appointed committee thereof in each case at which a quorum is present; 

“Control” 
 the
same meaning as in Section 840 of the Taxes Act and the expression “controlled” shall be construed accordingly; 

“Date of Grant” 

the date of the Agreement; 

“Dealing Day” 
 a
day on which the London Stock Exchange is open for business; 
 “Disqualifying Event” 

any event within Sections 534 to 536 ITEPA as supplemented by Sections 537 to 539 ITEPA; 

  
 10 

 “Eligible Employee” 

an employee of any member of the Group who at all material times satisfies the requirements of paragraphs 26 and 27 of Schedule 5 and the
“no material interest” requirement of paragraph 28 of Schedule 5; 
 “EMI Code” 

has the same meaning as in Section 527(3) of ITEPA; 

“EMI Option” 

any option over Shares that is a qualifying option for the purposes of the EMI Code; 

“Employees’ Share Scheme” 

an employees’ share scheme (as defined in Section 743 of the Act) constituted formally as such or consisting of one or more agreement
granting rights to acquire shares in the share capital of the Company, as appropriate, adopted or entered into by the Company or any Subsidiary; 

“Employer” 
 the
Group Member that is or at any relevant time was the employer in relation to the Option Holder; 
 “Employers’ NIC”

 secondary Class 1 contributions payable by virtue of Section 6(1)(b) of the Social Security Contributions and Benefits Act 1992 (as
amended from time to time) or any substitute thereof; 
 “Exercise Date” 

the date on which an Exercise Notice together with the payment (in cleared funds unless the Board otherwise determines) referred to in
Condition 10.3 in relation to an Option is received by the Company; 
 “Exercise Notice” 

the notice of exercise of an Option substantially in the form set out in Schedule 3; 

“Exercise Price” 

the price per Share stated in the Agreement; 

“Expected Retirement Date” 

the date on which an Eligible Employee is expected to retire in accordance with the terms of his contract of employment with the relevant Group
Member. 
 “Group” 

the Company and every company that is a 51% subsidiary (as defined in Section 838(1) Taxes Act) and “Group Member” or any
similar expression shall be construed accordingly; 
 “HMRC” 

Her Majesty’s Revenue and Customs; 

“Investment Exchange” 

the UK Listing Authority, the London Stock Exchange, the New York Stock Exchange, the National Association of Securities Dealers Automated
Quotation, AIM and any other recognised investment exchange (as defined in the Financial Services and Markets Act 2000) or recognised stock exchange (as defined in Section 841(1) of the Taxes Act); 

  
 11 

 “ITEPA” 

the Income Tax (Earnings and Pensions) Act 2003; 

“London Stock Exchange” 

the London Stock Exchange plc which trades as the “London Stock Exchange” or any successor thereof; 

“Market Value” 

in respect of any Share on any day means either: 
  

	 	(a)	(when on that day the shares of that class are admitted on the Official List and admitted to trading by the London Stock Exchange) the middle market quotation of such a Share as derived from the Daily Official List of
the London Stock Exchange for the Dealing Day immediately preceding that day; or 

  

	 	(b)	in all other cases the market value of such a Share as determined in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed for the purposes of this Agreement with Shares
Valuation, a division of HMRC; 

 “Maximum Overall Statutory Limit” 

such limit as may be permitted from time to time by paragraph 7(1) of Part 2 of Schedule 5; 

“Maximum Personal Limit” 

such limit as may be permitted from time to time by paragraphs 5 and 6 of Part 2 of Schedule 5; 

“NICs” 
 National
Insurance Contributions; 
 “Official List” 

the Official List of the UK Listing Authority; 

“Option” 
 a
right to acquire Shares granted under the Agreement and where the context so requires shall include New Options granted in consideration for the release of Old Options in accordance with Condition 8.4; 

“Performance Conditions” 

the conditions, if any, specified in Schedule 2; 

“Relevant Advisors” 

such advisors selected by the Board in its absolute discretion including, without limitation, or in any event in the absence of any such
selection, the Auditors in each case acting as experts and not as arbitrators; 
 “Schedule 5” 

Schedule 5 to ITEPA; 

  
 12 

 “Share” 

an ordinary share of 0.5 pence each in the capital of the Company which satisfies the conditions specified in paragraph 35 of Schedule 5 or any
share replacing the same following any adjustment made pursuant to Condition 9.1 or the application of Condition 9.1.3; 
 “Special
Conditions” 
 any conditions specified in Clause 4 of the Agreement; 

“Subsidiary” 
 a
subsidiary (as defined by Section 736 of the Act) for the time being of the Company; 
 “Subsisting Option” 

an Option to the extent that it has not been exercised, lapsed or cancelled; 

“Tax Liability” 

any liability of the Employer or any company which Controls or is a Group Member to account for any income tax, NICs or other tax (including
Employers’ NIC unless the Special Conditions specify otherwise) arising in connection with the grant, exercise or other dealing with or in relation to the Option(s) or otherwise in connection with the Shares; 

“Taxes Act” 
 the
Income and Corporation Taxes Act 1988; 
 “UK Listing Authority” 

the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and
Markets Act 2000 and in exercise of its function in respect of admissions to the Official List; 
 “Vest” or
“Vesting” 
 in relation to any Option when any conditions or terms as to Vesting specified in the Special Conditions are
satisfied and the expression “Vested” shall be construed accordingly subject to Condition 2.2. 
  

	1.2	Any reference in the Agreement to any provision of any Act of Parliament or any subordinate legislation made pursuant to any Act of Parliament shall be deemed to be a reference to such Act of Parliament or subordinate
legislation as amended modified or re-enacted (whether before or after the date hereof). 

  

	1.3	In the Agreement words incorporating the masculine gender only include the feminine and neuter genders and words incorporating the singular number only include the plural and vice versa. 

 

	1.4	Clause, paragraph or Condition headings are for ease of reference only and do not affect the construction or interpretation of the Agreement. 

 

	1.5	References to writing shall include typewriting printing lithography photography and facsimile messages and other modes of reproducing words in a legible and non-transitory form. 

 

	1.6	The Board’s decision on any matter with regard to the Agreement shall be final. 

  

	1.7	References to any specific body shall, unless the Board determines otherwise, be deemed to include any body replacing or succeeding the same. 

  
 13 

	2	VESTING 

  

	2.1	The Special Conditions may specify any conditions or terms as to Vesting or that there shall be no conditions as to Vesting. 

  

	2.2	Where the Special Conditions do not specify any conditions as to Vesting or state that there are no conditions as to Vesting all references to “Vest”, “Vesting” and “Vested” and any
associated expression shall be disregarded in construing the Conditions. 

  

	3	PERFORMANCE AND NON-TRANSFERABILITY CONDITIONS 

  

	3.1	The exercise of the Option(s) is subject to the Performance Conditions if so specified in the Special Conditions and the Performance Conditions may be waived or amended if an event (including, without limitation, an
event within Condition 8) occurs which causes the Company to consider that such Performance Conditions could not fairly or reasonably be met, provided that any amended conditions shall not be more difficult to satisfy than the original Performance
Conditions were intended to be at the time of their imposition. 

  

	3.2	Each Option is personal to the Option Holder and may not be transferred, assigned, charged, pledged or otherwise disposed of or dealt with otherwise than in accordance with the Agreement. Any purported transfer,
assignment, charge, pledge or other disposal or dealing (other than the exercise of an Option in accordance with the Agreement) with an Option otherwise than in accordance with the Agreement shall cause the Option to lapse forthwith.

  

	4	OPTION HOLDER’S WARRANTY AND UNDERTAKING 

  

	4.1	The Option Holder hereby warrants that he satisfies the: 

  

	 	4.1.1	employment requirement and the requirement as to commitment of working time set out in paragraphs 26 and 27 of Schedule 5 respectively; and 

 

	 	4.1.2	“no material interest” requirement set out in paragraph 28 of Schedule 5; 

 and will
at all material times use all reasonable endeavours to continue to satisfy the said requirements. 
  

	4.2	The Option Holder hereby undertakes to give written notice to the Company forthwith upon becoming aware that he is or may be in breach of the warranty given in Condition 4.1. 

 

	5	PERSONAL LIMITS 

  

	5.1	The number of Shares in respect of which the Option(s) is/are granted to the Option Holder is limited, and the Option(s) shall take effect as an EMI Option(s) so and to the extent that the aggregate Market Value of the
Shares the Option Holder may acquire pursuant to such Option when added to the aggregate Market Value of Shares comprised in: 

  

	 	5.1.1	existing unexercised rights (which for the purposes of this Condition 5 shall not include cancelled Options or rights) previously granted to him under Schedule 5 by virtue of being an employee of any Group Member; and

  

	 	5.1.2	any other existing unexercised rights obtained by him under any other option scheme approved under Schedule 4 to ITEPA 

does not exceed or further exceed the Maximum Personal Limit (being £100,000 at the Date of Grant) provided that, where appropriate, in
relation to each Option granted to the Option Holder under this Agreement this Condition 5 shall apply (so as to scale down the number of Shares comprised in each Option, rounded to whole number of Shares as determined by the Board) to all such
Options on a pro rata basis. 
  

	5.2	The number of Shares deemed to be excluded from each Option by virtue of Condition 5.1 shall be deemed to be comprised in a separate option which shall be deemed to have been granted on the Date of Grant and shall have
effect as and on the same terms as an Unapproved Option and Condition 12.1, 12.2 the opening paragraph of Condition 12.3 and the provisions referred to in Conditions 12.3.1 to 12.3.8 (other than Condition 12.3.7) shall not apply and Condition 12.3.7
shall apply to the Unapproved Option. 

  
 14 

	6	SCHEME LIMITS 

  

	6.1	The number of Shares in respect of which the Option(s) is/are granted under the Agreement is limited and the Option(s) shall take effect so and to the extent that immediately following any such grant of the Option(s)
the aggregate of the number of Shares which remain to be issued on the exercise of the Option(s) and the number of Shares of the Company which remain to be issued pursuant to rights granted under any Employees’ Share Scheme will not exceed such
number of Shares as represents 15 per cent of the issued ordinary share capital of the Company immediately prior to the Date of Grant. 

  

	6.2	The number of Shares in respect of which the Option(s) is/are granted to the Option Holder is limited and the Option(s) shall take effect so and to the extent that immediately following such grant the aggregate Market
Value of the Shares that Option Holder may acquire pursuant to the Option when added to the aggregate Market Value of Shares comprised in every other Subsisting EMI Option granted on or before the Date of Grant shall not exceed or further exceed the
Maximum Overall Statutory Limit (being £3 million at the Date of Grant). 

  

	6.3	For the avoidance of doubt, where: 

  

	 	6.3.1	an Option or right lapses or has been renounced or cancelled, the number of Shares comprised in the Option or the subject of the right immediately before the same lapses or is renounced or cancelled shall be disregarded
for the purposes of this Condition 6; and 

  

	 	6.3.2	a right is granted pursuant to any provision similar to Condition 8.4, the number of Shares comprised in such right shall be disregarded for the purposes of Condition 6.1. 

 

	6.4	Where more than one Option or right granted on the same date causes the limits, or any of them in Conditions 6.1 or as appropriate 6.2 to be exceeded (the aggregate number of Shares (rounded up to the nearest whole
number) causing the said limit(s) to be exceeded being “the Excess”) then for determining which part of the Excess relates to each relevant Option or right, the Excess shall be divided pro rata among the Options and rights concerned
according to the number of Shares comprised in each Option or right such division to be rounded down to the nearest whole number of Shares in respect of each Option or right concerned. 

 

	7	EXERCISE AND LAPSE OF OPTION 

  

	7.1	Subject to this Condition 7 and Conditions 8 and 10 the Option(s) may be exercised at any time on or after the earliest date on which it becomes Vested, but if there are no conditions or terms as to Vesting, on or after
the date specified in the Special Conditions and if neither of the foregoing shall apply, on or after the third anniversary of the Date of Grant. 

  

	7.2	No Option shall in any event be exercisable on or after the tenth anniversary of its Date of Grant under any circumstances whatsoever and every Option shall, unless an earlier lapse occurs in accordance with the
Agreement, lapse on the tenth anniversary of the Date of Grant. 

  

	7.3	The right to exercise any and all of the Option(s) shall terminate immediately upon the Option Holder ceasing to be an Eligible Employee (except where Conditions 7.4 or 7.5 apply). 

 

	7.4	Where the Option Holder dies his personal representatives may within a period of 12 months after the date of death exercise any Option, whether or not Vested, if it is unexercised on the date of death.

  

	7.5	An Option shall cease to be exercisable upon the Option Holder ceasing to be an Eligible Employee except where he so ceases by reason of: 

 

	 	7.5.1	retirement on reaching the Expected Retirement Date; 

  
 15 

	 	7.5.2	injury or disability in each case, as a result of which the participant is certified as being unable to work; 

  

	 	7.5.3	redundancy within the meaning of the Employment Rights Act 1996; 

  

	 	7.5.4	the office or employment either being in a company which ceases to be a Subsidiary or relating to a business or part of a business which is transferred to a person who is not a Group Member; 

 

	 	7.5.5	any other circumstances determined in the absolute discretion of the Board within 30 days of the date on which he so ceases to be an Eligible Employee. 

In any such circumstances, the Option may be exercised at any time within 365 days from the date on which he so ceases to be an Eligible
Employee, to the extent it is a Vested Subsisting Option on or before the date the Option Holder ceases to be an Eligible Employee or is deemed to be vested pursuant the exercise of the Board’s discretion under Condition .7.5.5. 

 

	7.6	For the purposes of this Condition 7 above (but for no other purpose): 

  

	 	7.6.1	a participant shall not be regarded as having ceased to be an Eligible Employee by reason of: 

  

	 	(a)	his being or becoming employed by a company which is another Group Member; or 

  

	 	(b)	his ceasing to be employed full-time but continuing to be employed on a part-time basis; and 

  

	 	7.6.2	a participant shall be regarded as ceasing to be an Eligible Employee when he holds no employment with any Group Member 

  

	 	7.6.3	the certification referred to in Condition 7.5.2 shall be made by a suitably qualified medical practitioner but where there is a conflict between the opinions of two or more medical practitioners then termination of
employment shall be deemed not to be within the circumstances specified in Condition 7.5.2 and the Board shall be entitled to exercise its discretion to allow the exercise of the Option concerned pursuant to Condition 7.5.2. 

 

	7.7	Where a Disqualifying Event occurs, any Subsisting Option that is an EMI Option may be exercised in whole or in part with the prior written consent of the Board to the extent permitted by the Board in writing within 40
days of the relevant Disqualifying Event occurring and to the extent that the Option in question is not so exercised, it shall continue as an Unapproved Option subject to and in accordance with the terms of the Agreement 

 

	7.8	Where an Option is subject to Performance Conditions it shall not be exercisable, including by virtue of any event specified in Conditions 7.4, and 8 if so specified in the Performance Conditions, save where the Special
Conditions so specify otherwise, unless the Performance Conditions have been satisfied to the satisfaction of the Board. The Company shall notify in writing the Option Holder whose Option is subject to Performance Conditions when the Performance
Conditions have been satisfied and his Option has Vested. 

  

	7.9	Each Option shall lapse upon the earliest occurrence of any of the following events insofar as it has not been exercised: 

  

	 	7.9.1	the tenth anniversary of the Date of Grant; 

  

	 	7.9.2	the expiry of 12 months from the date of the Option Holder’s death; 

  

	 	7.9.3	upon the Option Holder ceasing to be an Eligible Employee except where Condition 7.5 applies; 

  

	 	7.9.4	on the expiry of the period of 365 days specified in Condition 7.5, where that Condition applies; 

  
 16 

	 	7.9.5	to the extent the Option has not Vested, upon the Option Holder ceasing to be an Eligible Employee where Condition 7.5 applies unless it is deemed to be vested pursuant the exercise of the Board’s discretion under
Condition .7.5.5; 

  

	 	7.9.6	the earliest date upon which the Option is expressed to lapse under Condition 8; 

  

	 	7.9.7	the date of an event specified in Condition 3.2; 

  

	 	7.9.8	the fortieth day after the date on which a bankruptcy order is made in respect of the Option Holder; and 

  

	 	7.9.9	the date on which a resolution is passed or an order is made by the Court, for the compulsory winding up of the Company. 

  

	8	TAKEOVERS AND LIQUIDATIONS 

  

	8.1	If any person obtains Control of the Company as a result of making an offer. 

  

	 	8.1.1	to acquire the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or 

 

	 	8.1.2	to acquire all the shares in the Company which are of the same class as the Shares 

 then
subject to the remaining provisions of this Condition 8 any Subsisting Option whether or not it has Vested may be exercised within the Appropriate Period and to the extent that it has not been exercised by the end of the Appropriate Period the
Option(s) shall lapse immediately upon the end of the Appropriate Period. 
  

	8.2	In the event that notice is given to the shareholders of the Company of a resolution to approve (subject to sanction by the Court) a compromise or arrangement proposed for the purposes of or in connection with a scheme
for the reconstruction of the Company or its amalgamation with any other company or companies pursuant to Section 425 of the Act (“the Reconstruction Scheme”) then subject to the remaining provisions of this Condition 8 the
Option Holder may exercise any Subsisting Option, whether or not it has Vested at any time during the Appropriate Period and to the extent that an Option has not been exercised by the end of the Appropriate Period it shall lapse immediately upon the
end of the Appropriate Period. 

  

	8.3	If any person becomes bound or entitled to acquire Shares in the Company under Sections 428 to 430F of the Act then subject to the remaining provisions of this Condition 8 any Subsisting Option, whether or not it
has Vested may be exercised at any time during the Appropriate Period and to the extent that it has not been exercised by the end of the Appropriate Period the Option shall lapse immediately upon the end of the Appropriate Period. 

 

	8.4	If as a result of the events specified in Conditions 8.1 or 8.2 a company has obtained Control of the Company or if a company has become bound or entitled as mentioned in Condition 8.3 and the Board determines that and
to the extent that this Condition 8.4 shall apply in respect of the Option (“Old Option”) and that other company (“the Acquiring Company”) or a company which has Control over the Acquiring Company agrees the Old
Option may within the Appropriate Period (or such longer period permitted under paragraph 42 of Schedule 5) applicable to the relevant Condition be released in consideration of the grant of a new Option (“New Option”) which
satisfies the following conditions: 

  

	 	8.4.1	it is over shares in the Acquiring Company or a company which has Control over the Acquiring Company and which satisfy the conditions specified in paragraph 35 of Schedule 5; 

 

	 	8.4.2	it is a right to acquire such number of such shares as has on acquisition of the New Option an aggregate Market Value equal to the aggregate Market Value of the Shares subject to the Old Option on its disposal;

  
 17 

	 	8.4.3	it has an exercise price per share such that the aggregate price payable on complete exercise equals the aggregate price which would have been payable on complete exercise of the Old Option; 

 

	 	8.4.4	it is otherwise identical in terms to the Old Option; and 

  

	 	8.4.5	to the extent applicable in relation to the New Option any other requirements of Part 6 of Schedule 5. 

The New Option shall for all other purposes of the Agreement be treated as having been acquired at the same time as the Old Option in
consideration of the release of which it is granted and where any New Option is granted pursuant to this Condition 8.4 Conditions 8, 9, and 10 and all definitions in Condition 1.1 as appropriate in those Conditions shall in relation to the New
Option be construed as if references to the Company and to the Shares were references to the company whose share capital includes shares over which the New Option has been granted and to the shares in that company but references to the Company or a
Group Member for the purpose of the definition of “Eligible Employee” shall continue to be construed as if they were references to Xenetic Biosciences plc. Where in accordance with this Condition 8.4 Old Options are released and New
Options granted the New Options shall not be exercisable in accordance with Conditions 8.1, 8.2 and 8.3 above by virtue of the event by reason of which the New Options were granted. 

 

	8.5	In the event that notice is given to the shareholders of the Company of a resolution to be proposed for the voluntary winding up of the Company the Option Holder may serve notice to exercise his Subsisting Option,
whether or not it has Vested at any time up to the passing of the resolution provided that any such notice to exercise shall only be effective if the resolution is passed. If such resolution is duly passed the Option shall, to the extent that it has
not been exercised, lapse. 

  

	8.6	For the purposes of this Condition 8 other than Condition 8.4 a person shall be deemed to have obtained Control of a Company if he and others acting in concert with him have together obtained Control of it.

  

	9	VARIATION OF SHARE CAPITAL 

  

	9.1	In the event of any variation in the share capital of the Company by way of capitalisation or rights issue or any consolidation sub-division or reduction of capital or otherwise by the Company the number of Shares
subject to any Option and the Exercise Price for each of those Shares may be adjusted by the Board subject (except in the case of a capitalisation) to written confirmation by the Relevant Advisors that in their opinion such adjustment is fair and
reasonable provided that: 

  

	 	9.1.1	Subject to Condition 9.2 the aggregate amount payable on the exercise of the Option in full is not increased; 

  

	 	9.1.2	following the adjustment the Shares continue to satisfy the conditions specified in paragraph 35 of Schedule 5; 

  

	 	9.1.3	in the event of any variation of share capital of the Company that has the effect that the Shares cease to exist in the form for the time being (“Original Shares”) and no adjustment is made pursuant to
this Condition 9.1 each Option shall be deemed to be: 

  

	 	(a)	over such shares that replace the Original Shares; and 

  

	 	(b)	over such number of the shares referred to in Condition (a) above that fairly represent the Original Shares; 

  

	 	(c)	at such Exercise Price as fairly represents the original Exercise Price, taking account of Condition 9.1.1; 

  

	 	9.1.4	notice of any adjustment made pursuant to this Condition 9.1 shall, where appropriate, be given to HMRC as soon as reasonably practicable. 

  
 18 

	9.2	Save as provided in this Condition 9.2, no adjustment under Condition 9 can have the effect of reducing the Exercise Price of a Share below its nominal value. Any adjustment made to the Exercise Price under Condition
9.1 that results in the Exercise Price of a Share being below its nominal value shall only be made if the Company is authorised to: 

  

	 	9.2.1	capitalise from reserves of the Company a sum equal to the aggregate of the amounts by which the nominal value of each Share comprised in each Subsisting Option exceeds the adjusted Exercise Price in respect of that
Share (“the deficit”); and 

  

	 	9.2.2	apply the amount referred to in Condition 9.2.1 in paying up each such Share to the extent of the deficit by way of capitalisation on the exercise of each relevant Subsisting Option and to make provision in respect of
such amount to enable the Board to give effect to the said capitalisation. 

  

	10	MANNER OF EXERCISE OF OPTION 

  

	10.1	The Option may not be exercised by the Option Holder at any time when the requirements of paragraph 28 of Schedule 5 cease to be met and subject to Condition 9 no Option may be exercised at any time when the shares
which may be thereby acquired are not Shares as defined in Condition 1.1. 

  

	10.2	No Option shall be exercisable save in accordance with the then current Model Code for Securities Transactions by Directors of Listed Companies issued by the UK Listing Authority to the extent that the same applies to
the Company or any of its officers and employees. 

  

	10.3	Subject to the provisions of Condition 7 and this Condition 10 an Option may be exercised in whole or in part but not unless the Board otherwise permits in respect of less than 10 per cent of the Shares the subject
of the Option unless such smaller percentage represents all the remaining Shares under the Option held by the Option Holder or (as the case may be) the Option Holder’s personal representatives giving an Exercise Notice to the Company, subject
to Condition 10.4, accompanied by the appropriate payment and shall be effective on the Exercise Date provided that wherever relevant the Performance Conditions shall first have been fulfilled to the satisfaction of the Board or otherwise waived by
the Board in its absolute discretion and written notice of such waiver has been given to the Option Holder. 

  

	10.4	The Board may in its absolute discretion offer the Option Holder the opportunity to adopt arrangements on such terms as it specifies in writing to enable the Option Holder to exercise the Option and satisfy the
aggregate Exercise Price without having to make payment (the “cashless exercise facility”) provided that such cashless exercise facility is not contrary to the provisions of the EMI Code, where necessary it is first approved by HMRC
and where it constitutes or may constitute the provision of financial assistance Condition 10.8 shall apply. 

  

	10.5	No Option can be quoted or dealt in on any Investment Exchange. 

  

	10.6	Subject arrangements to the satisfaction of the Company being made for the discharge of any Tax Liability (including without limitation Employers’ NIC where appropriate) as provided for in Condition 11 or otherwise
Shares shall be allotted by the Company or, as appropriate, transferred pursuant to an Exercise Notice within 30 days of the Exercise Date. Save for any rights determined by reference to a date preceding the date of any allotment of Shares pursuant
to the exercise of an Option, such Shares shall rank pari passu with other Shares of the same class in issue at the date of such allotment and will be subject to all the provisions of the Articles relating to (including, without limitation) all and
any restrictions and/or risk of forfeiture, voting, dividends, transfer or otherwise. 

  

	10.7	When an Option is exercised only in part the balance shall remain exercisable on the same terms as originally applied to the whole Option. 

  
 19 

	10.8	If the Board determines in its absolute discretion, the Company may provide financial assistance to the Option Holder in connection with the exercise of an Option by way of loan or in any other way to the extent that
the same is not prohibited by law including, without limitation, under the Act. 

  

	10.9	The Company shall at all times ensure that it will have sufficient authorised and unissued share capital to satisfy the exercise to the full extent still possible of the Options over unissued shares which have neither
lapsed nor been fully exercised taking account of any other obligations of the Company. 

  

	10.10	It is a condition of the Agreement that in the event of the Option Holder ceasing to be an Eligible Employee (for whatever reason) he shall not claim and shall not be entitled to any compensation whatsoever by reason of
any termination or alteration of rights or expectations under the Agreement whether such compensation is claimed by way of damages for wrongful dismissal or breach of contract or for loss of office or otherwise howsoever. The Option Holder’s
rights under the Agreement are entirely separate from any pension right or entitlement the Option Holder may have and from his terms or conditions of employment and nothing in the Agreement shall in any respect whatsoever affect in any way the
Option Holder’s pension rights or entitlement or terms or conditions of employment but the condition specified in this Condition 10.10 shall be deemed to be repeated in such contract of employment mutatis mutandis such that it is a term of both
the Agreement and such employment contract each as a primary contract. 

  

	11	TAXATION 

  

	11.1	If a Tax Liability arises in respect of the exercise of an Option and the Option Holder undertakes in the Exercise Notice to pay an amount equal to the Tax Liability, the Employer shall notify the Option Holder of the
Tax Liability within 14 days of the Exercise Date and the Option Holder shall pay to the Employer such amount(s) sufficient to discharge the Tax Liability in cleared funds not later than the twenty-fifth day after the Exercise Date.

  

	11.2	If the Option Holder does not make payment or undertake to make payment in respect of the Tax Liability or fails to make the payment described in Condition 11.1: 

 

	 	11.2.1	the Employer shall be entitled to deduct, to the extent not prohibited by law, such amount(s) from any payment whatsoever due to be made by the Employer to or in respect of the Option Holder in order to satisfy and
discharge the Tax Liability whether or not such payment is of an income or capital nature; and 

  

	 	11.2.2	without prejudice to the Employer’s rights under Condition 11.2.1 the Board may, by written notice to the Option Holder concerned nominate as his bare trustee any person (“the Bare Trustee”) to
sell such number of Shares to be transferred or, as appropriate, allotted upon the exercise of the Option as may be required in order to discharge the Tax Liability and any other liability (including costs) connected with the said sale and the Bare
Trustee shall pay an amount equal to the Tax Liability to the Employer and otherwise discharge any other said liability to the extent that the net proceeds from the said sale permit; and 

 

	 	11.2.3	if and to the extent the Tax Liability exceeds the amount or amounts recovered or recoverable by the Employer under Condition 11.2.1 and 11.2.2 above that Option Holder shall pay to the Employer in cleared funds the
amount of the excess on demand or within such period as may be specified in any written notice given by the Company. 

  

	11.3	The Option Holder shall, upon the exercise of his Option, agree to make any election and shall take all such other action that may be required by the Company or the Employer for the purposes of this Condition 11 or
otherwise in connection with a Tax Liability. 

  

	12	EMI CODE COMPLIANCE 

  

	12.1	This Condition 12 only applies in relation to the EMI Option(s). 

  
 20 

	12.2	It is intended by the parties to the Agreement hereto that the Agreement complies with the provisions of the EMI Code and the parties hereby agree that if and to the extent that any provision (including without
limitation any Condition) is not so compliant or is inconsistent with the EMI Code, to that extent such provision shall not have effect (unless the Company and the Option Holder agree to allow the Option(s) to continue as Unapproved Option(s)) and
the parties hereby agree to take all steps that are necessary to insert a provision that complies with the EMI Code and is as near as possible equivalent to the said provision that shall not have effect. 

 

	12.3	Where the Board resolves that the requirements of the EMI Code have not been satisfied, whether following any action taken pursuant to Condition 12.2 or otherwise the Company shall give written notice thereof to the
Option Holder and with effect from the date of such notice any provision in this Agreement intended to make this Agreement compliant with the EMI Code shall cease to have effect, including without limitation: 

 

	 	12.3.1	the words “under the provisions of the EMI Code” in Clause 3; 

  

	 	12.3.2	Conditions 4, 5, 6.2, 8.4.1, 8.4.5, 9.1.2, 10.1 and the proviso in Condition 19; 

  

	 	12.3.3	the words “who at all material times satisfies the requirements of paragraphs 26 and 27 of Schedule 5 and the “no material interest” requirement of paragraph 28 of Schedule 5 in the definition of
“Eligible Employee”; 

  

	 	12.3.4	the definition of “Disqualifying Event”; 

  

	 	12.3.5	the definitions of “Maximum Personal Limit” and “Maximum Overall Statutory Limit”; 

  

	 	12.3.6	the words “which satisfies the conditions specified in paragraph 35 of Schedule 5 in the definition of “Share” and any similar expression in these Conditions; 

 

	 	12.3.7	the words “six months” shall be substituted for the words “40 days” in paragraphs (a) and (b) in the definition of “Appropriate Period” and in paragraph (c) of that
definition, the words “to the extent that it does not exceed 40 days after the date on which there was a change of Control of the Company which is connected with the circumstances mentioned in Condition 8.3 “ shall be disregarded”;
and 

  

	 	12.3.8	the words “and agreed for the purposes of the Agreement with the Shares Valuation division of HMRC” in the definition of “Market Value” shall be disregarded 

and the Option(s) hereby granted, if still subsisting, shall continue to subsist as Unapproved Option(s) and any provision made ineffective by
Condition 12.2 shall, unless the Board otherwise states in the said notice, become effective again. 
  

	13	COSTS 

 Each of the parties to the Agreement shall bear and pay its own legal accountancy
and other fees and expenses incurred in the preparation and implementation of the Agreement. 
  

	14	ASSIGNMENT 

 The Agreement shall be binding upon each party’s personal
representatives and successors in title but the benefit of the Agreement shall be personal to the Option Holder and shall not be assignable by the Option Holder. 
  

	15	TIME FOR PERFORMANCE 

 Any date or period mentioned in any provision (including without
limitation the Conditions) of the Agreement (other than any reference to the tenth anniversary of the date hereof) may be extended by mutual agreement between the parties. 

  
 21 

	16	NOTICES 

 Any notice to be given pursuant to the terms of the Agreement shall be given in
writing to the party due to receive such notice (in the case of a company) at its registered office from time to time or (in the case of an individual) at such party’s address set out in the Agreement or such other address as may have been
notified for the purpose to the other parties hereto in accordance with this Condition. Every Notice shall be delivered personally or sent by first class pre-paid recorded delivery or registered post (air mail if overseas) or by facsimile
transmission and shall be deemed to be given in the case of delivery personally on delivery and in the case of posting (in the absence of evidence of earlier receipt) 48 hours after posting (6 days if sent by air mail) and in the case of facsimile
transmission on completion of the transmission. 
  

	17	GOVERNING LAW 

 The Agreement shall be governed by and construed in accordance with
English Law and the parties hereby submit for all purposes in connection with the Agreement to the exclusive jurisdiction of the English Courts. 
  

	18	COUNTERPARTS 

 The Agreement may be executed in any number of counterparts each of which
when executed by one or more of the parties hereto shall constitute an original but all of which shall constitute one and the same instrument. 
  

	19	VARIATIONS 

 No variation of the Agreement shall be valid unless it is in writing and
signed by or on behalf of each of the parties hereto provided that the Company and Option Holder hereby agree to co- operate to make any and all such changes as may be required to comply with the provisions of the EMI Code. 

  
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 SCHEDULE 2 

Performance Conditions 

  
 23 

 SCHEDULE 3 

Exercise Notice 
 [US
Incentive Stock Option Form] 
 (Please read the notes below carefully before completing) 

The Secretary 
 XENETIC BIOSCIENCES PLC 

I, the undersigned, having become entitled so to do, hereby exercise the Option referred to in the Agreement dated
[                    ] and made between XENETIC BIOSCIENCES PLC (1) and me (2) (“the Agreement”) in respect of an
aggregate of [    ] Shares comprised in the said Option(s) upon the terms of the Agreement and agree to accept the Shares to be transferred or issued pursuant to this Exercise Notice subject to and in accordance with the
Memorandum and Articles of Association of the Company and hereby request you to place my name on the Register of Members in respect thereof. 
 I enclose a
remittance for £[    ] being the aggregate Exercise Price payable for the Shares in respect of which the Option is now exercised. 
  

	 ̈	*I hereby undertake to pay to you the amount payable in respect of all tax and National Insurance Contributions liabilities (including Employer’s NICs to the extent not excluded from my options) arising on the
exercise of my Option in cleared funds not later than the twenty-fifth day after the exercise date. Please advise me of the amount I should pay. 

In the event I do not undertake to pay the amount of tax and National Insurance Contributions or I breach the undertaking given above, I hereby
agree that Condition 11.2 of the Conditions may be applied by the Company and the Board in respect of the Option(s) hereby exercised so that any tax that is chargeable on the exercise of the Option is discharged. 

I hereby undertake to make such elections or take such action as may be required pursuant to Condition 11.3. 

If the Option is an Incentive Stock Option, by exercising the Option I hereby agree that I will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the Shares issued upon exercise of the Option that occurs within two (2) years after the date of grant or within one (1) year after such Shares are transferred upon exercise of the Option. 

 

					
		 	Signature	 	  

			
		 	Surname	 	  

			
		 	Forename(s)	 	  

			
		 	Address	 	  

		
		 	  

 NOTES: 
  

	 	1.	Although the Option referred to in the Agreement is personal to the Option Holder named in the Agreement it may be exercised by his personal representative(s) if he dies while it is still capable of exercise provided
the personal representative(s) does/do so before the expiration of 12 months from the date of the Option Holder’s death or 10 years from the date of its grant or if the effective date (if sooner). If there is more than one, each of the personal
representatives must sign this form. 

  

	*	Place a tick in this box if you wish to pay income tax [and just National Contributions] due on the exercise of your Option(s), Otherwise Condition 11 will apply. 

  
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	 	2.	Option(s) must be exercised in respect of whole numbers of Shares. Please indicate the number of Shares which you wish to acquire on this occasion (this must not exceed the number of Shares comprised in the Option). In
any event you will be deemed to have exercised your rights in respect of that whole number of Shares which can be acquired with the moneys represented by your remittance. 

 

	 	3.	The remittance should be for an amount equal to the aggregate Exercise Price, being the Exercise Price per Share shown in the Agreement, multiplied by the number of Shares applied for. If you are offered the cashless
exercise facility pursuant to Condition 10.4 you are likely to be provided with an alternative exercise notice in place of this one. 

  

	 	4.	Please note that before any Shares are transferred or issued to you any Tax Liability, as defined in the Agreement that arises on the exercise of your Option will be required to be satisfied by the Board [and you will
be required to enter into an election or to take such other action as the Board may require in connection with Employer’s NIC]. 

  
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